It was a big adrenaline rush for Marcos Monteiro, João Pedro Monteiro, and Till Haug, the young founders of Veezoo, when they were given the opportunity in 2017 to present to the open-innovation unit of AXA, one of the world’s biggest insurance companies. At first, things went well for Veezoo, which had participated in the incubator program at ETH Zurich. Veezoo’s technology allows users to ask natural-language or voice questions in plain English and receive data-based actionable insights, and the technology seemed like a great match for an information-intensive industry such as insurance.
AXA first came across the Veezoo solution at the Kickstart Innovation’s platform. The Veezoo team was assigned a business case to work on, sharpened it through a few rounds of feedback from a business manager at AXA’s office, and was set to pitch it to an AXA evaluation board. There was every indication that the three-employee startup might land a big-name commercial client and enter a phase of high growth. But the trio’s hopes were dashed when the day’s discussions failed to outline a clear path forward for deploying Veezoo’s new tech in AXA’s operations. It felt as if someone had pulled the plug.
The frustration was understandable: traditionally, innovation partnerships and ecosystems have focused on filling a specific gap. The dominant mindset among players participating in such ecosystems was “We know what we want.” In this mindset, an established organization would come up with detailed specifications for a desired technological or product feature. Startups, for their part, were similarly rigid in pursuit of a large corporate client and a deal that could be finalized within a few months. Across industries, the result was an innovation landscape built on arm’s-length models of cooperation. Self-interest was the name of the game, and every party in the system pursued its own narrow agenda.
Over the next few months, the team at Veezoo noticed something strange. During the pitch process, they had granted access to the demo account to a member of AXA’s innovation team. And suddenly, they saw activity in the demo. A few months later, that AXA manager identified a new internal stakeholder who reported a machine learning–related need that Veezoo’s product could address. Things quickly snowballed. Soon the teams were hammering out legal agreements, syncing up Veezoo to AXA’s IT infrastructure, and integrating with existing customer relationship management (CRM) analytics. Throughout, the number of stakeholders and users continued to climb. Veezoo and AXA jointly developed a proof-of-concept AI-powered, dialogue-based smart assistant to help AXA’s sales consultants analyze and visualize large volumes of data within seconds, filter out the required information, and answer queries.
This is a heartening story of a “little data engine that could.” But there’s something deeper at work here. It really shows how collaboration within innovation ecosystems has evolved in the past few years. In particular, my ongoing research into shifts in collaboration dynamics has highlighted four key trends.
Empowering people through collaboration
Whether you call it socialization or use any other term, the human dimension of innovation is often overlooked or obscured. In part, this is because technology and the covid-19–induced migration to online platforms have garnered a great deal of attention. It’s important to remind managers that innovating as a special form of problem-solving is best tackled by empowering the workforce. Collaboration can be jump-started from many directions, but it can be only as vibrant as the company’s underlying culture of curiosity, learning, and continuous adaptation.
In the Veezoo–AXA story, the formal process failed to reach a breakthrough. It was the involvement of specific individuals who were keen to see the collaboration through—often on their own terms—that led to success in building an innovation ecosystem. In fact, it is often through the behaviors and work of certain people that effective structure and discipline emerge across an ecosystem. For instance, ecosystem partners can identify the people at a counterpart organization who can champion an innovation (idea people) and who can actually make decisions (gatekeepers). Managers who are open to social links and communication can help their ecosystem partners in this process.
A prerequisite for forging and leveraging such links with an ecosystem highlights the importance of developing trust. Trust can be built only over time, through multiple interactions, underpinned by a clear and shared sense of purpose. With time, the quantity, quality, and inclusiveness of communication can help build a sense of purpose, alignment between partners, and ultimately impact. In practice, this requires a healthy dose of daring from managers whose thinking is shaped by the question “What can we learn?” rather than the more defensive query “What do we stand to lose?” These managers will actively help the ecosystem partner navigate the internal matrix of, for instance, who is an idea person and who is a gatekeeper.
Reshaping how modern ecosystems work
Fail fast, learn fast, succeed faster. These precepts, which emanated from Silicon Valley tech labs, have taken the world of open innovation by storm. Executives who are eager to get to the bottom line of evaluating an innovative idea, product, or technology will likely be told, “Wait for the retrospective!” Even in the most traditional, non-digital-native corporations, innovative collaborations have borrowed heavily from methods such as agile technology and lean startup. From ideating and producing a proof of concept, innovation partners will typically work in sprints, testing and prototyping until they have come up with a minimum viable product. In the meantime, successful pilots may lead to other pilots and create spillover effects. Few best practices or approved scripts are available to follow. Instead, it is crucial to test and experiment with different ways of finding solutions to a problem. Although the search for solutions is typically driven by customer needs, optimizing the internal process can also produce results.
Trust can be built only over time, through multiple interactions, underpinned by a clear and shared sense of purpose.
Today, even non-digital-native enterprises are finding that up to 70% of their products didn’t exist until a few years ago. In 2014, Swisscom, Switzerland’s major telecom provider (with 2021 annual revenues of US$12 billion) realized that in moving away from voice services, which had become a commodity, and expanding its IT services and digital portfolio, it couldn’t go it alone: it urgently needed access to fresh ideas, skills, and entrepreneurial drive.
