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IN DEGREE PROJECT INDUSTRIAL ENGINEERING AND MANAGEMENT,SECOND CYCLE, 30 CREDITS

, STOCKHOLM SWEDEN 2020

Facilitating Innovation of a Large-Scale Company with External Startups

TESI HAJZERI

KTH ROYAL INSTITUTE OF TECHNOLOGYSCHOOL OF INDUSTRIAL ENGINEERING AND MANAGEMENT

Facilitating Innovation of a Large-ScaleCompany with External Startups

TESI HAJZERI

KTH Industrial Engineering and ManagementIndustrial Engineering and Management

SE-100 44 STOCKHOLM

May 30, 2020

AbstractAlong with an increased environmental awareness, compa-nies are encouraged to go through big, internal transforma-tions and look outside of their core businesses. For them toremain competitive, they need to show an urge for externalinnovation and collaboration with startups. Front end in-novation (FEI) plays a crucial role in the success of ideas,yet the process for it is scattered and unorganised. Thepurpose of this thesis is to provide structure to externalFEI and ensure success to further stages such as commer-cialization.

The thesis was conducted at a large, sustainable materi-als company, by performing a literature study and quali-tative interviews. The results were divided in two parts:(1). Identification of tools and success factors within FEIand (2). Construction of a relevant business model at thisphase based on previous findings. The discussion of the re-sults has been derived by performing deep analysis of thedata and benchmarking it to previous findings.

The thesis resulted in concrete suggestions and improve-ments of FEI management processes. A business modelframework applicable for FEI processes is suggested basedon recommendations and findings. Concluding, I argue thatthe result can be considered as a bridge between large scalecompanies and external startups, as well as between FEIand commercialization, however, it needs to be validatedon other environments than the subject company.

Keywords: Innovation Management, Front End Innova-tion, Commercialization, Startups, External Sourcing

SammanfattningForetag utfor stora, interna omvandlingar och tittar utanforsina karnverksamheter pa grund av en okad miljomedveten-het. For att de ska forbli konkurrenskraftiga maste deutoka sina processer for extern innovation och samarbetemed startups. Front end innovation (FEI) spelar en avgoranderoll for framgangsrik innovation, men denna process ar ut-spridd och osystematisk. Syftet med projektet ar att inforastruktur av externa innovationsprocesser och sakerstalla fram-gang for framtida steg sasom kommersialisering.

Projektet genomfordes vid ett stort foretag som fokuserarpa hallbara material, genom att utfora en litteraturstudieoch kvalitativa intervjuer. Resultaten delades upp i tvadelar: (1). Identifiering av verktyg och framgangsfaktorerinom FEI och (2). Konstruktion av en relevant affarsmod-ell i denna fas baserat pa tidigare litteratur. Diskussionenav resultaten bestar av en djup analys av samlade data ochjamforelse av detta med tidigare resultat.

Projektet resulterade i konkreta forslag och forbattringarav innovations processer. En affarsmodells ram foreslassom ar tillampad for FEI baserad pa rekommendationeroch litteratur. Avslutningsvis havdar jag att resultatet kanbetraktas som en bro mellan storskaliga foretag och externastartups, liksom mellan FEI och kommersialisering men denmaste valideras genom testning i andra miljoer och foretag.

Nyckelord: Innovation Management, Front End Innova-tion, Commercialization, Startups, External Sourcing

Acknowledgements

This thesis was conducted during spring 2020 as a final project of an MSc degreein Industrial Engineering - Product Development and Mechatronics at the RoyalInstitute of Technology (KTH) in Stockholm, Sweden.

I would like to thank all the people who have made this study possible and con-tributed to the results. To begin with I would like to express gratitude to the topmanagement at the subject company for welcoming me and enabling the results ofthe thesis. I would like to direct a big thank you to my supervisors at the subjectcompany and my supervisor, Kristina Nystrom at KTH, for dedicating a significantpart of your time and for being incredibly supportive and engaged in the subject.Your constant presence and valuable advice have assisted with direction and facili-tated the process of the thesis.

In addition, I would like to express my gratefulness to all the internal and externalinterviewees for putting great value in the subject and contributing with their time,knowledge, experience and insights.

Tesi Hajzeri

May 30, 2020, Stockholm

Contents

1 Introduction 11.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 Problem Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.3 Purpose and Research Questions . . . . . . . . . . . . . . . . . . . . 31.4 Delimitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.5 Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

2 Theoretical Framework 62.1 Company Innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.1.1 Front End Innovation Management . . . . . . . . . . . . . . . 72.1.2 External Innovation . . . . . . . . . . . . . . . . . . . . . . . 13

2.2 Innovation Management . . . . . . . . . . . . . . . . . . . . . . . . . 142.2.1 The Business Mating Phase . . . . . . . . . . . . . . . . . . . 152.2.2 Measuring Innovation Inputs and Company Performance . . 172.2.3 Measuring Innovation Maturity . . . . . . . . . . . . . . . . . 182.2.4 Defining the Boundaries of Uncertainty . . . . . . . . . . . . 19

2.3 Business Modelling . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212.3.1 The Business Model Framework . . . . . . . . . . . . . . . . 222.3.2 The Discovery-Driven Model . . . . . . . . . . . . . . . . . . 232.3.3 Business Model Canvas . . . . . . . . . . . . . . . . . . . . . 24

2.4 Conceptual Framework . . . . . . . . . . . . . . . . . . . . . . . . . . 27

3 Methodology 293.1 Research Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . 293.2 Research Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303.3 Case Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303.4 Data Collection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 313.5 Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 333.6 Quality Assurance & Ethics . . . . . . . . . . . . . . . . . . . . . . . 333.7 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

4 Case Company 364.1 Group IT and Digitalisation . . . . . . . . . . . . . . . . . . . . . . . 36

4.2 Group HR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 374.3 Division A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 384.4 Division B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

5 Interview Findings 415.1 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 415.2 Evaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435.3 Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 465.4 Innovation Management . . . . . . . . . . . . . . . . . . . . . . . . . 475.5 Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

6 Analysis and Discussion 526.1 The Innovation Process . . . . . . . . . . . . . . . . . . . . . . . . . 52

6.1.1 Success Factors and Evaluation Process . . . . . . . . . . . . 526.1.2 The FEI Process . . . . . . . . . . . . . . . . . . . . . . . . . 62

6.2 The Business Model . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

7 Conclusions 70

8 Future Work 72

Bibliography 73

Appendices 78

A Interview Questions - Subject Company & General A1A.1 Pre-Collaboration Phase . . . . . . . . . . . . . . . . . . . . . . . . . A1A.2 During Collaboration Phase . . . . . . . . . . . . . . . . . . . . . . . A2A.3 Future Collaboration Phase . . . . . . . . . . . . . . . . . . . . . . . A3

B Interview Questions - Startups B1

List of Figures

2.1 Front End Innovation described as a process (Koen et al., 2002, p.6). . . 82.2 The New Concept Development Model (NCD) can complement FFE by

providing it with a clearer structure (Koen et al., 2001, p.51). . . . . . . 102.3 The New Concept Development Model (NCD) provides the possibility

to iterative thinking from a process perspective (Koen et al., 2001, p.47). 112.4 The Innovation Ambition Matrix (Nagji & Tuff, 2012). . . . . . . . . . . 142.5 Indicators for measuring innovation performance. . . . . . . . . . . . . . 172.6 (a) Spider chart. (b) Customer Readiness Level (KTH, n.d.). . . . . . . 182.7 The Probability-Impact matrix used for evaluating the uncertainty of

transformational innovation (O’Connor and Rice, 2013a, p.15). . . . . . 202.8 Relation between latency and criticality (O’Connor and Rice, 2013a, p.14). 212.9 The Business Model Framework (Richardson, 2008, p.138). . . . . . . . 232.10 The Business Model Canvas used for structuring how a company handles

value (Osterwalder and Pigneur, 2010, p.44). . . . . . . . . . . . . . . . 252.11 The FEI Canvas (Koen, n.d.). . . . . . . . . . . . . . . . . . . . . . . . . 272.12 The proposed frame of reference used in this study. . . . . . . . . . . . . 27

3.1 Mapping of internal and external interviewees. . . . . . . . . . . . . . . 32

4.1 The process of one cycle with the open innovation platform. . . . . . . . 374.2 The process of the accelerator program. . . . . . . . . . . . . . . . . . . 384.3 The screening processes of Innovation and R&D and NPPD as well as

the interaction in-between. . . . . . . . . . . . . . . . . . . . . . . . . . 394.4 The 3 pillars illustrating the partitioning of different innovation types. . 404.5 The circular model of NPPD. . . . . . . . . . . . . . . . . . . . . . . . . 40

5.1 List of the most common improvement attributes encountered. . . . . . 51

6.1 EO scale describing the management of the subject company. . . . . . . 546.2 Pyramid showing different types of innovation, open innovation applica-

tion and transformation of innovation into goal measurements. . . . . . 576.3 The Profitability-Impact matrix for evaluating the uncertainty of an in-

novation where green indicates low risk while red indicates high-risk. . . 606.4 A suggested system to improve the link between Innovation and R&D

and NPPD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

6.5 An FEI model combining the process, knowledge and translation per-spective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

6.6 Customized business model for innovation at large companies. . . . . . . 65

List of Tables

2.1 The differences between Front End Innovation and New Product ProcessDevelopment (Koen et al., 2001, p.47). . . . . . . . . . . . . . . . . . . . 8

2.2 7 FFE Activities to facilitate decision-making. (Khurana & Rosenthal,1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

2.3 The 4 actions of the translation process. (Callon, 1986) . . . . . . . . . 13

5.1 Different evaluation attributes during startup collaboration. . . . . . . . 445.2 The 6 different strategy focus areas of Division A. . . . . . . . . . . . . 445.3 The focus areas of Division B while evaluating ideas. . . . . . . . . . . . 455.4 The focus areas of Telia while evaluating ideas. . . . . . . . . . . . . . . 46

List of Abbreviations

ANT Actor-Network-Theory.

BMC Business Model Canvas.

EO Entrepreneurial Orientation.

FEI Front End Innovation.

FFE Fuzzy Front End.

KIRL KTH Innovation Readiness Level.

MVP Minimum Viable Product.

NCD New Concept Development.

NPD New Product Development.

NPPD New Product Process Development.

RBV Resource-Based View.

ROI Return on Investment.

TLBMC Triple Layer Business Model Canvas.

TRL Technology Readiness Levels.

Chapter 1

Introduction

This chapter provides information about the background and the reason to why thethesis was conducted, accompanied by the identified issue, the purpose, the limita-tions during the realization of the thesis and lastly the sustainability aspect of theproject.

1.1 BackgroundIn a rapidly evolving world, the environmental awareness is increasing and inno-vative solutions to produce sustainable materials that minimize the environmentalimpact are emerging, increasing the need for companies to look for innovation out-side of their main businesses (Xie & Jia, 2016). The high air pollution rate is killingan estimated of seven million people worldwide a year (WHO, 2018). The GreatPacific Garbage Patch is rapidly growing consisting of a plastic landscape morethan three times the size of Spain. The last decade the amount of plastic producedsurpassed any previous volumes (Lebreton et al., 2018). Consequently, these occur-rences are raising the global awareness of what needs to change in our consumerhabits but also the production of companies. An increased customer demand forproducts with better sustainability footprints and the introduction of many reg-ulations to reduce and limit the plastic impact set by the European Commissionare forcing companies to rethink their strategies and find sustainable solutions toproducts (EU, 2020).

The increasing demand for a more sustainable life style and for constant changeand improvement encourages companies to consider applying innovative ideas intheir current products, innovate new ideas and absorb innovation in the processesin order to facilitate continues improvement and meet the demand (Bogers et al.,2019). The importance of innovation for a long-term success of a firm has also beenunderlined and proven, therefore it is extremely important for companies to keep acompetitive position to embrace innovation and find solutions to incorporate it inthe current business (Tushman & O’Reilly, 1996).

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CHAPTER 1. INTRODUCTION

Companies have always relied on external sourcing, to some degree to fulfil theabove ambitions and fill their technology-sourcing portfolio (Bogers et al., 2019).External sourcing includes different types of partnerships and partners. It includesactivities such as corporate venture capital investments, strategic alliances, jointventures, mergers and acquisitions (M&A) and partners that can be customers,competitors, universities and young startup firms (Vrande, 2013). In recent yearsthis has intensified and companies are more frequently looking outside their mainbusiness to expand by collaborations with startups that are mostly privately owned,in order to change their traditional ways, gain an agile organisation and expand theirinnovation portfolios (Bogers et al., 2019).

1.2 Problem FormulationTo contribute to a sustainable environment and to meet the new regulations com-panies are going through big internal transformations (Xie & Jia, 2016). Theyinvest in more resources to make innovation, research and development (R&D) andcommercialization of products more efficient and entwined. Some of the innovationefforts are focused on creating solutions to allow customers to replace fossil-basedmaterials with renewable ones. The target is usually to reach commercial and op-erational excellence as well as customer-focused innovations, product managementand service through a developed supply chain strategy, while keeping a strong mar-ket position (Pfeffermann, 2020).

However, innovation does not happen in isolation, and due to this large compa-nies are constantly searching externally for new technologies and potential partnerswith whom to cooperate with to find new material solutions, services or businessmodels to complement the offerings (Lin et al., 2018). Despite the cognition of theimportance of a structured way when working with innovation, there is a lack of aholistic view on what activities and initiatives that bring the largest value to driveinnovation agenda forward and an uncertainty on the amount of resources that areor should be spent on sourcing activities (Koen et al., 2001).

One big challenge is that innovation is defined in various ways leading to a challengefor companies to define and manage it correctly for their environment and industry.It has been shown that companies that focus on innovation in early phases also havea higher quality of new products (O’Connor & Rice, 2013a). To some extent allcompanies need innovation and new solutions in order to survive, therefore, theyneed to define their strategies carefully considering innovation and what it meansfor the company’s well-being (Koen et al., 2001).

This study is aimed to fill the knowledge gaps of what innovation in early stagesmeans to a company and how it can be evaluated and performed in a structured

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way benefiting both the company and the startup. In addition, the study suggestspractical steps that can be taken to apply and to modify already existing businessmodels. However, the complexity and the different dimensions of innovation impedeits application in practice and the usage of a framework of best practice, therefore,the study focuses on producing a tailored solution for a specific company benefitinga specific industry (Fielt, 2013). To do so a holistic view of the company’s organiza-tion is required understanding areas of importance such as innovation management,decision-making, measurements and culture affecting innovation decisions (Koen etal., 2001).

1.3 Purpose and Research QuestionsThe main purpose of the master thesis is to facilitate innovation with external part-ners at large scale companies by constructing a business model based on previousmodels that allows large scale companies to expand their innovation activities andgain more knowledge on working with external partners. A second aspect of thethesis is to investigate and facilitate the transition of external innovation to com-mercialization of products by bridging the process for an evident transition ensuringa higher outcome. The purpose has been divided into related research questions for-mulated accordingly:

How can large scale companies expand their innovation activities by collaborationwith external startups?

Additional sub-questions that arise in order to answer the research question are:

• What are important factors of success in the sourcing process facilitating thelinkage with commercialization of innovation and how can they be evaluatedand measured?

• How should the business model for the sourcing process look like to enable apositive output?

1.4 DelimitationsThe research is focused on success factors and construction of a business modelfor sourcing of startups at large scale companies targeting sustainable, innovativematerial solutions.

The case study is performed at the subject company, which is one of the biggest com-panies that develop and produce sustainable solutions based on wood and biomassfor a range of industries and applications worldwide, leading in the bio-economyand supporting customers in meeting demand for renewable Eco-friendly products.They are committed to the development of products and technologies based on

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renewable materials and provide a low-carbon alternative to products made fromfossil-based or other non-renewable materials. The future goal and ambition of thecompany is to produce anything that is made with fossil-based materials from atree. Early phase sourcing is currently being done but the work around sourcing isscattered and not centrally coordinated, therefore, there is potential for the processto be more efficient and productive.

