For any organization, the strategic decision to innovate in a domain is accompanied by the choice of an innovation management model, typically characterized by its degree and form of openness to other actors participating in the domain. The challenge of innovation increasingly requires resources to be shared in order to explore a common domain, whether it be technological applications, social usage patterns or markets. This reality is all the more unavoidable when innovation aims to introduce a break in technology or in the market.
Breakthroughs being hard to create within mature organizations, their effective implementation tends to be supported by various kinds of strategic openness. For numerous industrial groups, the choice of an innovation management model takes two main solutions into consideration: either to create a spin-off from the mother company, which can be hosted by an incubator, or to acquire a stake in a start-up created outside of the company. It is this second approach that we propose to discuss here, based on the cases of SEB and Alstom.
Information Technologies for Cooking
The recent creation of the SEB Alliance investment fund has in all likelihood not escaped the attention of the cooking aficionados among our geek readership. Indeed, its first deal targeted the Texas start-up Key Ingredient, whose aim is to put digital technology in the service of the kitchen. Aside from a passionate interest in the world of cooking, what are the reasons standing behind the launch of SEB Alliance ?
A Competitive Intelligence Tool
The SEB Group (Paris: SK) manages over sixteen brands of small home equipment, as well as eight industrial sites across the world. Faced with competition from the emerging countries, the Group decided to commit resources to support its strategy of innovation. Endowed with 30 M€ capital, the SEB Alliance fund aims to empower exploration of forward trends in domestic equipment use, along several thematic axes: aging, body preservation, sustainable development, new energies, digital technology, robotics… to these axes correspond matching competitive watch set-ups, geared towards the detection of innovating projects.
The Major Role of Start-ups
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The strategy of SEB Alliance suggests that start-ups accomplish a major exploration function from which big corporations may capture long-term benefits. As often, the question here is to determine according to which priorities and criteria the detection of innovating projects can and should be conducted. Without a relevant analytical key, the innovations held in store by start-ups risk remaining purely virtual from the point of view of industrial groups. Business angels and venture capitalists have brought differing answers to this question: should the qualities of the start-up team come foremost, or should the deciding criterion be market potential ? Should competitive watch include a permanent process of market estimation, or should it remain solely focused on the entrepreneur population, as a prime source of information and potential deal targets ? Finally, how does SEB access expertise it doesn’t have within itself, but which is necessary to evaluate the potential of projects from a technology and marketing perspective ?
With these questions in mind, SEB Alliances first investment reveals the importance granted to actual consumer usage patterns when it come to evaluate a project. Bertrand Neuschwander, SEB Group Assistant General Manager, in charge of Operations, explains this point as follows [source]:
Connected products are starting to appear in our kitchens. In the same way that, in the fifties, the success of the “Cocotte minute” pressure cooker was supported by the famous recipe book of Françoise Bernard, we believe that the development of the kitchen will happen along with digital recipes and the services they enable. Key Ingredient brings us solutions and competencies that make it possible for us to accelerate our research plan, and to be able soon to offer consumers devices and services integrating digital content.
SEB included Key Ingredient in its portfolio because it matched the strategic analysis of the usage patterns that will help spread technological innovation.