Open innovation with startups” is now one of the indispensable management strategies for major companies. Many major companies are undertaking a variety of initiatives to encounter startups.
ENEOS is also a major company that is actively working to co-create with startups. The company has created the “Future Business Promotion Department” and is actively investing in new businesses. Many enterprises establish themselves in “Dejima” separately from the implementation of startup investment and the main body, but there are few cases in which executive officers are stationed in Dejima.
Against this backdrop, ENEOS has stationed executive officers at the Inspired.Lab collaborative platform operated by Mitsubishi Estate, where they make investment decisions. With the speed of investment decisions rising, they have started many projects in just two years.
Efforts in new businesses are not limited to external investments. To invigorate internal innovation, an internal startup program “Challenge X” has been held, and business ideas are also solicited from the entire company.
This time, we heard from Yasunori Yazaki, the head of the Future Business Promotion Department, why so bold efforts could be made to that extent. He was affiliated with the Future Business Promotion Department. We also heard Rie Matsumoto, who was also involved in the operation of Challenge X, and discussed the current state of internal innovation.
He joined Esso Petroleum (currently a Japanese subsidiary of ExxonMobil) after graduation from university. After reorganizing the primary distributor of petroleum in Japan, he was appointed General Manager of Strategic Planning Department at Tonen General Sekiyu in 2013. He led a project to acquire all shares of Mitsui Oil from Mitsui & Co., Ltd. Since 2016, ha has promoted the merger with JX (currently ENEOS Group) as the head of the Group Business Administration Preparatory Office. In April 2017, he was appointed Executive Officer and General Manager of the Reform Promotion Department and assumed his current position in April 2019. He is working to realize ENEOS 2040 Vision.
She joined Nippon Oil after graduating from university. After having been involved for a long time in administrative operations, such as sales staff at the (then) Kansai Branch, recruitment and training at the head office and research laboratories, and social contribution activities, in August 2019, she was transferred to the Future Business Promotion Department through an internal recruitment. In addition to supporting employees in creating their businesses through the operation of Challenge X, ENEOS Group’s internal venture program launched in fiscal 2019, the company is exploring startups from their interest in areas related to human resources and education.
・The key points for startup investment are “sufficient investment funds” and “delegation of authority for investment decisions”
・Ongoing projects to solve environmental problems
・Create an in-house culture with a “cool challenge” entrepreneurship program
・If you decide to invest in a start-up, do not let it be half-baked.
The key points for startup investment are “sufficient investment funds” and “delegation of authority for investment decisions”
――First, Yazaki, please tell us about how you came to be permanently stationed in Inspired.Lab.
Yazaki: “When the ‘Future Business Promotion Department’ was established in 2019, it was proposed by an executive who is my supervisor.
The executive had been discussing how open innovation should be pursued before the organization was launched. As we began to invest in startups in earnest, I was told that ‘We have secured a seat in Inspired.Lab, and we will do our activities there.’”
――What was emphasized when starting startup investment?
Yazaki: “One is to ensure sufficient investment funds. The second is to delegate authority for investment decisions.
As a result, we started the CVC with a fund of 15 billion yen, because if it is an investment of 1 billion yen or less, it can be decided at my discretion. As we wanted the company to know about the startup investment in the beginning, we held circular letter deliberations only for the first case, but since then we have all invested with my decision.”
――You were valuing the speed to investment.
Yazaki: “If you have the funds and authority, I think you can do it for the time being. What is more important, however, is to establish it as a culture rather than a transient epidemic. In other words, can we continue our activities 20 or 30 years from now?
For this, it is important to consistently appeal the importance of open innovation to management. People are hot, easy to cool. I do not know five or ten years from now even if you agree with our efforts. It is possible that the management will change. Therefore, everyone at the top needs to understand the importance of open innovation.
My job as the manager is to promote startups to the management team to ensure that they are always excited.”
――How did management react to startup investment?
Yazaki: “Management has been positive since inception. The stance of Sugimori (current chairman), who was then president of the company, was very positive, and I was even told, “Please do it by all means.” That stance remains unchanged today.”
Ongoing projects to solve environmental problems
――Please tell us what kind of results has been produced.
Yazaki: “The following six projects are mainly underway.
1 Micromobility Station
2 “Air Industrial Revolution” with drones and flying vehicles
3 Fixation and crediting of carbon dioxide utilizing natural forces such as forests and marine life
4 Promotion of renewable energy introduction (sunlight x agriculture x∞)
5 Realization of an ecosystem for the recycling of plastics
6 Efforts toward effective use of unutilized energy
Micromobility has already begun demonstration tests. Since our main business is infrastructure, vehicles are close to areas, and we like it above all. We are now increasingly trying to create micromobility stations.
It is not just a cycle port, but a station that can rent a variety of mobility, such as micro-EVs, electric bicycles, and motorcycles. We are already conducting demonstration tests of about 10 micro-EV sharing devices in Saitama.
In addition, drones, which are still used for a limited number of uses, are now looking for ways to be used by the general public in the future.”