At the subject company, the thesis is performed at Division A, therefore, sourc-ing at other divisions is not considered. However, facilitating the transition fromthe sourcing process to commercialization of the product is examined and solutionsare suggested. The focus of the thesis concerns the European market and innovationcentres, wherefore other markets are not included in the results or the proposition.However, a globalization model for the sourcing process is proposed.

1.5 SustainabilityThere are over 200 definitions of sustainable development, however, the most com-mon is the definition ’Sustainable development is development that meets the needsof the present without compromising the ability of future generations to meet theirown needs.’ (Brundtland, 1987, p.37) This definition implies a division of sustain-ability in three different dimensions such as social, environmental and economicsustainability (Brundtland, 1987).

Social sustainability refers to the long-term development of a society towards ahealthier well-being considering general health, gender equality and poverty. Eco-nomic sustainability aims to achieve a responsible usage of resources and to con-sistently produce an operational profit for the businesses to sustain their activities.Lastly, environmental sustainability aims to protect the environment and the nat-ural resources and advocates for circular economy (Brundtland, 1987).

This research contributes to sustainability on all aspects by facilitating the in-novation work for companies focused on sustainability and providing sustainablesolutions to the consumers. The business model derived favours directly 11 out of17 of the sustainable development goals set by United Nations by year 2030 suchas life on land, life below water and climate action (UN, 2015).

Facilitating external innovation and its application on companies that are focusedon renewable materials and circular economy contributes to social sustainability byimproving partnerships and promoting knowledge exchange as well as promotingsustainable cities and communities by for example adding sustainable materials inthe building industry. Additionally, it also improves the reputation and attractive-ness of the company to partners. This on its turn enhances the customers to choosethe services of the company contributing to economic growth for the company that

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leads to economic sustainability. Consequently, these effects of working with in-novation affect environmental sustainability partly because of the direct effect ofdeveloping sustainable products with sustainable materials and life cycles but alsoby promoting a sustainable consumption from society leading to a healthier envi-ronment and well-being.

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Chapter 2

Theoretical Framework

The theoretical framework is meant to provide an overview of all the relevant theoryfor the analyse of the research question and is divided into two parts. The first partgives an overview of the definition of innovation, its meaning and usage within alarge scale company and the importance of external innovation. The second partincludes different innovation management methods concerning explanation of dif-ferent views of innovation, the tools used to manage it and the business models thatcan be used to enable a positive output.

2.1 Company InnovationInnovation is a word that has meant many different things throughout the years;however, the earliest modern interpretation is that innovation is novel combinationsof the world and the society (Schumpeter, 1934). Additionally, innovation shouldbe distinguished from invention since innovation is carried out within the economicsphere and has a commercial purpose, while inventions can happen anywhere with-out a commercialization purpose (Hakkarainen & Talonen, 2014). Innovation incombination with the social agents that carry innovation called entrepreneurs andcommercialization are keys to a long-term economic change (Schumpeter, 1934).

The nature of innovation can be divided into incremental and radical. If the in-novation is a red ocean innovation, meaning that it exploits existing demand andcompetes in existing market space, than it is considered as an incremental innova-tion, while if the innovation creates a new demand in a uncontested market spacethan it is a radical innovation (Kim & Mauborgne, 2004). A dynamic company en-vironment with high competitiveness drives companies to broaden their perspectiveof innovation and on which platforms to look for it. Consequently, the interest ofmany companies in this field is growing continuously and the demand for structuredmethods and approaches is increasing (Anzola-Roman et al., 2018). It is in the in-terest of the companies’ future strategies to engage in activities that transcend theboundaries of the company and look for innovation potential in unknown areas re-

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CHAPTER 2. THEORETICAL FRAMEWORK

ciprocal to Front End Innovation (FEI) and Open Innovation, which provide a largeplatform for innovation that will be explained thoroughly in the following chapter(Jensen et al., 2018).

Moreover, innovation should be caressed meaning that the adoption, integrationand implementation of innovation are key aspects that should be incorporated inthe companies’ strategy, routines and resources in order to succeed with the ob-tained output. A strategy for a successful partnership is for both the companyand the startup to have characters in common, in particular regarding managementstyle. Some common aspects are the structure of innovation, mindset and cohesivetechnological systems (Kask & Linton, 2013).

2.1.1 Front End Innovation ManagementEven though companies talk about innovation diligently and refer to it as the mostimportant mean to reach success and keep a strong competitive position it is verydifficult for them to implement an organizational culture that is eager for innovationbecause of the risks that innovation is linked to (Ahmed, 1998). Great companiesthat have tried to implement innovation according to the books listening to cus-tomers and seeing potential in new technologies have still lost their competitivenesswhen a new disruptive technology has been introduced to the market. Companiesneed to look further than investments in the technology or product that is the mostprofitable presently (Christensen, 1997). Failing to do so could mean the weak-ening of the company and ultimately its failure. However, this has shown to bedifficult for companies who are very customer focused since the customers fail tosee the strategic important innovations that they can’t use leading to great newmarket and products to languish. That is when new entrepreneurial companiesthat don’t bypass these opportunities become relevant and contribute to industrygrowth (Christensen, 1997).

In order to facilitate the innovation process and to easier embrace innovation itis crucial for the company to utilize innovation management. Innovation manage-ment refers to the practices that are used in order to manage innovation performance(Tidd, 2001). Even though innovation management has been studied throughoutdecades there are still no clear frameworks on how to manage innovation (Tidd,2001). A method that has been used widely for facilitating innovation managementis trying to understand FEI (Hakkarainen & Talonen, 2014). FEI describes theearly phase of innovation where the ideas are created and nourished to finally resultin project initiations (Floren & Frishammar, 2012), which is suitable to answer theresearch question since it is focused on examining innovation collaboration at anearly stage. FEI could be investigated through three different perspectives such asprocess, knowledge and translation perspective explained in the following sections(Jensen et al., 2018).

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The Process Perspective

Most companies have been focusing on understanding and using FEI as a linearprocess meaning that it includes a structured approach to innovation that minimizesrisk and improves efficiency. The process is divided in different phases such as FEI,also called Fuzzy Front End (FFE), New Product Development (NPD), also calledNew Product Process Development (NPPD) and Commercialization as shown inFigure 2.1 (Martinsuo & Poskela, 2011). Table 2.1 explains the comprehensivedifferences between FEI and NPPD (Koen et al., 2001).

Figure 2.1: Front End Innovation described as a process (Koen et al., 2002, p.6).

Table 2.1: The differences between Front End Innovation and New Product ProcessDevelopment (Koen et al., 2001, p.47).

The FFE phase refers to idea generation that can be gained internally and exter-nally, filling the innovation funnel. Ideas from this phase are screened and most ofthem fail to reach the next phase because of issues encountered along the way fromfeasibility to compatibility and alignment with the companies’ strategy (Ahmed,1998). One proposed approach to how the FFE phase should be organized is that itshould consist of two pre-phases such as pre-phase zero that consists of opportunityidentification where product concept and definition are developed and pre-phase

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one that consists of business and technical feasibility of the product and NPD planand strategy. In order to make FFE less fuzzy it is important to introduce strategi-cal and operational activities such as the ones shown in Table 2.2. However, theseactivities are not applicable on all companies considering that not all companieshave the same structure or needs (Khurana & Rosenthal, 1997).

Table 2.2: 7 FFE Activities to facilitate decision-making. (Khurana & Rosenthal,1997)

FFE Activities DescriptionFront-End ProjectDefinition and Planning

Establish clear priorities and planning. There should be a matchbetween management expectations and FEI activities and enoughpeople in the core group that can work on the new projects.

Product StrategyAssignment of a product manager, a project team and a responsiblefor product strategy formulation. The projects should satisfy productrequirements.

Product PortfolioPlanning

Achieve a balance between established and new technologies to decidethe different types of innovations.

Product DefinitionKeep product definition both strongly set to have a clear visionbut also flexible by for example using a multi-release platform ormissed elevator approach, meaning that if the new customer need ortechnology-driven feature missed the elevator on one product release,it can be put into the next one.

Product ConceptDevelop clear, precise product concepts from top management to thedevelopment team about expectations of product benefits and marketsegments. Properly screen the market by listening to the voice of thecustomer and by carrying out observations.

Value ChainConsideration

Envision and plan a broad value chain perspective (sales interaction,delivery, after-sales service, follow-up).

Product DevelopmentOrganization Structure

Allocate project leaders who are responsible for both promoting theproject and the core team. The projects should have cross-functionalcore teams and executive reviews designed to develop strategic skills.

NPD consists of stage-gate phases that contain a much more structured approachwith a clear methodology and steps that the innovation must pass to show feasi-bility and to be able to move on to the next phase, commercialization. This lastphase allows extraction of value from the idea by launching a functional productor service (Ahmed, 1998). The main focus of these models is to serve as a man-agement tool that transforms an activity from an idea or source to a functioningoutput and therefore gives a broader understanding of the situation without consid-ering the actual interactions happening in the process (Floren & Frishammar, 2012).

The process perspective assumes that the time perspective and the formal structureis able to be applied in the real world. The time perspective of this model allows toassume that the idea will move linearly from one stage to the other, while the for-mal structure implies that the company has functional structures with well-definedresponsibilities and logical criteria in the decision-making of the idea prosecution.Furthermore, using this model as a managerial tool in an attempt to reduce fuzzinesscould inhibit creativity, which is positively affected by broad grounds to develop on

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(Schweitzer & Gabriel, 2012).

There should be a balance between managing innovation and letting it flow freelywithout any constraints (Gassmann et al., 2006). Despite all efforts to make this FEImodel applicable to the real world it is still criticized for being overly abstract, gen-eral without descriptions of real actions (Gaubinger & Rabl, 2014). Consequently,it is difficult to work with this model since ideas are treated as projects that onlyneed to be pushed forwards and bring results.

The belief that sequential processes do not work for FEI leads to the suggestionof organizing FEI in a non-sequential process called New Concept Development(NCD) shown in Figures 2.2 and 2.3. This model allows a circular shape enablingan iterative thinking but is still described from a process perspective (Koen et al.,2002). The model contains an engine in the middle of it that represents the man-agement that powers the five elements of the NCD model. In addition, the outerarea of the model takes into consideration the influencing factors that affect thedecisions made from the inner parts of the circle.

NCD compromises different aspects such as leadership, culture and business strat-egy. It contains five different activities such as opportunity identification, opportu-nity analysis, idea generation and enrichment, idea selection and concept definitionand development. Furthermore, the described process also consists of non-processinfluencing factors that should be taken into consideration such as organisationalcapabilities referring to innovation teams and culture and external influences of theoutside world such as customer input (Trotter, 2011).

Figure 2.2: The New Concept Development Model (NCD) can complement FFE byproviding it with a clearer structure (Koen et al., 2001, p.51).

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Figure 2.3: The New Concept Development Model (NCD) provides the possibilityto iterative thinking from a process perspective (Koen et al., 2001, p.47).

The Knowledge Perspective

In addition to the process perspective of FEI there is the knowledge perspectivethat highlights the creative, informal and exploratory aspects of innovation. Thisperspective focuses on the informal relations in the company to promote innova-tion and the individual contribution. Knowledge is shared by communities thatallow people to share knowledge in a free, creative way allowing innovation to flowwith no boundaries (Wenger & Snyder, 2000). The knowledge perspective allowsinformal processes, knowledge sharing beyond boundaries and across companies. Itenables innovation through unexpected combinations and creation of diverse knowl-edge (Nonaka & Toyama, 2003). Additionally, compared to the process model italso reduces the time to market (Paez-Aviles et al., 2015).

The knowledge perspective of FEI also identifies roles in the company as being veryimportant in the continuation of innovation flow and its outcome (Cross & Prusak,2002). Different roles in the company can act as boundary spanners, gatekeepersbut also as carriers and spreaders of information and knowledge about innovationacross organisational and cultural borders. These individuals have the ability topersonalize and customize strategies instead of using codified knowledge leading toa higher and better innovation output (Mangiarotti & Mention, 2015). However,when the organisation wants radical innovation, while protecting its main business,there are tensions between roles, path dependencies and path creation (Garud &Karnøe, 2001).

In order to practice the knowledge perspective there are some exploratory ap-

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proaches that are used frequently such as suggestion systems used by employeesto convey their ideas (Dijk & Ende, 2002). While this method is still protective andrestrictive there are other ways to reach a much larger innovation platform by forexample looking at external actors using open innovation (Chesbrough, 2003), ideacompetitions (Ebner et al., 2009) and workshops and seminars. Although practicingthese approaches leads to circulation of ideas and acquisition of innovation at anearly stage, it is a very challenging method since the ideas are revisited infrequentlyand the outcome is unspecified.

Open Innovation

Open innovation is a fast approach to innovation with the aim to discover new,disruptive technologies in the market (Jacobson & Ramslov, 2017). It requires al-though an open, sharing mindset and collaboration with other companies (Tour etal., 2017). Some companies have embraced this way of operating and have formedalliances in-between companies, using platforms where companies can share a sub-ject and find innovation through startups. Other companies are forming their ownopen innovation labs like BNP Paribas (Tour et al., 2017) or AstraZeneca’s Bioven-ture hub (Jacobson & Ramslov, 2017).

Open innovation and startups are increasingly getting attention from large compa-nies and they are using this type of platforms to remain competitive and innovative(Tour et al., 2017). However, although open innovation contributes to knowledgesharing and it benefits many companies it faces some obstacles. One of them beingthat the startups participating in open innovation platforms possess low maturitylevels complicating the partnerships (Tour et al., 2017). Another disadvantage forcompanies is that open innovation involves risks and it can expose the company’sstrategy leaving it in a vulnerable competitive position (Naqshbandi et al., 2019).It is therefore crucial with the company having a clear strategy of where to use openinnovation and to what extent.

The Translation Perspective

The translation perspective is a complementary method on managing innovationthat contributes by looking at the social and technical dimensions of innovation(Akrich et al., 2002). The Actor-Network-Theory (ANT) is a theory facilitatingthe analysis of the translation perspective viewed as a network of actors consistingof humans and objects (Christiansen & Varnes, 2007). These networks of actorsare seldom in harmony but instead they are influenced by different forces and theirstruggle is what drives the process (Lundberg & Sandahl, 2000). Translation isthe process when the actor-network becomes stable described in Table 2.3 (Callon,1986). Thus, the process of translation is the negotiation with the aim of creatinga strong network to carry the idea or product concept forward (Christiansen &Varnes, 2007).

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Table 2.3: The 4 actions of the translation process. (Callon, 1986)

Problematisation Interessement Enrolment Mobilisation

Key actors become indis-pensable to the other ac-tors in the network andtherefore take on the roleas spokespersons for thenetwork for example theproject managers.

Different processesfor example ideationthat allow thespokesperson tomake the projectattractive to otheractors.

A set of strate-gies used by thespokesperson tocreate alliances withmore actors andcoordinate relationssupporting thenetwork.

A set of methodsused to ensure thatthe enrolled actorsare properly repre-senting the projectand its needs.

2.1.2 External InnovationStudies suggest that collaboration with startups and insights from an external part-ner strengthen product innovation and enhance innovative performance (Anzola-Roman et al., 2018). Startups can be found through many different platforms suchas universities, incubators, accelerators and open innovation platforms (Vrande,2013). Incubators provide the startup with the right tools to overcome challengesand enhance their growth and maturity by providing shared working space, facili-ties, administrative support, legal services, and networking possibilities (Bangqi &Jianxi, 2018). An accelerator is an intensified incubator provided by a companyduring a short period of time where co-creation is enabled.

Over the years external innovation has become more valuable for companies com-plicating their portfolios (Vrande, 2013). However, the circumstances that the part-nership is built upon are crucial for the success of the collaboration. Regardless ofthe advantages that startups bring to their partners, the partnership can be com-plicated and the startups need at the earliest opportunity to show potential andpropose a valuable solution in order for the company to find them attractive andchoose them as a partner (Anzola-Roman et al., 2018).

