In this Mind the Chat, we had the pleasure to sit down with Michael Webber, Chief Science & Technology Officer at Engie, who has just been awarded by Mind the Bridge and the International Chamber of Commerce (ICC), as a 2020 global Corporate Startup Star.

Innovation: To Buy or Not to Buy?

Michael started by stating that “investing in innovation in big companies is difficult. This is also true for companies with innovation at their core, unless they have anomaly positions – such as AT&T that was required by law to spend 10% of revenue into R&D”.

The way out from this impasse is to buy innovation by purchasing a startup or other companies.

That has been an approach in the past, but over time large companies are starting to figure out:

“You can’t always buy your way out. You can’t always buy the innovation.”

Sometimes, you have to innovate internally, either with your labs, research, or with innovation programs. That is the approach that ENGIE has undertaken. Indeed, Engie has an international innovation program that invests, acquires startups, and also launches solutions built in-house.

Companies are recognizing the importance of engaging with innovators at an earlier stage. Why buy a company for 60 million dollars, when you can invest and get in earlier for 3 million dollars, the price to value ratio is riskier, but potentially with more upside?

Furthermore, ENGIE soon recognized that sometimes the opportunities they would have liked to invest in did not exist yet, and therefore had to be created.

Michael quickly pointed out that “As in universities innovation comes from students rather than professors. Within corporates, we should go for employees and not for managers. Unfortunately, there is no Google Search for Entrepreneurs inside a company. Intrapreneurship programs are meant to identify people with an innovative and entrepreneurial attitude”.

How is ENGIE leveraging its internal innovation, then?

First, with Engie Innovation.

ENGIE Innovation is a platform that manages intrapreneurship programs and relationships with the 25 Business Units (BUs).

Call-for-projects or Innovation Trophies are also organized under this umbrella. If they have the potential to reach 1B of revenues at scale, the ideas coming out of it then move to the New Business Factory program to scale.

In parallel, there are also many discussions happening with BUs to create ideas from scratch.

Engie New Business Factory, ENGIE’s Venture Builder

The New Business Factory, ENGIE’s Venture Builder, was created with a simple approach: Grow, Keep or Kill.

“It is important to kill ideas if they are no longer aligned with Corporate Strategy, despite the quality of the project. In fact, we are not following the spray-and-pray model of Accelerators, which produce 1 good project out of 10. That works for software companies that can scale fast. You cannot afford a 90% failure rate in the energy sector because of the nature of the technology involved.”

The idea is then to have a ratio of 7 out of 10, killing just two or three projects: “a lot of thinking goes behind the launch of these projects”.

So how does the Engie New Business Factory work?

Generally, there are about ten projects per year with a team of 15-20 people developing new ventures and with a strong business background, “borrowed” by BUs for one or two years through rotation schemes. And how do people get selected?

“Well, sometimes you start with the idea and find the person, sometimes you have the person and look for the idea. Here we’re not leveraging assets, we’re leveraging capabilities from our people.”

The question to ask then is: “Is this venture something that should be grown within the company or outside the company?” Typically, the ventures are created inside the company at first. If it is successful, several options are possible, as the venture can be either:

1. transferred to a BU,
2. handed over to an external partner,
3. spun off into a new separate entity.

ENGIE New Ventures, the CVC arm

Furthermore, ENGIE has a CVC fund, ENGIE New Ventures, that can invest in these ventures. One of the key criteria for investment from Engie New Venture is a clear relation with a BU, as stated by Csilla Kohalmi-Monfils in another Mind the Chat.

Michael concluded his talk by reminding that the ultimate goal of innovation, on top of other KPIs such as the reduction of carbon emission, is to improve revenues and profits.

To achieve that, it is critical to create personal relationships with BUs, as well as drafting the importance of Innovation Roadmaps and strategic alignments.

“Without roadmaps, you might say yes to everything. And you want Research and Innovation to happen on purpose, not by accident.”