――Are you also focusing on environmental issues?
Yazaki: “That is right. For example, various industries are now working to reduce CO2 by renewing their businesses, but that alone will not reduce CO2. This is because only a decrease in emissions will increase the amount of CO2 in the air. ENEOS is also promoting projects to absorb atmospheric CO2 and fill it in the ground.
Naturally, it has the ability to absorb CO2, but the functioning of old forests weakens. We are studying how forests can increase their capacity to absorb CO2 in ways that are different from those of the forestry industry.”
――You are developing many projects in a short period of time.
Yazaki: “I think we are also working at a fairly fast pace. We have been slower to start open innovation than other companies; we must recover that delay. At the same time, we would like to publicize to the outside that ENEOS can also tackle new issues.
That said, we are amateurs in startup investment. Before I started my current efforts, I worked in corporate planning for many years. We have done work that changes the company’s culture, but we have never started anything new. When we started our efforts, neither the right nor the left was known.
The reason we have done so far is that we have been supported by a variety of partner companies.”
――We are taking various steps. How do you think about the future prospects?
Yazaki: “Until now, it was a phase of demonstration trials. We would like to move toward implementation in 2021. We will continue to look for startups, but first, commercializing as many as possible is an urgent task.
However, the time horizon varies greatly depending on the project. There are a variety of projects that appear to be commercialized within this year, including those that will be commercialized over a 10-year period, and those that can be commercialized within 30 years.
The time to implementation varies greatly depending on each project, but we plan to steadily realize it one by one.”
Create an in-house culture with a “cool challenge” entrepreneurship program
――Matsumoto, please tell us about your area of responsibility.
Matsumoto: “Like Yazaki, I am also involved in the operation of Challenge X, an in-house innovation program, besides the job of finding a startup. This is a program that examines publicly solicited business plans within the company and ultimately enables selected ideas to be commercialized.
I previously worked in recruitment and training as a human resource. In that sense, perhaps, previous experiences have been used to find and nurture talent both inside and outside the company.
――Are there any difficulties in running the program?
Matsumoto: “I would say “communicating the purpose to employees” and “establishing commercialization know-how.”
It is only possible to match even the ideals and visions of ENEOS with the themes of public solicitation. However, there are a number of employees who think that ‘synergy with their core business is indispensable.’ Although there are occasions when business ideas that are out of line with our core business pass the selection process, the reality is that they are still small.
We also do not have the expertise in commercializing services that are commonplace for IT companies and others. There are some concerns about how we can support commercialization, but we are also strengthening our support for commercialization by having people who are strong in external digital operations enter into operations.
By providing more generous support for commercialization, we would like to make it easier for as many people as possible to apply.”
――What kind of people do you have many entries from?
Matsumoto: “The intermediate levels are surprisingly large. Applications were also received from general managers and people in their 50s. Conversely, we would like to see more applications from younger employees. I look forward to seeing that middle-class employees are taking on challenges, and expect that applications from younger employees will increase.
What we want to create in the future is an environment that makes it easy for both young employees and managers to support. I want to create an in-house culture where everyone, young and old, men and women, can apply, and ‘it’s cool to take on challenges.’”
If you decide to invest in a start-up, do not let it be half-baked
――Lastly, I would like to ask for your message to a large company that wants to move forward with open innovation with startups in the future.
Yazaki: “If you do it, do not let it be half-baked. Please decide whether you ‘do’ or ‘do not.’
Startup investment does not necessarily need to be made. The best thing is that the management does not empower the site while ordering it to do ‘do it.’ Then it does not go all the way. It is not necessary to start with a large amount from the beginning, but it is also 1 billion yen, so please give authority on-site.
Further, if you decide to do it, proceed with confidence. We did not start with know-how, either. Even with the help of those around you, you are running this much of a project right now. Start thinking you can do it.”
――How about you, Matsumoto?
Matsumoto: “I think it is important to gather people who want to do it and create an organization. The Future Business Promotion Department is characterized by the fact that many people, including private employees, have applied for positions within the company, and those who have entered mid-career recruitment who want to work in the Future Business Promotion Department. Even if I let people who are not aware of the problem do it, their motivation will not continue.
I hope that employees’ motivation will also be taken seriously when it comes to in-house innovation. It does not make sense to listen only to employees talking and not to put anything into shape. It is of utmost importance to put in place a system that ensures that ideas are firmly shaped.
It is important for a company to create an environment that makes it easier for people with ideas to move, is it not?
・Focusing on startup investment is ensuring sufficient investment funds and delegating authority to make investment decisions.
・it is necessary to constantly appeal the importance of open innovation to management, because it is important to establish itself as a culture rather than a transient fad
・A number of projects are underway in the areas of urban development and mobility, a low-carbon, recycling-oriented society, and data science and advanced technologies
・Initiatives to create an internal culture of “challenging yourself” through startup programs are also underway
・It is important to decide whether to “do” or “do not” engage in start-up investment and not to do it half-baked