Governance,Product,Scale
Written by Sigrid Hellberg
October 3, 2022

Electrolux’s Nexure on managing the first 4 years as a corporate venture

Whether it is a corporate venture or an independent startup, many ventures don’t make it past the first couple of years. When they do, they do it by continuously rediscovering and redefining themselves. Nexure, a corporate venture established within the home appliances giant Electrolux, is one venture which is going strong after 4 years. They have developed several successful services, and have reached tens of thousands of transactions going through their own subscriptions platform per month. But the journey has not only been plain sailing. During our most recent dinner with Desifer Venture Club, CEO Giulio Mola and Head of Product Liang Hiah, both of whom have been at Nexure from the start, shared their story and many learnings.

Electrolux taking on services

Back in 2018, Electrolux was looking to re-establish itself in the direct-to-consumer market and leverage opportunities in services. A first attempt to start building services and shape an offering for extended warranties was made within Electrolux but failed. As a next attempt, a consultant was brought in to do a pilot on one market. This was a great success, so an independent corporate venture was set up to continue growing this new line of business. The response from the market during the first pilot, in Poland, was in fact so positive that when Nexure was finally established and ready to take over, the growth targets were very aggressive. With one new country to launch every quarter, the team at Nexure knew that the coming months would be tough. But not how tough.

A challenging start

The aggressive expansion plans put a lot of pressure on the Nexure team, but it was far from the only challenge they faced. The venture was structured so that Nexure would be responsible for shaping the extended warranty offering and rolling out the new business, while the parent company would carry part of the weight in sales, marketing, and operations. But the collaboration between the venture and some of these overlapping entities at the corporation turned out to be complex and was putting spokes in the wheel for Nexure.

Another major roadblock was adhering to the highly localized insurance regulations of the different markets. The legal complications had been tremendously underestimated and required a lot of investments into the product design and a unique solution for each market.

But perhaps the most pressing challenge, and one that is too often underestimated, was the lack of team cohesion. A newly formed team, with many different personalities, unaligned goals, and poor communication, led to slower progress than hoped.

Adapting and reconfiguring

Despite the many challenges, Nexure managed to survive this first year, and after 4 years they are in a place where as Giulio and Liang put it “we are shining”. But this is only the case because the team managed to be flexible and adapt to the situation, and continuously reinvent themselves and their offering to become more and more relevant.

One of the first changes was tuning the governance model to give freedom for Nexure to operate. Initially, a board from the corporation had been appointed to ensure the venture would move in the right direction whilst giving Nexure internal leverage. The board would ideally act as the element of coordination between the venture and the local organization and sales channel. A setup for maximum flexibility.

While good in theory, a few months into the venture this quickly came to change due to pressing requests from the local organizations for a more structured governance model. This resulted in complex RACI matrices and feared steering committees.

A closed framework, with little or no space for initiative taking, stopped Nexure from working quickly and experimentatively like a startup. Therefore Nexure started promoting a new process where the venture would get full autonomy over the initial stages, enough to build an MVP on their premises, before aligning with the board and going to market. After building trust through several successful product launches a model internally called the “Vendor Paradigm” was put in place, essentially ensuring that Nexure is perceived and treated like any other vendor Electrolux would use. This gives a balance of independent product development and adaptation during implementation.

Setting up a well functioning product team is a key challenge for any venture, and the Nexure product team has gone through a series of re-organisations in order to serve the product best during different phases of maturity. Since the early product development required quite heavy localization, the teams were re-structured from their initial setup to cater for this. This involved turning several roles into business developers working closely to the markets to understand the changes needed to meet the regulatory requirements. When the product matured and the focus shifted to scaling efficiently, the product team was again re-structured to be able to work more independently as a central product team.

Quite early on it became clear that the business model could be improved. At first, Nexure’s extended warranty was sold at a fixed cost for one, two, or three years ahead, requiring their customers to pay a high upfront cost and making the team struggle to meet sales targets. When they moved to a subscription model the sales increased quickly. Giulio mentions that the success that came after this was crucial for Nexures survival as a corporate venture continuously has to build trust in the organization and this is best done by showing tangible business results.

A pivotal moment in Nexure’s turnaround happened while doing a demo of the solution for extended warranty to a team in one of the local markets. At this point in time Nexure had been operating for about one year with still little commercial results. The local team was so impressed by the quality of the demo that they requested to use the platform for all their D2C services, thus far beyond the original scope of the extended warranty products.

This led to the team developing this as a platform product of its own. This responsiveness to market needs turned out to be a great success and this is now driving Nexure growth and services several parts of Electrolux.

“We need hundreds of Nexures in Electrolux”

The further Nexure continues its journey, the more developed and comprehensive its platform gets. Today, it is the go-to for any service product that Electrolux wants to sell in Europe. They have managed to enable a service movement within a traditional product company.

The next step for the venture is to develop the most sustainable service model for appliance manufacturing and ownership, helping Electrolux drive towards their ambitious sustainability targets. Giulio says, “As someone clever within the core organization pointed out: We need hundreds of Nexures in Electrolux.” Nexure has done the hard groundwork and established a working model, so now it’s just for Electrolux to keep new corporate ventures coming.

More about Desifer Venture Club
Governance,Product,Scale
Written by Sigrid Hellberg
October 3, 2022