One expects to hear about sleek new cabin designs or fuel-efficient aircraft from the $70.5 billion Airbus Group. So heads turned when the aerospace giant introduced the world’s first 3D-printed motorcycle in May.
The story of the how and why Airbus brought the bike to market offers useful lessons for other large corporations.
In Gardin’s first job at Airbus, he had served as Chief of Staff for the CEO. Later, he was responsible for establishing and managing research and technology partnerships for Airbus. In those roles, Gardin noticed that there was a backlog of promising business plans on the desk of the CEO and other high-level executives. “There were extraordinary ideas and proposals,” Gardin recalls. But he realized “that nobody was making any decisions, so I said you need to organize to funnel all these opportunities.”
To address the backlog, Gardin helped Airbus create the Nursery, an incubator that provides support for exploring and developing new concepts and projects within Airbus.
Among the projects that took began life in the Nursery was APWorks, now an independent subsidiary. Located outside of Munich, APWorks has a full-time staff of 15 and focuses on metallic 3D printing for industries ranging from aerospace to robotics and automotive.
However, Airbus quickly discovered that, despite their extraordinary patents and products, few people knew that APWorks existed. Gardin realized they needed an extraordinary innovation to demonstrate their capabilities.
Enter the Light Rider, a lightweight but high-performance electric motorcycle.
And, yes, Gardin acknowledges that creating the motorcycle was a bit of a publicity stunt. “It’s difficult to tell people what you can do with APWorks,” says Gardin, “so if you can show them, ‘I can design a completely new motorcycle,’ it’s very visible to people.”
In fact, APWorks created 50 collector’s edition motorcycles, all 3D printed, which are now for sale and available for preorder, at a price of about $56,000.
And while Airbus has no intentions of competing with Harley Davidson, the development of APWorks and the Light Rider provide lessons that other innovation executives may find useful.
InnoLead spoke with Gardin about the company’s foray into motorcycles, and some of the things he’s learned from shepherding companies through the Nursery over the last few years.
1. Market Immersion
Too often, innovation teams are kept away from prospective customers and the marketplace.
With APWorks, Gardin says “immersion,” or working directly in the market, was critical. This is very different from the extended technical R&D that most corporations pursue. “The technical part is [only] one part,” says Gardin, “but what is also very important is to understand how people are using the technologies, what are the constraints, what are the benefits?”
To accomplish this, APWorks was established as its own separate subsidiary, where it could act independently and entrepreneurially, without the constraints or buffering of the larger corporate entity.
It was even staffed differently. APWorks CEO and Managing Director Joachim Zettler, a former Airbus researcher, hired 15 people who had never worked for Airbus Group before.
By structuring and staffing the company closer to the market, it was able to immerse itself in fast-paced dynamics to which Airbus might not be aware. That enabled APWorks to adopt a flexible approach that best served the market.
For example, APWorks discovered it serve clients by producing either one-off materials, doing serial production, or helping clients set up their own in-house production facilities.
According to Gardin, this more responsive, market-based approach couldn’t have been pursued if APWorks wasn’t its own separate entity.
2. Treat It like a Startup
To that end, Gardin believes it is important that large corporations let go of the reins. Airbus and the Nursery treat APWorks as a startup, and he advises that other companies do the same with their subsidiaries. “It’s important to give the maximum signal that it’s like a normal startup,” he says.
Independence, separation, and some amount of risk can create the do-or-die urgency that large companies often lack — not to mention an appreciation for cashflow. It also forces the startup’s CEO to look at the parent company as a traditional investor, not an overly patient benefactor. “The CEO understands if you don’t get money in by that month, they’re out of money, and he needs to go back to convince investors to reinvest to get cash by that time,” says Gardin.
Gardin also says the urgency and pressure force the subsidiary to be both aggressive and cost conscious. “This leads to frugal innovation,” he says. “They can better understand and compete with other startups, and they’re in the same world.”
That has been the case at APWorks, which — while profitable — has limited cash reserves. “When they need to buy machines that are $1 million to $2 million, they don’t have the cash for that,” he says.
The upshot is that, by treating the subsidiary as a startup, it avoids becoming a profitless research center. “The goal of the Nursery, the achievement,” says Gardin, “is when people are selling products.” Just like a startup…
3. Organic Approach
Gardin has become an advocate for organic innovation, as opposed to just pursuing mergers and acquisitions. “I would recommend every company to have an organization to kick off business organically,” he says.
This is especially important a large, research-intensive industries, where there may not be a plethora of M&A targets. “Even though you’re going to grow through M&A in the way you want to grow faster and be bigger, in some fields there are not a lot of M&A targets because they’re so new.”
To help with that strategy, Gardin focuses his organic innovation on adjacencies that are closely aligned to Airbus’ future. “We’re limiting our investments in the Nursery to domains that are useful potentially to our core business,” he says.
At the same time, Airbus is also active in the venture capital space. Last year it opened a Silicon Valley venture capital fund, as well as an innovation center, called A³. Based in San Jose, Calif., the venture fund has $150 million backing from Airbus to invest in emerging companies in the aerospace arena. Its first investment was Local Motors, a Phoenix-based company with a focus on open innovation vehicle development and micro-manufacturing.
4. Venture Out of Your Industry
The aerospace industry is, by its very nature, extraordinarily slow-moving and safety conscious. Market-shifting technology advancements require massive investment, and the R&D cycle is measured in decades, not months. “You need to do a lot of proof in regard to safety, qualification of materials, and so on,” Gardin says.
As a result, APWorks knew its technologies and expertise would have to be leveraged in other industries, and that’s exactly what happened. “APWorks’ first customers were not from aerospace,” says Gardin.
But by going outside of aerospace, Gardin says, the company needed to explore how different industries could benefit from 3D printing. APWorks now serves automotive manufacturers such as Formula One; is creating robotic parts for medical companies; and is manufacturing other parts for high-end industrial companies.
5. Create New Incentives
Incentivizing entrepreneurs and startups is very different than creating incentives within a large corporation, and Gardin says his company is still in the early stages of addressing that.
As InnoLead has heard from other companies (see this interview with the innovation head of EMC), there is no single right way to incentivize employees, and Gardin admits that Airbus is just starting to figure out how to reward key people based on the valuation of a startup. “We’re making progress,” he says.
He also acknowledges that employee expectations may change over time. For example, in the early days of APWorks, incentivization wasn’t as important because people “were happy to be part of the startup and appreciated the startup experience.”
But that has changed over time, and he — and other companies — will have to identify the right incentives for retention and promotion. “For this next stage, it’s very important.”
Among the biggest take-aways from Denis Gardin, SVP of New Technology Ventures at Airbus:
Market immersion — Internal startups should create their own culture, connect with customers, and immerse themselves in the market to understand true dynamics and opportunities
Treat it like a startup — Large companies should commit to treating these innovative subsidiaries as a startup. Don’t be a benevolent benefactor. Be an investor, and treat the startup like any investor would.
Organic approach — Commit to this internal, organic, investment-driven incubator approach. It’s different than traditional M&A, complements those activities, and can be more strategically tied to the core business.
Venture out of the industry — While the parent company may play in a particular industry (like Airbus in the aerospace industry), the startup should be freed to expand to other verticals that yield the greatest opportunities for success.
Create new incentives — Companies like Airbus are still in the process of determining the most effective and appropriate incentive strategy for these startup employees. But commit to solving this, or you’ll likely see your highest performing employees leave for a “true” startup with equity.