Creating an arms-length nightmare disruptor for a Finnish listed company

Background & Challenges

One of Finland’s largest listed companies with a leading position in northern Europe came to Shift with a nightmare. It was their CEO’s worst nightmare.

“One morning when I wake up, a new player in the market has stolen our customers”

This nightmare scenario was based on the fact that the client operated in a traditional, legacy-driven industry that was already showing initial signs of potential future disruption based on movements among non-market actors.

With the “Nightmare as a service” concept Shift explored the CEO nightmare with the goal of:

  1. Understanding how a new or existing market actor could disrupt the industry
  2. Understanding what this disruption could look like
  3. Understanding if the client could build this disruptor themselves, instead of waiting for someone else to do it

Solution & outcomes

Shift Actions set up a cross-functional strategic task force consisting of 3 business designers, one service designer, one brand/marketing strategist and finally a full-stack developer/technology lead.

This team started with a clean slate. The only thing limiting the team was a) the product and b) the B2C market. Other than that the team was given full freedom in order to create the most efficient and threatening concept the market could envision.

A few of the outcomes included:

  1. A long-list of seven defined disruption scenarios
  2. One validated disruption strategy and business concept tested with over 5 thousand consumers across 7 markets. The concept was created to provide the best customer experience in the industry, backed up by a truly data-driven organization
  3. An initial customer CRM-base of over 1 thousand customers
  4. A clear business plan, budget and investment proposal to the senior management team outlining how the client could build and launch the nightmare disruption concept in 5 months

Through extensive concept validation and iteration, Shift Actions was able to present client management with a robust investment proposal and business case for decision making in order to make the disruptor a reality.

How to start a digital revolution

Shift Case Study on Start-up Collaboration – An interview with Tero Hottinen, Director Digital Ventures at Wärtsilä.

Twelve months ago, Tero Hottinen, Director Digital Ventures at Wärtsilä stood on stage at Slush and launched the Wärtsilä Marine Mastermind innovation competition with the goal of learning what kind of co-operation opportunities fast-paced and innovative start-up companies can offer a cumbersome, traditional corporation like Wärtsilä.

Now, in hindsight one year later, Hottinen explains that what started as a relatively small-scale initiative has changed how the company as a whole views start-up collaboration and future disruptive forces in the industry. Throughout this exciting journey, Shift Actions supported Tero and Wärtsilä in making it a reality.

What initiated the need for Wärtsilä’s innovation competition?

The need behind the idea for the innovation competition was twofold, firstly we wanted to understand what kind of disruptive initiatives are emerging within the marine industry because lately, we have been seeing how digitalization is taking over other traditional industries beyond ours. We want to be prepared for the inevitable changes and disruptions through following up on what is happening in the start-up scene.

Secondly, initially the justification was that we want to learn from startups regarding how to operate in a lean and agile way.

What was the internal feeling at Wärtsilä regarding the competition initiative?

The feeling was definitely exciting with a hint of uncertainty as this initiative was something totally new at Wärtsilä and also within our industry. As always, there will be critical voices, but the overall vibe was positive. As an engineering-heavy company, justifying the actual business value of the initiative was not always easy but we were able to fine-tune our message in order to gain internal traction.

How did you manage to structure the aims and goals for the innovation competition as this was a first of its kind initiative at Wärtsilä?

We set off with rather undefined aims and goals which was more beneficial than anything else for the project. One of the main goals for the initiative was to showcase that we are thought leaders in the field and to display that we are an innovative company willing to take advantage of new opportunities. I think we succeeded in this sense.

How did you structure the actual competition? I.e. what was done when you got the green light to go ahead?

The structure for the competition came along as the project developed. As this was a first of its kind initiative, the structure was built up as we learned what we really want to get out of it. We were getting a taste of the lean start-up way of working so nothing was too defined but we were able to adjust on the fly.

How big was the key project team at Wärtsilä?

The core team was three persons, two who were fully involved operationally and one part-time. The key internal team was really small. Not to forget Shift of course. The size of our team enabled flexibility and we were also able to operate quite independently and somewhat under the radar.

What was the outcome of the actual competition?

First of all, I was surprised of the amount of high quality input we got in the competition. We were able to get a good understanding of what exists beyond the traditional industry benchmarks. In practice, we have worked together with nine of the companies that participated in the competition.

The co-operation varies from testing their solutions to potential investment screening and discussions regarding the companies acting as service providers for Wärtsilä. We actually hired a couple of guys from one of the companies as we saw that they could unleash their full potential at Wärtsilä.

Did it surprise you that the outcomes were so concrete despite the discussions being so vague in the beginning of the project?

We were extremely happy to receive such a high number of proposals, the majority of which were of very high quality. As i mentioned, we have continued cooperation with several of the applicants even after the competition.

In hindsight, when you begin listing all of the good results from the initiative combined with nominations for marketing initiative of the year and IoT initiative of the year, the return on investment could be seen as quite good right?

