Venture Clienting at BSH Home Appliances: Clear Focus > Tangible Impact

First engineered at the BMW Startup Garage in 2015, the model involves corporates acting as clients to startups at a very early stage.

BSH has endorsed this approach, preferring it to accelerators and incubators. The multinational company is known for its home appliances, making consumers' lives better and creating enjoyable engagement and experiences. Like most industries, innovation is happening on both the physical and digital level.

Over the years, BSH has tested and then eliminated certain forms of startup collaboration, such as accelerators and incubators, as they did not see the desired impact. They believe that these methods are more suitable for building an innovation brand and inducing a startup mindset within an organization. They believe that corporate venture capital only makes sense when done at a large scale as a pure play financial investor, or when used to create deal flow for potential mergers and acquisitions.

Venture Clienting To Solve Business Challenges

They chose to do venture clienting, based on a solid foundation with four key pillars: clear goals, the right approach, measurable KPIs, and effective operations.

They start by identifying specific challenges or needs within the core business, proposed by decision-makers. Then, they go out and find the best startup solutions, make the match and support the validation.

As a service unit, the value they bring to the business is increasing speed and effectiveness in implementing startup technologies supporting and facilitating business teams in their innovation development efforts. They do they startup screening, with access to relevant local and global startup sources, leverage simplified processes to initiate startup pilots, plus strong PMO support and test relevant technology aspects in pilots to validate the potential value and overcome doubts or resistance internally.

As they are partners providing a service to the business team, it’s up to the business to pay for the PoC. In fact, that decision serves as a litmus test to determine if the stakeholder has the buy-in and resources to scale the solution if the PoC is successful. The execution of the POC varies depending on the specific challenge, whether it involves coding, joint installations, or using live data in a test market. The key is to ensure the POC is relevant and proves that the solution can fulfill the desired job and meet the key performance indicators (KPIs).

Expanding The Scope For Short-Term Impact

While the company's initial focus was on product innovation, they have realized the potential for benefits in other areas. They now work on product innovations, manufacturing, production, logistics, and business-enablers such as marketing and e-commerce. They recognize that integrating solutions in these areas compared to product is often easier and less dependent on internal R&D processes, which can be time-consuming in a hardware-driven company with product cycles of 5 to 8 years.

Implementing solutions in areas like last-mile delivery, the impact can be seen within months rather than waiting several years. Their portfolio of activities is designed to balance product innovations, production technologies, and business enablers, while also exploring new growth areas such as new business models.

To create traction, it is important to be clear about the goal of creating impact for the company and transparently communicate this to all stakeholders. They track and share project progress and the maturity of the solutions within the organization. Adoption and scaling rates are key metrics they follow, with one out of five projects so far considered a success, acknowledging that it often takes 1,5 years for benefits to materialize. The business impact has been significant, with cost synergies and efficiency gains of over 20 million, making the investment in startup solutions highly valuable compared to other forms of innovation investment.

Lessons Learned

BSH has learned several key principles over the past years that are worth following. Firstly, effective communication is crucial, but it should not be just for show. The goal should be to create business impact and support the corporate goals.

Secondly, working with startups requires discipline, processes, and good communication, both internally and with the startups. Transparency and resisting the temptation to hide things is important for long-term success.

Lastly, the PoC is not the end, but rather the beginning of scaling the solution into the core business. It is important to avoid the trap of relaxing after the PoC, even though these are often quite stressful. That’s only when the journey to impact to start.