Fintech and blockchain have been major areas on Swisscom’s startup radar ever since. Every month for the past eight years, it has updated its digital interactive map of the Swiss fintech startup landscape. The company has been partnering with these startups, offering scalable digital solutions in areas including banking, digital trust services, and crypto property services.
The company not only had to design and nurture collaborative environments with a view of growth areas outside its core telecom business, it also had to learn to move swiftly, taking ecosystem members through fast iterations and communicating the outcomes to the right stakeholders. Manuela Disch, Swisscom’s new business manager in charge of fintech, told me in a panel discussion: “Keep an open mind; you never know where the initial idea will be going. It’s not about falling in love with a product; it’s about developing it in ways that make the most sense for our customers and stakeholders.”
Collaborating to enable value creation
Handled in the right way, collaborations will align and connect potential co-innovators to a shared purpose—internally as well as externally. Importantly, value creation is no longer just a numbers game. Echoing the motto of former PepsiCo CEO Indra Nooyi, “performance with purpose,” impactful innovation in an ecosystem is likewise driven by social values as much as by numbers. These are reflected in the challenges and specific problems the collaborators seek to address; in reframing the purpose, if necessary, so that it fits everyone’s objectives; and in the way the collaboration defines success. Much as in a team sport, egos and titles are swept aside in pursuit of a greater goal.
In 2013, University of Cambridge researcher Sascha Wischek started Fjuul, a Helsinki-based digital health solutions provider, which has been collaborating with 200-year-old insurance cooperative Swiss Mobiliar. Their joint focus has been on small and medium-sized enterprise employees’ health management, helping workers maintain and keep track of their health with the aid of personalized and gamified services. Fjuul’s data-driven solutions capture biometric data from smartphones, sensors, and wearables and feed them into well-being programs, ultimately pushing the health insurance model onto a path of what is known as “predict and prevent.”
Wischek chalks up much of the partnership’s success to “speaking with stakeholders with one voice, as one team.” He elaborates, “We don’t sell tech; we sell value. A great deal of that value comes from the team, its professionalism, and its ability to co-create.” When ecosystem members understand their own purpose, it is easier for them to position themselves as equal partners in their collaborative space. And that is a key precondition of achievement.
Another example of fruitful collaboration comes from the company Clara, which has also partnered with Swisscom. Set up in Berlin in 2020 as a pivot from Fintechdb (a database of fintech companies), Clara builds interactive data visualization software. Its stated goal is to help businesses understand and communicate their data in a visually appealing way, across the organization and with customers.
Alex Beck, Clara’s founder and CEO, says, “In growing our partnership, we have come to know Swisscom as open to new ideas; eager to try out new things and constantly iterating; and very open with its network book, willing to connect us with other departments internally as well as with other people in the emerging ecosystem.”
Considering new types of matchmakers
Innovation that draws on social values is occurring on many levels and involving a growing number of actors. Today, ecosystems need to do more than match startups with incumbents. Given the scope and complexity of the challenges they face, they must include regulators and other government agencies, NGOs, and social activists. Improved sharing, learning, and networking are key prerequisites in making these complex systems work and deliver value.
Billing itself as “innovation ecosystems with purpose,” the platform Kickstart Innovation, discussed above, represents a new breed of ecosystem enabler specializing in setting up and accelerating networking and learning. Launched in Zurich in 2015, Kickstart is a zero-equity, multi-corporate platform that matches high-growth startups with established organizations. It also runs a scale-up program for later-stage startups with a goal to accelerate deep tech innovation and achieve sustainable and tangible results.
Science- and engineering-driven technologies have the potential to address humanity’s biggest challenges. They require unprecedented collaboration between established organizations and audacious entrepreneurs. Kickstart is thus committed to building an innovation ecosystem that brings high-growth startups, corporates, cities, foundations, and universities together.
The company takes a phased approach to what it describes as fast-forwarding the innovation process. Its founders believe that high-impact collaboration needs to be construed and executed in stages rather than as a single exercise, because each stage merits different types of attention, tools, and frameworks.
In practical terms, Kickstart selects, encourages, and coaches entrepreneurship as well as intrapreneurship teams to remain agile, competitive, and relevant. It supports them in reaching their milestones faster. Kickstart has been building its own ecosystem of collaboration support, complete with alumni, coaches, and other specialists, which can be activated at different junctures in the collaboration process. Its goal is to strengthen awareness of the many differences among ecosystem players, such as resources, timelines, key performance indicators (KPIs), and vocabulary. These differences can be formidable: for example, whereas a digital startup’s outlook is fixed on next week, a smart city as its partner continues to think in terms of years, if not decades. Kickstart works toward bridging the corporate mindset of tapping the ecosystem for a predefined need and the startup goal of aiming for instant traction and big results.
Disruption, the digital revolution, covid-19—in aggregate, these factors have blurred and, in some cases, dissolved the boundaries between organizations, segments, and entire industries. As a result, innovation ecosystems are emerging as the dominant paradigm for corporate innovation. Yet, because of the fundamental disparities embedded in their structures, ecosystems are difficult to form and initiate, let alone sustain. The people-centric, values-driven, and purposeful approaches described here will help managers patiently design, nurture, and accelerate innovation ecosystems as powerful vehicles of value creation as well as of cultural and organizational change.
- Louise Muhdi is Affiliate Professor of Innovation and Strategy at IMD business school.