Successes and failures build the brand’s strength
Alain, let’s talk about Design Thinking and the human-centered approach. How have these concepts evolved over time?
I think it was more of a marketing goal – a vision or an idea. Nobody talked the talk. I think we have now started to walk the walk. Talking is easy. We are user, customer or human oriented. And when you see what reality looks like… it can usually surprise us. Take, for example, the big banks I work for. They pretend to be human-centered, but still develop products and services internally, without interacting with customers. The fact that they operate with a human-centric mindset is just a marketing gimmick. And then you can see that nearly 42 percent of startup failures and corporate innovation are due to a lack of market research. This means that people are still sitting in their rooms, developing something, and then they go to the market and the market says “we don’t need this”. If you are a start-up, it is a dramatic situation because you go bankrupt and fail. We all have to agree and accept that failure is a part of the journey, as approximately 75% of projects fail. But let’s be honest, failure is never pleasant. Financially, this can be dramatic for you. We must learn from our successes and failures. Corporations never analyze their failures, rarely do internal summaries of their losers. They say something is a bad product, throw it away or try a different one. They spend millions a year to develop something without really confronting the customer or the market, and then introduce it… and wait for first reactions. If they are successful, they find a genius in the company. If the project is a failure, they will fire a few people, an external partner, and tell the employer that they have taken some actions. But the real problem is that few organizations are truly human-centered, while in difficult times we need it more than ever…
Would you like to give some examples?
That’s why many (tech) startups continue to be successful and steal customers from others! They are obsessed with one thing – the customer and what they bring as value to the customer. That is why N26 and Revolut were successful in the banking sector. They are so easy to use, simple, nice looking and enhance functionality! They work with you 24/7 a week. I opened my account on Sunday afternoon on my mobile phone. Likewise, I started using Drive-Now car rental services. The whole experience was just great. So the obsession with some tech startups and giants is amazing. I have doubts about Google, Amazon, Alibaba or Facebook. I think we’ve let them go too far. They are monopolists, keepers of the gates who are abusing their rights in the world today (the playing field has been disturbed). They can greatly harm or destroy all innovation and the creative economy. Can you imagine that Alphabet (Google’s parent company) is worth € 2 trillion? Can you imagine that the GDP of Germany and Chancellor Merkel is € 2.7 trillion? We are talking here about almost equal players and the largest country of the European economy. It is dangerous. And who is conquering space? These are no longer nations, but companies such as Richard Branson, Elon Musk or Jeff Bezos. We give them a lot of power. Once I counted that the value of the 15 largest technology companies in the world (mainly Chinese, American and Russian) is about 17-18 trillion in total, and that’s the worth of American economy. If they stick together and go to negotiate with the head of state, they will talk as equals. We have gone too far because economic monopolies (as well as political regimes) kill the economy (or the opposition) and all initiatives. This does not bode well for the future. We should be less naive and keep them from doing that. Let’s try to disassemble them. I worked for four years as a “resident entrepreneur” in one branch of the French company Saint-Gobain. The company was founded 350 years ago and has a turnover of € 40 billion. Every year it generates a profit of € 5 billion. Total inventory value is € 20 billion. They employ 200,000 people internally and millions of people in the supply chain. The twenty-billion-dollar company that built the history of the European economy could be acquired on Friday afternoon by Jeff Bezos (founder of Amazon) after his one call. He has enough cash in his bank account and can easily buy it. Tomorrow we may lose all of Europe’s jewels, and then your children will grow up in American or Chinese Europe.
Would you like that to happen?
We need to be sure that we can survive in the world of the future, which will be very difficult for all that I have talked about. This is crazy. Greece went almost bankrupt a few years ago. What did they ask the European Commission for? For a loan of € 200 billion. How much does Google have in its bank account today? € 400 billion. They could have told Greece they would give it € 200 billion, but they had to rename Greece to Google Land and they would accept it. Do you remember how revolutionary Finance Minister Varoufakis was?
How do you fight against big competitors? How can you avoid small companies being taken over by large ones? Big players seem to be getting even stronger by crises like the 2010 banking crisis or COVID-19 in 2020?
Two things have already started. On the one hand, we are becoming protectionists who use the legal shield to protect our economy, and although I do not like it very much, remember that I am a lawyer by trade, in the current situation such solutions work for some time. The GDPR has created a kind of a legal shield for us. Concerns over privacy and the abuse of dominant position began in 2007, when Commissioners Kroes and Redding began investigating the technological practices of giants taking over an entire ecosystem and becoming monopolistic watchdogs. But protectionism is not a lasting vision of the future. This is a temporary solution! It gives us some time, maybe 3 or 4 years, but in the meantime we need to wake Europe up and create an innovative culture in our society and organizations. About 10 years ago I was worried, but today I think there is hope – if you go to Paris then be sure to see the Station F incubation center. It was built by Xavier Niel – a French businessman who sold his company to France Telecom. With this money, he created an incubator for around 1035 companies in the center of Paris. Similarly, in the center of Kiev, Vasyl Khmelnitsky invested in an old motorcycle factory. It covers approximately 30 hectares and is an innovation center for start-ups and technicians in Ukraine. The same is happening in Brussels with the Tour & Taxis project or in Lisbon – Hub Criativo do Beato. Moreover, we have Concordia Design Wrocław or LAB150 in Poznań!