For a successful partnership between large companies and startups it is crucialwith a functioning match-making process that takes into consideration the integra-tion and cultural aspects (Tavis, 2018). Demand validation, customer affordability,market demographics, concept maturity, sales and distribution, product maturity,value proposition, and technology expertise, sustainable advantage, prior startupexperience, feedback mechanism and growth strategy are other critical aspects thatlead to success of large companies collaborating with startups (Bangqi & Jianxi,2018). It is important for the companies to understand the needs of their externalpartners and the differences that there exist between a startup and a large com-pany (Sokol, 2018). These differences along with the cultural aspects should formthe innovation strategy of the company and be a part of all processes.

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2.2 Innovation ManagementDuring this section different theories and frameworks for managing innovation arepresented. The research question is focused on facilitating the innovation collabora-tion of large scale companies with startups. Therefore, it is crucial for the theoreticalframework to be used in order to answer the sub-questions and provide the neces-sary base for identifying success factors and a business model that is flexible andaccurate to the startup innovation environment. Therefore, the frameworks coverdifferent areas such as business mating, innovation measurement, innovation matu-rity and risk measurement.

Managing innovation strategically is important for companies to understand itspurpose in the company and what the usage areas are internally. To keep a con-sistent terminology during the thesis the different types of innovation are explainedthrough the Innovation Ambition Matrix that is shown in Figure 2.4. The frame-work is divided in two dimensions to describe innovation as a phenomenon: Whereto play and How to win and the matrix is divided in the different types of innovationsuch as: core, adjacent and transformational innovation. The purpose of the matrixis to firstly give companies a tool for surveying all the initiatives and understandingthe amount of the different innovations introduced in the company and secondly itfacilitates the concretization of the company’s innovation portfolio ambition (Nagji& Tuff, 2012).

Figure 2.4: The Innovation Ambition Matrix (Nagji & Tuff, 2012).

The Where to play dimension takes into account the nature of the innovation andthe novelty of its customer markets, while the dimension How to win reflects uponthe novelty of a company’s offerings such as level to product- and technology de-

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velopment. Core innovation initiatives refer to incremental innovation of existingproducts that draw on assets the company already has. The opposite of core in-novation is transformational initiatives, designed to create radical innovation suchas new offers, markets and meet new customer needs. Lastly, adjacent innovationsshare characteristics from both core and transformational innovation meaning thatthe company uses a well-used asset in a new environment creating a new demand,market structure, competitive dynamics or trend (Nagji & Tuff, 2012). During therest of the thesis the terms core, adjacent and transformational innovation will beused in order to maintain consistency throughout the thesis.

2.2.1 The Business Mating PhaseBusiness mating between established companies and startups is a complex processand requires mutual consideration. One theoretical framework suggests that po-tential partners need to find a good fit between internal and external conditions,including invention features, management style and market situation (Harms, 2013).Those partners that are able to find a good fit between these three conditions aremore likely to form a successful partnership, meet each other’s needs and bring valueto one another (Kask & Linton, 2013). Nonetheless, as mentioned above inventionand innovation need to be differentiated from each other, however, this model hasbeen used widely on explaining entrepreneurship for established organisations, al-lowing usage of entrepreneurship out of the startup context and applying it to largecompanies with commercialization purpose (Harms, 2013).

Internal conditions refer to the nature of innovation. Core, adjacent or transfor-mational innovation has different nuances at a company depending on the natureof the company and its circumstances, which means that these terms are relative.Therefore, looking at innovation from different levels such as industry, organizationand technological can facilitate the comprehension to how different innovations canbe applied. On an industry level transformational innovation leads to obsolete tech-nology and gives way for new markets and possibilities. Looking at transformationalinnovation from a company’s point of view the focus lies on the company’s abili-ties and state meaning that transformational innovation can mean different thingsfor different companies. Lastly, transformational innovation concerning technologyaffects previous technology and brings it obsolete and affects both the market con-ditions but also all the companies that adopt the innovative technology (Katila,2007). For a company to maintain a competitive market position it is importantthat it works simultaneously with all types of innovation. Studies have showed thatcompanies that launch successful new products work with both cases of innova-tion and these kinds of companies are called ambidextrous companies (Tushman &O’Reilly, 1996).

Another key aspect of the internal conditions is the management style. Top manage-ment style characterizes the short- and long-term strategies of the company, which

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are essential in decision-making processes. Different attributes to consider are ex-ploitation versus exploration, formal planning versus improvisation, autocratic ver-sus democratic decision-making and finally risk-taking. This can be defined as thespectrum that outlines the nature of an entrepreneurial company versus a conserva-tive one. Using the Entrepreneurial Orientation scale EO, a company’s attitudinalorientation to entrepreneurship can be mapped in the attributes innovativeness,risk-taking and proactiveness. This method evaluates the tendency to take riskswithin the company and the orientation of the management can be characterizedwhether they are innovation-focused, risk-takers or opportunity-oriented, leadingto less formal investigations or in contrary to a conservative management that isrisk-averse (Covin & Slevin, 1989).

The external condition is market situation that is determined by the presence orabsence of a dominant design in the market. A dominant design is characterized bytechnological descriptions consisting of co-evolved systems, subsystems and com-ponents that somehow have been promoted and spread to become the reigningarchetype within a given market or industry. The presence or absence of a domi-nant design shapes the market situation to either an era with core innovation or toa turbulent era where different prospects compete (Kask & Linton, 2013).

The associations between these three conditions are important to understand thenature of the company, its strategy and goals and potential business mating possibil-ities. Consequently, this leads to better calculated decisions considering the matingwith startups (Kask & Linton, 2013). Reflecting upon the innovation feature of thestartup and the management type of the partnering company, conclusions can bedrawn that adjacent and transformational innovations are beneficial and attractiveto potential partnering companies when they are aligned with high EO while coreinnovations are beneficial and attractive to potential partnering companies whenthey are aligned with low EO. This is due to the fact that adjacent and transfor-mational innovation requires a more risk-taking, proactive management style thatcan quickly identify potential application areas in contrary to core innovations thatdo not require high risk-taking but instead thrive from a partnership that possessesdeep market and technology-specific knowledge and high administrative efficiency(Kask & Linton, 2013).

Furthermore, by analyzing the innovation features and market situation it can beconcluded that core innovations are attractive to a potential partnering companywhen there is a dominant design present, focusing on finding solutions such as ef-ficiency and specialization. In contrary, adjacent and transformational innovationrequires an environment of development before launching, which can lead to spe-cialized companies having a limited capacity to do so. Therefore, these innovationsare typically beneficial and attractive to potential partnering companies when nodominant design exists (Kask & Linton, 2013).

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Lastly, a successful and natural correlation between management style and marketsituation is usually described that an entrepreneurial management style, meaningthat the potential partnering company possesses a high EO, fits well during an eraof ferment when a dominant design does not exist, due to the fact that during thisexploration is rewarded. An era of incremental change on the other hand, when adominant design exists, rewards exploitation which leads to a beneficial managementstyle that possesses a low EO (Kask & Linton, 2013).

2.2.2 Measuring Innovation Inputs and Company PerformanceMeasuring innovation inputs and outputs is a complex process and it is difficultto establish a best way for doing so, however, it is necessary for managers to havea clear perception of the successful rate of innovation. There are different criteriathat need to be taken into account and one approach to do so is shown in Figure2.5 where a broad range of measures are used and their strengths and weaknessesare explained. Some indicators work better than others, depending on the industryand the sector that the innovation is being examined within (Tidd, 2001).

Figure 2.5: Indicators for measuring innovation performance.

After measuring innovation inputs and outputs, relations between these and com-pany performance need to be established. This can be done in two different aspects:financial and market performance. Financial performance such as profitability, re-turn of investment ROI and share price often concentrate on short-term measuresof performance, which could lead to undervaluation of innovation.

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2.2.3 Measuring Innovation MaturityWhen in contact with a startup, there is a need to understand the current situa-tion of the innovation. This is necessary for the potential partnering company tomap the possibilities of the startup and the potential prospects of the collaboration.

One model to measure the maturity level of an innovation is the Technology Readi-ness Levels TRL, which is originally a NASA model consisting of nine technologyreadiness levels (Fasterholdt et al., 2018). This is a measurement which each techno-logical project is evaluated against and assigned a TRL rating based on the project’sprogress where TRL 1 is the lowest and TRL 9 is the highest (Mai, 2012). TRL1 refers to a product idea that is in the early stages where basic principles havebeen observed, while TRL 9 refers to an idea that has been proven and tested in afunctional environment.

However, the NASA TRL scale only applies for measuring technology performanceand is not suitable for measuring other improvement areas concerning the inno-vation. KTH Innovation Readiness Level (KIRL) is a spin-off model of the TRLmodel taking into consideration five additional areas such as customer, team, busi-ness, IPR and funding (KTH, n.d.). It is used for visualizing the progress in a spiderchart shape displaying the evaluation of different areas such as shown in Figure 2.6.

(a) (b)

Figure 2.6: (a) Spider chart. (b) Customer Readiness Level (KTH, n.d.).

The model facilitates communication and is used for guidance and structure. It usesthe scale 1 to 9 for rating the idea development in the six key areas of innovationdevelopment where customer readiness level is shown as an example in Figure 2.6.A clear definition, milestones and activities to reach different levels for each of theareas is given, facilitating the evaluation of innovation. It supports development bymeasuring progress and status and visualizing it for everyone involved. Companiesoften experience issues with understanding and obtaining an objective assessment

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of the status of an innovation and the risks involved in investing in it. The modelcontributes to facilitating the communication of innovation status, establishing acommon view of innovation throughout the company and defining a clear path forinnovation development (KTH, n.d.).

2.2.4 Defining the Boundaries of UncertaintyLarge companies usually focus on developing their main business in areas such ascost reduction, quality improvement and incremental change of existing organiza-tion. However, in order for the companies to maintain a high competitiveness levelthe focus needs to lie on simultaneously developing transformational innovations.This automatically indicates higher levels of uncertainty that are not measurablewith traditional management practices, which requires development of appropriatemanagerial practices (O’Connor & Rice, 2013a).

A multidimensional framework for measuring the uncertainty of transformational in-novation is required as shown in Figure 2.7. The Probability-Impact matrix containsthree elements along three dimensions that transformational innovation projects en-counter such as category of uncertainty (where the uncertainty was encountered),latency (whether the uncertainty was anticipated or not) and criticality (whetherthe uncertainty is encountered on routine bases or if it is a showstopper). Under-standing the elements of the matrix increases the capability for assessing, prioritiz-ing, and attacking uncertainties as well as reducing the frequency and severity ofunanticipated showstoppers (O’Connor & Rice, 2013a).

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Figure 2.7: The Probability-Impact matrix used for evaluating the uncertainty oftransformational innovation (O’Connor and Rice, 2013a, p.15).

Category of uncertainty outlines where the uncertainty was encountered. One ofthese areas is understanding the technical area referring to how well the knowledgecan be converted into a useful technology platform that is possible to manufacture.Market uncertainties is another area aiming to understanding the promptitude ofapplication markets and customer needs. Since transformational innovation is con-nected to a high risk and requires nurturing during a long time the organizationaluncertainty needs to be considered. This includes examining organizational resis-tance, lack of continuity and persistence, inconsistency in expectations and metrics,and changes in strategic commitment. Finally, the resource uncertainty such asfinancial and competencies need to be considered and evaluated. Most transforma-tional innovation projects spend extraordinary amount of time trying to get holdon investments and competencies that play a crucial role if the project would con-tinue or not. It is common that the companies’ budget is usually not designed fortransformational innovation leading to informal funding for innovation projects andtherefore increasing the risks of failure (O’Connor & Rice, 2013a).

Lastly, the comprehension of the relation between latency and criticality providesthe knowledge of how often the uncertainty is encountered and what is its nature.The relations between these two are shown in Figure 2.8, however it is impor-tant to underline that some relations such as unanticipated showstopper can meana positive outcome for example if the company decides to take a decision forcedby circumstances that turn out to be a good long-term development such as an

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unexpected technical breakthrough or an enthusiastic response from an attractivepotential customer (O’Connor & Rice, 2013a).

Figure 2.8: Relation between latency and criticality (O’Connor and Rice, 2013a,p.14).

2.3 Business ModellingThe supply-driven logic importance of the industrial area has started to fade. Be-cause of a global market and a digitized world, the demands from customers tocompanies have increased and become more complex (McGrath, 2010). Therefore,there is a need for new innovative business models that combine new technologywith main business and allow innovation to prosper (Teece, 2010).

Business models contribute with a frame of delivery goals and provide a platform tocapture value in different innovations. They demonstrate the creation and deliveryof value to the customers by providing logic and data to support the claims as wellas an essential understanding of the company’s financial situation and organization(Teece, 2010). However, there is a lack on a prevalent view and definition of abusiness model and its usage (Gordijn et al., 2005).

Consequently, business modelling can be used in many different areas and usedon a broad spectrum by modification and adjustment (Fielt, 2013). It has alsobeen described as a superior way to analyzing companies compared to traditionalconcepts such as position within an industry (Chesbrough, 2006). Contradictoryto this the multi-purpose of business modelling has simultaneously led to the beliefthat the concept doesn’t have any foundation in theory (DaSilva & Trkman, 2014).This further strengthens the notion of the issue being that there is a lack of a clearand common definition of business modelling.

Beyond the cluster of definitions of a business model there are some definitionsthat are more widely used than others. One of them is that a business model is a ’Acombination of resources which through transactions generate value for the company

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and its customers’ (DaSilva and Trkman, 2014, p.382). Another basic definition isthat a business model is ’A description of how a firm does business’ (Richardson,2008, p.136). Business modelling has also been defined as ’Describing the rationaleof how a company creates, delivers, and captures value’ (Osterwalder and Pigneur,2010, p.14). Lastly, there is study on business model definition resulting in thedefinition that a business model is ’The value logic of a company in terms of how itcreates and captures customer value and can be concisely represented by an inter-related set of elements that address the customer, value proposition, organizationalarchitecture and economics dimensions’ (Fielt, 2013, p.96).

Most definitions involve the creation and capturing of value. The definition ofvalue is also buoyant and is transformed depending on the situation that it is usedin (Fielt, 2013). Nevertheless, the early definition of a business model was derivedfrom the field of strategic management where capturing value is based on a com-pany’s positioning, transaction costs, and a resource-based view (RBV) meaningthat, what leads to a competitive advantage are non-replicable organizational ca-pabilities, but managers would still have trouble to understand which resources toinvest in and how these would contribute to a future competitive position (Mc-Grath, 2001). As a result, applying a business model regarding innovation and itsoutcomes requires a combination and an overall understanding of customer needsand technological trajectories and in order to ensure a competitive advantage itneeds to be differentiated but also effective and provide firstly a conceptual ratherthan financial point of view (Teece, 2010). Therefore, different business modelswith relation to FEI are described, their benefits, disadvantages and usage areasfacilitating a comparison and allowing an analysis whether they can be applied onthe FEI process.

2.3.1 The Business Model FrameworkEarlier studies of business models looked at few success components role in thebusiness model, while later work has been focused on a larger number of elementsand general applications (Morris et al., 2002). However, these studies have beenprocessed and common themes have been identified in order to produce a compre-hensive picture of a company’s business providing a logical, generalized structurefocused on strategy such as shown in Figure 2.9 (Richardson, 2008). The businessmodel is focused on three main components considering value from proposition,creation and delivery and value capture. This model incorporates previously de-rived business models in a simplified structure. It is used as a tool to design thecompany’s allocation of activities giving it a measure of control and ownership. Ifwell-designed it provides the company with an overall picture of the organizationand allows relevant and beneficial strategies to be established with a competitiveadvantage in mind (Richardson, 2008).

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Figure 2.9: The Business Model Framework (Richardson, 2008, p.138).

