We all need to be "imagineers" now and there appears to be no more pressing demand for their talents than in the industrial sector, at least judging by the number of corporate venturing units in some of the industry’s largest companies.
Ja-kyun Koo, chief executive and vice-chairman of South Korea-based LS Industrial Systems, said "imagineer" was a compound word merging imagine and engineer. He told 135 people joining LS in December: "In this era, students majoring in humanities can survive only when they understand technology, and engineering students can survive and thrive only when they learn the humani-ties as well. To that end, I urge you to become imagineers who create completely new things by integrating different areas."
Industrial groups have taken the advice on board with their breadth of innovation strategies, from research and development, incubation, open innovation competitions, corporate venturing and partnering, licensing, and mergers and acquisitions across a wide range of sectors.
France-based defence group Thales invests 20% of its consolidated revenues – €2.5bn ($3.5bn) in 2009 – in research and development. Its more than 25,000 researchers and engineers develop 300 inventions each year and the company has a portfolio of 11,000 patents and more than 30 co operation agreements with universities and public research laboratories in Europe, the US and Asia.
Its Thales Corporate Ventures unit, however, has been more quiescent. The unit posted a fair value of €17.2m in Thales results for last year, which was only €200,000 more than the same period a year earlier, although in January it did take 20% of MultiX, a maker of x-ray machines for airport security. Jacques Doremus and Patrick Radisson, both from the Thales Group, founded MultiX in October with the support of the French Commissariat à l’Energie Atomique.
Other groups have also reinvigorated or launched their corporate venturing programmes in the past year, including oil services company Schlumberger, which invested NKr10m ($1.8m) in cable monitoring company Wirescan in December, India-based conglomerate Aditya Birla, which set up its Capital Advisors Private division for venture capital and private equity funds, and France-based chemicals company Rhodia, which backed flexible solar panels maker Eight19’s seed round and committed to a second fund managed by independent venture capital firm Aster Capital.
Aster was formed last year through the merger of local industrial companies Schneider Electric and Alstom’s corporate venturing units and follows a well-established tradition of industrial groups forming some of the most successful independent venture capital teams. In the late 1990s, the Swiss Federal Institute of Technology in Zurich (ETH Zurich) and consultancy firm Mc Kinsey had 10 companies, including local conglomerate Sulzer, to back the launch of Venture Incubator. In 2001, oil major Royal Dutch Shell, fuel cell-maker Ballard Power Systems and US-based Westcoast Energy started Chrysalix Energy, and the following year Shell, Japanese conglomerate Mitsubishi and UK-listed industrial group Johnson Matthey, launched Conduit Ventures with a $100m fund to target early-stage opportunities in the fuel-cell sector.
Johnson Matthey has also partnered organisations that can help it gain a competitive advantage in clean-tech, where many of the technologies rely on so-called rare earths or precious metals. Barry Murrer, director of the technology centre at Johnson Matthey, is on the advisory board of the market group World Gold Council’s unit that is encouraging industrial use of the metal (see related content).
Meanwhile, diamond supplier De Beers has used its corporate venturing unit Element 6 Ventures to tap into the use of synthetic diamonds and other super-materials in industrial processes. Industrial innovation is often a process of efficiency improvements to save costs and boost margins or retain sales but the political and social impetus towards cutting emissions and reduce reliance on finiteresources is spurring the trend.
US-listed industrial conglomerate General Electric (GE, see profile in related content), ranked the most influential corporate venturing programme by Global Corporate Venturing (click for full ranking), has saved billions of dollars by using innovation and in the past 18 months has set up three dedicated corporate venturing funds across clean-tech, energy and healthcare to allow the company to be more proactive with entrepreneurs and venture capital firms.
Though GE has financial targets, the group is using venturing to help the company’s strategy. Other companies, such as Dow Chemical (see profile, related content) have moved towards a more strategic than financial goal, while Netherlands-based DSM in December promoted Marcel Lubben from handling licensing to a broader role including DSM Venturing, which takes minority equity stakes in third parties.
And career development has led peers to move from corporate venturing to closer management of business units and carved-out companies. In December, Matthias Baum moved after nine years at Germany-based chemicals company BASF the project team carving out Styrolution, while Alexander Rietz left local conglomerate Siemens Venture Capital after five years to be a business manager at Desertec Industrial Initiative.
While other industries, such as pharmaceuticals and information technology, have grasped more public atten-tion for their innovation and corporate venturing programmes, the industrial sector has remained one of the most sophisticated.