10 principles I’ve learned for managing innovation environments
People always ask me, why Berlin? I’m an American with (embarrassingly) little knowledge of German after two years of living here. So how did I find my new home with a venture builder funded by Viessmann, a 100-year-old German heating and cooling systems manufacturer? On a cold day in January 2016, WATTx’s CEO, Bastian Bergmann, bought me a croissant along with a coffee and got me excited about a vision. A corporate innovation vision I couldn’t totally articulate (“Who’s Viessmann?”) but I knew I’d be in for an adventure and certainly, as any startup environment will tell you, “navigating ambiguity.”
The last nearly two years have been nothing short of a wild, wild ride. What started out as an experimental corporate innovation lab for energy-related technologies has since blossomed into a professional company builder focused on industrial B2B solutions. I’ve been lucky to be part of shaping the company, first concentrating on partnerships and later as a part of the management team, planning the long-term strategy and development of the company as a whole.
In our short existence, we at WATTx have changed the way we conduct research, putting a greater emphasis on (and creating a team for) user experience; we’ve narrowed our focus for the products we want to build and where we want to make an impact; we’ve considered the sustainability of different funding models; and we’ve built a portfolio of successful companies that have raised capital. And as I prepare to leave WATTx at the end of the year, I find myself reflecting on various wins and losses. Below are ten things (in no particular order, and among dozens of lessons learned, I’m sure) that I believe ensure better, more innovative environments in Europe — related to topics ranging from user experience to venture development, technology development to management.
Photo credit: Vika Spokojna
- Be hyper-transparent with your team. From weekly all-hands, monthly retrospectives, and quarterly personal feedback to even more creative settings, encouraging transparency is a crucial theme for managing an innovative environment. By being completely open to feedback and questions, even in times that are difficult or lack clarity, team members feel 1) motivated to mimic this feedback and openness in their day-to-day operation in the office, and 2) invested in the company because they become intimately involved in the company’s evolution and can understand how they contribute to its greater vision. Accomplishing transparency that encourages these feelings lead to the long-term trust and faith of your team which is essential to promoting creativity, developing great products, and weathering tough pivots.
- Products should be problem-driven, not solution/tech-driven. This is core to our method at WATTx. Incredibly important is to start with defining a real, validated problem, before setting out to solve it. I was surprised to find that many new companies don’t necessarily do this — and that (certainly) most industrial companies are actually tech-driven. Defining a problem comes from understanding your potential users. If your product doesn’t solve a real problem, how can you expect people to buy or even want it? My lesson: dive deep into user research, conducting interviews with relevant stakeholders and creating empathy (just as my creative colleague, Quentin Parizot, describes), to know the ins and outs of the problem you want to solve.
- Know when it’s time to let go of ideas that don’t work. There is certainly a fine balance between putting enough time into testing an idea or researching a market and knowing when to stop. An essential piece to keeping this balance is the need to fail quickly. This allows teams to test new ideas and take risks (which are fundamental to exploring new business opportunities) without spending huge amounts of resources. When your business focuses on innovation management, and you explore a variety of topics and test diverse concepts all the time, it’s important to recognize when research is leading you to a focus that has traction among potential users. While regulatory obstacles are clearer things to steer clear of, it’s always worth questioning whether it’s worth putting resources towards the path you’re on. We at WATTx do this during bi-weekly ‘Do or Die’ sessions where we meet with our founding team to assess whether the product and business model still make sense.
- Give your team work they want to do — and your trust. The more your employees feel engaged and valued, the more they will enjoy coming to work each day and feel dedicated to the long term growth of the company. To do this, you must listen to your employees, understanding how they want to develop personally and professionally, and helping them grow in this direction. The feeling of being valued comes from having autonomy over the work they are doing, which also triggers “creative confidence.” And of course, employees who prove themselves with expanding sets of responsibilities should be rewarded.