2.3.2 The Discovery-Driven ModelThe discovery-driven approach is a business model that challenges conventional ap-proaches that lack comprehension of what knowledge a company possesses in com-parison to what it is assumed that it possesses. The conventional strategic planningmeasures success by looking at how close the outcome came to the predictions thatwere made. However, operating in a highly uncertain environment impedes thepossibility to make accurate predictions. The discovery-driven planning approachrecognizes the fundamental uncertainty and controls the costs of the project byhaving as a goal to retain the highest amount of knowledge to the lowest possiblecost (McGrath & MacMillan, 2009).

During the process of developing a statement of success the unit of business fora plan is articulated, a reverse income statement created and the business modelis bench-marked against competitive models and market demand. The process isdescribed by assumptions and experiments needed to be executed in order to testarticulated business models assumptions. When the assumptions are validated thanthe next step is to analyse if it will deliver the desired outcome. By inserting check-points when assumptions can be tested the plan is able to be re-evaluated at eachcheckpoint and decisions and measurement for the future of the plan can be taken

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(McGrath, 2010).

The goal of the discovery-driven approach is to discover the right approaches asnew information is revealed. Some advantages with using this approach is thatexperiments can be done with various business models before any investment isdone and the plan and its key drivers can be properly understood and thoroughlyinvestigated. This allows the companies to get familiar with the new models beforeputting any money in the equation. Another benefit is that the teams are focusedand determined to find ways and test critical assumptions instead of focusing onachieving a financial goal that was estimated and rarely accurate. However, achiev-ing a discovery-driven approach can be very difficult for established companies thatare used to following an already established plan. This issue needs to be overcomein order for the companies to have a flexible mindset and dive in and take advantageof opportunities that are not obvious from the very beginning (McGrath, 2010).

2.3.3 Business Model CanvasThe Business Model Canvas (BMC) is a widely used model considering how a com-pany creates, delivers and captures value (Johnson, 2012). It allows the previousexplanations of the discovery-driven approach and the business model framework tobe put in practice and be visualized in the nine blocks of the canvas shown in Figure2.10 (Osterwalder & Pigneur, 2010). The blocks take into consideration the networkand alliances of key suppliers and partners, distribution through selected channels,key resources and activities, the value proposition to the customers, definition ofthe targeted groups, indirect and direct communication channels, goal of customerrelationship, cost- or value-driven structure and the different revenue streams fromthe customer segments (Osterwalder & Pigneur, 2010).

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Figure 2.10: The Business Model Canvas used for structuring how a company han-dles value (Osterwalder and Pigneur, 2010, p.44).

The business model canvas works as a guidance map to achieve a structured ap-proach to novel ways of value (Trochim, 1989). In order to achieve a successfulbusiness model there are some design techniques that reinforce it such as customerinsights, ideation, visual and textual depictions of elements such as prototyping,storytelling, and envisioning scenarios of the future market and customer (Johnson,2012). Furthermore, the companies’ innovation strategy should be clear and takeninto consideration. One way to divide the innovation strategy in different types isby looking at the technology driver, the need seeker and the market reader (Yannouet al., 2015). The technology driver is obligated to have a resource led approach,the need seeker a customer led approach and the market reader a finance led ora multiple-centered approach. These different approaches require insights in thevarious parts of the canvas.

BMC is an easy to use canvas that offers a structured way of understanding acompany. However, with its simplicity it can also be associated with lack of con-sistency and power because there are many overlaps in the structure caused by thefixed architecture of the model. These overlaps hinder the understanding of criticalresources needed for the activities (Verruel, 2014). Lastly, the model has also beenidentified to perform better on environments where core innovation is the focusrather than transformational innovation (Maurya, 2012).

The thesis is focused on looking for innovation outside of the comfort zone of the

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companies requiring a point of view that incorporates adjacent and transformationalinnovation. Furthermore, it requires a sustainability point of view because of thedomain and the subject company that the thesis is performed at. One way to modifythe BMC model to overcome its hinders, is by using complementary models suchas the Lean BMC and The Triple Layer Business Model Canvas (TLBMC). TheTLBMC complements it with different sustainability aspects and enables feasibleinsights about sustainability such as economic, also described in BMC, environmen-tal based on a life cycle perspective and social based on a stakeholder perspective(Joyce & Paquin, 2016).

The Lean BMC is more useful for a variety of ideas and focuses on getting newenterprises or projects off the ground by providing a problem-user focus (Maurya,2012). The canvas was derived through a combination of the BMC model, the cus-tomers development practices for start-ups and lean manufacturing (Ward et al.,1995). It also goes hand in hand with the discovery-driven approach since the modelis aiming for a continuous learning process that allows a testing environment thatdetermines early on if the business development process is accurate (Ries, 2011).Furthermore, the approach facilitates the risk and the uncertainty reduction (Lochet al., 2008). The canvas can also be used as a tool to systematically test each ofthe 9 blocks of the business model from the highest to the lowest risk (Maurya, 2012).

One of the differences to BMC is that the boxes have a signified order that theyshould be performed and evaluated in. The customer problem-focus of the LeanCanvas is supposed to be more effective in finding solutions to address the customerneed. Similarly, the substitution to key metrics and discovering the unfair advan-tages can lead to a more successful business model by an iterative developmentprocess and comprehension of the business (Maurya, 2012). However, BMC allowsa more strategic placement in the market rather than looking at a single productproviding a more holistic view of the situation.

FEI Canvas

The FEI Canvas is a business model bridging the gap between BMC and Lean BMCwith the purpose of being a brainstorming tool for FEI in large and well-establishedcompanies focused towards start-ups, enabling an independent work with each ofthe elements for teams to be able to focus on one element at a time (Koen, n.d.).The different blocks of the canvas are explained in Figure 2.11 but what makes themodel really stand out from the rest is the fact that there is a risk and assumptionblock allowing further analysis of unknown environments.

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Figure 2.11: The FEI Canvas (Koen, n.d.).

2.4 Conceptual FrameworkDuring this section the most relevant frameworks are presented and conceptualized.In order to facilitate innovation of large-scale companies with external startups aproposed framework is suggested in Figure 2.12.

Figure 2.12: The proposed frame of reference used in this study.

The FEI process will be the base of the study including the NCD process (Koenet al., 2002), knowledge (Nonaka & Toyama, 2003) and translation perspective

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(Christiansen & Varnes, 2007). The different steps allow mapping of business mat-ing potential through the EO scale (Covin & Slevin, 1989), mapping of innovationand strategy through the innovation ambition matrix (Nagji & Tuff, 2012) and themeasurement criteria (Tidd, 2001), clarification of company goals and applicationof open innovation (Tour et al., 2017), visualisation of innovation maturity andimprovement areas through the KIRL scale (KTH, n.d.) and profitability-impactmatrix (O’Connor & Rice, 2013a) as well as a value chain mapping and develop-ment.

Once the FEI process has been established, it can be performed with the help ofa business model combining the BMC (Osterwalder & Pigneur, 2010), Lean BMC(Maurya, 2012), TLBMC (Joyce & Paquin, 2016) and the FEI canvas (Koen, n.d.).It is important to custom-make a business model since all companies have differentstructures and goals (Fielt, 2013), and the process of adjusting the business modelin accordance to the market and the current opportunities plays a big role on thesuccess of FEI innovation.

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Chapter 3

Methodology

This chapter describes the methodology for the research and the approach of theresearch strategy is explained. The data collection process and its analysis are pre-sented and motivated. Finally, the chapter covers how the study quality assurancewas assessed. The aim with this chapter is to show the systematic approach that isused in order to maintain a scientific level of the research.

3.1 Research ApproachThe formation of the research design requires a clear view on which paradigm theresearch belongs to. Paradigms are constituted by different beliefs and are usedto justify the research methods. There exist many different paradigms such asfunctionalism, positivism and interpretivism (Teddlie & Tashakkori, 2009). Thefunctionalist paradigm’s goal is that the research should be able to be replicated inall aspects serving the goal of theory testing and refinement (Shah & Corley, 2006).The positivist paradigm advocates for scientific experiments and observations anddoesn’t take into account concepts such as culture or opinions (Cibangu, 2010). Incontradiction to the positivism paradigm, the interpretive paradigm possesses thegoal that results are representative of the situation studied and that different viewsand interpretations are taken into consideration enabling plausible theory develop-ment (Shah & Corley, 2006).

The research design needs to be decided on an early phase of the study dependingon the nature of the research question. There are different approaches to the re-search design such as deductive, inductive and abductive approach. The deductiveapproach is designed to solve questions that aim to test hypothesis and revise theory(Woiceshyn & Daellenbach, 2018). An inductive approach is aimed to make em-pirical observations of interest and thereafter to form general concepts and theoriesbased on them (Woiceshyn & Daellenbach, 2018). Lastly, the abductive approachis a combination of the two previously mentioned approaches, providing a bridgebetween theory and practice. It allows interpretations of the real world, application

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CHAPTER 3. METHODOLOGY

of former research and usage of evidence to form hypothesis (Urdari & Tudor, 2014).

For this study, the interpretive paradigm with a deductive approach is suitableregarding the research question. The reason for this is that the study requires theinterpretations of the interviewees since innovation can be perceived differently fromdifferent point of views. Furthermore, the deductive approach is chosen because thearea of the study has well-known theory, but the collaboration of innovation be-tween large-scale companies and startups has not been well-studied. An empiricalstudy was conducted to gain understanding on the sourcing process of innovationin Europe and how to improve its output. It also aims to gain more insights on howthe FFE process can be linked to commercialization. Due to the fact that the FFEprocess is scattered and not organized or monitored there is a lack of knowledgeand information on how to improve its outcome.

3.2 Research StrategyThere are two types of research strategy divided into qualitative and quantitativeresearch. Theory process testing requires rich and complex knowledge that qualita-tive research can provide. The benefits of this type of research are that it facilitatesthe comprehension of processes, discovering of new correlations and mainly that itallows the social context influence to be displayed and accounted for in the calcu-lations. Simultaneously, quantitative research is more suitable when there is largeamount of data that need to be measured and analyzed (Shah & Corley, 2006).

The research requires a deep understanding of the FFE process. It is thereforenecessary to undertake a qualitative research strategy enabling compound mappingof the innovation process and providing essential information about the outline ofthe business model required in order to answer the research question. The businessmodel development has been based on interpretations of the sourcing process andthe successful key aspects of it as well as the key actors of the company’s long-termstrategy.

3.3 Case StudyA case study is considered a useful tool in the critical, early phases of a new man-agement theory, when key variables and their relationships are being explored ofa real management situation. They are performed in close collaboration with thepractitioners and are ideally suited to contributing to managerial-relevant knowl-edge. In order to assess a rigorous case study several validity and reliability criteriahave been taken into account such as internal validity, construct validity, externalvalidity and reliability (Gibbert et al., 2008).

A case study can be either explanatory, exploratory, or descriptive. Explanatory

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case studies are used in case there is a specific question that needs to be answeredthat is too complex for experimental strategies, while an exploratory case study isused when the situation is not clear and there needs to be an exploration to gainknowledge and understanding of it (Yin, 2014). Lastly, descriptive case study de-scribes a phenomenon that has already occurred (Baxter & Jack, 2008).

An appropriate tool for this research is chosen to be an exploratory case studybecause of the exploratory and mapping nature of the research question. In orderto meet the criteria a research framework from previous literature through theorytriangulation and pattern matching has been derived. Furthermore, the data hasbeen collected through carefully selected interviews, resulting in a report protocoland interview transcripts. The goal of the research is to contribute to the subjectcompany through a tailored solution which resulted in presenting a solution in twoparts, firstly, through qualitative interviews and secondly, through development of atailored framework derived through a deep analysis of the company’s current stateand future strategies and goals.

3.4 Data CollectionA qualitative research doesn’t contain only one approach but instead it includes anumerous set of approaches. As a result, the qualitative research methods provideresearchers with diverse philosophies and tools. However, one pitfall is usually theamount of collected data and if this exceeds the possibility to analyse and manageit than it can lead to confusion and disorganization (Baxter & Jack, 2008).

To fulfil the purpose of this research the methods used for data collection were di-vided in a literature review and a qualitative empirical study. The literature reviewof relevant theory is collected through documentation and internet-based informa-tion, while qualitative study consists of interviews and participant-observations inorder to get a holistic view of the phenomenon being studied.

The majority of the data collection was through interviews shown in AppendixA and Appendix B because this method was considered most appropriate to get theresults required. The interview questions were derived from the frame of reference,considering their relevance and contribution to the subject and the research ques-tion, and divided in company and startup specific questions. The duration of theinterviews was one hour long and the design of them was semi-structured, referringto the interview questions being partially predefined but still have the possibilityto change in case it is required (Bryman & Bell, 2011). However, in order to main-tain a high quality of the semi-structured interview it is important to have a cleartopic in mind to not differ from the subject and still keep a red thread throughoutthe interview (Edwards & Holland, 2013). It was considered of high importance toconduct the interviews both internally with the actors corresponding to the divi-

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sions of interest to get an understanding of the company and its future goals, aswell as externally with actors possessing necessary knowledge and experience in thesubject. Therefore, the interviewees were chosen within areas such as innovation,strategy and management. The 28 respondents were divided in different sectionsas shown in Figure 3.1 to facilitate the comprehension of the interviews conductedand the gained information in different areas. Most of the interviews were carriedout through video conference but when possible, they were carried out in person.

Figure 3.1: Mapping of internal and external interviewees.

The internal interviewees were somehow participating in the innovation and R&Dprocesses at the subject company by being the drivers of innovation or its strategy,while the external actors had long experience within innovation and FEI work. Sev-eral interviewees within the same departments were interviewed in order to reducebiases and to get a more authentic overview (O’Connor & Rice, 2013b). More-over, contact with top management was required to get an extensive overview ofthe company’s goals and requirements because the overall culture and behaviour isset at the top level (Cooper & Kleinschmidt, 1987). In order to have a successfulFEI process it is important to have clear criteria, evaluation methods, goals anddeliverables therefore the interview questions were focused on the current ways ofdriving innovation, what the interviewees found important about innovation andhow they saw the innovation develop at the subject company (Koen et al., 2002).

Complementary to the qualitative study a study of previous research was conductedto explore previous literature and findings. Articles, books and e-books mainly re-lated to innovation, FEI and business models were examined and provided insightsin established business models, examples of successful FEI processes and the mainattributes to achieve a prospering innovation culture within a company.

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3.5 Data AnalysisData analysis is an important phase after the data collection, which should beperformed simultaneously and in a structured way because of the big amount ofdata collected. Most of the interviews were recorded and in order to make the datamanageable, the qualitative interviews were summarized directly after the interviewand coded in different sections that are relevant to the theoretical models presentedabove. The coding included many codes to start with that with time were reducedto 5 different categories such as strategy, evaluation, results, innovation manage-ment and improvements while similarities between the codes emerged. Processesand short answers were displayed with graphs, tables and pictures, which facilitatedthe analysis and the comprehension of the data. More complex data was displayedand summarized in key points.

The analysis of the data was also conducted during tight communication with thedepartments of the subject company in order to get the correct view of the com-pany’s current state and the usage of the data in the business model was advocatedby key persons at the company. Because of this, biases could arise, but this could beavoided by having a structured research design and gaining different perspectives onthe subject. Therefore, in order to reduce biases and increase reliability an externalpoint of view was taken into consideration by performing interviews with startups,external organizations and companies. In an effort to further minimize biases, thedata from the relevant literature and qualitative, empirical study was analysed con-tinuously to be able to achieve parallel results (Carter et al., 2014). The sourcesused were analysed and compared to other sources to increase the reliability andvalidity of the thesis.

3.6 Quality Assurance & EthicsQuality assurance was looked upon considering both the theoretical framework andthe conducted qualitative interviews. There are different aspects that induce qualitysuch as internal validity, construct validity, external validity and reliability (Gibbertet al., 2008).

