How Russian Consumer Companies Cooperate with Start-ups
What prevents them from getting a return on joint projects
In October 2017 on the Impact Hub Moscow platform there was an announcement of the program "Assembage Point" launched with Leroy Merlin. Anybody who wanted to create something new in collaboration with the French retailer could take part in the program: goods for stores, an educational course, or IT system for customers, suppliers or business processes.
Generally, Leroy Merlin refers for innovations to start-ups with ready-made developments, says Ani Kocharyan, author of the "Assembly Point", but this time it was decided to finalize the products and services of start-ups together with Leroy Merlin customers and employees. 10 out of 74 applications were chosen for the program.
Such programs help to create a corporate culture for working with start-ups, says Timofey Golovin, partner and director of corporate services of the French accelerator Numa Moscow (cooperates with Leroy Merlin).
For the last 2-3 years consumer companies have shown a great amount of interest in startups: innovations help to create new products, to increase sales and to cut costs, but innovative processes in companies are not tuned yet and they hamper the work with start-ups, explains Olga Strelova, director of the Center of Innovative Technologies for Retail and FMCG.
By any means.
Kocharyan says that the "Assembly Point" aims at developing domestic entrepreneurship. The idea of the program itself came up when a Leroy Merlin employee thought about a small- size store "Leroy Merlin apartment"- recently it was opened in Odintsovo. 103 "Leroy Merlin" employees wanted to participate in the "Assembly Point", 35 were selected, and they were divided into 10 teams, she continues. The teams create prototypes from products that were written off by Leroy Merlin, and the projects will be presented in May. Kocharyan compares the spendings on the program with the costs of the trainings without disclosing the numbers.
A startup dilemma: an accelerator, an incubator or a technopark?
Corporate incubators are not popular- companies don't want to work with startups that don't have any products, says Evgeniy Borisov- Development Director for IIDF. The most difficult and expensive corporate venture funds are even less common - they invest in any projects, not only those that the compnay is interested in, notes Zamir Shukhov, CEO and partner of the Global Venture Alliance (GVA).
Companies looking for startups usually turn to IIDF or Skolkovo. В октябре 2017 г. IIDF held a session for the "Russian Post" and selected 11 projects - in advertising, data monitoring, e-commerce, personnel management and so on. The "Russian Post" representative could not specify if any of the pilot projects were actually launched.
IT giants hunt for startup ideas. They increasingly implement pilot projects of young companies, not allowing them to succeed.
IIFD worked with X5 Retail Group as well. According to Borisov, the project lasted for a year. The X5 representative says that the retailer studied 350 projects, the half of them are taken for further examination. The director of strategic marketing Vadim Kapustin knows that the company began with 20 start-ups and pilot projects: for example, video recognition of merchandise display, lines length analysis and customer’s routes in a store. Sergei Zakharov, CEO of Cera Marketing, which has been doing a pilot project- the video analytics in retailer stores since the mid-2017, says that the X5 does not pay anything, but this is a common case when working with a large company.
On the other hand, Denis Shpak, the founder of the Mobile Agent project, offered X5 a new model for personnel renting. He complains that X5 took a break in the cooperation, referring to the internal procedures. Andrey Kovtun, the founder of the "Moy Grafik" service, explained that X5 was interested in the services and the retailer was considering many solutions, but the negotiation process is really slow. The X5 representative does not comment on the negotiations, but indicates that the company is actively developing procedures for integrating innovations into internal processes.
Sergey Sergeev - the IT director at "M.video" affirms that tenders are usually held for specific tasks of the company. "M.video" evaluates start- ups on three parameters, it lists: technical maturity, simplicity of integration, cost of implementation and ownership. M.Video pays for pilot projects. For example, the company chose the work time reporting system using biometric data (the developer of the system is the Timebook startup): the employees liked photo identification more than other options, and the cost of implementation was low. Timebook CEO Pavel Konozakov said that the system was also implemented in “Lenta" and “Auchan” stores, both retailers confirmed it. Sergeev thinks that the introduction of Timebook technology is a success and reports that "M. video» along with tenders also collaborates with accelerators and venture capital funds, conducts hackathons and startup battles.
"Mega Accelerator" was the first accelerator for startups in Russia, and it was launched by IKEA Centres Russia and GVA. It includeded 10 teams, and the SensArt startup with the "Surfancy" technology became a winner. Surfancy allows you to turn any surface into a touch screen, says the Milen Genchev, General Director of IKEA Centres Russia and curator of the project "The Mega Accelerator". According to Mr Genchev, the winner was awarded 3.5 million rubles. and the ability to implement the project in "Mega" shopping centers. But the main result is that during the accelerator the Russian IKEA created a strong team and showed to the market that innovations can be successfully implemented in Russia, said Shukhov. In September 2017 IKEA Centres Russia and GVA launched another accelerator. According to Genchev, seven teams tested their products in "Mega" shopping centers and IKEA stores, and the winner- Beesender startup, the solution of which allows to educate and monitor the competence of employees by using chat-bots, got 2 million rubles for the implementation of the idea.
In 2016, together with the GVA Faberlic launched a corporate accelerator and selected five teams out of the 250 applications. According to the Faberlic representative, the products of the winners are not implemented in mass production yet– there is still few technical arrangements to be made. Faberlic spent in 2016 400 mln rubles on startups (2% of annual revenue).
In September 2017 PepsiCo chose 24 project from more than 500 applications to PepsiCo Lab corporate accelerator. According to Ilya Maltsev, the head of PepsiCo Lab, half of the participants worked on food and beverages and the other half developed IT solutions and technologies; at this moment pilot projects in both spheres are being tested.
In June 2017 "Diksi" retailer launched an accelerator. "Diksi" IT Director Vladimir Muraviev says that the company has planned to invest up to 1 million rubles in an idea or a prototype to bring it to the industrial version. Out of 80 applicants the retailer tested 15 and chose 8. One of the finalists – Goodscan – suggested the technology of products recognition in the warehouse, which, according to Muraviev, "Dixie" needed much. The retailer invested 400,000 rubles in the development. Denis Efremchik, co-founder of Goodscan, announced that the company was refining the product and was analyzing the data, the testing is planned on February-March. Muraviev says that if the testing shows real results, "Diksi" more likely to buy the technology.
No credibility and no understanding
Companies declare readiness to cooperate with start-ups, but find it difficult to talk about the result – they are not ready to work with startups, said Borisov, the bureaucracy and unclear understanding of the goals are on the way. Borisov also comments that there are very few companies that have a separate department for working with startups or at least has Director for innovations. Companies do not understand that it is better to allocate innovation budget, team and introduce KPI for managers of innovation, explains Strelova.
Shukhov adds: It happens that a company does not believe in the ability of a startup to do something better than customary in the industry, and don't want to take a risk they try to calculate the return on investments, but realize that a startup can not give any guarantees. We have to explain, he says, that open innovations- is a faster and more affordable upgrade than the creation of an innovative structure within a company.
According to the observations of the Director of development Mikhail Gavrilov of "Saint Petersburg" Bank, middle managers do not understand why we need innovations, and they don't want to spend any effort on a case, where it is easy to make a mistake. "I had to explain that nobody will be scolded for mistakes, and for success in working with startups there will be appraisal. Only then the case was set in motion", concludes Gavrilov.
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