“Being immersed in the customer operations is a key to producing things that are credible and innovative, not overload stuff with fancy things and technology."
In this episode, we welcome Hans Lind, Director Business Innovation & Foresight at the Volvo Group. As part of the Volvo Connected Solutions Innovation Lab, Hans’ job is to explore ideas that add value to the business and help it stay relevant in the long term. In addition to a brief dive into the Volvo Group and its strategy, we take a look behind the scenes of the Volvo Connected Solutions Innovation Lab and learn a lot about partnerships, the right team composition, but also about the importance of patience and a holistic approach when it comes to building up such a lab. Curious to learn more? Then tune in to get the full story!
Below you will find the full transcript for the episode.
How to make innovation labs work
Chris: Hi, and welcome back to the Innovation Rockstar interviews. My name is Chris Mühlroth and in this episode, I am thrilled to welcome Hans Lind. So Hans is continuously challenging and also changing the state of the transportation industry. And in his role as director of business innovation and foresight at Volvo Group, Hans and his team create new services in their ecosystem. And they're also telling stories from the future as I learned in the foresight function. So that sounds very interesting. Hans, first of all, thanks a lot for joining us. It's a pleasure to be talking to you. Hello Chris, nice to meet you, and thanks for having me here. All right, so Hans, we start as always with a very short 60 seconds introduction sprint. And that sprint is all about you, your career, and your current role. So for the next 60 seconds, Hans, the virtual stage is all yours. Let's go!
Hans: Thank you. Well, I was born in the south of Sweden and I grew up on an island, actually. And I started working very early on in my life. I was only 15, I think, when I started working weekends and evenings at the Swedish postal service. Then I became an engineer like many of us in this industry. And I worked for Ericsson, another big Swedish company for many, many years. And then I ended up in Volvo. And in this role, eventually, I've been here now for a little bit more than four years in the innovation lab of a Volvo Group company called Connected Solutions. So that's me in a nutshell.
Chris: All right. And to get you to know a little bit better, I have three sentence starters for you. And the ask is for you to complete those sentences. So let's start with this. Number one: A typical day for me starts with...?
Hans: A typical day for me starts with opening up my telephone and basically looking at the news. I check what has happened during the night. And then I also always play a game of word with an old time friend of mine.
Chris: All right. That's a good start. Okay. Second sentence: If I was not in the transportation industry, I would be...
Hans: ...I would be somewhere in an industry that has a big relevance for many people, I think. I would probably strive towards the same things as I'm doing now, but maybe in banking, maybe in food industry or electricity, health care, something like that. So working on the large and important problems and challenges and opportunities out there.
Chris: That's kind of my areas of interest, I think. That's great. All right. And number three: The worst advice I hear all the time is...?
Hans: It is when people tell other people that you should check this with Mrs. X or Mr. Y before you do anything. And this is actually something that happens from time to time, especially in a large corporation where there are a lot of dependencies. But it's actually something that stops and hinders innovation, I think, and the speed of going forward.
Volvo: goals & strategy
Chris: Yeah, it hinders speed. And to be honest, that was kind of a passive-aggressive sentence starter, but interesting. So let's talk about Volvo and about the corporation for a while. Right. So as I learned, Volvo means I roll. So it was founded in 1927, so quite some time ago, which means that soon you will be rolling for an entire century, 400 years. Can you maybe as a starter tell me about Volvo's brands and also its products a bit?
Hans: Sure. Yes, we are 95 years old this year. That's quite the heritage. And I mean, we started off in the first place with a passenger car. That's something we don't do anymore. We are purely into the commercial vehicle and transportation industry. Our mission statement is actually to drive prosperity through transport and infrastructure solutions. And that means that we have a quite wide and big ambition, and we can grow in many directions. However, we have a number of brands, and we produce trucks under the brand names of Renault, Mack and Volvo. We have buses from both Volvo buses and Nova and Pevost in North America. And we do construction equipment and also engines and drive lines from Volvo Penta. So it's quite a wide scope for us. And over the years, I think we have also grown the service business a lot, starting off maybe in providing spare parts and repairs and things like that. But over time it's grown more and more through digital and connectivity, but also financing and helping our customers to finance their purchase.
Chris: That is pretty interesting. And if you are around, so not you personally, but Volvo as an organization for 95 years and soon 100 years, I mean, obviously change and innovation is not a new territory, right? You start with something with a product, and then you grow into you grow in the core, and then you grow to adjacent areas and all that stuff. But nevertheless, I guess Volvo now has set some compelling strategic ambitions and also goals for the future. Can you talk a little bit about that?
