A Different Approach to Corporate Innovation


In 2017 I left my big fat director job at Making Waves and said goodbye to corporate life. I thought I said farewell to big companies forever. I was done with corporates, and even more with corporate innovation.

After 15 years of doing in-house work for Sony and Philips, and consultative work for Sparebank 1 and other Norwegian brands, I was fed up with the corporate innovation battles I am sure many will recognize: The constant politics and minefields of turf wars and conflicting interests. The fear of stepping on the wrong toes. Needing to get on the good side with management and have a big gun’s blessing for your work. Taking forever to get stuff off the ground, let alone get it to market. Fighting for resources to go future chasing, not fire fighting. Bringing somebody’s crap idea to life, because they hold a senior position. Seeing good stuff stopped because it’s not on brand. Then seeing competitors succeed with it instead. The missing sense of urgency and drive to go the extra mile. The feeling that nobody really cares if we do better stuff. And why would they? They all get paid anyhow.

I left to work with entrepreneurs and nimble small teams. Hungry and dependent on success. Driven by passion and the will to deliver a better solution. Knowing that your ability to bring this forward is what puts food on your table. Free from politics, technical debt and allocation fights. And by running my own company, I also experienced the boost of being the decision-maker, being 100% dependent on my own drive and seeing my own efforts directly influence my paycheck. I had a great time. So when Finstart Nordic and SR-Bank came knocking, I said No. I’m not going back to corporate employment. I am my own boss now.

Finstart Nordic employees - photo

Fast forward to today, and I have been with Finstart for more than a year, as Head of the Lab where we develop new ventures from scratch. During the first year, we have managed to create and launch our very first venture, and have more coming. I’m excited, so it feels appropriate to share how we do things and point to the things that constitute a new approach to corporate innovation.

We are an independent operational unit — trusted to make our own decisions

Although fully owned by SR, we are a separate operational unit — not an innovation department. We are trusted to run our own business, in line with the strategic mandate given to us by SR. We have our own team and our own budgets.

Micromanagement is removed, and it is a blessing. We are trusted to decide what market areas to explore and can start any work without waiting for further acceptance. However, any major investment in an existing start-up or a homegrown venture has to be presented to the Board of Directors for approval. By the time we propose something major for the Board, we need to have done solid work on both opportunities, product, market, tech and financials.

Our model allows us to initiate things even if we don’t have the full picture yet. In my opinion, this is crucial, because I believe innovation starts bottom-up and not top-down. I believe it starts with people, having an idea of something that could be done better. An unmet need. A problem that should be fixed. A gap in the market. An inkling, or a hunch. But not at all the top-down analysis I’ve seen some companies require before doing something new. In the early days, you don’t know what the market value might be. You don’t have a go-to-market plan. And you’re likely to pivot many times before getting the right product-market fit. But your initial thinking might still be valid. In many big organizations chances are it is killed by analysis before getting started.

That’s why being able to start early explorations without too much hassle is important. We try to create a place where we can follow inklings and over time — through prototyping and testing — mature the hunch to a proper product venture. Or not. Some of our stuff will never see the market. Nobody can offer a 100% success rate on innovations. And for that reason as well it’s important to be quick on our feet and get things off the ground. A solid pipeline of initiatives is important because not all will succeed.

Our governance model lets us do this. It offers a good balance of freedom and trust, access to board members for important discussions and then clear requirements on how a case should be presented to the Board of Directors when it is mature enough to become a free-standing venture.

Finstart nordic employees - photo

We’re set up to create new ventures, not new features

Another aspect of our operation is that we are clearly tasked with exploring opportunities outside SR’s core business. We are set up to create new ventures. The mind-set of creating a business, not a concept or a feature, is in my opinion necessary to create the proper drive in our work.

Whenever we start working on something we need to believe that we eventually can make a profitable business from it. A business that can attract users, attract a talented team, stand up to competitors, and actually earn money. I find it very powerful to ask the question: Does this have what it takes to stand on its own feet?’. It makes us naturally shy away from problems that are features or incremental improvements. I do have a lot of respect for incremental improvements. But a company also needs to see what’s next, and that’s where we come into play.

Focusing on new ventures also helps us see the world outside of the mother brand. This is key. We are not making things to fit within what SR is today. We are making stuff that fits the market. It is an important distinction and in my experience a place where many in-house innovation departments go wrong. You come to love the brand and want the best for your company. It clouds your judgement and makes innovation about brand-fit, disregarding opportunities that are not in line with the brand today. When in reality, your brand constantly needs to evolve, and you should look outside your brand offerings. Because consumers do. And in our world, where PSD2 makes it easy for completely new players to enter into our domain, all existing brands will be challenged.

