#18: Unleashing innovation through partnerships with Luca Graf
Hi, I'm Jeppe and welcome to my weekly newsletter on Corporate Venturing, released every Tuesday. My aim is to provide a comprehensive perspective on the latest developments in the field and its related topics, drawing from the insights of top management, venture capitalists, founders, LPs, and family offices. I aim to offer valuable information and thought-provoking content that will aid in understanding the importance of Corporate Venturing in business strategy.
In this edition of the newsletter I'm talking to Luca Graf, the CEO of MS Direct AG, a leading eCommerce logistics provider from Switzerland . I met Luca some years back where he was leading the DSV Innovation Hub at DSV - Global Transport and Logistics. They developed digital innovations and corporate ventures for global logistics and supply chain management.
Luca also has experience from his time at Panalpina, Lufthansa Group and Swiss International Air Lines
Luca is also one of the co-editors of the collective book contribution “Disrupting Logistics, Startups, Technologies, and Investors Building Future Supply Chains” released in 2021.
MS Direct AG
Under the visionary leadership of Luca, MS Direct is on a journey to transform itself into a technology company. Recognizing the immense potential of data science, cloud computing and robotics, the company has been actively building its capabilities in these areas. MS Direct is also investing in HR project management, recognizing the importance of talent acquisition and development in driving success. By hiring skilled professionals and providing them with a conducive work environment, the company is fostering a culture of innovation and continuous improvement.
To further bolster its capabilities, MS Direct recently acquired a new AutoStore solution. This strategic move not only enhances the company's operational efficiency but also signifies a commitment to embracing cutting-edge technology to stay ahead in the market. This acquisition reflects MS Direct's dedication to introducing more structure into its operations being able to fulfill its ambitious international growth plans.
MS Direct operates in the e-commerce and parcel logistics sectors, with a presence in five different countries. With over 600 full-time employees across its various locations in fulfillment and cross-border logistics, the company continues to expand its reach and impact. Notably, MS Direct's expertise in warehouse management systems (WMS) has positioned it as a leading player in the market, and it is offering its WMS and multichannel tool as SaaS solutions.
Can you share an overview of how you worked with corporate venturing at DSV/Panalpina?
We delved into Luca's experience with corporate venturing at DSV Panalpina. At Panalpina, Luca and his team actively explored the integration of new products and solutions developed by startups. This approach allowed them to test innovations within their own organization to potentially create new offerings internally or externally. To further increase their expertise in corporate venturing, the company joined an accelerator program with Plug and Play Europe, which proved to be a valuable platform for learning and collaboration. Through this engagement, they gained insights into how to effectively conduct pilots, adopting a mindset of "Make/Partner/Buy" to fuel their innovation initiatives even more.
Luca continued to pursue a combination of in-house development and strategic partnerships. He emphasized the importance of building their own capabilities and leveraging their existing knowledge base. With allocated budgets for building, they were able to create one to two minimum viable products (MVPs) annually, demonstrating their commitment to continuous innovation.
Recognizing the need for technology expertise, Luca mentioned that they utilized an external venture builder to supplement their internal skill set. This strategic decision allowed them to bridge the gap in technology skills and efficiently develop new solutions. Through venture building, a comprehensive business plan, including a pitch deck, was created to secure additional funds and support the ongoing development.
Customer validation and need plays a crucial role
Customer validation played a crucial role in this process, with a focus on understanding customer needs and gathering feedback for each prototype. This feedback loop included internal customers as well, ensuring that the solutions developed would cater to the requirements of all stakeholders.
Moreover, DSV also tested strategic acquisitions to augment their innovation efforts. They acquired the assets of a start-up, demonstrating their willingness to explore external opportunities and integrate innovative solutions into their operations. The acquisition was a success, and the product grew in importance.
Luca highlighted the significance of external partnerships and stakeholder engagement. Through these partnerships, they were introduced to events and stakeholders that provided inspiration and support. They became sponsors themselves, offering resources and attention to further drive innovation within the organization.