Hans: Yes, I mean, we realized that we are in a time of change. There are a lot of things happening at the moment in transportation and mobility, partly driven by technology like autonomous driving, connectivity and data, electrification of vehicles. And perhaps more important than anything, a new business models. And to meet that, we are aiming to have a revenue of about 50 percent from services and solutions in 2030, which is not that far away, actually. And that's why we also need innovation to grow our service business and to come closer to our customers and come up with new solutions to them, to the value chain. And we and I mean, another strategic ambition is actually around electrification. So we aim to have 35 percent of vehicles sold electric in 2030 as well.
Chris: So that is something that is really moving fast at the moment. You know, I could imagine if you are a company that's, you know, at least has been previously all about producing vehicles and also, as you said, maintenance, bare parts, maybe also fleet management and financial services, you know, aiming for 50 percent revenue to come from services and other solutions by the time frame. It sounds like a transformation opportunity and also a challenge at the same time. So, Hans, how is Volvo actually attacking this transformational challenge and opportunity? And also, what is your part in that journey?
Hans: OK, so we do several things at the same time, and I think that's necessary. And we have recently established two new business areas in the group. One of them is called Volvo Autonomous Solutions, and it's dealing a lot with the new technology around autonomous driving and what we can do with that. And I think that is also a way to move into our customers' operation and better understanding what they are doing and how they want to do it. So that's a big move from our side, I think. We also have established a new business area called Volvo Energy that will deal with things related to the electrification of vehicles and machines. So here you will find anything ranging from charging solutions to how we handle batteries both in first and second life.
Chris: All right, so that's the strategy part. And I would be more than interested to also look at the execution of that strategy, Hans. But before we do that, let's play a quick round of the game Either-Or. And that's how it works. Pretty simple. I would like to give you two options. You choose one of those options and then spend one or two sentences each to briefly explain your choice. And speed is key, right? So let's start this. Number one, it's on transformation. What would you say?: Either change the company first, so its systems and processes, or help people change first?
Hans: I think it's about mindset, actually. So I would say people first, processes and stuff like that. That's more how you institutionalize what you're doing. That needs to come second in my mind.
Chris: I like that. All right. Okay. And now on the future. Based on your experience and on your opinion as well, what do you think will be more likely to reach mass market adoption first? Is it either new means of transportation? So, you know, new types of vehicles, aircraft and the like, or rather more efficient ways of transportation, which would mean higher autonomy of existing vehicles, self-driving cars and the like?
Hans: I definitely think the latter. I think this industry has so many opportunities to improve. That's ranging from fill rates in trucks on the roads to energy consumption and how much of the time that our vehicles are actually operating. Now you talk about autonomous vehicles. Of course, they can operate around the clock. So I would say that there's a lot more there to find than in new types of vehicles. Although that will also happen, I think. But it will not be as significant and as quick to change the industry, in my opinion.
Chris: Very spot on answer. All right. And okay, number three, that's going to be very challenging, Hans: Either Pepsi or Coke. Tell me.
Hans: Coke, I think. Coke, it is.
The Volvo Innovation Lab
Chris: Okay, fine. Yeah. Well, thanks for that very challenging answer to the very challenging question. Now go back to let's now look into execution of strategies, specifically execution of reaching the innovation ambitions and also the transformation ambitions. So at the Innovation Lab, specifically of Volvo Group, you with your team, obviously, you create new services and then also using various methodologies for that, for sure. You have to be adaptive. Tell me a little bit more about the lab. So how many people work there, and what is the constitution of the team?
Hans: You know, people, culture, diversity, roles and so on. I'd be interested. Yeah, I'm glad you asked because I think this is at the core of what we are and who we are in the lab. And we are basically three teams. Two of them are located in Gothenburg in Sweden, close to the Volvo headquarters. We have my team, which constitutes business innovation and foresight. That's innovation managers, service designers and actually one person fully dedicated to foresight, looking into the future. And you mentioned telling stories from the future. And that's how we typically say. And then we also have a tech team. It's really important to have the ability to do things fast. So pretty early on, we decided that we need our own capabilities in that area. So we have architects, we have UX designers, we have Scrum Masters, we have front and back end developers and full stack people as well. That's interesting. Did you hire them from the teams, like from corporate teams, or did you hire them externally? How did they get to the Innovation Lab? I think that is also a very important mix you need to have there because we are trying to do something new to Volvo and perhaps also to the world. So I think the more aspects you can and the more diverse the team is, the better. But still, since we are part of a big organization, we need the connection to all the other business areas that we are working with, the networks internally and so on. We need to understand the strategies. So we have recruited approximately, I think, 65-70% externally and a little bit more than around a third internally. So that's the setup. But then we also have a team in the US. We established ourselves in Silicon Valley in 2018. We started off in Palo Alto, but moved rather quickly, I think, one year later into Mountain View. So we also have that connection and that is important to us to capture what is happening over there. We have also decided to have connections to incubators and accelerators. So we have one in Gothenburg close to us that we share together with other parties, Swedish partners like Ericsson and Volvo Cars. And we have one in Tel Aviv called Drives. And then we have Plug and Play as a partner in California. So these are also important elements of how we have built the lab. You also mentioned where people come from etc. I think one interesting aspect is that we, I think, last time I counted, we had people coming from 12 different countries, and we are a team of around 35. So I think that also tells something about how we actively have worked with diversity and about a little bit less than maybe a third is women of the team. The only thing I'm missing is a bit more of the older, more experienced people. Maybe I don't like being the oldest guy in the team, but I am.
