Tomasz Rudolf, founder and CEO of the Heart, a Warsaw-based European centre for corporate-startup collaboration, spoke to features editor Nicole Idar Lee about helping corporates develop “innovation muscles” and central Europe’s growing role as a digital sandbox for testing innovative ideas
You set up the Heart after noticing that corporates were taking far too long to create new ventures internally. Why is this, and how does the Heart solve this problem?
As Clayton Christensen, author of Innovator’s Dilemma, has noted, successful big organisations can do everything right and still lose market leadership. They are great at scaling proven business models, yet find it hard to experiment with new products and ventures. When an entrepreneur comes up with an idea for a disruptive innovation, it is more likely to be implemented outside corporate boundaries than within them.
It is natural that internal decision-making processes and organisational politics often slow down new business creation. After all, would you blame a leader managing a huge business line for focusing his attention on the core business that brings him hundreds of millions, and not some crazy ideas that have not been validated? It is so much easier to explore new oceans when you lose sight of the well-known shore. I believe the startup ecosystem is a perfect lab for discovering technologies, products and businesses of tomorrow. Smart corporate leaders recognise that, and want to leverage that potential as a source of innovation. The Heart is a European centre for such corporate-startup collaboration.
You began helping corporates innovate 12 years ago, when you co-founded Innovatika to run corporate accelerators. How has corporate innovation evolved since then?
I have been reflecting on that journey a lot recently. We have helped organisations build different “innovation muscles” – from design thinking to new business model generation. But the ones that are growing in importance, and are often underdeveloped in large organisations, are the ones connected with open innovation.
Even the greatest team of developers at Nokia could not compete with the ecosystem of independent innovators creating apps for Google or Apple. In the digital world, organisations need to get ready for co-creating value with startups. They need to admit limitations of internal innovation units and buy, partner or invest in the best external solutions.
What lessons can you share with executives wishing to prepare their businesses to innovate?
We sometimes hear complaints from startups about corporations that just want to look around, see the solutions, but lack the resources or decision-making power to actually implement anything. Often, this is a result of so called “innovation theatre” – launching corporate startup programs just for public relations value, without the commitment to open the organisation for true collaboration.
Such initiatives are not sustainable and often get killed when people start asking for results. The best open innovation initiatives that I have seen are deeply connected with the corporate’s business strategy, have well-thought processes and top-management commitment.
A great example is Unilever Foundry, a pragmatic approach that led to more than 100 commercial pilots in the first 18 months of the program, with 48% of them ending in longer-term collaboration. Part of that success was preparing the organisation properly – securing a $50,000 budget for each pilot, building a central unit and website to screen and select partners, or leveraging external scouts to find high-quality partners across the world.
Tell us about the tech-entrepreneur dynamic in central and eastern Europe.
We work across Europe, but the fact that we are headquartered in Poland is actually helpful. Many of our corporate clients treat the region as a digital sandbox. In the building where we have our hub – the tallest skyscraper in Warsaw – you can find digital R&D and the regional offices of companies like Samsung, Goldman Sachs, JLL and Mastercard.
Central Europe is not only a valuable spot for shared service centres, but increasingly a development and testing ground for innovations that later get scaled internationally. The startup ecosystem here is also developing fast, mostly thanks to the great talent pool – some statistics show the Central and Eastern Europe region has more engineering graduates than the US, and the quality of their work is perceived to be impressive.
EU and government support is also giving a boost to the ecosystem – many new programs inspired by Israel’s Yozma initiative [a government-led effort launched in 1993 to promote venture investment] are now under way. All of that puts us at the heart of digital transformation in Europe.
The Heart offers three types of service – a corporate club, sector-focused programs, and a scouting service to identify suitable business partners. How many members does the corporate club have, and what role does it play?
Since we started, more than 40 corporations have joined our community. The goal of the club was to help companies just starting to work with startups by giving access to regular knowledge-sharing roundtables. We regularly bring in international practitioners from around the world to inspire and share the learnings. It is great to see how our members develop their innovation initiatives, but also initiate joint projects with other corporations. It is a truly open community.
