From industry shifts to supporting innovation: Insights from KONE's chief innovation officer

In this podcast, Heidrick & Struggles’ Matti Takala speaks to Amy Chen, senior vice president and chief innovation officer at KONE, a global elevator engineering company, about industry shifts in the industrial sector and which leadership capabilities drive innovation forward.

Some key questions answered in this podcast include:

• (1:25) You spent several years in the automotive sector, which was going through a fundamental shift in terms of technology and business models at the time. What can leaders in other industries learn from how you managed through that industry shift and how are you applying those lessons at KONE?
• (2:56) There are multiple ways for companies to support new innovations and technologies, and organize around them—corporate ventures, joint ventures, internal innovation hubs, start-ups, and so forth—and you have experience with different models. Can you share your thoughts on the pros and cons of different models and how you are currently approaching it at KONE?
• (6:49) What are the leadership capabilities and cultural factors driving innovation for KONE now, and what will be needed in the future? 
• (8:58) What do you look for in terms of leadership or competencies when you're hiring talent for innovation or technological transformation?
• (12:23) Sustainability is at the core of KONE’s strategy. Can you describe how that is driving your innovation agenda?

Below is a full transcript of the episode, which has been edited for clarity.

Welcome to the Heidrick & Struggles Leadership Podcast. Heidrick is the premier global provider of senior-level executive search and leadership consulting services. Diversity and inclusion, leading through tumultuous times, and building thriving teams and organizations are among the core issues we talk with leaders about every day, including in our podcasts. Thank you for joining the conversation.

Matti Takala: Hi, I'm Matti Takala, a principal in Heidrick & Struggles’ Helsinki office and a member of the global Industrial, Technology Officers, and Private Equity practices. In today's podcast, I'm talking to Amy Chen, senior vice president and chief innovation officer at KONE, the elevators and escalators company dedicated to people flow. The company is headquartered in Finland and has over 60,000 employees across 60 countries worldwide. Amy has extensive experience in both corporate and start-up innovations. Prior to joining KONE, she was founder of a company called Car2Share, chief executive officer of Car2Go in China with Daimler, COO of DiDi and Li Auto’s mobility electric vehicle joint venture, and strategy head for Volkswagen China's software and digital services arm. 

Amy, welcome and thank you for taking the time to speak with us today. 

You spent several years in the automotive sector, which was going through a fundamental shift in terms of technology and business models at the time. What can leaders in other industries learn from how you managed through that industry shift and how are you applying those lessons at KONE?

Amy Chen: I think many industries have been facing very similar challenges. How do we change from a product-focused company to providing solutions to customers? How do we face different customer demands, whether it’s on a digital side or more adaptive? How can we accommodate those newer customer demands and how do we apply new technologies that are maturing and could change our products and solutions? I think these are all very similar challenges we face across different industries. The unique thing about the automotive industry is its disruptive competitors. It makes where to focus, as a leader, much clearer. We were talking about mobility, electric vehicles, connectivity, and autonomous driving across the board. And from the other industries’ perspective, as we do not have that much disruption, it’s probably easier from a time perspective. We can make changes gradually, although we are guided with less-clear trends. And I think there are a lot of lessons we can learn from the automotive industry going through that transition. 

Matti Takala: There are multiple ways for companies to support new innovations and technologies and organize around them—corporate ventures, joint ventures, internal innovation hubs, start-ups, and so forth—and you actually have experience with different models. Can you share your thoughts on the pros and cons of different models and how you are currently approaching it at KONE?

Amy Chen: I think [the pros and cons] very much depend on what your company wants from innovation. We've heard a lot of people saying, “While we want innovations because we want to be among the most innovative companies, we also want to generate revenue or new business.” But what does that company, your company, really want? If you look at this from the perspective of the business and customer sides, can you run a new business line and new subsidiaries from innovations, or should the new stuff operate under the existing business setup? Then it comes down to whether or not you’re talking about solving pain points of existing customers versus attracting new customers or adjacent customers. It very much comes down to the question of whether you predominantly want innovations to strengthen your core business under its existing setup or to enter new businesses to diversify or mitigate. My answer depends on your objective. If you are going more toward the innovation at core—existing customers, existing business setup—it is important that you have innovation as a separate function and then you go to market with existing business lines and in markets you have. If the main objective is really to enter new business, then it’s more about innovation to grow, to grow into new businesses. In that case, it’s about how to run it as a separate, new business unit, and then corporate venture and CVC become much more relevant tools. 

If we look at the technology side, we can use a very similar decision-making tool. Are you targeting core technologies that you want to apply to your today and future products? If those technologies are very core to you, then it’s important to develop them in-house or make acquisitions. If you are talking about technologies that are good enough to just apply, then you have a much more open space regarding partnerships either with start-ups or mature companies, or even with taking minority stakes into investments. 

