Ep.3 - Thierry Golliard / Swiss Post - Open Innovation Starts Internally

In depth interviews with the most influential innovation executives of the tech arena. Exclusive data and insights on major and emerging ecosystems all around the world. The hottest news on technology and open innovation at a global level. This and much more in every new episode. Welcome to Open Innovation Talks. Mind the Bridge chat with industry leaders.

I'm Alberto Netti, senior entrepreneur, university professor and Chairman of Mind the Bridge. And this is the third episode of the Open Innovation Talks. Mind the Bridge chats with industry leaders. This podcast is about open innovation and this is aimed at people, corporate executives, practitioners, but also executive founders or startups interested how to make a very difficult thing like open innovation and startup corporate collaboration actually work. Today guest is Thierry Goyard. Thierry is VP of Open Innovation and venturing at Swiss Post. Swiss Post is the national postal service of Switzerland and is a public company owned by the Swiss Confederation that is the country's largest, second largest employer with 54,000 employees. And during this conversation we will go through the innovation journey that Swiss Post has done, moving from entrepreneurship to innovation antennas and lately to corporate venture capital from the helm of Mind the Bridge. I'm Alberto Netti and this is the Open Innovation Talks. Today we are going to Switzerland, specifically into Bern. And I have the pleasure to have with me Thierry Goliad. Thierry is the Vice President, Open Innovation and Venture for swisspos. Welcome Thierry.

Thank you for the invitation and happy to meet you, Alberto.

So, Thierry, we would like to know a bit more about how swisspos is organizing his innovation activities. As far as I know, you have two big areas. One is called internal innovation and that is not the part that is reporting to you. And the other one is the open innovation venture is one that is reporting to you. Maybe you can give us some figures about Swiss Post so our audience can understand and assess the size of the company and then going a bit more into broader organization of the innovation activities.

Very happily, actually, Swiss Post is for Switzerland, a very big organization. Might not be the case in other countries, but For Switzerland, with 50k employees, this is the third biggest employer in Switzerland. We are operating actually in different markets. So of course you know the classical letters and parcel business businesses. But we are actually much more diversified in the sense we are operating the logistics and supply chain with other kind of services than parcels and letters. We are doing cargo as well, but we are also operating in the mobility public transport market and we own also a bank with Post Finance. So meaning that financial services are also a big business area for us.

And talking about the organization of innovation, as mentioned, there is an internal Innovation and external innovation. Can you give us some first level description who is doing what?

Yes, of course. Starting by saying that both are very relevant and important. So we are not just relying on one of but on both. So the internal innovation is really about using this wonderful reservoir of employees with kind of services like our ID management. We launched about 20 years ago a kind of platform for ID suggestions open for our employees. We are getting about thousand IDs every year over this this kind of platform. We are also managing this innovation space for workshops that we have in our head office but also decentrally within the organization. And we are facilitating also innovation spirit inside the company by pushing some methodologies like Lean startups. This is what we do on the internal innovation, on the external innovation. What we are managing with my team we are offering actually startup screenings to our business units to connect with startups identifying the right use cases. We are also investing in startups over a venture capital army. We are managing research with academic partners. We are managing the outpost that we do have in San Francisco and Shanghai. So this is the kind of services we are actually offering.

Let's focus on the internal pilot. I think you have an internal platform. I think it's called the Post. The idea is the platform you use to gather the inputs from the employees. You mentioned about 1000 career new ideas. How does it work? Is it an annual cycle or is always open?

It's always open to all the employees of Swiss Post. And this is quite easily accessible home in the sense that it's not so complex to use. We are not asking to describe the idea in a very complex form, but what we do also manage over this platform is not just the suggestion of the ID but the entire assessment of the id. Because you can imagine that one ID suggested is not directly assessed by the same team, meaning that you have within the organization to manage the assessment. And this is what actually this platform is doing.

And also I believe that the same platform, again you have several steps for qualifying the ideas. How much is typical, the ratio, how many of these ideas turn into something that will be implemented.

It's about 10 to 15% of the ideas that are actually really implemented. At the end.

That means probably most of the idea is more on incremental impact. So something just some small suggestion that might definitely improve the way things have been done based on variations.

Yes, absolutely, your assumption is correct. Many good ideas are also suggested but have already been implemented in the past as you can imagine. So that's the reason for this ratio as well.

Okay, cool. Let's focus now on the external part. Obviously there is the the corporate venture capital arm. Understand your off balance sheet. Remember it was launched in 2017. Can you provide us some figures in terms of how many investment has done? What are your poster children in terms of investment you're particularly proud about? If you got any exits, give us some details and what are the areas you're particularly interested to invest in? Again?