Do they follow their own intuition or do they have good advisers?
They have intuition and advisers. It’s good that they returned their money to the European ecosystem, thanks to which we will be able to create future technology giants in Europe. In 5 or 10 years, we will be able to create new successful European unicorns. Or maybe there is an European vision that we should strive to develop: Corporate Venturing? How can Siemens, Bosh or Airbus work with successful startups and help them grow? In Europe, we often have problems developing our beautiful ideas. Maybe a corporate venture or something similar could help? I really believe that in 5 to 10 years’ time we will become a digital economic power zone, just like China and the US today.
See how Poland begins to develop: Tricity, Wrocław and Łódź. A new generation is waking up, full of energy and good vibes.
I wonder why they can’t develop more…
Tax borders, taxes, administration, language, culture…
Maybe we should learn from the States…
In the US, and maybe even more in Asia, you open a company, and tomorrow you are known nationwide. We should be able to do business all over Europe with one click.
So it is regulations that inhibit innovation.
Exactly. They block development.
Policymakers know it’s the future…
I think they understand and want to get involved… but as always, it takes a while. This is the beauty of Europe. Why is China growing fast? Because one man decides there. In Europe, we must all agree first… Merkel, Macron and all the other political leaders have to say something.
Is it even possible? Or maybe there is another solution?
As indicated earlier, the answer may come from the private sector. Imagine that I manage Siemens and understand the value of helping start-ups grow. I decided to offer them access to my “backbone”. So let’s imagine that I am a start-up in France and I want my products to be distributed to 28 countries in Europe. What if I could surf the backbone of Siemens and not get bought by them, because sometimes there is a danger of getting swallowed up by a larger company working in a pyramid-shaped like management system that will kill your company’s culture. It should be something like a joint venture. I use Siemens’ backbone all over Europe, as there are already local taxes, administration, VAT numbers etc. I surf on your backbone and we agree to share the profits from co-development, but I remain independent and do not become a part of Siemens. Nobody has yet an answer on how we could improve the development process in Europe, but let’s try some ideas.
Maybe it’s also a question of communication. I am asking from the perspective of a marketing agency. How should we inform about innovations? Sometimes we have a problem with convincing our potential clients to new solutions and approach to business because they either do not know or cannot understand that it may be beneficial, so they usually stick to some standard solutions they know.
One of my recent lectures was entitled “How to bring innovation back to your company’s DNA“. I think we lost a bit of that. We had great inventions 100 years ago in Europe and thanks to them we created beautiful companies such as Siemens and Bosh. Since then, we have been ‘milking cows’ and entrusting responsibility for innovation to research and development centers. What about the rest of the company? It has to take care of production, quality control, standards, processes etc. This automatically leads to the creation of gradual innovations in which incumbent operators observe and copy each other. Toyota looks at Renault, Renault looks at Volkswagen, they copy each other, but rarely make breakthrough innovations. Innovation should be supported by the entire organization, and while I don’t want to always use Google as an example, you should read their book, “How Google Works”. From the very beginning, they kept telling their employees that 10% to 15% of their time should be spent on innovation. But each design should be 10 times better than the product on the market. Not 10%, but 10 times better! Is this the case in European companies? Not at all. But imagine if we changed this paradigm and that everyone in our organization could contribute: front desk person, waiter in a restaurant, accountant, someone working in production… all of these can contribute to innovation!
We must, of course, give them the framework that the innovation strategy should provide. I like the “Job To Be Done” methodology by Professor HBS Clayton Christensen. It’s a kind of compass for your innovation. When your teams come up with ideas, you can accept or reject them, you can put them aside or prioritize based on the framework. We can’t do it all together. I have personally contributed to the culture of innovation in these 15 Saint-Gobain factories.
Did it work?
