New business models spread innovative designs
September 15, 2015
When inspiration strikes during a project, designers often lack the time and resources to pursue it. When they do manage to apply an innovative concept on one job, they can struggle to find opportunities for further application or refinement.
Arup’s venturing program wants to change this. By giving employees the potential to develop their ideas into commercial market offerings, it hopes to bring groundbreaking designs to a wider audience while creating valuable new revenue streams for the company.
We spoke to Ralph Wilson, who manages the effort from our London office, to learn more.
What is venturing?
Arup’s venturing initiative is all about breathing life into opportunities that wouldn’t necessarily be taken forward under the business-as-usual consultancy model. We invest in products, software, and equity ventures — that’s where we take an equity stake in a new or existing company — that align with all the good things Arup wants to do.
There’s a strong sustainability theme running throughout all the ideas we take on, but they also have the potential to generate great commercial returns.
So with products, for example, we look to develop novel technologies, novel products, that we think are better than anything else out there. Then we license the intellectual property out to manufacturers and make royalties every time they’re sold.
For equity ventures, we might set up a company with an external party and build that into something that’s a profitable entity in its own right, making a return when we exit through a share sale.
It’s currently a quite small part of what Arup does, but it’s very exciting.
When and why was the program started?
For some years Arup has been exploring these kinds of opportunities here and there, sometimes with a lot of success and other times with less.
There was one venture three or four years ago called Halo IPT. It was a piece of technology for induction charging of electric vehicles. It’s a bit like the technology used for charging electric toothbrushes, but at a bigger and more complex scale.
Wireless charging allows us to get rid of cables, and the long-term vision is that you could bury charging pads in asphalt roads and cars would never have to stop to recharge. A real transition to electric vehicles would dramatically reduce noise and pollution in city streets, which is something Arup would want to lead.
So we formed a company with the University of Auckland and then developed the technology from a lab demonstrator to a point where it could actually be put on a car. We later sold the business.
That initiative was really successful, both financially and in positioning Arup as leaders in the field of electric vehicles. It woke Arup up to the potential of these kinds of ventures.
Then a couple of years ago Ian Rogers, one of the directors in our legal team, was charged with trying to really make something of these opportunities. So he developed a process around how we would harvest and develop them, and I got involved shortly after that.
Broadly speaking, what do you think about the relationship between this program and the future of the design consulting business? For Arup, at least, is this seen as something with the potential to make up a significant part of our revenue stream down the road?
That’s my hope, that the initiative can become really profitable for Arup.
We’re a huge consulting business, and it will take a long, long time for venturing revenues to make a dent in Arup’s turnover for consulting. But any individual venture has the opportunity to be a lot more profitable than a typical consulting project. There’s a huge number of intelligent people with great ideas in the company. We have to root out these ideas and develop them, but I think if we pick the right ones we can turn this into something that’s really profitable.
But for every successful idea there are ten that aren’t, so it’s a slower burn than consulting, too.
That said, it’s also really important that the kinds of things we’re developing are raising our profile in the kinds of markets we want to work in and demonstrating to the outside world that we’re the innovative firm we say we are.
And in terms of how it relates to consulting… our consulting business is really successful, and a lot of the venturing ideas are born from that business. So I think there’s a really nice synergy there. Every so often there’s an idea that doesn’t fit that consulting model, and having this process in place makes sense.
There could also be something complimentary between long-term revenues from venturing and shorter-term revenues from consulting: solving our clients’ problems for a fee and also investing resources at risk in ventures.
What are some of your favorite venturing projects?
Right now we’re developing about a dozen different technologies, of which eight are products, two are pieces of software, and two are equity ventures.
We’re working on a fiber-reinforced plastic, lightweight, modular footbridge called arcoBridge, which is very cool. That came from a competition for a bridge over a stream in a forest with no roads to it. We didn’t win the competition — felling a tree was cheaper! — but the team started to develop the concept further. It then became a venture because we realized it had really wide application in the rail industry beyond this small project. There’s also a whole host of benefits in terms of cost, robustness, and embodied carbon. We’re getting to the point of building our first demonstrator and are quite excited about that.
Another one is a low-energy air conditioning system, which is exciting because it’s a step change in terms of energy consumption. It’s also really low profile, shallow in depth, so you can stick it in places where you can’t fit existing systems.
Then we have a new equity venture where we’re building a heat utility company around a deep geothermal well technology.
And one that I’m really interested in, one I think really falls in line with what Arup should be doing, is a living wall system: essentially a façade system that grows plants from seed.
What does the venturing process currently look like?
Usually ideas come from the experience of working on consultancy projects for years, perhaps noticing a problem that occurs again and again on projects and seeking out how it might be solved. Or other times, staff members have been developing ideas on their own. Or we’ve been developing pieces of software that we use internally and think might have a market externally. Or we have links with other organizations and have opportunities to develop concepts with them. So they arrive through a whole range of streams.
We try to ask the difficult questions early on.
And then the process… you often hear the word “lean” when people talk about startups and technology development and tech transfer, that kind of thing, and we operate under some lean principles. We’re lucky to have a huge depth and breadth of expertise within Arup, and so very early on we’ll reach out to these people and get their take.
We’ll also go out to the market for feedback very early. Maybe in the past we would have been afraid of revealing an idea until it was really polished, but now we try to ask the difficult questions early on and gain confidence in a market pull before we make any significant investment.