So, I think, if we look at it more or less from two-by-two perspective, are we talking about existing customers, existing business setup? Or are we talking about new business setup, new and adjacent customer? Are we talking about core technologies or non-core technologies? At KONE, we take a more mixed approach on the technology side. So, we have core technologies we want to develop in-house, and we have non-core technologies that we’re developing in partnership with others. But, on the business side, I think we are very clear about wanting to be growing our core business, so this is very much closer to our core and existing customers. 

It is important to know that no matter what, it's very important that innovation is a separate setup. Corporate innovation itself is already hard enough if you do not have a separate setup; you really need that fighting chance to succeed. And this was also why I joined KONE to start with, because it is a separate setup; it allows us the opportunity to actually be successful in that field. 

Matti Takala: What are the leadership capabilities and cultural factors driving innovation for KONE now and what will be needed in the future? 

Amy Chen: I would say that the most important and most beneficial thing for innovation is really the customer, putting customers first. Because, for any kind of innovation, the first questions you would ask is whose problems and what problems you are solving. So, it’s very much coming from a customer perspective, what you can create and what technologies you can apply. So this is where we have a very clear synergy with the KONE culture. Earlier this year we launched our JumpLift solution and I really found it nice that when we talked to the engineers in the team, we asked at the starting point, “It is about how we can reduce the installation time of our own elevators?” But when we started to talk to our customers, we realized that their problem was more about how they can construct faster—so it’s about their productivity. And this is why we shifted the direction of the innovation toward this JumpLift solution for lower-rise buildings: even when you close the first floors, even when you finish the first floors, you can already have the elevator in the floor, in your building, so that you can start to move goods and materials while you're finishing the upper floors. So, in that way, we are actually solving a problem of our customers, that is, to help them to build buildings faster instead of focusing on our own problem, how we can install faster. This is really where it is very crucial that this part of the culture is with us. Of course, there are other cultures within KONE such as collaboration and courage that are also very, very beneficial to innovation. But what I find most important is this customer perspective. 

Matti Takala: And what do you, yourself, look for in terms of leadership or competencies when you're hiring talent for innovation or technological transformation?

Amy Chen: That's a very, very good question. I think there are parts of innovation that are very different. You cannot run an innovation unit by setting up KPIs because there are just too many uncertainties, and failure is part of the process. Of course, we take a portfolio approach, which helps us to still run it as an operation, but you cannot lead people in the classic format only. In my team, we actually rely on about 10 innovation drivers. They are actually the ones driving things forward, leading key activities and key projects. They run their small core teams as multi-competence teams with product development, design thinking, and business understanding together in one team. 

I sometimes find it hard to describe what are we really looking for in terms of innovation competence. Because there is a very narrow passageway you need to find in order to actually deliver the results you want, and it’s not preset, so you really need to find the passageway each time. So, I've always wanted to look for people who are very, very driven to deliver results, and but in a more creative way. So, those that are not set in saying, “This is how we do it,” but can be a bit more creative but still very, very focused on delivering results. In addition to that, I also realized that what we need from a competence perspective is more a holistic competence. So, either people who have very good general business acumen or people who have a very good general understanding of technologies, not necessarily on the deep expertise level, but who very much can comprehend how a business is running and how technologies can impact products generally. Of course, we still need to combine skill sets, because not everyone has that. Therefore it’s also important that a team of innovators working on a project has people with some of those competencies as well as people with very deep expertise. That is very important—that at least one person in that team is very good with driving and delivering results, and that you have someone who has a very good overall understanding of business and technology. 

Matti Takala: Thank you. So it’s kind of a mix of different things?

Amy Chen: Yes, and I think there also are things you might not able to find in everyone. And so it’s also about mixing people with different competencies in a group. And we also very much work in that format: we have people with product or engineering capabilities and people with business capabilities working together in one team. That's also a very important part of driving innovations forward. 

Matti Takala: Sustainability is at the core of KONE’s strategy. Can you describe a bit how that is driving your innovation agenda?

Amy Chen: Yes, absolutely. We have a set of key themes we work with when we innovate. There are about five of them, and sustainability is the one [that carries] across the board, so it is in everything we do. And, of course, we were considering sustainability when we were developing our next generation core products, but we're also very much looking at how we can help our customers reach their sustainability targets and make a bigger impact. 

Matti Takala: Thinking about disruption from a leadership perspective, how do you balance looking for incremental improvements as opposed to the bolder and disruptive game-changing results?

Amy Chen: I generally try to stay away from incremental improvements. So, I will try to answer between the balance of quick wins—so, sure bets—versus longer-term and higher-potential game-changers. And here, I think, portfolio is really the key word. You need to have a balanced portfolio, and we very much run our innovation units as a portfolio. We need to make sure that there are quick wins and sure bets so that there is something generating off the portfolio constantly. And by doing that, we have actually gained a license to innovate. You also need to have investors who believe in innovation. And one of the key things is that you constantly need to deliver results. This is where I think quick wins and sure bets play a very, very important part. 

