SUCCESS FACTORS AND PITFALLS FOR CORPORATE INNOVATION

In the 3.5 years of its existence, we have gone through the whole lifecycle of a corporate innovation program: From creating the concept, onboarding our first projects, having successful exits from the program, being celebrated, and winning prizes, all the way to phasing out our program.

Read on to find out more about:

1. Our Program
2. Our Impact
3. Our Learnings
4. Our Playbook
5. Our Alumni
6. Our Contacts

We want to share with

• Corporate Innovators which challenges our teams had to face, how they successfully avoided common pitfalls of innovation in big corporations, and what you can learn for your own projects.
• Corporate Innovation Managers how our program was set up, what successes and failures we had along the way as well as what you can learn to succeed with your own innovation program.

It can be hard to give new ideas a chance when your organisation is very successful by executing proven ones. However, to succeed long-term, a company needs to be ambidextrous, relentlessly delivering excellence today while simultaneously searching for new ways to deliver excellence going forward. This is why in early 2018, we created the DHL Start-up Lab to support employees all across the globe to create new business models and technologies for Deutsche Post DHL Group. 

We started our journey with a focus on 3 main goals:

How the program was set up

The team running the Start-up Lab program was part of the Deutsche Post DHL Group’s corporate development and strategy department, supporting innovation projects from all 5 business units of our Group. Our program was built on a batch logic, with new batches of innovation projects starting every 6–9 months. Starting to work with multiple project teams at the same time had great benefits for the ability of the teams to learn from each other and to build a sense of community. It also helped us to control the cost when running a global program like Start-up Lab, having many teams join input sessions, workshops, or expert sessions physically at the same time (remember, this was mostly pre-COVID times). Despite the batch logic, we also supported selected projects on an ad-hoc-basis, as long as there was an urgent need, problem, or opportunity.

How we raised awareness within our company

Innovation projects were able to always get in touch with us and apply for support, with dedicated campaigns activating innovators to apply prior to deadlines. The communication channels we used ranged from CEO letters, intranet articles, newsletters, and roadshows to our own LinkedIn and Instagram channels. Applications were based on a few core questions the applying teams needed to answer, which were mostly based on the Lean Canvas  of Ash Maurya. This helped us to get a quick understanding of the idea without creating a huge hurdle for interested teams to apply. Every application was evaluated on the overall quality of the application content, the team’s expertise to solve the problem, as well as the overall fit to our company’s core assets and strategy. It was central to our program’s success to include the business units as potential future sponsors of the projects early on in the process to minimize the risk of raising orphan projects (see chapter 3 for more details on how we did this).

How the innovation journey looked like

Our program was structured into 3 phases, based on the Next Canvas. Once a team was accepted to our program, it had to start with proving that the problem it wanted to solve actually existed and had a relevant size justifying a continuation of the project. Too many innovation projects are focused on the solution before actually validating whether there is a need for a new solution in the first place. In the second phase of the program, the teams then had to validate whether their idea could actually solve the identified problem and whether they would be able to build such a solution. Last but not least, teams that made it to the third phase had to validate whether there was somebody willing to pay for the solution. This might have been either paying customers or a future sponsor within our company that was willing to cover the costs to implement the solution within their part of our organisation. Each phase ended with a quality gate, in which we evaluated together with key stakeholders from across our Group whether the team was clearly able to answer the key questions of the previous phase(s).

How supported teams benefited from our program

During their time within our program, we offered 5 key types of support to our projects.

How we worked together with our teams

Our way of working with teams was based on maximizing their speed of learning. The teams worked in sprints of 2 weeks, with bi-weekly calls with their coaches, in which we focused on what the team did since the last call, what they learned from the outcomes, what currently was most risky for their project’s success, and finally which experiment to conduct to test these riskiest assumptions during the next sprint. We regularly brought all teams together physically or virtually to learn from each other or to get expert input on relevant topics based on their progress through our program’s phases. This approach enabled multiple iterative learning loops, which helped teams to progress faster. 