Yeah, definitely! If I could have mentioned all of this when kicking off the project, it would have been a no brainer to go ahead with. Probably with a different budget as well. I guess the story goes that all of this became much bigger than anticipated in the beginning.

We didn’t necessarily learn too much from the start-ups in terms of actual ways of working as that would have required a broader scope of co-operation internally at Wärtsilä but we were definitely able to raise a great amount of interest in our management towards new kinds of initiatives and opportunities which for me, was one of the biggest outcomes of the whole initiative. We were able to create a change in mindset.

Throughout the competition it seemed as if Wärtsilä’s management and the whole company changed its views regarding the initiative?

We are very excited about cooperation with start-ups and trust that there is still a lot for us to learn from this type of cooperation

Now, 12 months after the competition was launched, what has the internal impact been?

At the moment, there are a number of things going on which I can’t disclose unfortunately, but the mindset change is certainly evident. What I can say is that we have a significantly stronger and more systematic approach regarding setting up actual start-up collaboration. As a company, we have understood that it’s not only about what the start-ups can provide for us, but we need to be able to solve the value proposition for start-ups, i.e. we help them and improve their business through a two-way dialogue.

That brings us to a very interesting question: What are your learnings regarding start-up collaboration? How should the typical, traditional industrial company approach agile and young-minded start-ups?

One of the key learnings is that there needs to be an agile interface between the corporation and the start-ups. If this is missing, you can forget the whole thing. The collaboration definitely needs adaptation from both parties but the corporation will probably need to adapt on a greater scale. A dedicated, flexible team is key.

Looking at the Wärtsilä Marine Mastermind innovation competition compared to other similar initiatives, it seems like the quality of submissions was good, as was the collaboration. What do you think made this competition different and attractive for start-ups?

The team setup comes to mind first as we had a very good and motivated team both internally and externally which was small enough and capable of being agile. Not to mention that we also had fun throughout the project which definitely had a positive impact on the end result.

We had certain goals which we wanted to achieve but due to the nature of the project we were able to adapt on the go when needed. Through partnerships we were able to spread the message to relevant stakeholders and we were able to achieve a good reach which probably was a differentiating element.

The final number of submissions was 47 and from those you shortlisted roughly 20 which led to collaboration with nine start-ups. How is the winner of the competition doing?

Well, the winner’s prize was a Lean Innovation Lab concept sprint together with Shift Actions and the outcome of that was a magnificent business concept, a real blank spot within the market. How it will realize is yet to be seen. We also continued cooperation with selected companies.

The winning start-up Marina Ahoy evaluated the concept for a few months in terms of what it would require from the company to turn it into a business. Despite the business potential being quite clear, they came to the conclusion that as a small start-up they cannot split their resources into more than one stream at a time. It certainly is a wise move to climb one mountain at a time. We are currently looking into alternative ways to forward the case.

If you were to decide on launching a second innovation competition, what would you do differently?

Not too much, I have to say that it was a success in every way. It’s difficult to pinpoint what should be done differently as the project grew to be much bigger than initially anticipated.

Making the competition more attractive for start-ups who are not active in the marine industry would be one development opportunity as there is lots of untapped potential outside of this segment that could be utilized at Wärtsilä.

If we were to launch a new competition, there would need to be a new additional element in order to avoid repeating the same concept. There is a possibility for a Marine Mastermind 2.0 and if it happens it will be beautiful! Now, after our successful initial effort, it’s also easier to justify something big internally.

What about Lean Innovation Lab as a prize, was it a good fit?

I think that from an awareness point of view and making it attractive, yes, it was a good fit. Internally it was an excellent prize as we can’t commit to buying or investing into something so hastily. Alternatively, a monetary prize was ruled out as it would have been so faceless. As a tool to develop something in the way we did with Marina Ahoy, to pivot their existing solution towards industrial shipping, the Lean Innovation Lab was a very good tool.

The internal feedback was also good and the involved Wärtsilä team was definitely positively surprised. The Lean Start-Up way of working used during the Lean Innovation Lab really proved that it is possible to get truly new things accomplished in a matter of weeks instead of months. It’s a shame that we couldn’t involve more people internally in order to spread the message at Wärtsilä.

“Be afraid, be very afraid!”

Regarding the future of the marine industry, we obviously heard about new, interesting concepts such as unmanned ships, connectivity, data etc. What do you see as the main trends at the moment?

The ones you mentioned are probably the obvious ones, I would perhaps use the word autonomous instead of unmanned though as I believe that many vessels will still need a person on board for years to come. A large portion of the opportunities are data driven and there are clear future disruptions upcoming in certain areas.

We are also seeing totally new types of offerings in terms of hardware, so there are changes coming. There will be a lot happening in the near future. Many players in the industry have accepted a wait-and-see approach but the way I see it, you can’t accept the status quo in the sense that changes are coming, whether you want it or not.

How do you see cross-industry collaboration as boundaries are crashing between industries?