- Create a good culture from the start. Good culture starts with good talent. Our CEO baked values into the very formation of the company. These values include “We are one team” and “Be critical of ideas, not people.” Among others, these values set out the framework for the people that we hire. While the former emphasizes our own understanding that teammates are always willing to jump in and help on a project they aren’t a part of, the latter emphasizes our culture of open criticism that will ultimately make our team, and our ventures, stronger.
- Hiring good talent is still hard. Simple as this might seem, this is probably what we underestimated most when we pivoted to a company builder model. Hiring good talent is hard; hiring for “innovation work” at a company builder, specifically, means that we need employees that are flexible, enjoy shifting projects, and can adapt quickly to new teams and products. (Did I mention WATTx is hiring?) Additionally, building companies means that we are constantly in search for not only good talent, but also good founders: experienced leaders who are willing to take on a project that was not necessarily started by them and who are “execution work” oriented. Also, once you’ve interviewed enough and you hire many positions, you start to grow an informed gut-feeling. Listen to this feeling.
- VCs still have difficulty with B2B business models. Venture capital firms always talk about hardware being hard — but I have a whole other level of this understanding when it comes to early stage B2B products with a hardware component. According to TechCrunch, the sharpest fall in funding activity has happened among seed- and early-stage rounds (note, this is a global observation and not country-specific). More anecdotally, I’ve seen “early-stage” VCs , who say they are open to B2B and hardware, say they 1) still require “traction” (i.e. varying numbers of customers, which of course take time to lock-in given the sales cycles of larger companies), and 2) don’t like “consultancy” type customer relationships (i.e. products that require company-individualization at the beginning, which doesn’t scale as quickly — just as a reminder, billion-dollar company SAP does this). On a somewhat side note, we still see too many investment teams with limited abilities to do tech due-diligence — perhaps this plays a role in risk taking around early products without established customers.
- There is big innovation potential in the industrial sector. I’ve previously described this optimism more indepthly, but I do believe that there is room for Germany’s traditional businesses to finance and develop the next generation of industrial technologies. These will be revolutionary technologies that will build on the deep expertise and market penetration of these traditional businesses — but will also rely on working together with new skillsets (internal or external) that lead to older technologies taking advantage of digital technologies, business models, and development methodologies. Additionally, the network of relationships that have long supported and moved the Mittelstand economy forward will also have to be rethought — a shift towards thinking of your supplier as also your collaborator. (More on that from Bastian Bergmann.) #futureisphysical
- To harness that potential, the industrial sector still has a long way to go. As much as I am optimistic about these traditional companies, there are also some deep-seated challenges that lie in the way of true digital innovation. There is a culture of control and pride that still prevails: there is the need to figure out one’s own projects and problems, leading many to build their own hub or company builder in Berlin (without clear direction); a reluctance to acknowledge new methodologies (and changing customer based) that contradict preconceived technology and product development; a prevalent hierarchical structure that reduces speed of development; avoidance of opening up to external partnerships (for development, collaboration, or dissemination) in the fear of losing their decade-long market leadership in a niche technology.
- Always be pivoting. Just as rapid prototyping is part of our process for building great products, we’ve embraced “iteration” as part of protocol for our own company strategy. As I mentioned, we’ve changed our focus, our partners, our topics, our business model, our team, our methodology, our goals — all to adapt to new priorities and circumstances. Time and time again, it’s proved important to change the course of our direction. Which is a good reminder that we are one big prototype.
We’ve embraced “iteration” as part of protocol for our own company strategy…we are one big prototype.
Photo credit: Ange Royall-Kahin
There is definitely enough buzz language around how to create innovative environments: agile development, design thinking, flat hierarchies, and adaptability. I hope the lessons above give some tangibility to these concepts: how they break down into real-world actions, why they are important, and what it means to successfully integrate them into your business.
Au revoir, WATTx. It’s been real.
In Berlin? In Bordeaux? Are you working on a new nerdy project and want to bounce ideas over a glass of wine? Give me a shout @angedupre.