Andy Binns: Timo it’s great to see you again. Thank you very much for being our corporate explorer to watch in this edition. Tell us a little bit about the business that you lead at Siemens.
Timo Muehlhausen: Hi, Andy. Thanks for having me. It’s a pleasure to meet you again. I’m heading a startup. We call it a “venture in a corporate” in Siemens which is a complete new topic, at least for the corporate.
Our idea is to use machine data, process them towards the financial institutions so that they can offer new, dynamic financing solutions to exactly that machine builder and machine user customers of Siemens to get rid of this typical CapEx driven business models and move forward towards the OPEX business models.
I guess in simple words, many people would talk about a pay-per-use use- a lot of marketing material is existing about this. And our philosophy and our clear understanding and based on evidence out of more than 700 interviews now, there is a solution possible, but you have to connect the ecosystem of producing industry with the ecosystem of financing industry. So you have to work clearly cross domain, and this is what we are doing.
Andy Binns: It’s a byproduct of what Siemens does, anyway, generates data, and you’re figuring out how to make that useful in the finance industry to offer products back to your end user customers in new ways.
Timo Muehlhausen: I remember quite clearly when a group of Machine Builders came to me at a very important automation fair in Germany and they were asking me, ‘Siemens, do you have a solution for a CapEx, OpEx shift?’
It was the time when all this cloud activities in the operations technology emerged and a lot of competitive activities were ongoing in that entire field. We designed at that time, so called ‘digitalization use cases’.
And I explored it a little bit deeper, but more from a technical perspective. I thought, let’s create a blockchain based notary service for data, but no one was willing to pay for it.
Andy Binns: So you discovered this from just somebody randomly engaging with you at a trade fair. CapEx to OPEX kind of models. And you’re like, what does that mean? But your first answer to this is to go and figure out what the technical solution might be.
Timo Muehlhausen: Technology with purpose, right? But I think it and this is what it is about in my opinion the purpose is coming from the customer.
Andy Binns: GE had GE Predix and their big platform. I’m sure this may also be true. I won’t mention it. And, the notion was, big answers, big generic answers. And what you were hearing is actually no, it’s quite a discrete requirement that is the one that we can serve, that is more specific, if you will, the response to a customer need. Essentially, that’s what you’re building around.
Let’s just flesh out the story a little bit. So you have this insight at the trade fair, you develop something using blockchain as an answer, don’t get much traction for that. What happens next? What’s the next step in the story?
Timo Muehlhausen: After all these moments when you see things are not maybe scaling or at least emerging sure get a little bit frustrated and you have to stand up, find new allies, pivot your thoughts, consider your learnings, go through the interviews again, through your notes of all the workshops you’ve done probably with customers and yeah.
And what we clearly changed is yes, we know how to talk about technology, but this is not where we start our journey. We start from a customer problem clearly based on the interviews, workshops, and the first interactions with the customers on the problems. And we really segment problem scenarios where we have solutions for, where we can have solutions for, or where we will not have solutions for because of any strategic concerns. And our focus right now on the financing institutions in particularly on insurances.
Andy Binns: Got it. So let’s just unpack this a little bit, because it’s really rich what you’re saying.
Firstly, I want to observe that there’s a question about the sort of what I call customer discovery, that the interview workshop process you’re describing. I think that’s worth talking about a little bit. I love your description of here are the different customer scenarios, problems that you observe, and then the potential solutions are very clinical description of that.
And then also the recognition that you’re playing in an ecosystem, right? A business ecosystem. There’s you, there’s the there’s the OEM, the original equipment manufacturer in this story. There’s the end user and there’s the insurance companies. And there’s a few other players as you’ve discovered in this ecosystem as well. And each of these I think are pretty interesting that coming back to the customer discovery what’s fun is I spend a lot of time trying to convince customers to do more, my clients, to do more interviews and I sometimes scare them by saying at Bosch, and I know you worked with Bosch innovation with Bosch, that they say you must do 100 interviews ‘100? How am I going to 100?’ And you’re saying ‘I did 700’ interviews.
Timo Muehlhausen: Not in the eight weeks to do what you are referring to, but at least we succeeded. Yeah. We did the 100 interviews. And I think that’s also showing market readiness. There are two sides. One thing is when you are in that early stage of validation and run, maybe, the first eight weeks working on your idea.
I know it’s not 100 percent polite, but doing interviews is the job to be done from everyone in that founding team. And if you have a team, maybe, I don’t know oh no, no, bashing, yeah. But let’s consider four project managers or four developers sitting together, everyone has to talk to customer.