The promotion of DSV in the start-up community was essential for Luca to keep the ongoing internal support from top management of the DSV innovation Hub.
The blend of internal development, strategic partnerships, was crucial for the success. The journey involved active engagement with the startup ecosystems, customer validation, venture building, and leveraging their own know-how. While corporate venturing was not a primary focus for DSV, their efforts demonstrated a commitment to innovation and collaboration to drive future success.
What was the impact of DSV Innovation Hub and some success stories
The DSV Innovation Hub revolutionized collaboration with start-ups, inspiring a high potential for innovation amongst employees. One standout success was the implementation of indoor drones (Verity), automating manual labor and improving warehouse processes. The project showcased DSV's commitment to cutting-edge technology, despite the lack of a clear problem to solve. The experimentation sparked a wealth of possibilities and challenged traditional business case approval processes, leading to very transformative outcomes.
The collaboration with Verity showed that experimentation without a clear problem to solve can be very successful
What are the key challenges and considerations when implementing corporate venturing initiatives in your view?
Stakeholder approval poses a significant hurdle, along with securing necessary resources and budgets. A clear innovation strategy is essential, whether it focuses on core business, business development, or ventures further away from the existing operations. Understanding the expected timeline for success is crucial. Collaboration with start-ups requires aligning different expectations, as start-ups often seek immediate results while corporations have longer horizons. Assessing the maturity of the company and technology is important, as is determining the preferred stage of companies to work with, be it innovators, fast followers, or followers. A well-defined innovation strategy acts as a guiding force throughout the process.
How do you make corporate venturing a success story?
Creating a successful corporate venturing initiative requires several key factors. First and foremost, securing the full support of senior management is crucial and maintaining that support over the long term is essential. This ensures alignment with the organization's long-term vision and goals.
A clear strategy and mission are also vital for success. Setting ambitious goals, such as a "moon shot," can provide a unifying focus and inspire innovation within the company. This also determines the setup of a corporate venturing unit, either embedded in the core organization or as a separate unit with wide autonomy from the core organization.
Effective stakeholder management and communication play a pivotal role. Engaging stakeholders through regular updates, newsletters, and participation in events helps create a sense of involvement and ownership. Additionally, fostering a culture that embraces young, dynamic individuals and avoids corporate innovation theater can fuel creativity and collaboration.
By combining strong senior management support, a clear strategy and mission, and effective stakeholder management, a corporate venturing initiative can pave the way for a successful and transformative journey towards innovation and growth.
What three pieces of advice would you offer to companies seeking to embark on corporate venturing journeys and utilize innovation as a catalyst for growth?
When embarking on corporate venturing journeys to drive growth through innovation, there are three key pieces of advice to consider. Firstly, ensure that your mission and strategy are well-defined and that expectations are aligned across the organization. Secondly, consider the timing required to achieve your goals and milestones, as it is important to set realistic expectations. Effective communication is also crucial, both internally and externally, to keep stakeholders informed and engaged throughout the process. Additionally, obtaining backing from the C-level executives is vital, as their support can determine the success and longevity of the initiative.
Navigating the corporate immune system is essential for the success of the corporate venture unit
Furthermore, it is important to navigate the corporate immune system, ensuring that you have the necessary support and buy-in from the organization. An example from Panalpina illustrates the complexities of this process, where a digital forwarder project faced challenges due to conflicting incentives and P&L considerations. In such cases, having a sponsor who believes in the idea becomes crucial for its survival.
Make sure you have internal sponsors
Lastly, embracing the principle of "don't ask for permission, ask for forgiveness" can foster a culture of agility and empowerment. Encouraging experimentation and giving teams the freedom to explore innovative ideas without fear of failure can drive creativity and ultimately lead to successful outcomes.
I hope you enjoyed this week's newsletter. If you have any suggestions or contributions that you would like to share with me, please do not hesitate to reach out. I would be delighted to hear from you.
/Jeppe