To thrive or not to thrive? Why entreprises should work with startups

Marika af Enehjelm works as Executive Director of Innovation Management in Minimax Viking, one of the world’s leading fire protection companies. Previously she operated as the CEO of Finnish Venture Capital Association (FVCA) and was an active business angel.

She's currently witnessing how traditional industries collide with digitalization and the rise of startups.

Many traditional manufacturing companies feel they should digitalize their businesses, but don't know how:

"They may already have IoT enabled machines, they are aware of the development of sensors which are easily retrofittable and data transmission technologies which don't consume much energy thus increasing the battery life time of the sensors. To build a solution takes a lot of expertise in these new and fast developing technologies. An even bigger challenge is using the data in meaningful ways to create more efficient processes or new business models."

The typical startup way of operating could be the solution:

"Startup operations are based of quick and dirty trials, learning from them and improving the next version is a good way to tackle the digitalization challenge. When venturing into new areas, you can't plan everything ahead but have to learn as you go. For the same reason you should not make huge upfront investments, but proceed step by step and make sure you reach small successes along the way. Therefore startups are good partners for exploring new technologies or business models."

Whether or not in manufacturing business, corporations have many reasons for investing to startups:

"Some even do it for the expected financial returns. But the main reason is that more and more technological innovations happen in startups, so it would be dangerous not to follow what is going on there. Investing into startups can be also seen like a hedge - if new technologies are going to cannibalize my business, at least I gain by being an owner in them."

Marika af Enehjelm will join Avanto Executive Breakfast on Thursday 20th October to share her learnings on running a Corporate venture fund in the manufacturing industry.