At the beginning, of course, we started training people who were convinced of it. In every group of people you have 15-17% of people who believe, 25% who are actively trying to stop the change – they want to destroy this new culture, fablabs and all these crazy things because it will change our present world. You have people who really want to sabotage you. And there are sheep in between the two groups. They will follow, but probably a bit later. So we started with 17 percent of believers, and while the word virus isn’t very popular in 2020, we have gradually started the process of infecting the entire group. We started one small project, a second, a third, a fourth, a fifth, and we infected more and more people, or at least triggered their curiosity. And then, at some point, it comes to a tipping point when 60 to 70% of employees really start to collaborate under the new culture and mindset. By the end of the process, you can lose 10-15% of your people. It may sound dramatic, but some of them probably never fit into the new type of organization. Perhaps they will start working in another Saint-Gobain factory, which still has a pyramid-shaped management system. This is a part of the game. I am still working with Saint-Gobain and now we are working on a new project: we are trying to create a digital platform of connected and collective intelligence. As people cannot always physically work with others, we need to envisage hybrid tools that work together remotely and stimulate innovation and creativity. Ideally, one day we won’t need fablabs or digital platforms as they will become part of the company’s culture. Innovation inscribed in the organization’s DNA.
Back to my question, communication starts with management. How do you communicate inside the company and not with clients?
We need good leadership. At the highest level of the organization, we need at least one leader who believes in this. Sometimes people ask what innovation is. Is it about technology? I say no – it’s about culture. And culture is often the result of your processes. If you change processes, you will see how culture and people will change. Choose good people. And that’s what often happens with innovations in companies. I hear it all the time – innovation is the most important thing in our company for the next 10 years. The next question is who is driving innovation in your company? We only have 5 interns who came from the university yesterday to deal with innovation. So the future of your company lies in the hands of these 5 interns? Yes, but we also have an old man, 64, who will retire in a year, and we’ve made him responsible for implementing innovations. I would rather say that if you are a strong leader and have a visionary, innovative strategy then, you should choose the best person. If you are the best in my company, I would come to you and say – I know that today you have chosen your career path, you are ambitious and you know where you want to go… but I would like to chart a different path for you. I would like you to deal with our strategy and implementation of innovations, because this is where the future of our company is heading. It is not an easy choice, but I will protect you for the next 3 to 5 years, and if you fail, you can start another job at the company. However, if you succeed, you can create new departments. We all know that innovation will generate approximately 1% of revenue initially. In the meantime, 99% of the income will be made by others, they will laugh and say: “Look at Bartek Kowalski, he stopped doing his tasks, he works in a place where there are fat boys lying on the ground, there is also a ping-pong table and some nice places to work. There are no clear results, the projects are stupid and in the meantime we are providing the company with real money”.
So, once again, choose your best employee and set a career path for them for the next 3-5 years.
When can we say that Bartek has become successful and is on the right track?
Clearly defined KPIs. Sometimes, we lack KPIs for innovation. As in the case of a start-up, I would tell Bartek that whenever there is a project, the team must create a Business Model Canvas that will tell you exactly how much the start-up will cost. They need to tell you when the MVP (early stage product) will be ready; when they are ready to go to the market; and when they will have their first customers etc. It could be an internal project where you are saving on costs or it could be revenue generation because you develop new products or services, but use KPIs from a typical startup also when introducing corporate innovations… The worst thing you can do is disagree with clear KPIs. Because suddenly after 6 months, you will see that the goal is becoming unclear. Do we need to stop the project or invest more money and resources? Work with real budgets, real schedule, alpha-beta releases, while using consistent vocabulary and clear KPIs. And protect your teams. Something beautiful happened with Saint-Gobain. The commitment of the top management, a team of 7 people, was aimed at transforming the factories in the next 5-10 years. They knew it would be a complicated and delicate process, but they all agreed that they would not deviate from their current responsibilities, but would be dedicated to working on a long-term project. Even if an internal promotion was possible or if another company tried to recruit you. The worst that can happen is a new management board that wants to change the entire project. This would cause great frustration among believers and followers, and could even force talented people to leave the organization.
Do you think that, as a content marketing agency from a medium-sized city in Central Europe, we could turn this into our favor? How can we talk outside, convince our clients that what we’re doing is right?
There are many different activities to be done in this area. Concordia is one of them, but it is also active in universities and schools. VOX is also a part of Voelkel’s activities. Peter Voelkel also decided to put innovation at the center of their development. It can be said that VOX is just a company that creates furniture for home and office. But when you see that innovation is embedded in their DNA and that each employee can contribute to innovation while being supported by top management… Let’s use these case stories to convince others that this is the only way to move forward.
Talk a lot about the company?
I think that as a content marketing company, you should also contribute to the creation of another success story in Poland. Sometimes we can hear that Poland is not known as an innovative country. I give MA classes at the University of Gdańsk and of course I see students from various disciplines and companies, but everyone says that you are traditional and not innovative. I say that is not true, because you have some outstanding success stories in Poland that are worth talking about.