Yes, so we. We launched six years ago. So you were right first that it was a kind of roller coaster all this entire journey. You know, it was not so easy. Can you imagine? We are in a pretty much conservative industry with logistics, supply chain. It's not easy to launch a kind of corporate venture harm in those kind of organizations. But by chance I had the support of my management to do that. So we start pretty small. We increase our volumes of investments over the year, but we are still doing about three to four years a year with kind of small tickets between half a million Swiss francs to 2 million Swiss francs. Meaning that we are doing typically Serie A, right? Looking for startups globally, so not just Swiss startups. And we are offering smart money in the sense that the startup we invest in, we try to offer for instance the market entry in Switzerland or we are doing a project together, we are bringing also cash over joint projects, we are a reference customer or we introduced startup to our industry peers. So this is typically what we are doing at the end. We've done in the last 6 years 16 investments and we are exits, 2 internal exits and 1 external exits with internal exits. These are really the kind of we have with the venture capital which is acting as a kind of pre M and a tool in the sense that you do this kind of strategic investment in startups that are maybe not fitting entirely our the current strategy, but might fit the strategy of tomorrow, right?

Yes.

What happened twice in the past now.

That is interesting the ratio. Can you disclose some of the example of the company you acquired list? So we can also have an example of what we are doing and help us understand are you strategic or your financial and your decision or are you investing on horizon one or beyond horizon to an horizon three? So you're looking more in reshaping Swiss post in 2030, 2035 or you are trying to make investment that might have a potential application with the business unit. Because again the big question on the table and typically there is not a right answer to this question. If you invest in something that should have a validation from the business union, you are most investing close to the core business. Because obviously the business unit are interested in something that is an extension what they are doing today. While there are others that are investing beyond ahead of business. And definitely this kind of investments that do not have potential integration with the business unit in the short term. Because if you invest beyond the business, probably something that will not impact them in the short term or impact them in the long term. Because we are changing the way of doing. And so this is the typical question. And so also trying to find some KPIs to measure this strategic versus financial short term versus long term approaches. Some KPIs we have been discussing with your peers is number one is the number of investments where there is a POC or pilot of collaboration with other business units. That's always an indicator you're investing close by the core M and A is a complicated indicator to track. And that's also super interesting about your example because again if you don't acquire your portfolio company, it doesn't mean that you have the financial approach or maybe you have a very long term approach over Bosch. Again they are fund number five and probably they have acquired one or two startups out of hundreds of investments. So meaning the avenue process is very, very financial disciplined but also very long term reshaping Bosch 2035 rather than 2025. And so that was intrigued to understand some use case of your investments that turn into an acquisition because might be an indicator of how you guys are working. What has been the cases. Also you have also other 14, 15 companies that have not been acquired that are not interested to understand what you've done.

Many very interesting questions there, Alberto. So first let me say we need to grow organically and organically in different ways over acquisition, over venture capital. So we do actually both. Right to your first question. If a startup is at the moment so strategic for a business unit, probably the best way to do to collaborate with this startup is acquiring directly the startup so it's not the venture harm. And it actually answers to your second questions. We are targeting rather mid and long term. So we are doing strategic bet for the long term development of Swiss Post. And this is why for instance we invested in a startup called Brynk offering digital shopping lists for in store food shopping. And you might think what swisspos is investing in a kind of digital shopping list app. But our thinking at that time was that we are actually offering desects, you know, which we deliver in the letterboxes, this, you know, these flyers, right? And the big customers of those flyers are the retailers and especially the food retailers. So our Thinking by investing was that we want to offer this kind of multi channel marketing to those retailers. Let's carry on distributing flyers in the letterbox, but let's have a digital channel. This is the reason, the purpose behind this investment in this shopping channel list at the time we invested many people not so convinced, but we invested, we pushed the collaboration, we collaborate together, it works. Our clients were extremely satisfied. And then couple of years later we decided to acquire the startup. And this is the kind of thinking we promote over venture capital.

It's a good, good example that showed that at the time of investment, an idea of potential collaboration was not a bad business because it's probably a bit too far. Then you invested, you stimulated the collaboration and the collaboration worked and become something that entered part of the current strategy. So that's interesting. And can we make some example of something that is very, very far ahead? What you believe is more a moonshot among your investors, what is the more moonshot among your investments?

Oh, we have different kind of long shots, I would say in the logistics field. For instance, we invested five years ago already in autonomous robots for last mile deliveries in a company called Starship Y might know.

Starship has been invested also by Diamond Vance.

Absolutely. Mercedes by Sony Ventures as well, other corporate investors, also financial investors as well. And by the way, it was also a question you had actually about are we financial investor versus strategic investor? Actually we are both. Because we are saying that strategic investment doesn't make any sense if we are not also financially driven. And it answer to your question that some of the startups in our portfolio, they will be acquired internally, some of them not, but they are still good bets and they will offer us a financial return on invest when we exited externally. So you see, that's the reason why any of our investment is also financially driven. If we don't believe in the financial success of the startups, we don't invest, right?

Yes, you typically lead the investments or there is someone else leading and you just participate.

We can do both. But typically we like co investing also with vc. We think we are a nice combination as well towards the startup. So this is what we like to do.

You were mentioning that the footprint of your investment is global and you already mentioned probably be interesting to understand or practice your scouting activities at global level. You mentioned that you have some outputs in some of the most typical clusters. I think you are in San Francisco. Tel Aviv is another place where you typically visit and the other one is China with Shanghai. That probably requires something a bit more dedicated. How do you Work. How do you structure your scouting activities?