Chris: Which might not be a bad thing, right? The most experienced at least. Interesting. So you have a good mix, right? And you specifically looked for that good mix, right? Of nationalities, of cultural backgrounds, of mindsets of people. But also then obviously you have a different set of capabilities in the technical team than you would have in the team who is telling the stories from the future and then the foresight team, for example, right?
Hans: Exactly. They're quite different. So it's a little bit of a functional organization, if you like. But then the US team works in a slightly different way. We have more of the connections there to the ecosystem and also to a couple of academies that we are working with, like Stanford University and Carnegie Mellon University over there. These are elements of how we work. It's a lot about communication and being open, I think, and get influenced by things around you.
Chris: Yeah, absolutely. And talking about the lab as one instrument, right? There are, of course, many instruments to drive innovation and to drive transformation. It depends on a couple of things, right? So depending on topology, for example. So is it inside out or rather outside in? What is about urgency? And also the proximity to the business, you know, core, adjacent, transformational, all that stuff, you know. Now, I think that setting up an innovation lab has become quite popular in the past few years. You know, Volkswagen has their automotive innovation lab. Hyundai has built their renovation center. Toyota has the Toyota Research Institute and also, of course, other groups. And the list goes on and on. But also at the same time, we've seen innovation labs close recently with rather disappointing results. Some of them, not the ones I mentioned, but the ones that are not existing anymore, for example, producing zero results, maybe stopping at creating mockups for apps and then things never get implemented or scale or need any custom demands, actually. So what do you think is the reason for innovation labs being closed recently and so many innovation labs being closed? What is the source of failure?
"If you really dive into your customers or intended customers and their problems, their opportunities, their future challenges, it's less likely to go wrong."
Hans: I think there can be many sources of failure. There are so many things that the impacts how you operate and your ability to succeed. But I think, you know, there's a lot of talk about the innovation theater and so on. And sometimes I think that is maybe the problem. But I mean, if you really dive into your customers or intended customers and their problems, their opportunities, their future challenges, it's less likely to go wrong. But I think many of the labs are pretty good at using methodologies like design thinking, for instance, and try to capture the need. I think it's probably the later stages of the innovation process, if I put it like that, where failure starts to emerge. And I think we've come up with also some clever ideas around our internal business model, if I put it like that. So we typically work in three phases. We call them discover, incubate and accelerate. And that's probably not special to us. It's a standard way of working with innovation, I think. But in the discovery phase, we have a little bit of our own budget in the labs, so we can dip our toes into things that maybe the group hasn't before. So we are the first ones to do it. And when we do that, we also try to engage our companies and business areas within the group. So we find a friend that believes in what we're doing, and then we can reduce risk to them because this is typically something that they don't have in their plans. And if we can do that, we also set up a way of working so that we have a co-funding of the activities. So typically we split 50-50. That means that we reduce risk to them, but they still have skin in the game. So it's not something just nice to have. And that means that you get a buy-in also. And we also have to deliver somehow. And some result has to come out. And during the incubation phase, we also think a lot about whether this fits straight away right into a business area or if we need to develop a new venture. And I think to have the whole flow here from early problems discovered that we're trying to solve and find a problem solution fit all the way to scaling business. I think perhaps that is the reason for some of the actors to fail. But I'm not sure. That's my guess anyway.
Chris: There is no black or white, of course. But that is very interesting. So splitting the risk like 50-50. So both parties, both groups or both teams have skin in the game. I guess that's very important. You said you find friends. How do you find them?