How our teams transitioned back into the business unites

At the end of our program, teams pitched in front of our company’s senior management, budget holders and external investors to secure follow-up investment and finance the implementation and scaling of their solutions. If a project needed to be spun-off outside of our company, we connected the team mainly with external investors. The long-term setups of our successful alumni are very diverse, ranging from new products being managed in already existing departments of our Group, new departments within existing business units, spin-offs that are still fully owned by our Group all the way to “real” external startups led by the founders themselves with only minority stakes owned by our Group.

The impact of our work can best be shown along the 3 key goals we defined when starting our program.

Portfolio

Create a portfolio of ideas that leverages trends and new technologies to ultimately support our company’s top and bottom line

• In 3 years, we built a portfolio of 46 projects, of which 23 have successfully been transitioned into a long-term setup (see chapter 5 for details on our alumni).
• In all 5 batches, there have been projects which were able to validate their ability to positively affect our Group’s top- or bottom-line and thus secured follow-up funding after the support from Start-up Lab ended.
• With a transition rate of over 50%, a new innovation project was transitioned from our program to our core business on average every 2 months.
• Our projects focused more on top-line impact at the beginning and on bottom-line impact at the end of the program, mirroring the shift of our company’s strategy towards exceptional excellence in the last years of the program’s existence.

Framework

Establish an innovation framework to (in)validate and develop new ideas in an agile, cost-effective, and low-risk way

• With the help of supportive colleagues across our Group’s functions as well as subject matter experts from inside and outside our company, we were able to create a framework that made it possible to test new ideas with very limited time and budget.
• Especially our legal, IT security, branding, and data protection colleagues helped us to provide leaner processes, developing and releasing new prototypes and MVPs within only a few weeks.
• As a result, the average investment per project in the first phase was below €1.000, with the cost per project rising with a factor of about 10x per phase. Thus, validated projects with a working MVP and onboarded paying customers were significantly cheaper than any average new product that a large company typically releases to the market.
• Our framework consisted of a track for new products, services, and business models, which focused more on the desirability and viability of a solution, as well as a track for the digitalization of our business, which focused more on the feasibility and viability of a solution.
• Regardless of the nature of the idea, our framework acted as a sandbox environment in which new ideas could be tested and learnings created without the risk of wasting resources for solutions that in the end, nobody wants, damaging the careers of the innovators involved, or alast, bringing harm to the brand of our Group. 

Upskilling

Enable the knowledge transfer of agile methodologies and tools to upskill colleagues and increase the internal speed of learning

• Our upskilling activities ranged from direct one-to-one collaborations with the teams behind new innovation and digitalization initiatives across our Group, the hands-on development of hundreds of intrapreneurs who participated in our core program, the training of thousands of employees who participated in events we held, as well as countless colleagues that interacted with our digital education and communication content.
• In the end, our program acted as a tool to enable our employees to become an active part of our company’s digital transformation.

Whether our work of the last 3,5 years should be evaluated as a success is hard to judge objectively. There certainly were lots of ups and downs along the way. We would be happy if you get in touch and let us know your personal evaluation or share your own experiences and outcomes of running similar programs in other organizations (see chapter 6 for our contacts).

Running a global program, supporting dozens of innovation projects and hundreds of internal innovators, we certainly had our fair share of success and failure. Below, you will find some key learnings we had during the highs and lows of our own corporate innovation journey.

In order to help future innovators within large organizations to turn new ideas into value-creating innovations, we wrote the DHL Start-up Lab Playbook. It summarizes our approach and learnings from incubating nearly 50 projects and successfully exiting over 20 of them. As the challenges of this process are certainly comparable across different organizations, we decided to share our playbook with you. If you have ideas how we can further improve it or feedback from using it within your organization, please get in touch — we would love to hear from you (see chapter 6 for our contacts).

