Can collaborative innovation speed up the slow-turning wheels of the European energy sector? When big energy companies struggle to innovate, partnering with startups might be their best option, argues Elena Bou.
Elena Bou is the Innovation Director at KIC InnoEnergy, one of the five Knowledge and Innovation Communities (KICs) supported by the European Institute of Innovation and Technology. This commercial company, headquartered in The Netherlands, is uniting businesses, academia and research institutes to foster innovation, entrepreneurship and education in the field of sustainable energy. One of the company’s main activities is to provide acceleration services to start-ups and ventures that contribute to Europe’s energy ecosystem; their potential protégés operate in eight selected thematic fields, among which Electricity Storage, Renewable Energy, and Smart Electric Grid. Every year, KIC InnoEnergy is showcasing its start-ups and SMEs in The Business Booster, an event attracting international energy companies and venture capitalists; in 2015, the event in Berlin saw more than 100 sustainable energy startups from all over Europe were lined-up there. Bou co-founded KIC InnoEnergy in 2010 and then proceeded to join the company’s Executive Team. As the Innovation Director, she is working closely with startups, assessing their business ideas and ensuring they have a solid business development model. Bou’s background is in the field of management consulting and academia; she has been researching extensively how innovation and knowledge are created and managed in companies, focusing specifically on the phenomenon of collaborative innovation. In her interview to NRG Magazine, Elena Bou explains what collaborative innovation might hold for Europe’s energy sector.
(NRGM) – Where does your interest in innovation come from, and how do you define this term?
(Elena) – My interest in innovation started during my time as a management consultant. Around 18 years ago it was connected to quality management, and that made me find out more about knowledge management and creation in organizations. Then, if we are talking about knowledge creation, we are talking about innovation. I was interested in how innovation can be done in a different way and the collaborative innovation especially. Innovation means bringing knowledge to the market. Probably one of the biggest paradoxes that we have in Europe is that we are good at creating knowledge but not so good at bringing that knowledge to the market. You can also define innovation as commercializing the invention. Many people identify innovation simply as a new invention, but that is not enough—invention should reach the market, and that is extremely challenging. We are helping companies to do this journey.
– So, until the idea is commercialized, there is no need to talk about the real innovation, right?
– Yes, it’s nice when something exists on paper, or as a patent, but it has to reach the market and by reaching the market it will also reach the society.
– Why is there a paradox like that in Europe? Why are we good at inventing but not so good at further doing something with it?
– There are historical and cultural reasons behind it. It’s not easy to solve. In terms of technology and capabilities, Europe is very similar to the US. We could see similar startups founded in America and in Germany, Poland or Spain. So, the technological gap is not that big. I think, it’s more about the culture. When you are a kid in the US, you are being pushed to take the initiative and you are rewarded by the fact of trying, not by the fact of succeeding. They accept that your business might not be a success—the important thing is to try. Children in school are selling lemonade and their own stuff, because it makes them recognized in the society. In Europe, when a kid tells his mom that he wants to start his own company, she says: why don’t you get a more stable job? Why don’t you work for the government or a bank? All these aspects are the reason why things are as they are in Europe. But we are also doing something, we are improving.
– Various start-up hubs and incubators became very popular in Europe. Do those really help accelerate innovation and bring it to market?
– In theory, startup incubators and accelerators should help. Just to have these actors in the ecosystem is already very positive. Why? Because they are active and they bring the energy into the ecosystem. Whether they are performing well enough is another question. I have seen some hubs that are working very well, and others that are not so good. But just having these entrepreneurial actors already helps. It all becomes more understandable; they are recognized, and people get attracted to them. If you have to do this journey alone, it is a very tough journey. Even if the performance of these actors could be better, their presence will still foster you to take a step forward.
– By nature, how innovative are the traditional energy and the sustainable energy sectors?