Hans: I think here we come back to so that we have recruited about a third internally. So typically we find people that are interested in innovation and perhaps have been working on strategy or product planning or sales or whatever in the organization. And now I want to move to something new, something else and also be in the forefront of finding new business. So they typically already also have a good network, but we spend quite some time to talk to all parts of the group to understand where they are heading, how we can help and what we need to do together. It's always a joint effort somehow.
Chris: Okay, so you get a seat at the table and first listen, right? So you're not jumping around like the crazy guys from the innovation lab. Hey, it's my idea. I want to 50% of the money. But you're actually listening, get a seat to the table and also obviously present what you're seeing. For example, I would assume you're presenting your stories from the future, maybe. You know, and also engage in a conversation and help them also be part of this. But now, you know, how do you get them on board to fund something, to give money for something they didn't come up with themselves, right? So the typical not invented here syndrome, like when do they give you to buy in? Because they think it's a great idea, a great opportunity for a venture, or they have also seen the idea of what's kind of the tipping point where they say, yes, I'll do it. I give you 50% of whatever budget is required.
Hans: I think we always start small. And if you bring people on board very early, so you have a possibility to influence where we are going. That is absolutely necessary. If you take things too far, too quick and then come up with something and put it on someone's plate, maybe it doesn't fly that good. So the earlier, the better. And to be honest, some of the ideas have actually come from our business areas and from their dialogues with their customers. And potential customers, I should say, because we are also extending beyond the usual, let's say, bus, coach or truck buyer.
Success metrics & future endeavors at Volvo's Innovation Lab
Chris: Yeah, OK, that makes perfect sense. Now, in terms of the success of your lab and also measuring the outcome, what are you measured against? Are you, for example, expected to deliver a certain amount of portfolio value like innovation portfolio value, maybe in net future sales of new products or new services? So how are you measured, and what are you measured against?
Hans: That's a really good question. And we have tried a number of KPIs during the years. We have tried to sort of balance our portfolio, so we should spend this much on discovery activities. You know, you do maybe if you do 10 discovery activities, maybe you come down to three incubation activities. And maybe if you're lucky, you have one in acceleration after that. So you need to be ready to try a lot of things and also discard them on the way. We don't have a clear fixed target in terms of portfolio value or future portfolio value. I think the way we can prove ourselves is to find and create services and solutions that actually generate new revenue to the group. And now we're at a stage where we have done that the number of times. And I think then you create trust. And that, I think, is the key to success and also to be able to continue working with the lab. And I see a growing interest as well, because over time, I mean, you become more and more established. And people discover what we can do for them and together with them. So that creates a sort of momentum that is beneficial.
Chris: But we don't measure or estimate the future portfolio value, at least not yet. Yeah, OK, that's fair. All right. And therefore, also, I'd be interested, you know, how do you gain, you know, street credibility? Right. So, you know, certainly projects start out in kind of a lab environment. Right. And I also know this from many AI and machine learning projects in different areas. You know, as soon as it comes to deployment and roll out in the real world, it of course gets difficult. You know, do things scale or do they just work in a, let's say, in an artificial lab environment? So how do you deal with that question? You know, you have discovered, incubate and then accelerate. So that's probably more on the accelerate phase. So how do you deal with, you know, how to make sure things actually can be deployed to the world once you develop them?
"You need to be ready to try a lot of things and also discard them on the way."
Hans: I think really early on, I mean, from the very first activities in the discovery phase, we are working with customers. I mean, if it's in a road construction site or if it's in a quarry or if it's on the road or in a warehouse or wherever. I think that feeling transmits into other people in the lab that maybe don't meet customers that often. So we always talk about how the user is behaving and what kind of restrictions they have. I mean, you can do very smart apps for a construction site. But once you get to the site, you realize that they have gloves on, and they can for sure not have an iPhone in their hand, etc. I think being immersed in the customer operations is a key to produce things that are credible, not overload stuff with fancy things and technology for its own sake. But try to find the value that is where we focus a lot. I think that has been a key. It's very helpful, and it's easy to take technology. We have a fancy blockchain or IoT application here. What could we do with that? Could we find a use case within, let's say, city bus applications? Then you probably, but not certainly, but probably will go wrong.
Chris: Then you're tapping into the solution seeks problem issue. So you're creating a problem. You can get into dream mode. You can come up with some great ideas. So how this could help somebody on the planet, but ultimately you don't know. So you start creating fancy stuff. We see this a lot with different technologies, and sometimes it works, but maybe the chance that it actually works is pretty low. The likelihood is pretty low. So go problem first and then value first. And sometimes it's not the most fancy solution. As you said, it's not working with the iPhone then because people have gloves in their hand, and then they can't operate in our phone. So probably don't give them a fancy tablet where they do stuff and do crazy things with it. That is simple. What does the future look like for Volvo's Innovation Lab? So what's up next?