But isn’t the mother brand also an asset? I hear you say. The answer is yes. The mother brand can be a very valuable asset and can, for instance, make a new service trustworthy. So we always consider how we can use the brand to benefit new ventures. Should it be a powered by? Should it be sold via brand channels? Should it be white-labelled? We have examples of all the above. But our starting point is not how to strengthen the brand. Our starting point is to understand what unmet needs we can cater to and to build new ventures from that.

We have skin in the game

The third thing I want to highlight in our approach is the fact that our team has skin in the game. We have the option to co-invest and take a real stake in the performance of our investments and ventures. We stand to earn if they do well, and we’ll lose if they don’t.

Finstart Nordic employees working - photo

This is important for two reasons. Firstly because it becomes an immediate acid test in our work. Are we doing something that we actually want to put our own money in? Do we believe in it that much? Is it that good? All of a sudden success or failure isn’t about some corporate management bonus scheme, but about ourselves. It raises the stakes. We can own up to 2% of any company Finstart is engaged with, but if we succeed, even 1% is a lot. All of a sudden those extra hours might be very well worth it. In my view, it creates a different drive.

Secondly, everyone in our team is capable of starting their own business. And in fact, almost everyone has. Our team is made up of entrepreneurs. They are driven by building great stuff. And they know that they can make it happen. And, if they did it on their own, they would stand to gain from it. Or lose of course, but they accept the risk. And these are the people we need to work at Finstart. We need the entrepreneurs and the risk-takers, and to get them on board we need to offer ownership. Without going all Ayn Rand, I believe that this exposure to risk and reward is crucial if you work with innovation, venture building and entrepreneurship. Giving the team true ownership to what you do, unlocks the personal passion and drive necessary to succeed.

Finstart Nordic employees - photo

Nobody’s perfect

I started off this piece sharing the struggles I have had with corporate innovation before, struggles I am sure many of you still have in your daily work. I am happy at Finstart, and I believe in the way we’re operating. Our governance model, our focus on ventures and the skin we put in the game, allows us to move more like an entrepreneurial team, and greatly benefits our owner SR-Bank.

But nobody’s perfect. There’s a couple of things that need to be ironed out when we move into our second year of operation.

We need to be better at playing the middle field
Right now, it’s very comfortable for Finstart and SR to be at different ends of the innovation spectrum. SR does what SR does, and Finstart does the rest. This is not in any way good enough. We need to be able to collaborate on the middle ground, where many interesting challenges can be found — for instance in relation to open banking. That’s why we have a least one potential collaboration venture lined up for next year.

We need to calibrate our views on risk
You cannot be in the venture business without accepting risk. This SR knows for sure. For every successful venture or investment, hundreds have failed. But still. How do you actually evaluate the risk? When do you say yes, and when do you say no? And on what grounds? You don’t need much imagination to understand that venture builders and bankers might pull in different directions when assessing risk. But some common ground and mutual understanding are necessary. Going forward, Finstart will more actively discuss potential risks in the material we place in front of our Board. And our Board will travel and meet other CVCs, incubators and accelerators, to get inspiration and new knowledge on risks and ventures. The ambition is not to close the gap, but to create a shared understanding of how we address risks in the Finstart space.

We need to leverage each other
Lastly, we need to leverage experts on both sides. Finstart has been given a dedicated room to operate. That is fundamental. But in that room, there is space for expert knowledge from our owners. Financial services is a regulated industry. Domain knowledge is not only important but could be an unfair advantage to our ventures. Many fintechs work hard to find a banking partner — we already have one. In Finstart, we have entrepreneurial and product development knowledge. SR knows everything finance. We need to leverage this and bring both perspectives into our teams. Friction will arise, but friction can be good. That’s how you make diamonds.

So there is work to do. But as I don’t suffer from corporate fatigue anymore. I am ready to keep evolving our model during the years to come, and to bring out new exciting stuff on behalf for SR. And to all my corporate innovator friends out there: I hope you can use our experiences to change your ways. Because a different approach to corporate innovation is possible.

About the author

Cathrine is Chief Product Officer and Head of the Lab at Finstart Nordic. She is a designer and strategist, specialising in digital product development. She has more than 15 years of experience combining design and business thinking.