It’s not one person doing the interviews. You hear so much what someone says, but you also understand something what is meant between the lines and everyone has a different background. And so you really have to work together on that 100 interviews and this first interviews can carry all your thoughts for the next years. But doing that in that compact format, really focus on customer engagements, customer discovery, discovery, discovery, doing that interviews is a very initial very important initial sequence, it is not a kind of a one hit wonder.
In every interview we have a product business owner, and we have an architect or a developer in the, especially early interviews, because it’s not only something that Sales can work on in that small team, which we are we are too small that we can hand over tasks from one department to the other. So we have to really work collaboratively. And that’s the reason why we decided very early to continue this learning of the 100 interviews at the, during the first eight weeks to continue, but run with so-called squad teams where we really have all domains in the startup involved in the interviews. And that goes even further. That means also during development of the, of our data trading platform, we pull customer into these Sprint reviews. It means we bypass all the typical roles of product business owner, scrum master, and so on. So we really bring the user and the developer together, which also brings a lot of learning in the development team, empathy on both sides.
So I think that’s one of the most important learnings we gained ever in your interviews and bring the target groups together.
Andy Binns: This is, and this is one of the characteristics of the Corporate Explorer, is somebody who develops an obsessive engagement with the customer problem. And, when I have people call me up to tell me stories of failed corporate exploring, some of them are because the problem didn’t work, the solution didn’t work, whatever they learned, some is it, the organization kills it.
But there’s a lot because the corporate explorer starts with an answer and goes looking for the problem to solve. And they’re frustrated that the world doesn’t conform to their assumptions. And I think you’re finding a way to let yourself go of what you may have started with, and really obsess about what’s needed, which is awesome.
And part of that is learning this thing about ecosystem, learning to play with the finance industry, which is a completely different market, as you say, for Siemens and for you personally. What’s that? Was there a moment at which you started to see this as an ecosystem and so how did that go?
Timo Muehlhausen: A little bit it was a moment where I had to accept to get rid of my old bias because I’m an engineer by education but have to work with a different domain, which speaks a little, slightly little bit different language. Maybe yes, when I as a German speak to a German, we speak German, but the domains have different vocabularies.
Andy Binns: Yeah, each technical in their way, because insurance is an insurance actuary. They even refer to them as technical people, and they’re very deep statistical types that live in that world.
Timo Muehlhausen: Yeah, I’m making a concrete example. A moment which was a kind of a eye-opening moment for me was, we would in two years back, we were in an interview with an insurance and they were asking us, Siemens, can you provide us real time data from the machine? First moment. When you ask an automation engineer about real time data, we think about nanoseconds synchronized eight Xs and more in a printing machine or so, but this is not what they are talking about.
So you first have to understand they have risk. In their risk management, they have risk tables with data, maybe out half-year old or so, yeah? And if they would get daily or weekly information about the health status of a machine, that’s real time already, yeah? So it has nothing to do with our definition of real time. And, such potential misunderstandings occurred a lot at the beginning but it also was fun.
On both sides. Yeah. We, if you do your workshops and we did that virtually during COVID, we could not meet in person at that days. So it was also a fun moment. Yeah. And we thought, okay, maybe we, if we spend time with each other working systematically on the problem, then we will find a common understanding and then we would also most likely find a solution.
So the solution was then, quite simple, at least from a PowerPoint perspective. So it’s a data trading platform we developed. Sounds simple, but where are the unique selling points that really makes that thing valuable. And, there are aspects from the OT. Our domain comes in, but there are also aspects from the financing institutions.
And I think again, that shows how cross domain you can work on a solution that brings value for all parties and also for customers, at first. And there are a lot of yeah, potential business impacts. Primary business impacts is getting more transparency from a financing institution, but the health status of the machine, secondary aspect is, can we maybe also use the machines and the data and sell them or combine them with other data pools?
And third is maybe, but this is probably more from my perspective, still a holy grail. Can we train AI algorithms with that data? There’s when you start thinking about it from a visionary perspective, there’s so much potential. And at the end we said, okay, let’s stay focused. On the financing institutions on technical insurances and also stay in the domain where Siemens currently has customers, they’re producing industry and this is a clear B2B market, which also is different than the B2C and all that.
Andy Binns: You are one of these corporate explorers that I write about and work with and you’re doing what many people believe to be impossible. Creating a new venture in an existing very large organization, really pushing a boundary that people had tried years ago, but given up on and, you’ve done it method, what would you say were some of the hardest things for you to cope with, managing that context, because you could have done this externally, right?
