Innovation is what ensures the longevity of traditional companies. But how do you go about making real and sustainable innovative progress while taking care of business as usual? This is a question that we have been exploring in our Innovation at Scale Survey. Line Lyst, Group Director, Head of Innovation at the global engineering company Ramboll, has integration of innovative initiatives into daily operations as a key objective. We sat down for a chat about how to go from innovation to profitable new business.
Many companies have ambitions to increase their speed of innovation and the scalability of new projects. You are in charge of innovation at Ramboll – how have you designed the process?
Line Lyst: We have an internal accelerator program which is open to everyone at the company and resulted in more than 250 idea submissions. From the most recent program, we ended up with three very concrete projects. And I will say we are very proud of all three – they are very different and have different target audiences. There was a discussion about where the projects would be housed – here in HQ? My recommendation was that we not do that. If you pull all projects into a central hub, it may create an "us and them," "not invented here" culture. So I have insisted that they stay at their origin. But on a practical level, they are still in the same line of business but are detached from the daily operations, a bit of an appendix. This has created a strong sense of local ownership and pride.
AI and machine learning are general trends when we speak about innovation. How are you seeing this reflected in your projects at Ramboll?
Line Lyst: Traditionally, Ramboll has been a very decentralized company selling projects locally. From this year’s innovation projects, I see definite trends towards AI applications, machine learning, as key drivers of the business proposition. The innovation projects are all products and services which can be sold again and again across countries and business units. This is new to Ramboll. It means that we must work differently. That we can take models from one unit and roll them out globally.
What does it mean to a traditional "time and material company" when you introduce entirely new business models in which the traditional metrics are replaced by other success criteria – and compensation models?
What happens as you advance your digital skills set and automate – we advance from a scenario in which we can go from delivering in two months to delivering in two hours. Then, if you are still getting paid on hourly rates, you are shooting yourself in the foot – or the head, really. It is such an ingrained part of our identity to try to win tenders on the lowest offer. But the projects from the accelerator are value-based business models, which means, for example, a subscription or license payment model.
What changes when data, knowledge and insights become part of the key offering from an engineering company?
Line Lyst: Let me give you an example. We have a project which involves measuring air quality in cities. There are already many sensor companies measuring many metrics, but here at Ramboll we can make this into actionable data. Even if you know you have an urban area with a lot of pollution, then what? What we can do is handle the data, model it and find the origin of the pollution. Is it the cars, factories, the shipyard? Where in the city do we act to minimize it – do we reroute traffic? All these simulations on data and handling of data are what we know how to do. and that is the key component of all these accelerator projects.
What characterizes the program participants in the internal accelerator program – are there general attributes that you can use to describe them?
Line Lyst: We do see that it is primarily our younger colleagues who come to us, and they are bursting with ideas. Most are engineers, and they have a tech-savviness and fascination with the opportunities. Those who make it through the program have stamina and a certain drive to be an entrepreneur.
You sometimes hear people say that if you are innovating inside a big company, you are in a safe space, getting paid a salary and so on. That it is easy being a corporate startup. But we do challenge the teams, so it is passionate people who go all-in and who are driven by the idea, not by recognition. Some of the applicants have data science skills but generally are experts in a very specific field. What they all have is the understanding and the skills to not only monitor but also make actionable insights. When it comes to AI and hardcore data science, we sometimes lack the skills. But then it is a benefit to be a large company because then we might find someone in Germany who can join the team.
In current business literature, millennials are often characterized as being driven by a need for recognition. Are young innovators at Ramboll different from the rest of their generation?
Line Lyst: I don’t think that they do not care about recognition, but the idea is always the main driver. None of the teams from last year had any idea where it would take them. But of course, they would like to be recognized for their work, no doubt. They get that during the process as they advance – it is a bit of a competition. So, when they get to present these ideas to our global executive team as their own ideas, they get a boost. The three teams from last year got to present at our Top 1000 Leaders Conference in Ramboll. They were on a panel debate, and I do think that this is about as good as it gets in terms of maximum exposure in the organization.
Is it too much to conclude that profitability is the ultimate decision factor when it comes to whether an innovation project has been a failure?
Line Lyst: The concept of failure in innovation – "fail forward" and so on – sometimes makes me a bit tired. Maybe it depends on what you consider a failure. But why do six out of nine to 10 original projects in the acceleration program not get finalized? Typically, they have not had the response from clients that they would want to buy the offering. Sometimes, the potential upside is not large enough. If it is too niche, not scalable enough, it may not continue in the accelerator, but perhaps it is adopted into business as usual.
Some fall to the side due to team dynamics. Both hard and soft skills can come into play. We do test participants as part of the accelerator process. Last year 11 out of 12 participants had very similar profiles. But we try to get them to recruit other profiles and, for example, think in marketing – this is a new one to Ramboll. Since we do not sell products normally, marketing is often the missing link. And sometimes the go-to-market strategy is a factor. But we have very clear steps in the process, from getting a validation, scalability, about 10 different criteria. So, if they are deselected, some of these factors have been too weak.
With that in mind, what is considered an acceptable time frame for profitability?
The planned payback period for the three projects chosen in December is that they start generating revenue this year. Not ROI, but revenue and hopefully paid back in 18 months. This is a general rule of thumb with us. We are not pharma, and as a company, we are not ready to have a time frame of several years until payback. So, we chose projects that can give fast payback and thus give us license to operate in the accelerator project.Line Lyst sees trends towards #AI applications, machine learning, as key drivers of the business proposition. Ramboll's #innovation projects are all products and services which can be sold again and again across countries and business units. Click To Tweet
A parting thought
Talking to Line Lyst about Ramboll’s innovation processes and her thinking about integration and scalability of new business ideas has brought it home to me that mastering the tricky transition from innovation project to sustainable business is the key differentiator for success. I think that if more companies take a similar structured approach to innovation, we will quickly start to see new, data driven business models even from more traditional companies.
If you are interested in reading the results of SAS’ Innovation at Scale study when it's published in October, please email me at firstname.lastname@example.org. Want to see more impressions about how Ramboll maintains innovation while taking care of its daily business? Click on Next at the top of my interview.