What technology do you spin out? Around what technology should you form a subsidiary? What technology do you need to bring in? Large companies who recognise that innovation is fundamental to long term survival constantly ask themselves these questions. They also want to know whether corporate venturing is their ultimate answer, only part of the solution or just a distraction.
Airbus Group, the European aviation giant, is a good case in point. These questions and issues are being grappled with by Otto Gies, Head of Innovation Nursery and Start-ups within the Airbus Group’s CTO organisation. I met Otto at the water venturing session I chaired at GCV’s May symposium. Water and Airbus – how do they mix?
Airbus has established Speetect, a spin-off company for bacteria detection in liquids and water. It was born of Airbus’s need for a new mobile technology to rapidly and automatically identify bacteria in water used for sanitary purposes on planes. The Speetect solution will save considerable penalty costs incurred when infected water prevents Airbus planes’ commissioning. But Speetect will achieve its full potential outside of aviation in industrial waste water markets. So Airbus is seeking co-investors for its spin-out’s development.
“Although Airbus Group is a customer of Speetect’s products and services its captive market in Airbus would not be sufficient to turn it into a prosperous business,” says Gies. “By spinning-off this business the team is able to implement a dedicated business model to address a wide range of market segments such as water providers, cooling towers, semi-conductors, pulp and paper, cooling lubricants, cosmetics, food and beverages, hospitals and others,” he adds.
There is a vast untapped wealth of under-utilised IP in large corporations like Airbus. It needs to be set free in such spin-off strategies. If it’s not strategic to the parent, it may nevertheless find a good home elsewhere and make the parent proud (and money). But far too often, it simply languishes or is licensed, which in my experience doesn’t always work for either the licensor or licensee.
But one Airbus start-up company that will not by spun out is Apworks, which provides advanced manufacturing and engineering services such as metallic 3D printing and friction welding. Apworks is core to Airbus and will sit within its research centre. “But it was necessary to establish it as a start-up within the overall group, as the research centre itself is not structured for external business and commercialisation,” explains Gies. “Airbus is the right company to help Apworks reach its full potential so it will remain within the Group.”
An Airbus innovation that will neither be spun out nor set up as a new company within the group is HAPS/Zephyr, a High Altitude Pseudo Satellite based on solar-powered glider aircraft technology. It provides services in earth observation, telecommunication, positioning and meteorology with extremely long unmanned flights in the stratosphere over the specific area of interest.
“As all targeted commercial and governmental markets are already serviced by Airbus Defence and Space core business, HAPS/Zephyr will benefit from the Groups marketing and sales contacts and initiatives,” says Gies. “We set up a separate department in a separate building to keep the entrepreneurial culture and spirit. But we did not set up a separate company.”
What are Airbus’s intentions in Corporate Venturing? “Today we invest on a case by case basis in external ventures,” explains Gies. “To fully engage in corporate venturing we need to complete our ongoing discussion: definition of respective search fields, willingness to incorporate disruptive or potentially cannibalizing innovations, the set-up of an efficient structure.”
Disclosure: I am part of Speetect’s advisory team.