Published 28. Sep. 2016
How to Create a Startup Environment in a Corporate Setting?
OP Financial Group, the world’s eigth strongest bank, according to Bloomberg, is betting on digitalization and taking steps towards transforming the whole organization into a multi-industry service giant. The change is accelerated by a two billion Euro investment in digitalization. As part of this renewal, they have established hubs that are working like startups and created new, entrepreneurial culture.
This is an interview with Masa Peura, Director of New Business at OP Financial Group, who is in charge of finding new interesting startups and providing them with ideal circumstances.
How do you build your network?
Since last year, OP has been systematically building a startup environment and inviting companies to join the network. Basically, we use our own networks to find the most potential ones. In addition, we use some existing international communities like ArcticStartup or Slush to meet interesting new contacts.
It also goes the other way around. When we manage to create an inspiring environment, people will ask to join. It is about planting seeds for a culture that attract the best ones.
What are the main criteria for a good startup?
It is all about people. Startups live and breathe with their founder, if the person is well-known and passionate, the good team will follow. A potential startup company also has a reasonably good original idea and an interesting story.
We are looking for persons and teams who already have a proven track record, maybe those who have already done a couple of exits. Obviously, the idea should be potentially valuable for our business.
How many startups do you expect to be successful?
We have not decided on a specific goal for that. It is often repeated that every 10th startup succeed, but I don´t believe in that kind of generalization. The best startup hubs´ success ratio is over 50%. In our network, there were originally 20 companies at the beginning of this year, and 50% of them continued. Some of them would hopefully be successful in future.
How can you help a startup to succeed?
We are offering them an opportunity to create something new and the best circumstances to cultivate their idea.
Naturally, we invest money, too. We finance the start with some seed money worth 50, 000 Euros. In the second round, we invest one to five million Euros more – if the company meets the criteria.
Most importantly, we offer an environment that encourages authenticity and agility. Startups are very fragile at the beginning and they should not be killed by corporate bureaucracy, regulation, and exhaustive reporting. Quite contrary, it seems that the less we interfere, the more successful they are.
Why is that?
Well, a team needs some time to figure out who they are and where they are going. Their focus should be on external issues, not corporate stuff or internal issues. Time, independence, and trust are essential
How do you ensure that the startups are going in the desired direction?
Of course the focus from the beginning is to create our business. While evaluating startups and their potential – that is the main criteria. However, one reason for the network is to create a culture of experimentation and thus, you have to accept failures. Sometimes, the team works with some ideas that do not work but comes up with a better idea later on. A good team will eventually succeed.
How long you are waiting to see the results?
One of the unique benefits is that startups deliver rapid results. As I mentioned earlier, our focus is on how useful the service or product is for our business. It takes a relatively short period of time to see if the idea has any potential, maybe two to four months and after that you should be ready to do some piloting with a test group. That is the reason why startups are actually more cost- efficient than traditional internal development programs. It is relatively easy to react and shift quickly if needed.
What kind of problems do startup cultures face inside a big company?
Companies are better at talking experimentation culture in theory than implementing it in practice. The fact is, if you apply all big company processes into startups, you’ll suffocate them. Motivation is more often killed than nurtured.
It is important to create a program or framework within startups so they may perform independently. What organizations do not understand is that even though the single task or demand may be relevant and reasonable, the cross linkages multiply the amount of tasks and some of them are conflicting. All this corporate stuff creates slowness and inefficiency.
Between internal innovation project or startup cooperation, what would you recommend?
It depends, but I assume that you need both for different purposes. However, people tend to exaggerate the risks of startups. It is not as expensive as you may think. Quite contrary, the cost effectiveness and agility are built inside a startup culture. Potential and non-potential startups are recognized at an early stage. Meanwhile, internal development projects tend to get stuck in conflicting interests and suffer from bureaucracy. Also, it seems that they are harder to kill if they don´t succeed.
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