How Deutsche Telekom and Deutsche Bahn spread the risks of venturing
Tldr: Deutsche Telekom and Deutsche Bahn are venturing through multiple organization alternatives and are thus spreading the risk associated with one option. Every venturing activity requires requires Entrepreneurial Management.
Based on my latest articles on the Venture Pyramid and the alternatives of venturing for corporates, I conducted a small research on the venturing activities of Deutsche Telekom and Deutsche Bahn. Both companies are quite active in the realm of venturing – Deutsche Telekom and Deutsche Bahn create ventures inside the company and support also venturing outside the company.
As I highlighted in the article on the alternatives of corporate venturing, there is no one best way to engage in venturing, it requires spreading the investment risks. Every one of the alternatives is a decision for an investment and the potential returns on the alternatives are completely different – from increasing competitiveness through an internal transformation to leveraging investments in outside businesses.
Deutsche Telekom runs different alternatives to boost innovation
Starting with Deutsche Telekom, one can observe, that the company has continuously developed its venturing alternatives and is now pursuing various activities.
Telekom Innovation Laboratories (also known as T-Labs) is based on an cooperation between Deutsche Telekom and Technical University of Berlin, partnerships with startups and focuses on the R&D of innovations that improve the daily business of Deutsche Telekom. Formerly set-up as pure strategy unit, Deutsche Telekom wants T-Labs not only to ideate, but also to deliver innovations.
Uqubate is an intrapreneurship programme at Deutsche Telekom, that accelerates business ideas from employees (see picture below). Some ideas e.g. Zubiq might have received equity and are organized as an own legal entity. It’s remarkable, for such an internal program, that many of the ideas don’t have anything to do with the current core business of Deutsche Telekom. Although many great ideas have been developed, I couldn’t find any of them on the internet anymore. It is - at least from an external perspective – difficult to evaluate, whether Uqubate can have an impact beside helping to transform Deutsche Telekom. [Johannes Nuenning - Initiator and Head of Uqbate sent me with linkedin comment the current URL of the website and informed me about eParkomat. The Uqbate Alumni just closed two finance rounds.]
hubraum was one of the earliest corporate business incubators in Germany (founded in 2012) and has accelerated e.g. Blinkist to growth and their Series A investment. The hubraum startups are like the activities of Uqubate not developed around the core business, but are enriching the core of Deutsche Telekom.
Deutsche Telekom Capital Partners was founded in 1997 and invested $1 billion in over 70 companies. One of the companies was e.g. Scout24. Capital Partners focuses the investment on technology assets with sophisticated intellectual property and differentiated business models with high disruption potential.
Deutsche Telekom very regularly runs different Hackathons (e.g. Smart Public Life) to let startups and individual developers leverage the developed competencies. A very new approach of Deutsche Telekom is TechBoost to give startups a (discounted) access to the Telekom infrastructure and marketing support. The main question is whether this has a relation to venturing or not. I see it more as a specific marketing program to increase attraction for companies with smaller pockets.
Deutsche Telekom has a relatively “long” history in venturing, with setting up early a venture capital arm and creating Uqubate as well as hubraum. The knowledge Deutsche Telekom created on success factors, potential barriers and pitfalls when accelerating incremental or disruptive innovations through different venturing alternatives seems to be very valuable for other incumbents.
Deutsche Bahn with a variety of different activities in venturing
Deutsche Bahn has like Deutsche Telekom developed various alternatives to bring up new ventures. In a recent post Manuel Gerres (Head of DB Digital Ventures) pointed out that DB is engaging broadly on the different Venture Alternatives.
And I do agree with Manuel, that DB is very active on the different Venturing Alternatives support intrapreneurs and startups while in their venturing progress. See below an overview of the current DB venturing activities.
I could not find anything public that is specifically highlighting internal departments which are responsible for developing new ventures, but I do expect them to exist.
The DB Mobility lab (d.lab) focuses on creating innovations that are targeted to enhance the value and experience of passenger transportation. The lab is located in Frankfurt and focuses its operations on ideation and prototyping for internal departments. Furthermore the d.lab is aiming to impact the transformation of various internal departments through specific formats and workshops. It is from my point of view highly relevant for these types of innovation labs to have a clear understanding of the internal customer’s needs, so that it is easy to hand it over for product realization. I do think though, that such an approach is not focusing on the market progress, but on the technical progress of a venture or an innovation. The validation of problem-solution-fit incl. the definition of a MVP, would be an interesting hand-over point.