Internal validity refers to the data analysis phase and there exist different waysto reach it (Yin, 2014). During the thesis the internal validity was ensured by con-ducting a clear theoretical framework that was the base for the information and theanalysis of the thesis. Multiple perspectives were ensured by comparison of differenttheories and internal and external interviews. Another aspect taken into consider-ation was matching of similar patterns performed during the theoretical frameworkand the coding of the interviews.

Construct validity refers to the data collection phase and can be ensured by a clear

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chain of evidence and triangulation (Gibbert et al., 2008). During the thesis a clearchain of evidence was ensured by providing a clear description of the method andthe collected data, which enables a replication of the thesis and ensures understand-ing of the process from the research question to the final conclusions. Furthermore,different point of views were incorporated in the thesis and taken into considerationfor example by performing interviews both at the large subject company but alsoat the startups.

External validity explains the generalizability of the thesis, which in this case isprohibited by the fact that the study was performed at one case company disablinga cross-case analysis (Gibbert et al., 2008). However, an attempt to improve theexternal validity of the thesis was made by providing details on the case study con-text and a clear rationale for the case study selection.

Lastly, the reliability of the thesis is linked with transparency and replication (Gib-bert et al., 2008). A clear description of the theoretical framework and the methodensured transparency and replication of the thesis. Moreover, the theoretical frame-work was described from different point of views considering different sources tocompare information and its quality. This led to reliability and acted as a base forthe analysis of the theoretical framework and the creation of the business model(Yin, 2014). The reliability of the sources was investigated to maintain a high qual-ity and the fact that the sources combine qualitative with quantitative data assuresa high quality. The quality of the input was also assured by the number and diver-sity of the interviews conducted and the risk of subjective data was minimized byinterviewing different people in the same departments to get a broad point of view.The interviews were viewed and examined with equal methods and the questionsposed were as neutral as possible to avoid affecting the answers.

The ethic aspects were taken into consideration and all the interviewees were askedin advance for their affirmation to conducting a recorded interview and only noteswere if that method was preferred by the interviewee (Ngozwana, 2018). Confiden-tiality and anonymity aspects were taken into consideration by keeping the inter-viewees anonymous and removing all confidential and sensitive information fromthe thesis (McMillan & Schumacher, 2006). Furthermore, misunderstandings wereeliminated by key persons looking at and correcting the collected data from theinterviews. Regular meetings were held with several internal stakeholders of theproject in the company to align the work with other internal divisions, therefore,the ethics perspective was taken in consideration during the analysis of the dataand the research maintained a high quality throughout.

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3.7 LimitationsThe subject company is going through a transition phase internally regarding in-novation, therefore, the information is collected considering the prior situation atthe subject company. In addition, sensitive information regarding names, the com-pany’s strategy and detailed data has been concealed due to confidentiality reasons.The thesis was conducted during the Covid-19 pandemic complicating and affectingthe process. Because of this, almost all the meeting and the interviews conductedthrough video conference, limiting the observation possibilities and the personalcontact and information sharing with the supervisors, the interviewees and the sub-ject company.

The semi-structured interviewees prohibit the exact same questions to be posedto all the interviewees, leading to a higher risk of misinterpretations that couldhave affected the result of the thesis. Moreover, because the number of interviewswith startups and external organisations was lower than the ones made internallyaffecting the results of the thesis and prohibiting an equal view of the big and thesmall companies.

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Chapter 4

Case Company

During this chapter, the subject company’s current processes and structures aremapped and explained. This is important to gain understating of how the results ofthe thesis should be formed.

The structure of the subject company is composed by group level and divisionactivities. Decisions about innovation made on group level are comprehensive forall divisions and manage the divisions on an overall level. Currently the companyhas an innovation goal corresponding to 15% of the revenue consisting of new prod-ucts. Interviews on group level were chosen to be conducted within HR (becauseof the managing of the accelerator program), IT and Digitalisation (because of themanaging of open innovation platforms and a well-defined structure for handlinginnovation), Strategy (in order to understand the overall strategy and goals of thecompany considering innovation), Innovation and R&D (in order to understand theoverall management of the innovation) and M&A (in order to understand the ca-pacity of the company and the methods used for investing in or integrating startups).

The focus of the interviews considering the divisions was on Division A and Divi-sion B. This served the purpose of the research since Division B has a well-definedinnovation and R&D management after a reorganization of the division, while ex-amining Division A is the target of conducting the case. In addition, the interviewswithin Division A were conducted on departments related to innovation such asStrategy, Innovation and R&D and NPPD.

4.1 Group IT and DigitalisationGroup IT and Digitalisation are responsible for setting up a new digitalisationbusiness and startup engagement covering all the divisions. They offer funding andhelp as consultants with the goal to boost digitalisation further for all divisions.Another task is to create educational material about emerging technologies andto boost talent development. One platform that digitalisation uses to introduce

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CHAPTER 4. CASE COMPANY

external innovation to the company is a venture-client alliance made of 30 Nordiccompanies. The goal of this platform is to screen the market for relevant startupsthat match with the themes introduced by the different companies. The process ofthe platform is shown in Figure 4.1.

Figure 4.1: The process of one cycle with the open innovation platform.

The set-up phase duration is one month where the process consists on finding spon-sors, business leaders, marketing and formulation of concrete criteria for what isbeen looked for. The criteria and the themes are introduced to the public throughopen innovation. In the next step a long list is created leading to the short listthat eventually results in the phase of 3 startups being chosen for every case. Thestartups present their initial ideas on day 1 of the process and present an improvedproposal on day 2. Thereafter, the decision is made internally about which startupsto continue collaboration with.

As mentioned above the digitalisation team also provides the company with ed-ucational material about emerging technologies. One of these materials covers theprocess of evaluation and performance of transformational innovation. Accordingto this material the process of handling transformational innovation needs to bemanaged in cycles where at each cycle the project is reconsidered and decisionsabout project continuation are made.

4.2 Group HRThe accelerator program is an HR initiative and therefore conducting interviews inthis department is of relevance for the research. The accelerator program shownin Figure 4.2 is an executive program with its first objective: Learning how towork with startups and creating change agents to support the subject company’sinnovation transformation. The second objective is to create collaborations withthe relevant startups.

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Figure 4.2: The process of the accelerator program.

During the set-up phase an open innovation campaign is formed with a formulationof the theme and marketing of the campaign. The next phase is the long list phasewhich is in turn reduced to a short list derived with the help of coaches chosen bythe subject company. In the last step of choosing startups, presentations are holdfor both coaches and members from group level, which result in 6 chosen startupsworking together with 12 accelerators for 12 weeks where executive training is per-formed focused on customer centralization, innovation, digitalisation, leadership,entrepreneurship and sustainable business.

4.3 Division ADivision A is divided in Innovation and R&D and NPPD to be able to managethe innovation flow. The sourcing process of Innovation and R&D happens on dif-ferent fronts and all the ideas are collected in a front-end funnel, where a conceptstudy and a pre-study are conducted. The ideas in the concept study are evaluatedthrough internal discussions about strategy alignment, while in the pre-study thefocus lies on evaluating the business model and estimating the technical and busi-ness potential.

Furthermore, the current state of communication and innovation sharing betweenInnovation and R&D and NPPD are shown in Figure 4.3. NPPD is divided in 5departments that are strategic projects operating towards commercialization. ForStrategic Flagship 1 and Strategic Flagship 2 the ideas come mainly from sourcingperformed at Innovation and R&D and it is a unilateral collaboration meaning thatthe market is not screened to understand needs and no requests are made to Inno-vation and R&D based on that. On the contrary, at Strategic Flagship 3, StrategicFlagship 4 and Strategic Flagship 5 interaction with Innovation and R&D is doneon demand by sending requirements. Since the projects are already decided andthere is no more capacity to undertake new projects, requirements are mostly aboutcomplementary technologies that can help the development of the current projects.

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Figure 4.3: The screening processes of Innovation and R&D and NPPD as well asthe interaction in-between.

4.4 Division BDivision B is a young division targeting a broad scope of innovation and focusedon understanding what long-term commitment would overlap or not the currentbusiness. 5/7 focus areas are related to transformational innovation and currentstate of innovation 90% is new business creation, while 10% is core innovation. Theinnovation work is divided in 3 pillars shown in Figure 4.4 to be able to understandthe partitioning of different innovation types and where to put the focus. The firstpillar shows the main business which is the commodity and the focus is productand operational excellence. The second and the third pillar represent adjacentinnovation where the existing mills are being expanded to new businesses and thethird pillar represents transformational innovation where breakthrough innovationis being developed.

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Figure 4.4: The 3 pillars illustrating the partitioning of different innovation types.

Furthermore, after the evaluation of how far the innovation is from main business ateam is put on the project working with sprints looking at factors such as businessopportunity and technical assessment. Thereafter, if the project fulfils the criteriaanother team is assigned to work on the project with a circular model as shownin Figure 4.5 that uses NPPD stage-gates as guidance but with a circular mindsetto avoid taking value out of the idea. The circular model emphasizes that foreach stage-gate, all other stage-gates in the past must be rethought and changed ifneeded based on the new gained knowledge. An example is starting the process byinvestigating if there is market potential and realizing stage-gate 1, which leads tothe team investigating if the idea is executable and reaching stage-gate 2. However,at this stage the last stage-gate must be reconsidered and changed before enablingthe process to move forwards to the third stage-gate and once more reconsider boththe previous stage-gates.

Figure 4.5: The circular model of NPPD.

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Chapter 5

Interview Findings

This chapter gives an overview of the interviews conducted and where the focushas been while developing the business model. The main focus for this study hasbeen to extract information internally and externally concerning the success factorsof FEI and how this is processed the best within the company to bring the highestoutcome. The most important and relevant findings are presented and compared inconsideration to the coding of the interviews and the 5 different categories derivedsuch as strategy, evaluation, results, innovation management and improvements.

5.1 StrategyStrategy plays a crucial role on understanding the subject company’s future visionand goals related to innovation. Therefore, all the internal interviewees respondedon this matter and gave their idea of what strategy has been implemented. Theinnovation strategy is initially formulated on group level to thereafter, be translatedinto division level.

Group Level

In group level the focus of the innovation strategy is sustainability and bio barriersaccording to interviewee 1 and 2. The reason for this is the increased demands fora more sustainable environment and a more responsible consuming activity posedby customers and because the major income for the subject company is producedin this area. All the interviewees mentioned the subject company’s innovation goalof 15% of the income created by new products implying younger innovation than 3years, which is set high to boost innovation thinking, performance and knowledge.Interviewee 3 also mentioned that the subject company is trying to focus moreon collaboration with startups, therefore, a development of a venture platform onM&A has begun as well as the formation of a sourcing council that processes andcollects ideas. The interviewee also mentioned that ’The direction of innovationmanagement is shifting from being very focused on up-scaling and improvement ofbusinesses to being focused on gaining a different value from new technology and

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CHAPTER 5. INTERVIEW FINDINGS

innovation. In addition, all the interviewees mentioned that the subject company’sgoal is to broaden the boarders of innovation and look outside of the company tocatch talent. All the interviewees also mentioned that activities such as the accel-erator program are important on the realization of the innovation goal. Anotherimportant strategy goal is becoming more digitized throughout the company. Thedigitalisation is using the venture-client model and focusing on transformationalinnovation. Open innovation is also being widely practiced by group IT & Digi-talisation and Division B. Lastly, the interviewees in Group Strategy also mentionthat the future of the strategy is predicted to be more precisely set on group levelto avoid having a too broad innovation agenda and to implement a smarter way ofusing resources.

Division A

In Division A the main goal of the innovation strategy is to gain knowledge aboutways of cooperating with startups in order to improve speed and agility, createvalue, control the direction of the universities focus areas as well as recruitmentof specialists. The goal is to grow to new areas and expand the current business.The overall opinion of the interviewees is that the subject company doesn’t have anyfocus on acquiring startups but collaboration is mainly being held through coachingand co-creation with the impression that the subject company appreciates externalinnovation only to proceed it internally after a certain maturity phase. This is,however, contradictory to the emphasizing by interviewee 3 about the new ventureplatform supporting acquisitions of startups. Furthermore, there is a numerical goalabout how many startups that it is required to be in the sourcing phase mentioned byinterviewee 13, however, this goal doesn’t seem to be broadly applied or understoodby the other interviewees. The overall strategy of Division A is based on 6 focusareas where one is continuously getting more attention than the others: Replacingplastics in packaging to for example bio barriers polarizing with group strategy.Additional goals in this division are that products should be tried early on in themarket to get feedback.

Division B

According to the interviewees in Division B, innovation is crucial for the companyleading to 30-40% of the budget being spent on innovation progress. Their focusis on transformational innovation, having 5/7 focus areas related to that as well asunderstanding what long-term commitment overlaps with current business. In orderto actualize their strategy, Division B performs open innovation just like Group IT& Digitalisation, which they consider to be intensifying with time.

External Interviewees

Interviewee 23 mentions that Vinnova, which is the governmental organisation thatfunds innovative startups and organisations, have inserted the goal that everyone

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searching for funding needs to have a sustainability agenda. This goal is backed upby the interviewees at KTH Innovation, which is a university organisation helpingideas reaching the market, as well as the interviewee at Rise, an organisation thatperforms testing for small and large companies, mentioning that changing plasticsto sustainable material is a very interesting area. Furthermore, Telia explains thattheir goal with innovation is to enhance and spread knowledge about innovationthrough coaching instead of already set models such as accelerators and incubators.This allows them to implement a flexible model that helps startups during a longerperiod of time.

5.2 EvaluationThis section explains the evaluation methods that are used during decision-makingof a new innovation. It is important to understand the current process of evaluationin order to understand the company and to be able to apply ways of thinking in thebusiness model.

Group Level

In group level all the interviewees have mentioned that it is important to under-stand what category the innovation under evaluation is regarding core, adjacent ortransformational innovation and that it is necessary for the innovation to belong tothe main business. The interviewees mentioned that 95% of the innovation chosenfor collaboration is able to be launched and able to be scaled up within the next 5years meaning that the focus lies on startups that have a Minimum Viable Product(MVP). There are indications of usage of TRL, but the boundaries of its usage arenot clear throughout the company. Some common attributes looked at in Grouplevel are shown in Table 5.1. During the evaluation phase on group level, IT & Dig-italisation is differentiated from the others by having investment money availablebefore the sourcing of startups in order to decrease time to value.

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Table 5.1: Different evaluation attributes during startup collaboration.

Evaluation Criteria

• Team experience and attitude

• Maturity and end user validation

• Ability to finance themselves

• Strategy fit

• Culture fit

• Clear resource vision

• Quality

Division A

During the sourcing process in Division A the first screening of ideas is based on the6 strategy focus areas shown in Table 5.2 translated from group to division strategy.During the first screening the ideas are divided into different portfolios depending onthe maturity of the startups considered in the TRL scale. The screening process isa thorough, time consuming process where the ideas are screened by different partswithin the company through meetings with different interested parts. Interviewee11 mentioned although that there is no need for screening startups, contradictingthe other interviewees, since most startups come from universities and the subjectcompany has a good view of what is relevant there. Interviewee 12 mentions thatprojects with universities are long-term and can go on for up to 10 years. Becauseof the broad strategy, changes of it usually don’t affect the procedure of researchprojects, but lack of quality is the main reason to do so.

Table 5.2: The 6 different strategy focus areas of Division A.

Focus Areas

• Source reduction

• Circular economy

• Replacing plastics

• Design solutions

• Barrier solutions

• Product Excellence

• Digitalisation

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In NPPD as explained in earlier sections some departments put demands on Inno-vation and R&D, while others receive an innovation pipeline. The ones who receivean innovation pipeline evaluate the ideas and determine if there is possibility tocommercialization. In the other departments, ideas received from Innovation andR&D are only on demand meaning that these departments scout the market andunderstand customer needs before searching for a solution.

