Venture Clienting in Practice: A Study of DB Schenker
Startups Must Mitigate or Even Eliminate a Pain in the Organization
In Brief: Since 2015, DB Schenker, a global transportation and logistics provider, has collected a database of over 4000 startups, of which more than 1250 have undergone evaluation in collaboration with four business units: air and ocean freight, land transport and contract logistics and the respective functional units. They have orchestrated 130+ global pilots and integrated 45+ startup solutions into their standard operations, serving business units across 50 countries on all continents.
Their key to success? Consists of 5 Steps and clear KPIs...
Seven years ago, DB Schenker implemented a centralized startup management team, dedicated to embarking on the adventurous journey of Venture Clienting. We have garnered invaluable insights, particularly about the cultural divergence between startups and corporations. While startups are often likened to agile speedboats and corporations to lumbering tankers, this metaphor underscores a crucial reality: corporate decision-making cycles can imperil a startup's financial runway, yet if the collaboration has started there are almost unlimited scaling opportunities.
The majority startups worry about a lengthy decision-making process, which ultimately might result in the startup running out of cash. This means that the perception of time is very different between startups and corporations. Ultimately, if a corporation wants to purchase from a startup, processes need to be fast and efficient, without long feedback loops through several levels of hierarchy.
At DB Schenker, there is a fully established target operating model for the Venture Clienting unit in place. This entails the mission statement, value proposition for the core organization and startup ecosystem, the underlying structure including the governance model, a well-established and running process as well as implemented tools, OKRs, KPIs and clear skill set combined with competences and mandate to foster collaboration with startups.
Behind the Scenes: The Target Operating Model of STARTup terminal
1. Push vs Pull
In the push approach, startups are integrated into the organization based on their perceived relevance and innovation. Here, the focus is not necessarily on immediate business needs, but rather on potential, market presence, and innovation. This is often the strategy for early- stage partnerships and allows corporations to potentially be first movers in adopting new technologies. However, this exploratory method comes with risks like timeline delays and over-promises from startups.
In contrast, the pull approach is more strategic and aims to solve specific, identified pain points within the corporation. This method involves a thorough evaluation of business needs and then scouting for startups that can provide the exact solution required. It is generally more focused and mitigates risks by closely aligning startup solutions with corporate needs. The pull approach ensures scalability by being directed towards a clear target. It is often backed by various functional units within the corporation, making it a sustainable long-term strategy.
2. Dense network of innovation enthusiasts
We understand ourselves as the entry gate for the startups responsible for finding the right ‘terminal’ aka contact person in the different business and functional units across various regions. It is a must to have committed and open-minded contact persons across all relevant operational activities. To further enable knowledge transfer and create synergies across business units and regions we have implemented an innovation platform from itonics.
This network is not only crucial to validate or reject novel solutions from startups but even more important when it comes to the execution of the pilot and long-term ownership of the supplier relationship. Maintaining this network is an ongoing task due to staff changes, shifting priorities, and evolving organizational structures. We believe our new brand startup terminal will help to position and encourage continued commitment from our internal network.
3. Running governance model
Our governance model ensures cross- business unit commitment regarding resource allocation and budgeting. This is particularly important when it comes to scaling startup solutions. Therefore, we only initiate pilots after receiving the GO from our global innovation board - it is with this commitment that we ensure the alignment of our projects with the overall strategy. This approach, in turn, allows us to further pursue topics post pilot in a scaling phase, minimizing the risk of tumbling over lack of commitment of resources.
4. Measurable KPIs
Measuring success and impact of the innovation department has been a key challenge for practitioners and academia since the very beginning. Yet, we at DB Schenker are happy to face this challenge and take the opportunity to demonstrate the impact of our work (next to open innovation calls, innovation ambassadors and internal pain point challenges). Having clear operational and financial key performance indicators helps us to focus on the topics that provide the biggest impact for the entire organization by letting go of what’s too complex, holds too little potential or is too far away from our strategic goals.
GlassDollar Insights: KPI & Impact Measurement
Based on the analysis of 40+ corporations. Key observation: Universal recognition of need to measure impact - however only systematically done once growing.
GlassDollar Context: Take it step by step...
The cost associated with measuring Key Performance Indicators (KPIs) poses a significant consideration, particularly for beginners who may have limited resources. Consequently, those in the early stages tend to measure fewer KPIs focusing on # PoCs & adoptions. However, as Venture Clienting activities mature, there is a universal recognition of the importance of tracking impact, leading to a shift in focus towards proper and comprehensive measurement of KPIs. This transition is crucial for a more nuanced understanding of project & unit performance and informed decision-making.
Venture Clienting in Practice - DB Schenker's learnings
The 5 steps towards venture clienting at DB Schenker
- Strategic Fields & Pains
Our playing field is gated by validated, committed business pain points. Together we identify use cases in the core business services and processes that (might) have further potential to be automated or digitalized. We also monitor industry trends, discerning which we can influence and which we simply need to understand.
- Startup Sourcing
One of our efficiency drivers is a diligent pre-filtering based on specific knock-out criteria such as technology-readiness and industry focus; our Venture Clienting unit acts as "startup bouncer”. These criteria are updated regularly and aim to identify startups that can function effectively in our complex, real-world business environment. Therefore, DB Schenker uses a pull approach, actively scouting for startups that solve our validated business problems.
- Startup Evaluation
After identifying promising startups, we facilitate introductory calls to explore potential use cases. The ultimate goal is to agree on a pilot project, complete with KPIs, terms conditions, and responsible contact persons. This is the make or break: in this step, the base work for the desired pilot is done. Sometimes the startup is not ready, and sometimes we are not ready. We like to see rejection as protection.
- Pilot Steering
The pilot process is broken down into the phases “preparation” and “execution”. It is vital for us to support pilot preparation with administrative and methodological guidance. By setting up a pilot canvas, we facilitate pilot execution and ensure initialization of the next steps. The goal is to have all pre-defined and aligned KPIs flagged green, to ensure extending the contracts post-pilot and to find scaling opportunities.
- Startup Portfolio Management
Successfully piloted solutions can only be scaled if their (long-term) value is demonstrated to and understood by all stakeholders. To build trust and raise awareness, business partners and startups founders get to pitch the solution to other relevant stakeholders in new business fields and regions. To understand the impact of our work for DB Schenker, we also monitor, track and analyze the impact of the previous pilots and scaled solutions. It all remains a learning journey, for DB Schenker, for startups, and for us personally.