Have you heard about Sescom from Gdańsk? I’ve seen their management strategy. They developed their current strategy with a horizon to 2030, an entire comprehensive strategy bringing together different sectors of their activity. The owner, who has been running this business for over 30 years, can adapt to the market, treat the recent crisis as an opportunity, not a risk, and put his company on a new track…
We should really show these innovative examples in Poland, to give Poles more self-confidence, to show that your country can also be innovative and creative. Use them to inspire others, because we always need role models. And I think that, with time, these patterns will increase.
For four years, I have been teaching fantastic people at the University of Gdańsk. I would hire them right away if I could. It’s also cool that the University asked if I would be interested in teaching. Of course I agreed, but I pointed out that I am not a teacher, but rather an entrepreneur. I am glad that the students leave their comfort zone, have fun, create a start-up and often even believe that their start-up could fly, and after graduation they say: Alain, we think we will really do it. We have come up with a great idea.
I think a similar approach to start-ups exists in Western Europe…
Exactly. The dean and director of the graduate studies asked me last year what else could be added to the study program? After a while I replied: We will organize an inspiring safari for the students! What is this? I take them to the city and discover the underground scene in order to inspire them, of course, but also to intrigue them and shake them up. Sometimes we have to open people’s eyes. I took them on a 4 day safari to Barcelona. They had to cover 50% of the cost out of pocket as the remaining 50% was financed by the University. From a group of 30 people, 25 people traveled with me. We spent 4 days in Barcelona’s underground scene, visiting spaces, fablabs and discovering other concepts, but also meeting entrepreneurs, artists, philosophers and the Cyborg community. The students made new friends, contacts, and came back full of inspiration, dreams or questions. Bewildered. So now I want to do another safari this year but it could be difficult due to COVID. I’d like to take them to Aarhus. It’s a nice and very inspiring city in Denmark, where KaosPilot started. Everything is different there, even the library in Aarhus, called Dokk1, is amazing. It is an open place where young and old people can come together to experiment and do different things together. It is the library of the future. I would also like to take them to Espoo, Finland, where the way people are educated is being reinvented. Not in a linear fashion, i.e. from geography to history to mathematics. It is a mixed model. You take a topic and ‘lead’ students through it. They will do math and discover history, but in a thematic way. This is another thing we should understand when we start the discussion on innovation in Europe. Innovation starts with education. We know much more than 20 years ago. We know how important the period of 4 to 12 years is for the development of our personality and brain work…
I heard that from 0-7…
Then you start to express much more. You have creative and innovative abilities and talent. But there is no room for creativity in our educational system. I always give a simple example that when Christmas is approaching, in a traditional educational school, they tell children: here is a piece of white paper, the shape of the Christmas tree is already drawn, but you can use colors and color the Christmas tree. Result: You have 20 trees on the wall made by 20 children. In a new educational system such as Montessori, Steiner, or Finnish, they would say: here’s a piece of paper – design what you want, what you associate with Christmas. Maybe one child would draw a candle, another a monster, and a third a tree. Then you suddenly have 20 different stories on the wall. This approach shows us that we conduct education in which there is no place for creativity. We should change education so that the new generation is more rooted in creativity.
Estonia is also the most digital and innovative country in Europe.
Definitely. The Baltic and Scandinavian countries are now undoubtedly the most groundbreaking countries in the world in many respects. In education, digitization, transport, mobility, but also in thinking. Moreover, the authorities don’t regulate too much, they give people freedom to innovate. They also have visionary politicians. We have the first all-female government in Finland! Let us transfer this thinking to the rest of Europe as well.
What can Skivak do to become an innovation marketing leader? Do you see any newest trends?
My Virtuology group deals with digital marketing. I have to adapt all the time to see what happens next. Of course, we care about the data. We need to look at this and see how technology can improve our services and deliver value to our customers. We also need to attract and retain our talented people. This is the first point on our agenda. We must also note that more and more advertisers in companies are trying to do some of the agency’s tasks personally. We are not against it. Sometimes we send our people to companies so that they pass on their know-how. It’s not easy for a content marketing agency to predict what will happen next, but…
We discover different ways, we also create publications on innovation ourselves. We recently released “TRENDBOOK. INSPIRACJE SĄ WSZĘDZIE”. We previously created our malls report and now we want to take a step towards innovation and star-ups. We also look at big data …
By looking at how you’re adjusting, I can see that you are doing great. You currently offer the full spectrum of content. I also regularly work with people at BMI to innovate the entire business model. You can also try it. As you mentioned, inspiration is everywhere! (laughs)
ALAIN HEUREUX – trainer of creativity, innovation and change. Expert in the 2030 High-Tech Skills working group within the European Commission, member of the MBA PG Program Board, leader of Brussels Creative and Creative Ring. Supports and teaches start-up leaders and large corporations at Virtuology Academy.