The different chapters explain how to better understand a customer’s problem, learn if the problem/market is big (and interesting) enough to build a new solution for, how to validate a solution by setting up experiments or building MVPs, and how to create a successful business (case) out of an idea. It will also help develop a team, improve team dynamics, understand the importance of stakeholder management, create a vision for the project, and teach how to present the project to others. It walks the reader through the journey from great idea to validated business model.

We also regularly published short but hopefully useful educational content for corporate innovators. See below for a selection.

There is a lot of great content from others that we built on and many books that were very helpful for us when trying to innovate within a large company. We found some of the most helpful insights in the following publications:

●      Dan Toma, Esther Gons & Tendayi Viki: The Corporate Startup

●      Tendayi Viki: Pirates In The Navy

●      Ash Maurya: Running Lean

●      Rob Fitzpatrick: The Mom Test

●      David Bland & Alexander Osterwalder: Testing Business Ideas

Happy reading!

The most important people for the DHL Start-up Lab were the hundreds of intrapreneurs, who shared their ideas with us and trusted us to support their innovation journeys. We are tremendously proud of all of them for their guts to try to challenge the status quo. No matter whether their projects were successfully implemented and scaled or invalidated along the way, it was a great joy to work with them. Knowing that most of them continue to work for our Group makes us very optimistic about the future of our company. Below you will find a selection of projects we supported and which were successfully transitioned long-term.

AIDE

When logistics companies start managing the supply chain of new customers, wrong or incomplete data on the goods that are to be handled can lead to costly and painful implementation failures. AIDE prevents this with a simple to use Software as a Service solution.

Customer Claims Portal

Unfortunately, every once in a while mistakes happen when transporting physical goods from A to B. Customer Claims Portal makes the process of handling claims much easier and more transparent for all parties involved, radically improving the customer experience in such situations.

D3TO

When managing large transportation networks, there is significant potential for savings in travel distance and CO2 reduction. D3TO leverages large amounts of data to optimize transportation logistics and routing for DHL internal use cases as well as for external customers.

Digital Manufacturing

Many parts of today’s manufacturing processes still involve significant manual work. Digital Manufacturing helps its customers to optimize their operations by designing, sourcing, and integrating robotics, which collaborate with their employees, taking over repetitive or physically stressful tasks. This enables the employees to focus on more complex and creative tasks. Digital Manufacturing is offering robotics-as-a-service for its customers, moving the implementation of state-of-the-art robotics from a CAPEX to an OPEX investment.

Easy Green Packaging

E-commerce has had a lot of success in recent years, but also came with the negative side-effect of inefficient usage of packaging material and its subsequent negative environmental impacts. Easy Green Packaging offers an intelligent, durable, reusable, and returnable packaging solution, moving e-commerce packaging to a circular model.

I.D.E.A.

Picking the right products at the right time for the right customer in a warehouse is a complex process that leads to thousands of small decisions and hundreds of kilometers that employees in a warehouse have to take care of daily. I.D.E.A. uses complex algorithms to optimize these warehouse pick assignments and can be easily implemented as a micro-service into the existing warehouse management systems of its customers.

Labor Share App

Companies with multiple physical locations have to deal with dynamic labor and infrastructure needs in these locations. The Labor Share App helps its customers and their employees to have real-time visibility of the resource needs between the different sites, enabling them to be at the right location at the right time. It also makes it possible to share physical resources (e.g. forklifts) between sites, applying the sharing economy approach to intra-company processes. 

Meerkat Inventory

An up-to-date inventory is of critical importance in today’s global supply chains. Keeping the inventory of warehouses updated can be a very labor-intensive and physically dangerous task, with storages in modern warehouses as high as 20 meters. Meerkat automates the inventory checking process, using ground-based robots outfitted with computer and camera technologies, which can “reach up” even to the highest racking locations to perform a complete warehouse check for its customers overnight.   