Division B

Division B uses open innovation to scout for ideas, enabling targeted solutions. Be-yond this search there is also a structured search for innovation at universities doneby a team. However, they don’t focus on knowledge creating innovation because ittakes too much resources and time. The evaluation criteria are shown in Table 5.3.

Table 5.3: The focus areas of Division B while evaluating ideas.

Focus Areas

• Sustainable

• Related to the main business

• Executional

• Business opportunity

• Technical assessment


At KTH Innovation match making between startups and big companies is performedin many different ways such as reverse pitching and Pre-incubator. At Rise, thereexists a 3-year long program that allows startups fitting with the theme to testtheir ideas in collaboration with big companies. The evaluation decisions for KTHInnovation and Rise are based on the TRL scale or variations of it.

At Telia, however, innovation is mainly caressed through their coaching programwelcoming 3 startups every year. The focus of the coaching program is to supportthe startups with coaching and co-creation. No active sourcing process is performedbecause of the good reputation that the company has within the startup world, al-lowing them to wait for startups to apply. Some of Telia’s evaluation criteria areshown in Table 5.4.

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Table 5.4: The focus areas of Telia while evaluating ideas.

Focus Areas

• An investment plan must exist

• MVP

• A match with main business

5.3 ResultsThis section presents the current results of the work done within innovation. Thisis important to understand in order to get a comprehensive picture of the processesand their outcome as well as understanding the growth capacity.

Internal Interviewees

According to the interviewee 4 ’The accelerator program has induced an open mind-set of the people involved in the program and the link to innovation has improvedwithin the company through the change agents’. Change agents are the people ofthe company involved in the different accelerator processes. Interviewee 5 and 6mentioned that IT & Digitalisation drive an open innovation platform, which con-tributes with a convenient database of all the startups and to getting fast resultsbecause of the structure and the fact that funding exists before collaboration. Bothprograms have had a good outcome of startup collaborations and beyond this theinterviewees mention that these activities contribute to a broader network and chan-nel quality by having concrete themes. In accordance, an M&A process for smalleropportunities is being developed to quickly go ahead with investments.

In Division A, interviewee 8 mentions that a lot of new technology is screenedthrough sourcing of startups. However, the issue is that there aren’t many goodopportunities and it is difficult to proceed with identified opportunities within theorganisation. In addition, the results of Division B are equal to Division A.


Interviewee 21 mentioned a couple of positive results after the acquisition by the sub-ject company on the development of the startup. The competencies of the startupwere preserved and the same group of people continued to work on the project.The positive effects of the acquisition are mentioned such as easier scale up strategyafter investment, faster development, increased focus and a clear time plan. Ac-cording to interviewee 23 the startup trend has increased the last 5 years, however,there is no raise in the amount of startups within material development. The major-ity of startups come from universities and the success rate for all the startups is 80%.

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KTH Innovation gets 300-400 ideas every year where 40% come from researchersand 60% come from students. The success rate, meaning that they get a partnershipor become a company, is 40-45 startups in total every year where 5-7 of them areresearchers. Moreover, 30 ideas every year get to be a part of the Pre-incubatorwhich has a success rate of 86%. The interviewees also point out that TRL 1-5often leads to coaching from companies, while higher values lead to collaborationof different kind. The results at Rise is that 50 external ideas are tested every yearand TRL 5 is when the ideas start to get interest from companies. According to in-terviewee 27 the future for materials is sustainable barrier technology and reducingone-time plastics but since the competitors are also very active in this area it posesdifficulties to the market.

The coaching process has delivered 100% success rate and the startups have ei-ther continued development on their own or continued the collaboration with Telia.It has also led to the activation of 50-100 people within innovation at Telia. Thereason to this success is, according to interviewee 28 that ’Relationships are builtwith the startups, making sure that the right people with competence and expertiseget in contact with them and the co-creation leads to faster, reliable results’.

5.4 Innovation ManagementThis section covers the handling and managing of innovation and the limitationsthat exist because of the flexible and inconstant environment where innovation oc-curs. There are 7 attributes identified as the key drivers of the issues encounteredduring management of innovation throughout the subject company and the exter-nal interviewees. These are mindset and cultural difference, strategy, systematicapproach, communication, long-term and scientific innovation, comprehension ofeffort required to reach different TRL and lack of startups. In the following sectionsthe opinions of different interviewees are explained in more detail.

Group Level

Mindset, cultural differences and strategy at the subject company has shown to becommon obstacles while managing innovation. Interviewee 7 mentioned that ’Thecurrent mindset is that innovation should be produced in-house to maintain highquality’. There is also a lack of understanding the cultural differences that exist be-tween the subject company and a startup. During the interviews, a lack of coherentand a clear innovation strategy was mentioned, referring to the strategy on grouplevel only playing a role as guidance.

External innovation implies a high risk, which requires a systematic approach toachieve a good outcome. No proper tools to measure the risks exist and there is alack of specific venture decision process for startups, which leads to no systemat-

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ical approach existing for comprehension of external investments and acquisitionsof startups. One of the challenges during integration of a startup is to take intoaccount their needs and to not suffocate them by bureaucracy and stiff processes,which is difficult to perform when a lack of systematical approach exists. The ac-celerator program is a well-planned program, however, there is a lack of systematicapproach after the demo day in order to manage the startups and the change agents.

Another obstacle to overcome is the lack of communication between the divisionsleading to competition among them and lack of trust. There is no proper com-munication about the statuses and processes of the divisions because each divisionhas their own innovation departments leading to repetition and overlapping of workas well as competition over technology and prudence of what information that isshared internally. This leads on its turn to divisions not being interested in de-veloping general innovation because they are too focused on developing their owninnovation agenda. The lack of communication within departments in Division A isleading to innovation coming out of the pipeline from innovation and R&D that isnot required from NPPD and is not applicable in the market. The lack of willing-ness to share information is also leading to prudence on what information is sharedexternally, prohibiting open innovation and leading to sharing themes externallythat are too broad, which causes drop on quality.

Long-term innovation is not prioritized because of lack of resources, comprehensionof the difference between a research question and a product development or com-mercialization process and the expectation that innovation should generate moneyfor the company as soon as possible. Currently, there is a lack of comprehensionabout the amount of effort needed to develop an idea reaching different TRL levels.What also makes this process more difficult is that the collaboration with startupsis complicated and they have too high, untested ambitions. Some of the startupsare careful with giving information, not having enough motivation and not beingable to be open minded. Lastly, a lack of startups in materials is mentioned bygroup strategy, which is reinforced by other interviewees at the divisions.

Divisions

At the divisions a change of mindset and the understanding of cultural differencesare intertwined with strategy and systematic approach. The broad strategy is men-tioned as a prohibiting attribute to sourcing of innovation and more specific strategyis required for long-term innovation. Continuing evaluating the same attributes asabove the lack of systematic is mentioned by the interviewees as an obstacle pre-venting flexible and agile startup sourcing and having an adequate comprehensionof how much effort should be put in each startup. The limited resources and thecultural difference between a small and a large company requires a systematicalapproach to overcome issues such as agility. Getting to understand division A indetail, the lack of a systematic approach and a broad strategy leads to Innovation

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and R&D producing a pipeline from a technology perspective not relevant to NPPDrequirements or their capacity to handle it. This is partly the result of no propermarket screening being done currently because of lack of time and resources. Themarket screening performed at current state is through contact with customers, butone difficulty is to understand the customer demands and make the wish lists intoreal, executable ideas.

While innovation and R&D refer to communication on general manners, NPPDpoints out several communication issues. The main issue is that NPPD has nomore capacity to work on new projects. Interviewee 14 mentioned that ’Sourcingof startups towards NPPD is not useful unless it is required for a specific cause’.However, innovation and R&D has continued to produce a pipeline of ideas thatcan’t be used because pilots of the previous ideas are getting commercialized so newsimilar ideas would lead to cannibalism. This leads on its turn that none of the ideascan be taken to the market and many concepts proposed are not interesting fromcustomer perspective. Furthermore, the communication and sharing of resourceswithin NPPD is lacking, presumably because of the difference in maturity of theprojects.

The lack of long-term innovation and understanding of scientific research is ex-plained from Innovation and R&D as a difference between the timelines and a lackof specific goals for long-term innovation. The interviewees also mention that theprojects take a long time to develop leading to the fact that when they are ready,the company’s goals and structure might have changed, therefore, a specific strategyand goals should exist for this kind of development.

The different interpretations of TRL are mentioned as an issue within both Inno-vation and R&D and NPPD. The maturity of the projects is often misunderstoodbecause of lack of knowledge and the exaggeration from the startups, leading tolack of quality, too expensive or no ability to scale up. There is no broad under-standing of the resources needed to take care of startups and this understanding isprohibited by the fact that no startups are very different, leading to no possible,common criteria for evaluation.

Lastly, there is a mutual comprehension that there is a lack of startups in ma-terials and material technology in Europe because of factors such as smaller marketand focus on digitalisation. Since developing new materials requires a lot of re-sources the materials solutions offered often have too low TRL. In order to get incontact with more relevant startups open innovation should be used. However, openinnovation is difficult to perform because of confidentiality reasons and should neverbe used for strategic projects.

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During the external interviews one point that was mentioned by everyone was thedifference in culture between small and big companies, which leads to a culturalshock during collaborations. Furthermore, the fact that companies don’t take risksto do collaboration with startups could have to do with the encountered lack ofsystematic approach and the effort needed to reach different TRL. Interviewee 21mentioned that ’The companies request an immediate scale up after collaborationand a set price for the product, which is not possible for the startup to deliver ’. Othercomplications considering startup collaboration is that the industry is extremelysmall, traditional and expensive, which results in few existing startups.

5.5 ImprovementsThis section addresses the innovation management encountered above. The im-provements are presented in a list format in Figure 5.1. The most important findingsare introduced as different attributes of improvement.

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Figure 5.1: List of the most common improvement attributes encountered.

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Chapter 6

Analysis and Discussion

The aim with this chapter is to analyse the findings considering the research ques-tion: How can large scale companies expand their innovation activities by collabo-ration with external startups? The findings of both theory and interviews are usedto answer the following sub-questions that lay the base for this research.

6.1 The Innovation ProcessThe first sub-question defined to disintegrate the research into smaller, manageablesessions is What are important factors of success in the sourcing process facilitatingthe linkage with commercialization of innovation and how can they be evaluatedand measured? Analysing the conducted interviews enables a comparison to thedescribed theories and a comprehension of the current state of the subject companyallowing analysis and detecting improvement areas.

6.1.1 Success Factors and Evaluation ProcessAfter analysing the theory and interviews it is clear that the subject company usesthe process perspective of FEI management to approach innovation in order tominimize risks and improve efficiency (Martinsuo & Poskela, 2011). A Pre-phasezero and one are performed during the evaluation, however, there is a lack of struc-ture and execution power in the evaluation and measuring of the innovations andfront end activities suggested in the theory to facilitate decision-making (Khurana& Rosenthal, 1997). Success criteria to improve the process perspective are mappedand discussed in the following sections in relation to the criteria on Table 2.2 (Khu-rana & Rosenthal, 1997).

Project Definition and Planning

Front-end project definition and planning describes obtaining clear priorities andplanning structure (Khurana & Rosenthal, 1997). There needs to be a match be-tween expectations and outcome as well as execution power and structure to reach

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CHAPTER 6. ANALYSIS AND DISCUSSION

the goals that are set. Some interesting criteria identified for this area are the mind-set and the cultural differences encountered by the subject company. The culturaldifference between small and big companies could lead to a culture shock and in-efficiency, while obtaining clear priorities and planning depends completely on theknowledge about innovation and its definition. The way that innovation is perceivedenables a certain innovation path for the company and sets the expectations leadingto success. In order to change this a big network of innovation is required to gainmore knowledge about the subject and its driving factors as well as a realization isrequired that driving innovation is expensive but worth to minimize lead time andto remain competitive.

In Front-end project definition and planning the business mating is very impor-tant. The theoretical framework for business mating provides a base and criteriafor the match-making process (Kask & Linton, 2013). Firstly, the internal condi-tions such as innovation features and the management style of the subject companyneed to be analysed. The ambition of the subject company considering the inno-vation features is to be an ambidextrous organization according to interviewees 8and 19 since these are the most successful at launching new products (Tushman &O’Reilly, 1996). This means that the subject company should focus on all the differ-ent types of innovation boosting performance on core, adjacent and transformationalinnovation, concentrating more on the latest. Analysing the style of the manage-ment determines whether the subject company is a match for a certain partnership.EO is a useful scale to determine the management style of the subject company asshown in Figure 6.1 (Harms, 2013). The company’s management is described bythe three different terms determining how innovation-focused, risk-taking focus oropportunity-oriented focus the company is. The subject company has a high innova-tion goal of 15% mentioned by all the interviewees, indicating that the managementis very focused on innovation. Although they are innovation-focused, the actionstaken within innovation are not reflecting this by not having accurate processes ofmanaging startups or open innovation, leading to a low risk-taking focus. However,the subject company has a higher proactiveness, combining the innovation- and risk-focus, by attempting to improve innovation processes, developing a venture arm foracquisition of startups mentioned by interviewee 3 and considering innovation fromopen innovation platforms. These results should be marked in the EO model andthe average of these provides the final value of the EO scale.

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Figure 6.1: EO scale describing the management of the subject company.

Lastly, the market conditions need to be taken into consideration. Interviewee 5 and6 mentioned that there exists dominant products within materials that have beenimproved during many years, therefore, regarding the current state of the companyand the increased focus on sustainability, it is more useful for the company to focuson adjacent and transformational innovation, rather than on core innovation. How-ever, interviewee 14 and 16 mentioned that a proper market screening is requiredfor an adequate positioning in the market.

Performing the above analysis for the different, potential collaborations with star-tups, an accurate business mating can be achieved. Due to the fact that trans-formational innovations are associated to high-risk, proactive management style,a high EO value is required for these kinds of partnerships, while the opposite iscorresponding to a low EO value (Harms, 2013). In conclusion, the managementstyle and market analysis play a crucial role at the outcome of the match-makingprocess.

Organization Structure & Strategy

Product strategy is intertwined with management style and is therefore an impor-tant attribute to the success of FEI by supporting definitions and planning (Khu-rana & Rosenthal, 1997). It is important with a clear, coherent innovation strategyformulation concerning the entire company. In order to achieve this interviewee7 mentioned that a well-defined strategy needs to be put on group level affectingthe entire company, which prevents a broad focus area that leads to the innovationagenda having little relation to the main business. The lack of coherent strategy hasalso led to resources being spent on the wrong projects, not benefiting the subjectcompany. A broad strategy is also a prohibiting factor for long-term innovationaccording to interviewee 2, which requires a specific approach and formulation ofresearch questions that benefit the long-term progress of the company.

Managerial contribution is crucial to create structure in innovation search but also

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to create a common vision and goal according to the innovation agenda. It is of highimportance to clarify what kind of innovation that is relevant for the developmentof the company, the purpose of the innovation agenda and the amount of focus thatneeds to be put on different innovation types as well as on innovation with differenttime frames. Having a high innovation goal could lead to pushing the companyforwards, however, it could also lead to demoralization by not reaching these goals,boosting search for innovation in the wrong forums and triggering a quantitativesearch rather than qualitative. In order to avoid this outcome, it is crucial to un-derstand the complexity of innovation, which should result in measuring innovationin numerous ways.

One way to do so is through the criteria in Figure 2.5 that can be linked withcompany performance (Tidd, 2001). The criteria relevant for measuring externalFEI at the subject company are significant innovations, innovation surveys, productannouncements, technical employees and expert judgements. The reason to choosethese criteria lies on the fact that the significance and the relevance of the inno-vation is measured rather than the proof of the innovation, which can be difficultto measure because external startups have a constraint environment to operate inleading to few patents and R&D achievements. The product announcements aremeasured as achievements that are close to commercialization, which is done byNPPD. Measuring innovation performance comes although with risks and difficul-ties explained in Figure 2.5 (Tidd, 2001).

