Preparing for Growth-Accelerating Partnerships

Preparing for GrowthAccelerating Partnerships
Influential alliances can help grow your business fast. It’s never too early to start building your
global network.
Henrik Nielsen knew he was on to a good thing
when he directed members of the Nielsen
Innovation team to design a hand-held espresso
machine back in 2005. When Fiat came on board
eight years later, unveiling a bespoke version of the
innovative drink-maker in its 500L model at the Paris
Motor Show, interest sky-rocketed.
As detailed in my case study with Manuel Sosa,
INSEAD Professor of Technology and Operations
Management and research associate Anne-Marie
Carrick, Handpresso’s journey from an innovative
idea to an alliance portfolio with big name brands
such as Lavazza and Fiat, involved a lot of
perseverance and a little luck, and is a classic
example of how important both alliances and
partnerships are for a business’s growth.
It’s never too early to grow your global network and
while potential partners may not jump on board at
the first meeting, just speaking with them indicates
their openness towards the invention. The memory
of it lingers, and when your product is right, the
door is already open.
A simpler and easier way to make espresso
Henrik Nielsen moved to France from Denmark in
1990 to take up a position as project manager at
Moulinex Krups’ European Research Centre.
Experience gained during his years with the
household appliance company, convinced him not
only was there a simpler and easier way of
engineering espresso machines but a new market
space was opening up for a hand-held product
targeted at “on the go” people, campers, small
households and the like.
It was a low budget start. Trainees worked on the
initial concept and money which would otherwise
have been spent on formal market or consumer
research was directed towards design and tooling.
After studying the coffee-making process the team
concluded that there were two main requirements
for good espresso: the correct amount of pressure
and the right water temperature. It was decided
early on that the machine would not include an
internal water heating device, as it was a complex
process, relying instead on preheated water from a
kettle or thermos. A machine was developed using a
hand pump mechanism that reached the 16 bar
pressure required.
At this point Henrik approached two leaders in the
espresso market – Nespresso and Sara Lee. After
filing utility patents and securing non-disclosure
agreements, he met with the companies’ marketing
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managers, engineers and IP heads on at least two
occasions. Unfortunately neither was interested in
purchasing or even licensing Handpresso, noting
their concerns that the water temperature couldn’t
be guaranteed to maintain the perfect heat to ensure
a good espresso was made from their product.
Informal partnership
Unperturbed Handpresso went it alone. Once the
team had built a prototype that produced high
quality coffee, they showed it to the top
management at leading coffee maker, Illy.
Impressed with the idea, Illy entered into an
informal partnership giving the go ahead to use
their easy serve espresso (ESE) pods and helping
optimise the infusion process.
through partnerships with large companies who
would bring credibility to the innovation. Contact
was re-established with Illy and Lavazzo, both of
whom had shown interest in the portable machine
but were not convinced it could produce
consistently high-quality coffee because of the water
temperature. With the addition of the electricpowered automatic machine their doubts were
allayed.
Lavazza moved quickly negotiating a deal on their
capsules in return for an initial three-year
partnership with Handpresso, encouraging the R&D
team to push the technology a step further to fine
tune the product.
Accelerating growth
Meanwhile other team members were working on
the machine with regards to colour, weight, and
development of a valve mechanism to indicate when
the crucial 16 bars of pressure had been reached.
With the product almost completed it was necessary
to build a business around it and the Handpresso
company was launched in November 2006.
It was then luck really fell Handpresso’s way.
Lavazza had been approached by Fiat who intended
to include a coffee machine in a new model car. The
machine would be based on Handpresso’s
technology using Lavazza’s capsules and would be
integrated directly into the vehicle – not using a
plug-in lead as with other models.
The first product Handpresso Wild was launched in
January 2008 at the Milan Show. This was followed
by shows in Paris, Frankfurt and Chicago. By 2009
Handpresso was distributed in 25 countries, and
within two years 100,000 machines had been sold,
assisted by Henrik’s wife Catherine who, in her role
as head of marketing and communications, had
targeted the trendsetting blogs that were springing
up across the virtual world. High margins were
given to distributors so they would invest in
communications within their own country. Over time
the company won eight prestigious awards for its
innovative product.
“This was a turning point for the company as we
were first endorsed by Lavazza, then Fiat,”
Jérôme said noting the relationships gave
Handpresso much-needed credibility. “People are
now sure of our quality and reliability, plus there’s
been widespread press coverage. All this spills over
into our other businesses, in particular the handheld machine.”
In April 2007 Jérôme Schlegel a manager with
vast experience in international distribution and
high-end fashion products took over as CEO while
Henrik concentrated his efforts innovating two new
versions of the machine: Handpresso Wild Hybrid,
that would use both ESE and ground coffee; and the
Handpresso Auto, an espresso machine for the car
using the same technology as the handheld product
but heating the water using the 12v cigarette lighter.
Handpresso is a great example of how an idea can
take off. The company made a series of correct
decisions, they got the machine out and sales going
early. They developed areas of the product in which
potential partners had expressed uncertainty and
they were able to hook up with collaborators to get
into cars . They were lucky to be introduced to Fiat
by Lavazza at the right time, but they had prepared
so when luck came they were ready to take the
opportunity.
Sadly Henrik didn’t see the launch of either. He died
suddenly in December 2011.
Time to grow … fast
The delayed launch in February 2012 met with little
initial enthusiasm but a month later, after being
mentioned in a U.S. blog, visits to the company
website jumped from 300 to 12,000 and the team
knew they had to grow the business rapidly before
another player moved in. The plan was to expand
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Henrich Greve is Professor of Entrepreneurship at
INSEAD.
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