How Wärtsilä Taps Startups to Help Spur Innovation

Wärtsilä is a 185-year-old Finnish company focused on energy solutions and marine — it is one of the largest systems and technology providers for the marine industry, producing everything related to systems, engines, navigation, emissions reduction, and more — the company covers practically everything on an ocean vessel. At such a large and storied company, it’s vital to keep innovating and building, and at Wärtsilä, Steffen Knodt, the firm’s director of digital ventures, leads this charge. SeaAhead caught up with Knodt recently to discuss the challenges of innovation, and how he thinks about interacting with the startup community.

Give me a little background on the way Wärtsilä thinks about innovation, and what you specifically have been working on.

I’m director of digital ventures and I’m working in the digital area of Wärtsilä … linked to our open innovation team. My and my teams role is to establish collaborations between startups and our business units. …

Since 2017 we have a new purpose in place for our company and this purpose is strongly based on sustainability — enabling sustainable societies with smart technology. If you go back into the heritage of our company, we do have a strong background in machinery, but we are also becoming more and more digital and are transforming our company. And by doing this we are having a positive impact on society and everybody related to us in the company, but also within the ecosystems.

Our business units quite strongly follow this purpose. So, for example, our energy business has a strong commitment to lead the world to a 100% renewable energy future. (https://www.pathto100.org/)If you go into their portfolio they are strongly into renewable energy, wind energy storage systems, and related to startups.  In the marine business we are envisioning a smart maritime ecosystem whereby digital technologies and the overall industry can become more sustainable and more efficient in the way it operates.

What do you think are some of the challenges to innovation for legacy companies like Wärtsilä?

We are really one of the dominant companies in the industry, and we have quite a number of subsidiaries around the globe, so our set-up is a bit complex.

So when it comes to innovation and, in particular, to startups, we simply need to explore new ways of working. And here my role comes into play for the company that we have tools and methods in place. We can simply support better startups and entrepreneurs in our industry to help them to go into maritime business, and there we can support each other.

On the one hand, the startups are a bit more agile — a bit faster maybe — in exploring new opportunities with customers. On the other side is a company like us with capabilities in scaling up technologies, delivering large projects and so forth.

How can you encourage [young people with startups] to look at maritime problems for their companies to solve? And, secondly, once you see a startup that is working on some of these problems, how do you engage with them?

[Working] with customers or with other industries [to make sure] that maritime is a topic, we could work together on doing better things on sustainability. For example, we launched two quite important initiatives in the marine business last year — one is “Oceanic Awakening” and the other is SEA20.

The Oceanic Awakening is really our call for action to the industry. What’s relevant to the ocean and our industry has a relationship to climate change and environmental aspects in our society. This is simply something where we all need to work together, and our products and our capabilities matter to the industry.  Just to give you reference, a majority of the global fleet has our equipment on board. We do service, we do maintenance, but of course we also have machinery on board where we are simply getting more environmentally friendly, by using alternative fuels, gas machines, and so forth.

So there we have impact and we realize that our clients are also taking more and more care — how we could work together to solve them?

The other element we have is SEA20. That’s a movement we have launched together with ports in the world, supported cities like Hamburg, Rotterdam, Helsinki and State of Washington. We are working together with other ports like Singapore to explore ways of working between ports. Collaboration takes place and we also address together challenges we have at that interface between large cities and port entities.

Knodt (right) at this year’s Sparkup Challenge.

Knodt (right) at this year’s Sparkup Challenge.

What are some of the challenges that you find in with working with small companies?

Some of them are simply too small — so if we go into projects, we need a certain maturity of the startups. We need to have a solution or product in place that we could bring into certain use cases or proof-of-concept. But that’s always a bit of discussion — if it’s something that is quite interesting or something that has some traction in the market, some customer engagement… then you get a feeling: “Okay, what’s in there?”

Second is related to our framework; we are acting for that as a venture client, so that means that we are really looking for collaboration, looking for projects, and to work together on finding new solutions for the industry. That always requires finding a counterpart in the business. Then the task is to scout and matchmake the right startups for the right needs, preferably also in relationship to a customer or a customer need.

So that’s a bit of the challenge we have. We need to bring those three perspectives together, and to find a project … [where we] can deliver a new solution and a startup together, and find synergies.

Is there a certain level of maturity in a startup that works best — in terms of capitalization or where they are in the process of figuring out their solution? I would imagine like if they’re too small it’s a little bit hard to deal with, but also if they’re already too advanced it might be as well, no?

If you go to our framework, we have a so-called “Venture Model” in place that starts from the really early engagement in more early-stage or spin-off-from-university type of startups. As a startup it might have a maturity level, also interesting for co-creation or collaboration — so really depending on the startup and the maturity level, we need to find the right entry point for collaboration.

For some they might also have good traction in the market. Some might even have products in their portfolio that we might have as well, and there we also need to find a way to collaborate or to team up in the right way. In particular, in some digital technologies you probably find some startups work right at launch and are quite happy to stand alone and to just deliver a service more in a supplier-based relationship.

Can you tell me a little bit about Wärtsilä’s vision for digital ports and how are you kind of thinking about digitization generally?

If you look at our industry, there’s of course an element where you can say “Well, I’m compatible with other industries.” When it becomes to digital, maritime is not in the lead. We are lagging a bit behind, and that has some quite essential factors on the technology. First of all it’s linked to connectivity — our vessels are quite remote on sea, so data connectivity is always a topic that somewhat slows down the development.

The other thing is our security. If you have many assets moving around, you need to be quite sure what cybersecurity means for the industry and that whatever you operate is safe. This is where Wärtsilä can support our customers too.

With ports, if you bring new technologies into that context there’s a huge opportunity within smart ports that if you would be able to automate your operations, arrival at port, how you handle the port operations, together with the ports themselves. There’s a huge opportunity for the industry simply to become more efficient, and also to become more environmentally friendly and use less resources overall in your operations.

Are there other sectors like that or other areas that really matter for you that you would particularly be looking for startups to help with?

Well, it’s always a close association with our business areas. Our business has in mind customer needs. What are the business segments that customers have where we see also opportunities for us to grow. …  Both energy and also marine, both can benefit and I think that is maybe the anchoring point here, a startup or technology that has growth potential, that could have impact on business and on sustainable societies, and then also fits a bit to our culture and way of working in the ecosystem. For example, Soletair Power is a Finnish startup, and of course that makes it easier as you are Finnish that we have a close relationship to them

When you look at a company like Soletair and kind of the technology that they’ve developed — how do you think about the value of trying to build it yourself versus what someone else has kind of already created. To what degree do you feel like you have the in-house capability to build the technologies you need as opposed to going out and finding them?

That’s always an evaluation you need to consider. Most likely you will find somewhere something that might have been brought up before and maybe even have a product in the setup that might be relevant. But still it’s a tradeoff if you can do it by yourself or if you find a startup that could support you in a certain way. ... When it comes to digital you might even find technologies from other industries who are ahead of you, who are more advanced, who are faster, who can also take a new knowledge into that domain within a setup you are not able to do by yourself.

So for example if we take 3-D printing, there we certainly have collaboration with other companies. It’s a technology we are evaluating. We know that it’s important for us, it’s a core element of our Smart Technology Hub. But of course we are also quite open to collaborating simply to explore opportunities of that new technology because that’s not specific within maritime.

We have internal teams in Vaasa but also in other places. ... You always find initiatives by the ecosystem [that relate to] 3-D printing and we have an internal team who’s taking care of that — and, as it is, finding the right pieces, the right use cases to then explore where it could make sense with our product portfolio.

This interview has been edited for length and clarity.

David Hirschman