Nostradamus

Having the right products at the right time at the right warehouses (and at the right location within these warehouses) becomes highly important with customers increasingly expecting fast delivery all over the world. Nostradamus predicts the sales of single items with no need for historical data. This enables its customers to improve their picking productivity (for direct put away), demand planning (forecast accuracy), and sorting (to smaller local warehouses).

Opti-Carton

When ordering things to be delivered to their homes, e-commerce customers often are negatively surprised by products being shipped in way too large packaging, not only leading to unnecessary amounts of waste but also to higher CO2 emissions due to the inefficient use of space within the logistics network. Opti-Carton applies advanced analytics to determine the optimal carton sizes its customers should stock along with other strategies that reduce void space, minimizing their shipping cost and carbon impact as well as improving the user experience of their customers.

PixoAnalytics

Fraud is not only a large challenge in digital environments but also leads to large financial damages in the physical goods space. PixoAnalytics makes it possible to identify fraudulent items including stamps, letters, parcels, medications, and fashion items anywhere in the world with its unique surface structure recognition algorithm. It can track and trace any physical item without requiring any additional identifier, recognize an object in milliseconds among billions of others, and identify fake and original products by only scanning the material structures, even with a smartphone camera. PixoAnalytics won the 2020 Postal Innovation Platform Startup Innovation Award. 

S.O.L.V.E

Storing the right product at the right time at the right location in a warehouse is a complex process with a large impact on the efficiency of running a warehouse. S.O.L.V.E. is an algorithm-based visualization and reporting tool that enables the best placement of products within warehouses.

Speedy Leads

When a company wants to ship with a new logistics provider, most of the time it wants to do so as soon as possible. But the onboarding processes of these providers often take a long time, making sure that the new customers are trustworthy and all necessary information is available. Speedy Leads offers a digital process to qualify new customers faster, reducing the manual effort for everyone involved and increasing the speed until the first shipment can be handled.

TRAILAR

TRAILAR utilizes solar technology integrated within commercial vehicles, to reduce the fuel and maintenance spend as well as reduce the carbon footprint of commercial fleets. It offers road transport businesses the opportunity to act upon their environmental impact whilst providing a powerful return on investment and a significant list of additional benefits to improve operations. The company’s vision is to change the face of global transport through the integration of solar and data-driven technology. TRAILAR is committed to delivering sustainable transport for all and achieving zero emissions sooner with solar. 

TransAudit

Disputed invoices between logistics service providers and their customers lead to a lot of manual effort and cash flow challenges for everyone involved. TransAudit adds trust, ensuring that shipping rates and charges comply with agreed contracts. It runs on the DHL blockchain platform BLESS and has been re-branded from XPL into BLESS TransAudit.

TransMit

When e-commerce shipments are sent or returned across boundaries, a lot of manual effort is needed by the shipper, the relevant authorities, and the recipient of the shipment, for example, to handle the duty collection and electronic settlements. TransMit is an award-winning solution that radically reduces this effort. It runs on the DHL blockchain platform BLESS and has been re-branded from TedEx into BLESS TransMit.

Waste Market

In today’s logistics processes, potentially reusable goods are often only used once and then disposed of, leading to large negative environmental consequences. Waste Market prevents reusable goods from being treated as waste when they are available for recycling or reuse within the operations, enabling logistics companies to take a circular approach to handling goods when offering their services.

The people behind the Start-up Lab have all gone on to work on new challenges, some within our Group, some for other great companies. Feel free to get in touch with some of us via the following contact details.

Johannes (Joey) Naumann Johannes.Naumann@dhl.com

• Joey was the head of the DHL Start-up Lab.

Felix Bauer Felix.Bauer@dpdhl.com

• Felix coached many Start-up Lab teams and was responsible for the program’s communication. 

Jenny Aschmann Jenny.Aschmann@dpdhl.com

• Jenny also coached many Start-up Lab teams and was responsible for the program management, e.g. taking care of the process of selecting new teams into the program.