Yes, what is quite particular in our organization is that we have really this team, open innovation and incorporate venture capital together. In many organizations this is fully separate, meaning that we can leverage actually the network or the networks. Because there are several networks in several ecosystems for both purpose, collaboration without inequity and really investment. So this is something particular for us, meaning that we have many sources for the identification of potential investment targets. We do have of course the networks we've developed over the years with incubator accelerators in venture capital, the investor, the network is maybe best sources. We have participation of events and of course also in the industry, logistics and postal industry. We are also known as a big brand in the sense that we've been awarded also by the Universal Postal Union on UN organization responsible for postal industry six or six or seven times in a row. Like the most innovative postal organization. Meaning that in our industry we are recognized as an innovative player being able to do stuff with startups. And this is something that also we leverage in our industry. And what is nice as well in the supply chain or logistics is that this kind of competition for investment is maybe a bit less high than in fintech or in other fields. Meaning that you can position yourself if you are smart in a way that offer you good, good chances to get good deals.

You have any other global corporates you typically work frequently along or just as speculative opportunistic corporates.

Meaning as co investors.

Yes, exactly. The example of Starship was pretty clear in terms of there was a big consortium of industrial companies behind that there are some other company. You typically work closely together or just mostly opportunistic based on the deal, you. You find the companions.

Not in particular, there are not so many, especially in Switzerland, so many corporates investors. Meaning that we know each other and of course we had some deals together, but there are not kind of strategic partnerships ongoing at the moment.

Talking about the platform for open innovation, I think if I can remember there you are using two platforms. Can you explain how do they work and what the goal of this platform, how you are dealing with the external networks? Again, there is something that is more inbound, outbound.

We are actually leveraging several forms for open innovation. We have actually a platform that is acting like a startup. I would say where we really follow the stages of the types of collaboration with startups might be open innovation, collaboration or investments. So this is the kind of platforms we do have, but rather for internal management of the collaboration with startups. And we do have the same kind of platforms as well for the academic partnerships where you can really think about how do you connect with the academic world. So those are the digital platforms we are using in order to manage our networks in the most efficient way. Plus then we have external platforms or partners that we leverage as well as for instance in the startup ecosystem, we do have Plug and play like a kind of global partner. We are actually partnering in the supply chain vertical that they do have. We have also partners in the form of SwissNext for instance, an organization that, you know, Alberto, which is actually offering the connections over their own networks in specific ecosystems like Shanghai or Francisco and so on. This is the kind of platforms, physical or digital, that we've been using.

If you would provide some advice to some of your peers and just to tell what are two, three things that really help you in properly doing your job? Again, what should be the tips and maybe a couple of things that you have learned that didn't work.

I would say first we are talking about open innovation and venture capital. And so. But open innovation starts for me very much internally. So you are thinking about external. No, think carefully about your internal networks. Right. So once you identify the external insights, how do you promote, push, facilitate the development in house, internally? And that's very important. And I think that's where actually a lot of corporates are doing it. Not in the best possible way. And the second one I would like to mention is about venture capital. You'll see many corporates starting with venture capital having no experience and expertise by working with startups and they start directly with venture capital. I think it's wrong. We really went step by step. We really built up our startup ecosystems, first in Switzerland, then in Europe, then globally. We pushed collaboration, we had success stories with startups. We were able to convince the management, then we started our venture capital and then we have this ability actually to leverage the collaboration with startup in different ways. But it has taken many years to achieve where we are now. So that's also a kind of advice I would like to hand over. Go step by step, add success stories and then you will have the commitment of your management.

What you're seeing multiple corporate. And the larger the corporate typical, the larger the problem. Most of the barriers are internal rather than external. In external there are plenty of solutions. The problem is when you find a solution, assuming you find the right solution, but it's not that complicated is to make sure that the solution might be implemented internally and internally there is not a sort of rejection or some. Most of the time it's just parking aside again. Oh, this is interesting. We'll definitely do a pilot and then you start the pilot and nobody really ended or it goes nowhere. Your words are confirming that focusing a lot of attention in building the internal condition and also building the internal appetite to support what you guys are doing helps a lot. And then top level by him helps, but you need to get a vote of confidence from the top management and then you need to walk the corridors of the business unit to make sure that anything that that's thank you for our conversation and definitely we are eager to stay in touch and to learn more about your program, your success stories, your ancestor stories, your next exits, your next future bet. So definitely interested to know more and congratulations for your year as you've been doing.

Thank you very much and thank you very much for this opportunity to share. Always happy to share best practices and experience and of course keep in touch. Thank you Alberto.

Bye. Thank you for listening. In the next episode of the Open Innovation Talks, my partner in crime, Marco Marinocci, will talk with Soco Reid of LG Nova. If you like this podcast, please go to the mind the bridge LinkedIn page and tell us what you make of it. We love to hear from you. See you next week.

Thank you for being with us today and see you in the next episode of Open Innovation Talks, Mind the Bridge chat with industry leaders.