You could have tried to build this business, and there are businesses that try to manage this exact use case that start in VC backed startups. What is it that was harder? What is it that you gained, do you think, from doing it inside?
Timo Muehlhausen: The environment is first, in my opinion, so the environment, which gives you psychological freedom, not only you, but also your team, and that allows you to build up a team according to your own thoughts, because all the thoughts of the founding team, at least based on what I said, the initial interviews. Because I think this is a little bit our job profiles, for instance, they are not a hundred percent matching to the existing typical job profiles here. You need an environment where you get that freedom, but also the empowerment, yeah, that really comes from the management.
Therefore I’m quite thankful about the trust we receive, but also the investment for sure. On the other hand, it’s our duty to pay back, yeah, in the way of generating the first revenues, giving that thing not only a marketing story, but really, generating the first businesses, and building evidence, business evidence, based on the first successes. And also making the right decisions or proposals, when to scale, not to overpace, for instance, I think this is also something in corporates sometimes the expectation for management is sometimes has a slightly tendency to ROI 10X after 12 months. Okay, probably may happen, but I don’t know it at least from my experience, but building up a sustainable organization, which is healthy, you need time. And therefore manage the evidence from the customer and what is possible with the team.
Andy Binns: You look at a startup growth rate and it’s wow, they grow really, really fast. But the thing is, you miss out all of those years that they took to get there. Some of them working from, I talked to one CEO of a billion plus revenue firm that only started 15 years ago. The first eight years he was doing from, and he’s probably around your age, doing from his parents’ house in his childhood bedroom, right? But he was building the business from there because that was the, he didn’t have any money to do anything else. And yeah, okay, he’s then had a hockey stick revenue curve, but this first period was much longer.
And, this I think is, what you’re describing is that there is a need to let the evidence drive your decision making. And then there’s a point at which you scale for sure. And it takes a while to get to that point. And if you try to push it too fast, you’ll just waste money, right?
Which is, I think, with pretty much other similar situations.
Timo Muehlhausen: On the other hand, you need a performing team, which is ready. When the moment when the tipping point occurs and you cannot predict it that accurately. The tipping point will come and you have to at least have a minimum working organization as a, on a solid foundation to scale. And I think we have that correct size right now. And it’s now more the challenge to manage when it’s the right moment for the next invest. And so also from a regional perspective, we stood focused. Yeah. We first started in central Europe from October on, we will start our scouting, our customer discovery in North America.
And there is more to go, seeing our corporate or happy home. The expectation is a global business. Yeah. Build up a global business is I think something different than running a startup in just one country, which is also a challenge. You have no time zones. Yeah. You have only one language. Maybe we are 10 countries. We are 13 nationalities already. So it’s a huge fun.
Andy Binns: And this, exemplifies a sort of crawl, walk, run, which again, corporates can move too fast on and because they’re used to running big complex multi markets, multi geography businesses, imagine that’s where you go rather than let’s just prove it out in one place and then add our learning. It’s a tough discipline to follow. So, Timo, what would be your one advice to corporate explorers. Imagine you’re speaking to somebody in a firm somewhere in the world, somebody who maybe is an engineer who’s Thinks they’ve got a an eye, a possibility of creating a new venture inside their company or that one piece of advice that you would give to that person.
Timo Muehlhausen: Do it. There is no, there’s no reason to wait. There’s never the right moment. But there’s also never the wrong moment. And I think it’s more are you, and maybe also there are different elements, is it the environment? Is it your age? Is it your experience? Is it your personality? Is it your private background?
When you feel the moment for you is the right one, then expose yourself, mention your willingness to do that. And if you get the opportunity I know it’s not a very nice explanation, but maybe bear with me. Maybe that’s my English, but you cannot stay everybody’s darling.
Andy Binns: Very good. Super, super advice for those corporate explorers out there. Thank you very much, Timo. It’s been a great pleasure speaking to you again.
I hope to see you again soon. And and, if people are interested, if they’re insurance companies out there inspired by what they’ve heard about Data Driven X, where would they find more details on your business? Do you have a website or something?
Timo Muehlhausen: Yes. on LinkedIn get in touch with me or with my discovery team or go on our website. It’s datadrivenx.com. Make it in touch with us. Or you also see us on the big industry fairs on the Siemens booth. And in the next month is also in North American regions on the one or the other customer discovery fair. Very good.
Andy Binns: Thank you, Timo. Thank you.