Innovation and competitive watch: the role of investment funds – Part 2 : Alstom

Alstom

How to detect innovative technologies

Operating both within the fields of power (Alstom Power and Alstom Grid) and transportation (Alstom Transport), the core business of the Alstom Group is subject to an innovation imperative: both into adjacent territories, and into disruptive technologies, markets and business models. Smart grids are an illustration of this imperative, as they produce power that is both delocalized and adjusted to the fluctuations of capacities and needs. Since 2007, the « I Nove You » program has reinforced the focus on innovating projects, leading to a permanent competitive watch on innovations falling the business domains of the Group. How does Alstom detect high potential start-ups, how does it then support their development, and finally, how does it eventually integrate them into the Group ? We believe that the case of Inspection Robotics contains answers to these questions.

Inspection Robotics as a starting point

The starting point lies here in the desire of Alstom to develop a robot dedicated to turbine maintenance. For this, Alstom required external expertise. Opting for an incubator solution, Alstom opted to provide human, financial and commercial support to a start-up from the ETH Zürich. But this approach brings with it the difficulties inherent to incubators. The work of Foucauld Dalle (who was a master student in innovation at the Ecole Polytechnique), on which we base ourselves, has made it possible to build a typology of different ways of accompanying start-ups, or external technology projects, based on five key variables: the type of innovation, the maturity of the innovation, the distance from the core business, the criticalness to the industrial partner, and capital intensiveness. In all configurations, it is a fundamental requirement to set up detection instruments.

Investment Funds as a detection tool

The solution adopted by Alstom to implement such a detection tool consists in an investment fund combining several non rival big corporations in the energy and environmental sectors. This observation post makes it possible to review a great number of projects and to invest in the best of them. The present evolution of this structure is towards an increase in size, an increased deal flow, and a higher number of potential investors for start-ups. The present deal flow is 1200 business plans per annum, which provides Alstom with real detection capacities. Once the detection phase is over, the project is transfered to an ad hoc business unit, depending on the project match.

Drawbacks and limits

Drawbacks

This set-up is however not without problems: indeed, the R&D budget being annualized, it makes it difficult to create long term partnerships. In addition, there is no integrated tool covering at the same time detection, project support and group integration. An optimal management model would build on an identified community capable of interfacing with all the actors, of promoting a common language and of centralizing information. With this in mind, Alstom is thinking of creating an open innovation portal similar to what Bouygues and Procter & Gamble have put into place.

Limits

Alstom’s approach raises several questions: can this model benefit from using innovation intermediaries such as PRESANS, who specialize in the detection and collaboration management of external experts ? From a technological perspective, is the competitive watch solution capable of functioning in real-time ? What is the share of value that remains for the inventors once an innovation is deployed by an industrial company? Finally, some projects risk falling under the radar because they are not presented in the right context. The organization along thematic axes of the competitive watch must not lead to a siloing of the project detection system.

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