To assist the product strategy a set definition of innovation should be established.One way to achieve this is by using the Innovation Ambition Matrix, which definesthe different innovations and separates them into the three categories of core, adja-cent and transformational innovation (Nagji & Tuff, 2012). In addition to displayingthe existing innovation types it also displays a convenient way of identifying areas ofimprovement according to market demand. The matrix is also a tool for companiesto survey all different initiatives and facilitate product portfolio planning, which inan never-ending, changing environment much by dint of digitalisation and an in-creasing sustainable mindset according to interviewee 23, is crucial for the subjectcompany to maintain a competitive position in the market.

Product Portfolio Planning

The importance of a well-functioning product portfolio planning helps understand-ing and mapping the different efforts made within innovation. It is also an approachto establish the maturity of the innovations and balance the efforts made, verifyingand fulfilling the goals that are set (Khurana & Rosenthal, 1997). The lack of asystematic approach was mentioned by the interviewees as the main reason to lookfor innovation only inside the company, to look at a narrow number of channels andportfolios and at old ones out of habit that are not productive enough. The lackof clear division between types of innovation leads to the full capacity of the com-

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pany not being used and no mapping by specialists results in few cases of externalinnovation and unstructured process that doesn’t work for startups according tointerviewee 21, 25 and 26.

Usage of the Innovation Ambition Matrix is as mentioned earlier a useful tool toconcretize innovation and assist in achieving a balanced portfolio based on the strat-egy that is set. Considering that the interviewees 8 and 13 have mentioned thatthere is a lack of startups in product materials because of the amount of resourcesrequired and the industry being extremely small and traditional, it is crucial tofocus on finding quality than quantity necessitating a well-thought strategy goalwithin the right area.

In addition to the Innovation Ambition Matrix, a useful way of dividing innova-tion is by ranking the projects in a pyramid shape as shown in Figure 6.2. Thefirst pyramid illustrates the efforts made in different innovation areas and allows amapping process. After the mapping is complete a rating is automatically done forprojects where open innovation is a possibility. Considering that the interviewees 13and 27 mentioned that the market for external innovation within materials is not bigit is important to look for innovation in unconventional ways such as open innova-tion platforms. The interviewees 5, 6, 19 and 20 have mentioned that changing themindset about open innovation is crucial for remaining competitive, nonetheless, itis important to apply it on relevant innovation that doesn’t affect the strategy ofthe company. Interviewee 5, 15 and 19 mentioned that open innovation inactivityshould be high considering transformational/strategic innovation because it couldgive the company an advantage and a short-term monopoly. Another advantagewith open innovation mentioned by Division B, where it is used on frequent bases,is to avoid active sourcing of startups since that takes a lot of effort and resources.However, since Division B almost exclusively uses open innovation platforms, whilehaving 90% of the projects focused on transformational and adjacent innovation,it affirms that it is possible to apply open innovation on a broad scope, avoidingstrategical innovation. The key to success is to generate open innovation themesthat are very specific, not allowing the public to understand the bigger purpose ofthe innovation.

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Figure 6.2: Pyramid showing different types of innovation, open innovation appli-cation and transformation of innovation into goal measurements.

Furthermore, the first pyramid can be translated into the second pyramid, gettinga comprehension of the innovation sourced in comparison to the goals that are put.It has been underlined from both the interviewees and the literature study that thesubject company should work more frequently with adjacent and transformationalinnovation, represented in the second pyramid as the largest focus areas.

Another important attribute detected considering product portfolio planning is thelack of understanding long-term and scientific innovation mentioned by all the in-terviewees. The incapability of understanding scientific contribution leads to lackof trust on innovation, while expectations and requirements are too high as well asthe focus on expenses. The lack of organisation and knowledge leads to difficultiesto understanding the risks of transformational innovation and the effort requiredfor its commercialization.

In order to gain more knowledge in this area, specific goals for long-term inno-vation need to exist and a change in the mindset, being appreciative of externalinnovation and expertise to gain scientific support of the innovations. Interviewee12 mentioned that short-term needs of the subject company can’t be a part of sci-entific collaboration and non-linear, long-term development of scientific researchdiffers from the subject company’s expectations. Along with these changes thereshould be a venture arm to support long-term collaborations as mentioned by in-terviewee 3 but there should also exist a budget covering funding for innovationprojects, especially for transformational innovation. This action will on its turnreduce the risks of failure and the amount of time trying to get hold on investmentsand competencies.

Product Definition

Product Definition includes the points mentioned above and remarks a strong andclear vision of the future products in a flexible organisation including a platform forlong-term innovation and a multi-release system providing a structure of managing

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innovation of different generations (Khurana & Rosenthal, 1997).

In order to distinguish the phase that different products are in and their relevancein the future, it is important to measure innovation with a relevant scale facilitat-ing comparison of the maturity stages. The internal interviewees mentioned thatmeasurement of maturity using the NASA TRL scale is useful but only measurestechnology development of the project and it doesn’t give a comprehensive picturethat is easy to communicate (Mai, 2012). They also mentioned that the misleadingstatements made by startups make it difficult to establish the correct TRL value,which makes the match making difficult, leads to development being longer thanexpected and it doesn’t give an understanding of the resources needed in case ofcollaboration.

Therefore, a more useful tool for measuring the state and development of inno-vation is the KIRL method, enabling visualization of the projects, which facilitatesthe communication. The detailed description of the areas and the levels give acomprehensive picture of the effort needed to reach different levels and the amountof work and resources needed to proceed with the development of the innovation(KTH, n.d.). Consequently, it leads to a more reliable match-making process andassists to the Product Portfolio Planning by properly being able to define the stateof the project and its future contribution to the company’s success. The externalinterviewees expressed that companies have to keep in mind that researchers areattractive in earlier stages, while student teams should have come longer in KIRLfor example have an MVP as shown in Figure 2.6 (KTH, n.d.). Interviewees 25, 26,27 and 28 mentioned that KIRL 1-3 should be knowledge gaining and long-termcollaboration, KIRL 4-5 should be coaching and KIRL 6-9 should be Co-creation.

Since the subject company doesn’t have many startups in a mature stage to choosefrom because of the amount of resources required to achieve progress in materials,it is important for the company to focus on KIRL 1-3 and KIRL 4-5. KIRL 1-3provides the opportunity for the subject company to gain knowledge and affect thefuture of the market as well as the opportunity to develop technology and solutionsin early stages. Coaching is the main tool for companies as Telia to get in contactwith startups according to interviewee 28. This could be an advantage for the sub-ject company by building connections with startups and gaining an understandingof their point of view. Therefore, it would be beneficial for the subject company tocreate a coaching environment which can be free of expectations allowing startupsto progress at their natural pace.

Product Concept

Product concept is about having the right expectations from innovation consider-ing outcome, benefits and correspondent market segments, permeating from topmanagement to the development team (Khurana & Rosenthal, 1997). The right

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expectations are reached by proper risk analysis and market screening (O’Connor& Rice, 2013a). A systematic approach also considers the needs of the startup,having regard to the cultural and organisational differences between a big and asmall company (Tavis, 2018).

In order to meet the expectations of innovation it is important to gain knowledgein startup abilities, realizing that the deliverables of the startup are limited and animmediate scale up is not possible without providing the correct setting and condi-tions to the startup prior to and during collaboration (Sokol, 2018). According tothe interviewees a successful collaboration is reached through communication andcomprehension for the startup perspective, a concrete plan for the integration isneeded including receiving an efficient information package at acquisition and rea-sonable expectations of outcome. Lastly, it is crucial to have a flexible organisationwhere the startup can operate freely without having to fit in already establishedstage gate models.

A systematic approach to these actions has been lacking in the subject companyresulting in no proper risk estimation and an inadequate market screening process.The risks taken by collaborating with startups can be estimated through a riskanalysis by using the Profitability-Impact matrix for evaluating the uncertainty oftransformational innovation as shown in Figure 6.3 (O’Connor & Rice, 2013a). Thematrix provides the company with a useful tool to get a comprehension of the risksinvolved in different projects where green indicates lower risk and red indicateshigher risk. By being able to place and combine the innovation’s different cate-gories with different latency and criticality levels, the comprehension of the risksinvolved is increased, providing the company with a higher clarity of the situation.It is important to keep in mind that a high-risk innovation belonging to the boxunanticipated showstopper can benefit the company in the long-term, providing thecompany with an advantage (O’Connor & Rice, 2013a).

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Figure 6.3: The Profitability-Impact matrix for evaluating the uncertainty of aninnovation where green indicates low risk while red indicates high-risk.

Value Chain Consideration

The value chain consideration encourages a mindset and evaluation that has inconsideration a broad perspective for innovation projects from sales interaction toafter-sale service and follow-up (Khurana & Rosenthal, 1997). Having this perspec-tive facilitates innovation management and reduces risks for the project to fail inlater stages. The process perspective suggests that the consideration of these stagesis linear (Floren & Frishammar, 2012), however, this will be discussed from differentperspectives in the following sections.

In order to have the right expectations of innovation, market screening and com-munication is required. At the current state of the company no proper marketscreening is done and there is a lack of communication between Innovation andR&D and NPPD according to the interviewees in Division A. A systematical ap-proach to market screening leads to gaining knowledge on what is required andwhere the focus of the strategy should be. If the strategy is not too broad, theresult will be a higher quality of the screening process. Innovation ideas should beconsidered after market screening since that considers the customer perspective asshown in Figure 6.4 (Ahmed, 1998). Thereafter, a pipeline of relevant ideas canbe transferred to NPPD, who can decide which ideas are relevant and possible toproceed with to commercialization. However, another issue that needs to be ad-

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dressed is the lack of capacity at NPPD. There is no possibility at current state forthem to manage new innovative ideas unless they are related to the current projectsaccording to interviewees at NPPD. For the pipeline to be relevant for NPPD, thesuggested ideas need to be linked with the wishes.

Figure 6.4: A suggested system to improve the link between Innovation and R&Dand NPPD.

The interviewees mentioned that another issue concerning the induced innovationpipeline derives from the ideas that are in conflict with the ones already in progresstowards commercialization. Working on these suggested ideas could lead to canni-balism. Implementing a specific venture arm for long-term innovation could also in-clude innovation that belongs to future generations of the strategic flagship projects,avoiding conflict with current projects.

Product Development Organisation Structure

Product development organisation structure points out the importance of allocatingthe right leaders and team to the right projects (Khurana & Rosenthal, 1997). Thepeople with the right experience are able to get immediately to the core compe-tencies of a startup, facilitating the sourcing process but also the comprehensionof the commercialization possibilities that exist for innovative projects according tointerviewee 10.

Creating cross-functional teams improves the communication throughout DivisionA, therefore, the teams created need to contain people from both innovation andcommercialization, creating a full perspective of the value chain. Some teams in

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NPPD and all the teams at Division B are arranged that way producing a betteroutcome according to interviewee 15 and 19.

6.1.2 The FEI ProcessThe above analysis has resulted in the supposition that Division A at the subjectcompany uses to some extent the process perspective to manage innovation. Theprocess perspective is a structured way of managing innovation, however, its result-focused structure and strive to push projects forwards linearly is difficult to applyto the real, complex world and could inhibit creativity (Gaubinger & Rabl, 2014).

To minimize usage of sequential processes while maintaining structure, a balancedmix of the process, knowledge and translation perspective should be used as shownin Figure 6.5. The process perspective needs to be used in a non-sequential wayby applying the NPPD process to the suggested approaches in the above sections.Proceeding from one front-end activity to another should happen in a circular mo-tion by taking into consideration all previous steps completed as well as taking theexternal influencing factors. This way of working with FEI allows an iterative think-ing and the previous steps being rethought and changed based on the new gainedknowledge (Koen et al., 2001). The circular way of thinking is used by Division B inthe NPPD phase and by Group IT and Digitalisation in the selection phase of thestartups, therefore, a similar concept would benefit the subject company’s DivisionA.

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Figure 6.5: An FEI model combining the process, knowledge and translation per-spective.

The circular time perspective of the model and the input from the market, allowsconsideration of non-process influencing factors such as organisational capabilityand consideration of cultural differences, enhancing the possibilities of innovationsuccess and minimized time to market. The open innovation access enables a plat-form of creative, informal innovation prohibiting the model to become too structured(Jacobson & Ramslov, 2017). By keeping an open mind and broadening the processways within the company, Division A will be better equipped to manage long-termand scientific innovation and be able to integrate external innovation more efficientlybenefiting knowledge sharing.

The three different perspectives mention the importance of roles in the continu-ation of innovation flow. It is therefore important to have specific roles managinginnovation in different stages with specific tasks. Having clear division between theroles contributes to minimizing conflicts between the people of the company and

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enabling innovation towards the same goal (Cross & Prusak, 2002). In addition,the translation perspective proposes a negotiation process shown in Table 2.3 aim-ing to create a strong network within the company to carry ideas and conceptsforwards (Callon, 1986). In order to improve the descriptions of the roles thereneeds to exist an organizational structure managing innovation in different stagesincluding spokespersons, ideation processes, strategy to create alliances and meth-ods to ensure that the projects are proceeding as they should. The example of anorganizational structure is the one at Division B. At Division B specific teams of 3people explore each innovation opportunity in sprints after the initial distribution ofthe ideas into different innovation types according to interviewees 19 and 20. There-after, if the innovation is still relevant a bigger team is created to proceed the worktowards commercialization. To strengthen the negotiation process it is importantwith a strong group level innovation department having an overall comprehensionof the innovation activities in different divisions and guiding the innovation work.

6.2 The Business ModelThe aim with this section is to answer the second sub-question How should thebusiness model for the sourcing process look like to enable a positive output? Be-cause of an increasing complexity of managing innovation in a global and digitizedenvironment, a corresponding business model combining technology and main busi-ness needs to exist. While the previous sections have focused on selecting relevanttechnologies for a specific innovation and the usage of different tools, this sectionfocuses on producing a relevant business model.

BMC is a canvas intertwining and putting in practice the business model approachand the discovery-driven approach, taking into consideration value proposition,value creation and delivery, value capture and the enabling of knowledge enhance-ment at the lowest possible cost (Teece, 2010). The suggested business model inFigure 6.6 is a combination of different variations of the BMC model such as LeanBMC (Maurya, 2012), FEI Canvas (Koen, n.d.) and TLBMC (Joyce & Paquin,2016) deriving the most important statements and the positive effects of each of thecanvases, customized as a brainstorming tool and a guidance map for innovation ina large company. The reason to using variations of the BMC model is to providethe model with focus on adjacent and transformational innovation, a strategic andholistic view and the sustainability aspect.

As mentioned in earlier sections, it is crucial for the subject company to retaina circular mindset while approaching innovation projects to avoid counterproduc-tive step by step approach. Therefore, the blocks of the business model are meant tobe able to be evaluated at any time of the process making them time independent.However, the arrows pointing towards value proposition can be interpreted suchas the actions taken and the knowledge gained through the blocks above generate

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the value proposition. The resource analysis needs to permeate all the differentblocks and the implementation plan needs to be thought through during the eval-uation of the blocks. Moreover, the success of the business model is dependent onthe strategy of the company. Aside from the previously suggested strategy mea-surements, the subject company should have all three different strategy approachesTechnology Driver, Need Seeker and Market Reader when evaluating or searchingfor innovation. This provides the company with a broad platform of innovation.

Figure 6.6: Customized business model for innovation at large companies.

Resource Analysis

One of the most common issues mentioned by the interviewees and the theoryconsidering managing innovation is that resources don’t exist before contact withstartups. The decision to proceed with a certain project is usually followed by along process of getting a hold on resources such as people and money. This processtakes a long time, prohibits development of innovation and enhances the risks ofmanaging innovation (Osterwalder & Pigneur, 2010). The resource analysis blockis very important and needs to be in consideration during the evaluation of all theother blocks.

