Interview with the founders of the LOIC on how Luxembourg’s businesses & startup ecosystem are banding together to innovate
The Luxembourg Open Innovation Club (LOIC) works to protect local businesses from this common fate. According to their school of thought, innovation is a relay race, not a sprint, relying on joint effort.
The days when established businesses could ignore startups are long gone, as seen in AirBnB’s takeover of the hotel industry and Uber’s redefining of taxi services.
Open innovation encourages companies to do the opposite: look outside themselves, collaborate with startups and share knowledge. Those that stick to the isolationism of traditional R&D — an internal, fixed-cost approach — may fall behind.
“The world is changing all the time and open innovation is a way to cope.”
Launched on May 25, 2016, the LOIC was founded by Nyuko, lux future lab, Technoport and Luxinnovation (LOIC partners) and now maintains a comprehensive network of corporate members from all sectors of the local ecosystem. It accelerates and multiplies innovation efforts by facilitating relationships between startups and companies, guiding them through the overwhelming startup universe.
According to Martin Guérin, CEO, Nyuko, open innovation is the future. “The world is changing all the time and open innovation is a way to cope,” he said. “The problem isn’t that large and midsize companies are not creating innovation, it’s just that the current level of disruption is so massive it requires all industries to accelerate their efforts.”
The LOIC partners draw upon their network of startups — the largest of its kind in Luxembourg — select appropriate matches and introduce the two parties, who take it from there. Notably, the Club is designed to be self-sufficient, run entirely by its members for its members.
“We were highly interested in joining right from the start,” said Karin Schintgen, CEO, lux future lab. “We fully recognize the value of such a forum. Last year, BNP Paribas started a similar initiative in Paris called “Innov&Connect” designed to connect its corporate clients with startups. Considering that Luxembourg is a much smaller place, we believe in uniting our efforts with those of other local actors for the benefit of all corporates, whether our clients or not.”
How does the Club work? Members — local companies — inform the LOIC partners of a specific theme in which they are interested, such as recruitment and mobility or smart packaging.
“We give them access to startups that are developing new technologies, products or services in the space they need,” said Itzel Lerma, LOIC Ambassador. “For example, if a retail bank is looking for new ways to interact with customers, we make a call for startups developing technologies in that area. We don’t narrow it down to one technology, because it’s not about what companies know they need, it’s about what they don’t know.”
Events include Innovation Dating where members and startups meet to discuss relevant themes, and Innovation Workshops, a time for members to share experiences, challenges and strategies.
“There are already communities of entrepreneurs and that’s how entrepreneurship has become the movement it is now, because they support each other. This is equally important for corporates,” Guérin said.
Historically, advancements were often made when technologies were applied to sectors for which they were not intended. For example, a solution designed for a law firm could be just what an energy company is after. The LOIC’s monthly Innovation Workshops give large and midsize companies the opportunity to make these connections.
“There’s a lot of value in exchanging with different industries because the processes are similar. As business models shift towards service, there’s going to be much more overlap, and this is something that we’re starting to see,” Lerma said.
Within the next five years, the LOIC aims to grow from 10 members to over 60, achieve dozens of success stories and dispel the misconception that working together is threatening.
The concept of open innovation is fairly new in Luxembourg. Some companies still believe that one’s competitive edge hinges on secrecy, so the LOIC’s main challenge is to change this mindset.
The idea is simple: a company that cooperates with a startup will advance faster than one depending solely on an internal team. “Internal productivity doesn’t compare to that of a startup that is working on its passion. If it fails, it loses everything, which is not the case with internal R&D,” Guérin said.
Schintgen expanded on this, adding: “We have received a number of applications to our lab – especially from the FinTech side – simply because of the fact that we have a large financial group behind us and those startups generally need access to our back-offices, our IT and ultimately, our client base.”
“The advantage of the country’s small size is that we can get all the influencers sitting at one table.”
By matching these companies that are striving to stay relevant and competitive with startups seeking clients, the LOIC creates mutually beneficial partnerships with little downside: if the relationship proves unsuccessful, then they simply part ways. With the help of startups, companies suddenly have the capacity to undertake numerous development projects simultaneously.
It is a natural fit, but established corporations and startups speak different languages, so the LOIC takes the role of translator, building a bridge between them.
The benefits extend beyond the material, overflowing into branding and employee engagement. Most individuals want to work for innovative companies, and the LOIC has found that internal developers enjoy collaborating with startups.
A company that fails to engage with the startup community cannot be a part of the narrative and risks being edged out altogether. Alternatively, if it is involved, it can position itself to benefit from new technologies.
The Club acts with the belief that open innovation will raise the quality of Luxembourg’s business scene as a whole, benefiting everyone. A community that shares and welcomes ideas, regardless of their origins, generates a stronger economy than one whose members work towards the same goals separately.
Inspired by the highly successful Paris Open Innovation Club started six years ago, Guérin foresees the LOIC doing well in Luxembourg: “We need everyone’s involvement to make it happen and there is already a strong spirit of cooperation here. The advantage of the country’s small size is that we can get all the influencers sitting at one table,” Guérin said.
Day by day, the LOIC aims to erase the old-fashioned notion that competitiveness equals secrecy and prove that when companies join forces in a strategic way, their competitive advantages can only multiply.