Scaling up is not just for start-ups: Established operators need the same kind of thinking
Business Development Director Turunen has been working at Elomatic for a total of six years over two different periods. Recently, he has been involved in developing a model to help scaling in an industrial environment.
What attracted you to Elomatic?
The chance to work on diverse cross-sectoral projects was appealing. I also saw an opportunity to do meaningful work towards the future.
What kind of projects have you been working on lately?
I have worked broadly on sustainable solutions, primarily related to clean energy and the hydrogen economy, as well as the bio- and circular economy. Among other things, I have been developing a scale up model that allows us to help our customers refine their industrial innovation ideas into commercial plants.
What made you begin developing a new scale up model?
Scaling anything or any function from one size class to another is always a challenging task. It can be easy to develop a good process, but it takes a lot of funding and the right choices to turn it into a business. In addition, you need to collaborate with many different parties.
It is therefore important to understand the steps in which scaling should be done and what special features are involved in each step. For example, different technology suppliers are needed in different phases. If the objective is a large, replicable solution, you must have a clear goal and proceed with it determinedly.
Do you see a demand for this kind of model today?
As we all know, everything has to be rethought in a new way at the moment. Clean energy production, the circular economy and the bioeconomy are taking on an increasingly significant role. The response to this challenge has already been impressive, and many bio- and circular economy projects and innovations have emerged. So there is clearly a need for the model we have developed.
It is also worth noting that our model is not only suitable for startups but provides a good framework for established operators as well. For example, switching raw materials may require a change to the process, in which case new equipment is needed and you will have to think about how they fit into the current layout. The dimensions and, for example, the reserve capacity required by the process may also require rethinking, and safety and licensing issues often play a more important role than previously.
What kind of team was needed to develop the new model?
We have been carrying out similar projects for a long time, and we possess a wide range of expertise within Elomatic. We involved several of these experts in the development work, as they were able to view the project from slightly different angles and contribute their strong content expertise to the work. It was up to me to combine all this expertise into a logical package and clarify the customer perspective.
How should a good idea be further refined?
According to our model, first comes the idea stage, where we think about how to move forward with the idea. There are no known technical or commercial limits, and obtaining financing can be challenging. There is still a long way to go before the idea becomes viable.
In the laboratory and modeling stage, we begin to acquire an understanding of the phenomenon. For example, testing in a test environment or process engineering simulations can be performed. For the first time, something concrete can be accomplished, and we often discover that it is difficult to find suitably sized test equipment or machine parts.
In the pilot stage, a small-scale plant or a combination of process parts is built for the first time, and we begin to understand what kind of technological implementation could be possible. This stage requires flexibility, as a lot of manual work still has to be done. The need for financing starts to increase sharply: we are easily talking about 7-figure investments.
What follows the pilot stage?
The output of the demo stage is an industrial-scale plant already, but it is not yet intended to generate significant turnover. Whereas in the pilot stage we were looking for equipment manufacturers, we are now looking for different technology suppliers. We have to find out what ready-made pieces they have, and we also need to tackle the business aspect even more strongly.
In the next stage, a commercial facility will be built. The goal is for it to generate a profitable business, so the business aspect starts to dominate at this stage. Essentially, a commercial plant is an actual industrial plant that has to show what is needed when we start replicating it for the world.
The last step is the duplication stage, where money is made. Different business models are available: you don’t necessarily have to carry out the expansion yourself, as it is also possible to sell licenses or participate in a co-ownership model.
What do you consider to be the most challenging aspect of scaling?
When talking about scaling operations in an industrial environment, the emphasis is on acquiring sufficient financing and managing timetables and risks. Obtaining financing especially is the key, which is why things have to be done in the right way and at the right stages. The amount of financing needed also increases from stage to stage. In addition, financiers want a return on their investment as quickly as possible, which is reflected in timetable pressures.
Finding technological solutions is not simple either. For example, when we start developing an idea for a production facility, we need many things around it: piping, electrical automation and weather protection in the form of a building.
It has to be remembered all the time that it is a creative process that is constantly evolving, so there must also be room for creativity and flexibility. They act as counterforces to the slavish scaling process, and you have to be able to combine them well.
What kind of advice would you give in terms of risk management when scaling?
The controlled implementation of scaling is the best possible risk management. In this way, technology risks, commercial risks and operational risks are managed at the same time, and both personal and process safety are taken into account. It is also important to take project risks into account, as many startup operators have limited project management skills. This is highlighted in the pilot, demo and commercial stages.
In particular, I would like to highlight business risks, because industrial projects require financing, and at each stage of scaling, you have to convince your financiers by providing them with the right level and scope of evidence. In the first stages, the idea is proven, then the technology, and finally the business.
It may also become clear at some point that the idea is not viable. Then you have to know how to stop or change direction, for example, in terms of raw materials. When scaling is done in a controlled manner, it is possible to change directions quickly enough.
What has working with startups taught you?
I lift my hat to all startup operators who boldly and passionately set out to change the world. It has become clear that effective collaboration between different parties is very important in order to succeed in scaling.
I also like how startups dare to think big and develop quickly – and also to fail. Many traditional and established operators should learn from this, including us!
Lives in: Muurame, Finland
Education: Licentiate degree (Applied Physics and Environmental Science)
Employment history: Expert in the technology and forest industries, in a state-owned company promoting energy and material efficiency, and in a micro-level consulting company. Part-time lecturer at Jyväskylä University of Applied Sciences.
Hobbies: Krav maga, the gym, enjoying nature with the family, and all types of small building jobs
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