Therefore, a clear structure and mapping of the external and the internal resourcesneeds to exist, facilitating decision-making and prohibiting loss of resources duringthe evaluation phase. The resources can be divided in physical, financial, intellec-tual, technology and human capabilities and in order for the block to function all ofthese resources need to be structured and provide a clear view of what is requiredfor the innovation project to be delivered (Osterwalder & Pigneur, 2010). The re-sources need to be divided in the ones that are required, current and the resources

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that need to be acquired. The resource analysis includes the key processes andactivities of how the resources can be acquired as well as the risks and time thatare involved in the development of the resources (Koen et al., 2002).

Opportunity

The opportunity block aims to formulate an opportunity encountered or a prob-lem that the company strives to solve through innovation. It refers to proceedingthrough the opportunity point of view by identifying opportunity possibilities andlisting problems that need to be solved. By obtaining clear definitions of the com-pany’s strategy and goals, the process of finding opportunities is easier and leadsto a higher outcome.

This block needs to be under consideration at the subject company to obtain abetter linkage between Innovation and R&D and NPPD and to increase commu-nication between the departments. Firstly, the problems should be identified andranked by NPPD to get an understanding of what is needed to be solved immedi-ately. Thereafter, they should be communicated to Innovation and R&D in orderto find a solution. The projects that are long-term should be managed by a specificgroup in charge of long-term development.

Customer

The block customer is aiming to define who the customers are and what are theirneeds and expectations. In order to do so it is important to understand the cur-rent state of the total market and the available target market (Ward et al., 1995).Thereafter, decisions about pricing and targeting new customers can be made.

This block also includes division of the customers in different customer segmentsproviding insights in common needs and behaviours, channel usage, relationshipwith the company and value proposition needs. Considering that a big issue forthe subject company is that no proper screening of the market and the customersis currently being done, this step is important to not overlook and an essentialprerequisite to the profitability analysis.

Channels

The customers and the resources are crucial to analyse and understand a decision-making process of innovation. Just as important is to understand the channels thatcan be used to reach the customers and collect the relevant resources. In addition,channels are used to target and communicate with different groups and segments(Teece, 2010). They play a crucial role at the distribution of the innovation and thevalue proposition. They are used to raise awareness of the value proposition, helpcustomers to evaluate it, allow them to purchase the product or service and providepost-purchase support to customers.

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The channels at the subject company should be divided in internal and externalchannels of resources covering platforms to find innovation. Moreover, the chan-nels for reaching the customers should be specified and mapped to facilitate thecommunication and the feedback received.

Environment

Gaining a deeper understanding of the market as mentioned above is intertwinedwith understanding the environment that the innovation exists in. For the subjectcompany this is particularly important considering that they offer sustainable solu-tions and promote sustainable innovation, therefore the TLBMC is useful for thesetype of companies (Joyce & Paquin, 2016). The economic, environmental and socialsustainability aspects and impact are taken into consideration enabling insights andactions required in the different areas.

A holistic view of the company’s goals, strategy is able to be matched with themarket change over time in terms of size, growth prospects and trends. Becauseof the changing perspective on sustainable materials it is important for the subjectcompany to evaluate what are the barriers and competition entering the chosenmarket and what is the best strategy to enter a new, innovative market.

Unique Solution & Key Metrics

The opportunity or the problem that has been encountered needs to have a uniquesolution derived from the customers and environment point of view (Koen, n.d.).The solution is found during the FEI process as described in earlier sections. How-ever, a pitfall is to put too much time and effort on a solution that is not beneficialor relevant for the company. Therefore, it is important to verify that the solutionappeals to the customers. This is a common issue at the subject company wheresolutions are found that are not relevant for the customer or commercialization be-cause of mismatch with the customer or market demands. This situation can beavoided through communication between different departments and key people.

In order to establish a valid verification of the solution it is important to vali-date the relevance and authenticity of the innovation that provides the solution.Key metrics that are presented in the sections above can be used to achieve this,however, it is important to understand that measuring and evaluating innovationis complicated and complex (Koen, n.d.). One procedure that needs to be avoidedis to evaluate innovation by using old methods that are only appropriate for coreinnovation and therefore lead to under-evaluation of adjacent or transformationalinnovation.

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Value Proposition

The gained knowledge through the resource, customer and environmental investi-gation produces a value proposition overview. This block describes the innovationoffer provided to the customers considering quantitative such as price or lead time,qualitative such as design or user experience and fulfilment of a new need generatinggrowth in customer demand (Teece, 2010).

The block maps the willingness of the customers to pay for the innovative solutionregarding the proposed value. The proposed value should be unique and contributeto all three sustainability aspects shown in TLBMC (Joyce & Paquin, 2016). In or-der to achieve a successful value proposition, it has to fit with the relevant customersegment or the new, targeted customer segment.

Profitability Analysis

The metrics used during the evaluation of the unique solution can be used to per-form a profitability and risk analysis. Performing a profitability analysis at FEIlevel is very uncertain and risky and it is more beneficial to perform a discovery-driven planning (McGrath & MacMillan, 2009). Unexpected costs can arise whenhandling adjacent and transformational innovation because of their complex anduncertain nature.

However, if mapping of resources, key activities and partners are done correctly,there is a possibility to count on the costs of the innovation. Innovation costsshould have a value-driven structure, focusing on value creation rather than on costreduction (Teece, 2010). The revenue stream is even more complex and depend-ing on several factors. Taking in consideration the environment and the customerscurrent situation, willingness to pay and preferred projects to spend money on anestimation of the generation of cash from different customer segments can be done(Teece, 2010). During this stage, the company should take into consideration howthe adoption dynamics of the new innovation impacts the revenue stream. Issuessuch as cannibalism can occur and a relocation of the innovation development andlaunching considering the timeline can be applicable.

Risk Analysis

The risk analysis is a very important addition to the BMC model because it ishighly relevant while managing FEI. It is although difficult to make assumptionsabout the risks involved at adjacent and transformational innovation because ofthe changing environment of these innovations. Some tools have been suggestedto manage innovation risk in previous sections and in addition to the Profitability-Impact matrix is for the company to distinguish the top 3 risks and assumptionsmade about the innovation and its future (O’Connor & Rice, 2013a). Thereafter,the matrix can be used to evaluate these risks.

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Integration & Implementation Plan

During the interviews it was mentioned that one issue at managing innovation andstartups was the lack of an integration and implementation plan. Contradictory tothe open innovation platform, the accelerator is lacking an implementation and afuture follow-up plan, preventing an agile and flexible management of the interestingideas discovered. Furthermore, when in contact with relevant innovation ideas andstartups it is unclear within the company which competencies and people that arerequired to evaluate the idea. After a successful evaluation the process of findingfunding starts and prohibits the agile development of the innovation as mentionedby interviewees 5 and 8. Lastly, there is a lack of an integration plan during acqui-sition of a startup causing confusion and disorganisation according to interviewees3 and 21.

Therefore, an integration and implementation plan should exist and be constructedin parallel with the evaluation of the innovation. This should include the key ac-tivities that are needed to be performed in order to create and deliver the valueproposition to the customers and the time estimation of how long that will take.It is very important in order to maintain a competitive position to have quick andwell-functioning processes leading to structured decisions and reduction of risks.The integration plan should include the startup point of view and take into consid-eration their needs in order to support them in the future work, however, it shouldbe balanced to avoid reducing the speed of the startup and their efficiency. There-fore, managing startups should be performed as it is done at Division B, where theintegrated startups form their own units and can proceed the job without beingtoo influenced by the subject company. These units should incorporate one or twopeople from the subject company and form a united team and front.

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Chapter 7

Conclusions

During this chapter, a summarizing of the findings is done as well as a reflectionupon how well the empirical results were in line with the theoretical explanations.The aim is to explain how well the results solved the research questions.

The aim of the thesis was to answer the research question How can large scale com-panies expand their innovation activities by collaboration with external startups? Inorder to achieve this the results were divided in two different parts:

• What are important factors of success in the sourcing process facilitating thelinkage with commercialization of innovation and how can they be evaluatedand measured?

• How should the business model for the sourcing process look like to enable apositive output?

This division of the results facilitated a analysis of the research question and pro-vided a clear and structured approach to solving it. The purpose of this methodwas to provide step by step models and actions that can be used to structure FEIby enhancing important success factors. It describes a general and cohesive way toorganize FEI and its link to commercialization. Furthermore, the business modelprovides a platform where the entire value creation process can be taken into con-sideration, allowing a bigger picture which is important at decision-making at FEI.

From the theoretical and empirical study, it is clear that in order for external innova-tion to succeed a structure is required. The structure should contain comprehensionof the startups point of view, comprehension of the future application of the inno-vation and communication throughout the company about the innovation agenda.However, the most important factor is that innovation should be allowed to flowfreely in order to be stimulated instead of being seen as a result. If viewed as aresult, complications will arise and the innovation’s true value will get lost.

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CHAPTER 7. CONCLUSIONS

To achieve the above-mentioned success factors a cross-divisional innovation agendaand strategy need to be set, followed by a clear definition of innovation. The com-pany should focus on value creation and general perception. However, these changesare not possible if not performed at managerial level and by inserting a joint rewardsystem of innovation the company can maintain the same innovation goals and re-duce lack of communication and dissatisfaction.

In order to put the success factors in action the innovation process should includean FEI process derived by the process, knowledge and translation perspective. TheFEI process allows an iterative thinking, external influencing factors and innova-tion and market feedback. The FEI process should contain different point of viewsand sections, one of them being project definition and planning tools such as theEO scale to facilitate business matching between large companies and startups. Itshould also include organization structure and strategy tools such as the InnovationAmbition Matrix and measurement criteria to get a clear view of innovation andinnovation goals. This should be followed by a product portfolio planning used tomap and visualize innovation goals.

Once the right startup collaboration has been established and an evaluation of aninnovation is required, different tools such as the KIRL scale and the Probability-Impact matrix can be used to visualize the innovation; its risk assessment andimprovement areas, facilitating decision-making in the future management of theinnovation. An important aspect is the value creation for the customers requiringproper market screening of demands and needs.

Lastly, all the models and tools need to be combined in a custom-made businessmodel derived for the purpose of innovation collaboration with startups. The busi-ness model needs to combine the different areas resource analysis, integration andimplementation plan, opportunity, unique solution, key metrics, customer, channels,environment, profitability analysis, risk analysis and value proposition, allowing avalue creation for the customers from different point of views and sources, coveringall its different aspects.

The findings of the thesis have mainly been based on the subject company’s pro-cesses; however, they are also based on external information and theory. Therefore,I argue that the results answer the research question and provide effective steps ofimprovement that need to be taken by large scale companies in order to expand theirinnovation activities by collaboration with external startups. The recommendationsoffered allow the company to maintain a future and general point of view ensuringsuccess and enabling long-term improvement of the company’s image. This pro-vides a development phase beyond screening of innovation to innovation naturallyapproaching the company. Concluding, the result can be considered as a bridgebetween large scale companies and external startups, as well as between FEI andcommercialization.

71

Chapter 8

Future Work

The literature about innovation is very scattered and there exist no dominant prac-tices that are able to be implemented in all different types of companies. No con-crete methods and tools for measuring and evaluating innovation exist prohibiting astructured method of managing innovation and a best practice for decision-making.Innovation is difficult to manage because of its ever-changing nature; however, itwould be interesting if further studies can be performed examining best practicemethods and their outcome.

Furthermore, the results of this thesis are created through tight collaboration withthe subject company and they should be applicable in the organization. Therefore,it would be interesting to test the suggested methods, models and processes to beable to prove their validity. The subject company should also perform more generalstudies in the future about innovation in order to gain a holistic view. Furtherstudies at diverse similar companies contributing with other perspectives would beinteresting to perform in order to achieve further generalization, increase validityand applicability of the results.

72

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Appendix A

Interview Questions - Subject Company& General

During this section questions are posed about the subject company’s current inno-vation process focused on startups. The interviews were although semi-structured,so the questions were filling the purpose as guideline and achieving a red thread butwere slightly modified according to the interviewee and the conversation.

A.1 Pre-Collaboration Phase• What are the reasons that you started to collaborate with startups?

• What different channels are there to find the startups? Data of the startupsand forums used?

• What are the reasons to why a startup chooses collaboration with the subjectcompany?

• What have been the drawbacks by working with startups?

• What are the criteria a startup should possess in order be selected?

• How does the screening process look like?At what maturity stage should a startup be in order for collaboration

possibilities?

• What are the criteria that the subject company should possess from startupspoint of view?

• Do you divide the selection process in different sections for example explo-ration or exploitation focus, radical or incremental innovation?

A1

APPENDIX A. INTERVIEW QUESTIONS - SUBJECT COMPANY & GENERAL

• Do you have any established value creation model?

• What project management methods are used?

• How does the evaluation process look like and what are the tools used?

• What is the detailed structure of the accelerator program and CombientFoundry?

• Is there a separate revenue stream assigned to innovation streams?

• Who is responsible for the funding choice and the decisions made in the pro-grams?

What are the reasons behind structure and funding choices?How does the investment willingness when it comes to innovation look

like?

• What is the expected outcome of the programs?

A.2 During Collaboration Phase

• What are the offers made to startups?Is there a process for understanding the different needs of the startups?How is the response to their different needs and what are the actions

taken?

• To what extent are the startups involved in the creation of the process?

• What kind of compromises have had to be done?How did you agree on the terms of the collaboration?

• How are the teams, working with the startups, chosen and structured?

• What project management methods are used?

• How does the evaluation process look like and what are the tools used?

• What criteria need to be fulfilled during the different stages of the evaluationprocess?

A2

APPENDIX A. INTERVIEW QUESTIONS - SUBJECT COMPANY & GENERAL

A.3 Future Collaboration Phase

• What data statistics do you have on the outcome of the collaborations?

• What has been challenging during the collaboration with the startups?

• Do you have processes that decide what kind of collaboration with the startupsthat is established?

How does the process look like to push an innovation to commercializa-tion?

How does the collaboration with commercialization look like?What are the challenges?

• How long did the collaboration last and what were the main reasons for ter-minating the collaboration?

• Did the startups get an opportunity to review the collaboration?

• Did you meet the startups expectations?

• What kind of strategy do you use for the integration of the startups in thecompany?

Does the startup have contact with the rest of the company or is it iso-lated?

• Which are the resources to follow the development of the startups?

• What are the set goals and strategies for the innovation process?

• What knowledge do we have on competitors’ goals and strategy when it comesto innovation?

• What are the risks with these set goals?What measurements are taken regarding these goals?

A3

Appendix B

Interview Questions - Startups

During this section questions are posed to startups about their point of view ofcollaboration with the subject company.

• What is your solution (product or service)?

• How did you assess the need for your solution and find that there is a demandfor it on the market?

• How large is the team and what positions do you all have?

• What is your market?

• Who is the target group?

• How far have you come in your startup’s development?

• What vision do you have for your solution?

• What were the challenges that made you seek help?

• What are some things that you have received help with from the subjectcompany?

• What kind of offerings (ex. infrastructure, business services, networks) havebeen offered to you?

How are these offerings helping you to overcome your challenges?

• To what extent have you been involved in deciding what help you receive?

• How did you manage to find this help?Why did you choose the subject company’s innovation resources?

B1

APPENDIX B. INTERVIEW QUESTIONS - STARTUPS

• When was the collaboration established and how long did it last?What does the format of the collaboration look like?

• Before the collaboration started, how did you make sure to agree on the termsof the collaboration?

• Were there aspects (ex. IP, resources, time, etc.) you needed to compromiseon during the collaboration?

• What were you not willing to compromise on and how did you reason?

• Looking back at the collaboration, what are your major takeaways from it?What are some of the major benefits and drawbacks?

• Have the outcomes met your expectations of the collaboration?

• How do you think it would have affected your work if you wouldn’t havereceived any help?

Could you have managed to solve your issues without any external help?

• If you would have had the possibility to change certain aspects of the collab-oration, what would you change and why?

B2

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