Hans: I think we are moving more and more into detailing our later stages of the innovation process. We have recently hired a venture development manager in the lab that is part of the staff. And when you start thinking about creating new ventures, a lot of new questions come up as well. It's another animal than putting something into an already existing business that is working and have its sort of rules and processes and all that stuff. Here you need to think about everything basically from branding to the market channel. And how to compensate people that take part in a new venture because it's often much higher risk. It becomes like a startup almost. So that's where I think we will focus maybe the coming year or so. And then we'll see. I think we will stay pretty stable in terms of headcount and use a little bit of flexibility. We are using partners in both for capacity and capability because we don't know everything. So that's the way forward, I think. And of course, we have a couple of projects now that are entering acceleration. So hopefully we will see a couple of real world applications and services in the market generating revenue during next year as well.
About foresight, collaboration, and hiring the right people
Chris: Yeah, I would be pretty confident about that. All right. Now moving to the end of this episode, Hans, let's aim at summarizing, and maybe you want to share three key actionable recommendations that you would want listeners to take away from this episode with you.
Hans: Yeah, the first I come to think of is something that we have mentioned but not talked so much about. And that's around foresight. Spend time to understand the world. I think that is really important. Where do we see opportunities? How does the future look? Where will businesses emerge? And how big are the value pools? Follow the investments, etc. So spend some time to understand not only your direct customers and your competitors, but the world at large. That's number one. Number two is obvious, and it's working with users and customers to develop your services. I think without that mindset all the time, you will fail. But to us, I think what you asked earlier has also been a key here. People. Higher the right people and things will get done. And I think the mix here that we already talked about, internal, external, women, men, different ages, different cultures, different backgrounds. Those three things. Understand the world, work with users, higher the right people. That is my take on innovation.
"Innovation is a harmonious symphony, where foresight, customer collaboration, and exceptional talent create the perfect composition."
Chris: That is very actionable too. That's great. And finally, Hans, thanks for that advice. Now, if you look back on your professional career, maybe also at Volvo in the past few years, what would you say was your greatest Innovation Rockstar moment, at least to date?
Hans: That might be some of the future, but to date. I hope it hasn't come yet. The biggest one. But I really don't. I love your title of this show, Innovation Rockstars. But my biggest moment is not a rock star moment. It's a rock group event, I think. And that was a couple of years or many years ago. It was around 10 years ago when we helped one. And this is actually before the Innovation Lab. So we helped one of our business areas to make business in another part of the world and set up a new company, a new trucking company. And the reason we came along was because the customer had no idea of how to operate the trucking company. But they wanted help. And we were, and I say we, I mean Volvo, we were the only ones who could provide that kind of help. And it was a bit of a gamble from our side. It was a bet. But we made it. We made it. And we had a deal with over 1000 trucks coming along. That sort of service innovation that we did in that deal. And we actually set up the whole company for the customer in terms of recruiting the CEO, in terms of developing their business plans, setting their pricing, managing repair and training the dispatches and their drivers and the lot. So it became an advisory service that nobody had seen before. And that was, I think, not a rock star, but a rock group moment because we were a team of five, six people that put this together. And it was great fun, but it was not always easy, I can tell you.
Chris: Of course, of course. But the challenging moments are the ones that are typically, at least they go well or learn something from it. The most rewarding one. Okay, so I'll take this as a rock band moment, but not as the individual rockstar moment. That's perfectly fine. And congratulations, that sounds really compelling. And with that rock group and rock band moment, we actually have reached the end of this episode. Hans, that's it for now. Thanks so much again for being my guest on this episode. It was a pleasure to listen to you.
Hans: Thanks for having me. It was a pleasure.
Chris: Awesome, and to everybody listening or watching, if you want to learn more about this story or get in touch, simply leave us a comment on this episode or drop us an email at info@innovationrockstars.show. That's it, folks. Thanks for listening and for tuning in. See you on the next episode. Take care and bye-bye.
About the authors
Dr. Christian Mühlroth is the host of the Innovation Rockstars podcast and CEO of ITONICS. Hans Lind is Director Business Innovation & Foresight at the Volvo Group.
The Innovation Rockstars podcast is a production of ITONICS, provider of the world’s leading Operating System for Innovation. Do you also have an eduspiring story to tell about innovation, foresight, strategy or growth? Then shoot us a note!