On the other hand, we need to look for game-changers. But this is why we need the quick wins—to get that license to innovate so that we can then be allowed to look into the game-changers and higher risks. You need to have a portfolio in which there are [longer-term goals] that you know that are higher risks and then [with the license to operate] you can actually have a chance to generate higher impacts with some of them. The other part of the portfolio is also that you have late-stage versus earlier-stage concepts. Naturally, if you take this approach, most of the investments or resources will go to the later stage concepts because that is where you have the quicker wins and sure bets. But it’s also very important that there are enough things being cooked on a regular basis—and being dropped, also, failed on a regular basis—so that you actually can make a consistence. In the end, the quick wins are also not quick wins; they are things that you cooked earlier in your portfolio that are just maturing now. So, I think this is also one point that's very, very important: that you have this portfolio to balance the risk appetite, the time horizon between the long term and short term, and the certainty of having something continuously out. 

Matti Takala: Thank you, those are very good examples. KONE is a very global company and you, yourself, have a very global background from living and working in China, the United States, Germany, the Netherlands, and now Finland, if I recall correctly all the countries. Can you share some of your learnings on inclusion and onboarding in different cultures and how you foster inclusive culture to get the best out of people?

Amy Chen: First off, people are people. Fundamentally we all want very similar things. We want to be respected, we want to be treated fairly and in kind, and we want to be recognized for our achievements. It doesn't matter where people come from. In my experience, showing respect and treating people as people has always worked. On the other hand, I’ve also realized that we are so much wired by how we were brought up, in many ways, and we tend to take those things for granted when we’re needed to judge things. So, we will not judge people based on how they are, but more with this cultural lens as we have. I still remember that when I was with McKinsey, back in 2006. I was working on a project in Libya and the first time we met two of our clients from Libya in Milan, I could sense that one of them was rather uncomfortable with the dining manners. And I recalled how painfully judgmental I also was, encountered as I was with these other dining matters. I decided, “OK, let's just talk about how this is difficult.” I shared my experience of the difficulty I encountered as a foreigner living in Europe. And for the six months afterward when I was on the project, he was our biggest supporter ever. And this is really an experience I want to share because sometimes you just need to be open-minded and not judge. It’s really helped. 

To give you another example, when I first joined KONE, I found the amount of alignment meetings to be quite overwhelming. Then I understood that, from this culture’s perspective, decisions are made through consensus and if you understand how it works, it becomes much easier, because having alignment and consensus earlier on actually helps to drive innovation forward, as we also need to rely on others to deliver the go-to-market part. So, then, if you learned the tricks of how to make that work, you can actually make it work for you and we end up being more aligned and with more innovations. Today, I found myself in much fewer consensus or alignment meetings are more in alignment. So, in short, I would say that it’s important that you treat people as people. Do not judge from your own cultural lens and make those cultural characteristics of others work for you. And this is also one thing I really like about KONE: the sincere emphasis on diversity, equity, and inclusion. And I really feel that there's a true respect for people, regardless of hierarchy. So this is also what makes me feel that KONE is truly inclusive. 

Matti Takala: Great. A final question then: looking ahead, which specific leadership skills and capabilities would you say will be the most important for your company to meet its strategic goals over the next three to five years?

Amy Chen: Let’s take it not even from my company’s perspective but from a broader base. I think, looking at the world today, we are facing a few mega-level uncertainties and I believe it calls for a very different type of skills. First of all, the ability to understand how macro factors will impact us and being able to spot the signals or signs for changing scenarios. I think we, as business leaders, have been quite used to focusing on day-to-day activities and we, as human beings, are wired to think in a linear format—that things that worked before should continue to work. This has worked very well under more stable megatrends in the last decades, but now there is a change in pace and a lot more uncertainty. So, we require even more understanding and foresight for leaders. The other quality I would stress is agility. This may be an overused word, but in a world in which the only constant is change, so must we follow. Combining foresight and agility can mean that we can adapt faster. It means that we are more prepared with foresight for different scenarios and will be able to move in different directions and that we have agility so that when things come up and are more ad hoc, we’ll be able to react faster. Luckily, I think both skills are often practiced through innovation. 

Matti Takala: Thank you, Amy. It has been a great pleasure to speak with you and hear about your thoughts and insights around this topic. Thanks for taking the time to speak with us. 

Amy Chen: Thank you.

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About the interviewer

Matti Takala (mtakala@heidrick.com) is a principal in Heidrick & Struggles' Helsinki office and a member of the global Industrial, Technology, and Private Equity practices.