We also organise regular corporate demo days, bringing the best European scale-ups to inspire and work with corporate executives. Having such a diverse group is inspiring, as the industry boundaries are blurring and trends impact everyone.
Your sector-focused programs target fintech, omnichannel and healthtech. Why did you select these areas?
Besides doing individual scouting projects for our corporate clients, we decided to bring together companies interested in similar areas. Such innovation alliances allow us to identify the top three common themes for the cluster each year and match them with the best ready-to-scale startups in that space.
Fintech was a natural choice, as we work with many of the leading banks in that space, and topics like cybersecurity, PSD2 [the EU’s revised Payment Services Directive], big data or blockchain interest everyone. The omnichannel program is even more diverse, connecting companies that are transforming their retail operations and looking for innovations in areas like customer intelligence and marketing and sales automation of future point of sale.
A smart city program is also in the pipeline. Tell us more about it?
This will be the first of our global programs, and we are currently confirming the focus areas with our first partners. We are definitely looking at areas like smart offices and buildings or construction. Digital transformation will definitely affect those capital-intensive industries, and potentially drive both efficiency and new value-added services.
Together with our investor, international developer Ghelamco, we also want to create sandboxes for testing such solutions. One of these will definitely be the Hub – a new real estate project in the heart of Warsaw that will become the regional centre for corporate digital R&Ds, startups and ecosystem partners.
How did payment services company Mastercard come to be a founding partner of the Heart?
We were lucky to have Mastercard as one of the first clients in our corporate club. Last year, they were moving their offices to Ghelamco’s Warsaw Spire building, and we were able to get their support for joining forces on creating our centre as a European hub for corporate-startup collaboration. Two months later, we could already announce the opening of our space with Mastercard’s CEO, Ajay Banga.
It is a very synergistic relationship – Mastercard is very active in working with startups through the Start Path program. Together, we can offer both corporations and startups unique collaboration opportunities.
You recently launched a scale-up club and an investors club. What is the role of each, and what do you hope they will achieve this year?
Although the focus on corporate needs is part of our DNA, we act as a single point of contact for the whole tech ecosystem in the region. Working with accelerators and venture capital funds across Europe and Israel has always been important for us, as they support us in scouting and selecting the best startups for specific corporate needs.
Recently, we decided to use our growing corporate network to help investors introduce their ready-to-scale portfolio companies to enterprise clients and partners. The scale-ups can use our executive briefings to present their solutions to our corporate network and use scheduled one-to-one meetings with interested executives to move to enterprise deals faster.
In June, the Heart Warsaw will host GCV Academy, Global Corporate Venturing’s training division, which helps organisations boost their open innovation and venturing capabilities. Tell us more about this collaboration.
As a hub, we like to work with global partners that bring in leading know-how and capabilities in their field. We have been attending the GCV Symposium in London for many years now, and had no doubt that we should bring the academy to Warsaw one day. Many of our clients are in the process of setting up corporate venturing activities and it is great that we can connect them with other practitioners and thought leaders in the space.
Above: The Warsaw Spire, home of the Heart
The GCV Academy will be running one of its accredited two-day programs at the Heart in Poland on June 13-14. Speakers will include Marcin Hejka, vice-president and managing director of Intel Capital in Poland; Paul Morris, investment director of the UK Department for International Trade’s venture capital unit, who previously set up and ran the CVC operation of Dow Chemical Europe; Andrew Gaule, leader of GCV Academy, and other leading experts. See the details and register at www.gcvacademy.com.
See the accreditation of GCV Academy by the leaders of global CVC units such as GE, Merck, IBM, Swisscom, REV and Tencent at: https://www.linkedin.com/pulse/from-zero-cvc-heroes-andrew-gaule
For more on the Heart, visit: www.theheart.tech