Skydeck is a program set-up by DB Systel GmbH – the IT service provider within Deutsche Bahn Group. It focuses on supporting internal departments to create prototypes for internal customers. The Skydeck Accelerator is an intrapreneurship program which seems to be comparable to uqubate from Deutsche Telekom.
The DB Schenker Enterprise Lab focuses its activities on the development of new digital logistics products and business models. It is not clear though, if the lab operates with the objective to focus on edgy technology development or to bring up new ventures. New venturing in the logistics domain is highly relevant, since the logistics market is full of untapped opportunities.
As part of the External Accelerator “Beyond1435”, Deutsche Bahn has created an intrapreneurship program that allows intrapreneurs to run through the same process like external startups and with the potential to get investment and to build a company. This is definitely an interesting new take on how to boost intrapreneurship and promises from an outside view lower barriers and obstacles that intrapreneurs typically face while realizing their projects.
Beyond1435 is in its core an accelerator in cooperation with Plug and Play that provides external startups with funding, a co-working possibility at mindbox and mentorship. The program started earlier this year and the startups in the last pitching session looked quite promising. Next to Beyond1435, mindbox is another DB Accelerator, which started in 2015. One of the startups that mindbox supported is the scooter sharing EMMY, which is today renting scooters in various cities in Berlin.
The accelerator program Beyond1435 is part of the Digital Venture GmbH, which also invests in later stage startups with their venture capital operations. The Venture Capital arm of Deutsche Bahn is equipped with a fund of $100 million.
Deutsche Bahn impresses with many different activities. However, it is unclear for me how e.g. mindbox and Beyond1435 differ in their value for DB and their value for startups.
Deutsche Bahn and Deutsche Telekom signal, that it is important to spread risks when venturing
It seems that both companies are very active in creating ventures through various alternatives. Deutsche Bahn and Deutsche Telekom are very much spreading the risk that is associated with a venturing alternative. It is interesting to see that a company like DB who is diversified through its logistics business and passenger transport business, has created different internal accelerators e.g. d.labs and DB Schenker Enterprise Labs that are focused on the different customer groups. The examples of Deutsche Telekom and Deutsche Bahn indicate for every incumbent, that it is important to drive various types of venturing. Some in order to increase competitiveness in the home turf, others to developed totally (formerly unconnected) businesses.
With their activities, I think both Deutsche Telekom and Deutsche Bahn are great examples how to approach venturing. For me the question remains how the relevant white spots are identified, when different venturing alternatives act at the same time. E.g. the question on mindbox and Beyond 1435. Another question that I see as very critical is how many ventures actually make it through an internal acceleration.
Internal Acceleration requires Entrepreneurial Management
Venturing is an activity under high uncertainty and thus requires a totally different type of management. It requires Entrepreneurial Management, which is based on the principles of speed, real market progress, experimentation, adaptability, waste minimization, acting on affordable losses and so on. Everyone who aims to develop ventures needs to follow these Entrepreneurial Management principles. In cases of outside venturing, it is very simple, since it is upon the entrepreneur to follow these principles to avoid e.g. overconfidence and confirmation bias or the planning fallacy. In internal accelerators scenarios e.g. innovation labs or intrapreneurship programs, the implementation of Entrepreneurial Management is often in strong conflict with established Traditional Management cultures, processes or structures. These conflicts don’t only impact the performance of the venturing teams, but also their motivation. Without solving these conflicts, you risk losing your greatest entrepreneurial talent, since you might promise your intrapreneurs that they have the chance to innovate, but they de-facto cannot.
We have developed a self-assessment for internal accelerators (e.g. labs, incubators) who are aiming to perform like a startup through Entrepreneurial Management. The assessment is leveraging more than 10 years of experience in intrapreneurial settings and many scientific insights. With the help of the assessment, you’ll be able to:
- Compare and Learn from Leaders
- Identify Rooms of Improvement
- Understand Conflicts in your current Setup
Contact us, if you want to perform like Startup.
Dr. Lutz Göcke is the founder of the innovation consultancy Swan Ventures which offers services and SaaS-tools that help you climb the Venture Pyramid with speed and at low cost. Lutz is a Serial-Intrapreneur, Startup-Mentor and a Lecturer on Entrepreneurship, Innovation and Strategic Management.