Digitalization is lowering cross-industry borders and there are horizontal changes happening constantly. New players both big and small from totally different industries are entering our field. Also, within the marine industry, there is more open collaborations between different players in the value network, even between traditional competitors, so called frenemies.

Lastly, what would your advice be to a marine industry executive who is thinking about the future of his or her company?

Be afraid, be very afraid! That keeps you alert and forces you to try and understand what is happening, whether it’s regarding start-up collaboration or anything else for that matter. Be awake, things will happen way sooner than anybody will expect. If you aren’t prepared for those changes, you will perish.

Tero opening the Corporate Pitching event at Slush on the 1st of December 2016.

Digital transformation in marine insurance

Background and Challenges

ONE of the leading marine and yacht insurance companies in Northern Europe was facing increasingly aggressive growth targets from their board of directors and needed new fuel for their international market expansion.

Being an old company with long traditions they had realized that they needed two things.

  1. A digital transformation strategy to make sure they fully utilize the opportunities digitalization brings.
  2. help with the implementation of the strategy while establishing their own internal digital business unit.

Solution and Outcomes

The first phase of Shift’s engagement with the insurance company was a 3 month long digital transformation strategy project. The strategy was built on two pillars. The current business strategy and customer needs. In order to do this, Shift performed deep diving interviews both internally with the insurance company, with brokers and customers.

The second phase of the project was a 9-month-long engagement where the Shift Team acted as interim Chief Digital Officer and digital business development team. During the engagement the core strategic initiatives were driven forward and implemented. Final handover was completed to the new digital team and CDO whom was hired during the project.

How to make sure digital transformation fails - Practical tips

Doesn’t sound very helpful, right? But really, in our line of work we see companies trying their hardest to fail at digital transformation every single day. Or so it seems. Naturally, no one wants to fail at digital transformation, but judging from companies’ actions one could start to wonder if they do want to fail.

So, what could be the reasons why we see these patterns? We believe there are several misconceptions surrounding digital transformation which set companies on the wrong path from the start. We could begin from, what the **** is digital transformation? Or more specifically from the word “Transformation”.

First, ‘transformation’ is not equal to ‘change’. Since c-level executives and other senior management sometimes might have a bit of a problem believing young, startup consultants running around consulting in their t-shirts, I will quote Harvard Business Review.

In an article called “We still don’t know the difference between change and transformation”, they define change as follows.

“means implementing finite initiatives, […] The focus is on executing a well-defined shift in the way things work”

Transformation on the other hand is quite different per the HBR article.

“The overall goal of transformation is […] to reinvent the organization and discover a new or revised business model based on a vision for the future. It’s much more unpredictable, iterative, and experimental. It entails much higher risk.”

Because of this mix up, companies end up in a situation where they severely underestimate complexity of digital transformation. In other words, digital transformation is just freaking hard. And honestly, I for one can’t blame the companies for making that mistake.

So, what do we think digital transformation is?

If you ask ten people what digital transformation is, you probably end up with ten different definitions.

Our definition of digital transformation is “a comprehensive plan for how to transform from your company at the core and redefining your core business through digital”.

Another thing that we are very convinced about and always tell our clients is “Digital transformation is not about technology – it is about strategy and new ways of thinking”. With that we try to tell our customers that the technology is just an enabler. The magic happens when you unlearn everything you take for granted, apply the new set of rules technological advances have brought to the table and redesign the way to do business.

The top tips for making sure transformation fails

#1 Try bottom-up transformation

Transformation must be led from the top, it is something the CEO, the senior management team and even the board need to stand united behind. There is no other way. The transformation journey will be so bumpy, filled with uncertainty and surprises that there is no other way that you will survive and get the proper funding. So if you want to fail, do it bottom up!

#2 Don’t bother setting a shared vision

From the start the company needs to understand that this is no technical project or IT undertaking. This is about the core of the business and it will require intense attention from business people. You cannot transform the way you do business by pushing the initiative to IT. So if you want to fail, hand it over to IT and “let them handle it”.

#3 Work in silos and functional teams

Successful transformation requires cross functional teams. Since digital transformation happens at the cross roads of technology and business you will need a cross functional team leading the transformation. And people will run in to regulatory issues, or at least people will say the magic words “due to regulation”. So make sure you have your most curious and adventurous lawyer hooked up to the team as well. But if you fail, make sure to push it into some silo or just one functional department and “let them handle it”.

#4 Don’t put your A-team on it

Transformation isn’t a walk in the park. Far from it. You will need the best of your people onboard if you want to pull through. Since we’re dealing with a mix of technology, business, and changing how people are supposed to do their work and see your products, you will need some hard-core communicators and bridge builders who can get people on board and excited. But, then again, if you want to fail, just assign some bodies to it and “let them handle it”.

#5 Do everything in-house

Transformation is a lot about changing ways of working so brining in external experts will increase the odds of thinking fresh and building truly new and improved ways of doing business. On the other hand, to fail, don’t bring in external experts. What are consultants good for anyways?