– For me, it was actually a surprise to find out that, when we were starting our Business Creation Services, only 8% of all the startups in Europe were coming from the cleantech sector. It’s peanuts compared to biotech or IT. Today, we can say that at KIC InnoEnergy we have accumulated a portfolio of more than 100 startups in four years. There are many teams that are posing the right questions and want to contribute to solving the energy challenge. But I have to say, in terms of innovation, it would be easier to be in IT rather than in energy. Why? Because energy is a very traditional sector. They have big players and big rigid structures. When they are trying to innovate, it is complicated. It is not because they do not have talented people, it is because of their type of organization. It doesn’t foster creativity or flexibility.
– What can be done to help big energy companies innovate, if anything?
– At The Business Booster we are trying to solve this situation. On one side we have big companies that are not flexible because they weren’t created like that. But they know the market and have access to the customer, and they have the experience. On the other side we have startups. The positive thing about them is that they are flexible, they are happy to customize their product for the customer; they have tons of creativity and are willing to take the risk. It is a win-win type of collaboration. Both parties can benefit from working together because they have complementary The thing is, the sustainable energy as a market is not very innovative, but they have to find a way. Sometimes, developing an internal competence, changing the company to make it flexible is not easy. Instead of making complex organizational changes, why not take advantage of a nice collaboration with a startup? That is what we are trying to foster. Big energy companies have no option, their market is changing so much that they will either accept change or disappear like Kodak or Nokia did. They should know that, even though they are giants, giants like them have fallen before. They need to be more innovative, and collaborating with startups makes it possible.
– So, being closer to startups can save the industry, potentially?
– I would not use the word “save”. I mean to say that collaborative innovation, and specifically collaborative innovation with startups is a way to get those competencies that are not inherent in big organizations. It is true that they are two different types of organizations, and that collaboration is complex, but it is possible and we have seen many examples of it. It reduces the time to market because the startups have ready-to-use innovative solutions, which have been in development for quite some time. There are many opportunities especially in the energy retail sectors, where the traditional energy companies have to compete with telco’s, security companies and other competitors that are using startups to occupy space in the energy market. If the energy companies wait and do not react, they will see in time that, no matter how high the walls they build around them, the change is still going to happen. Because the business models they have today are not going to be useful tomorrow.
– What form can such collaborations take?
– Usually, it is a strategic partnership to develop a specific product. Then, the product is customized to the big utility. It can also take a form of a commercial partnership. Sometimes, the big energy company has a way to commercialize an innovation, or they become the first customer. There are different forms of collaboration. The only thing that the big companies should understand is that the context of a small company or a startup is different. They cannot cope with the procurement process of a big company. They need payment faster and cannot be waiting for months to get it. Both actors need to understand all these aspects. At KIC InnoEnergy we are trying to have a role in this. Sometimes they need a bridge, a translator, and we act as one. We not only organize the networking part, but also make sure that the collaboration becomes a reality. In the end, the only question that matters to me is: how many companies are collaborating with the startups?
– Except collaborating with the startups, what else can be done to spur innovation?
– The energy challenge we have today is not the responsibility of big energy companies only. It is a society challenge. We cannot forget that there is a correlation between growth and energy—our growth depends on having affordable energy. We need more energy that is cheaper and greener. That’s why we need talented people who will offer us just that. It’s the co-responsibility of many actors in the society, including politicians. Today, one of the biggest obstacles to innovation in Europe is that we have 28 different regulations, and it is difficult to launch innovation at a global level when that is the case. A startup has to think that their business model is perhaps only useful in one particular country, and if they want to sell elsewhere, they need to change things. Then, there are individual citizens who are also responsible. Yet, they often have no idea how much they pay for electricity, and as a society, we also do not know much about electricity, except how to turn the switch on and off. I am sure that if we were more educated about these topics, we would be more demanding towards the government and the industry.
KIC Innonergy have now launched their Call for Innovation Proposals 2016, looking for businesses with innovations within the sustainable energy sector. More information can be found here.
The company will be hosting a webinar on the Call for Innovation Proposals 2016 and its application processes on Friday 29th January 2016 at 1pm (CET). Find out more here.