Corporate Innovation During a Global Pandemic

A chat with the President of the Daikin Open Innovation Lab Silicon Valley

Dr. Chun-Cheng Piao in Daikin’s Santa Clara office in 2020.

SkyDeck launched a pitch challenge with Daikin on September 8th. Lots of startups started reaching out to find out whether they’d be the right fit so I decided to sit with the President of Daikin’s Open Innovation Lab Silicon Valley, Dr. Chun-Cheng Piao, to learn more about what types of innovation and tech Daikin has been eyeing over the past few years. As the global №1 air conditioning manufacturer, the challenge is just one of many ways that Daikin seeks to identify startups that are developing new and interesting innovations in their focus areas. At first glance you may not think it matters what type of air conditioner you have in your home or work space, but when you stop to consider the fact that the air you breathe is greatly impacted by the quality of the air conditioner you use, you might pay closer attention. Read on to learn more about Daikin’s pursuits and their perspective on tech innovation amidst a global pandemic.

Sibyl: What was the catalyst behind Daikin hosting an innovation pitch challenge?

Dr. Piao: In the past, we have conducted focused challenges called “Daikin Challenge” in a closed setting with a clear business or technology need. We certainly will conduct those types of challenges in the future as well, but this innovation pitch challenge was motivated by the market’s changing trends due to the COVID-19 pandemic. As a heating, ventilation, and air-conditioning (‘HVAC’) manufacturer, which also strives to become a solutions provider, Daikin was already looking for ways to leverage AI/IoT in order to provide tailored solutions for customers. However, the pandemic changed the way people live and work. This pitch challenge was planned with the aim to leverage the creativity that startups can bring to the table in an ever-changing environment where we look at the problem with a broader lens.

Sibyl: What focus areas is Daikin most interested in?

Dr. Piao: Daikin has announced three key growth strategy themes as part of our five-year strategic management plan called the Fusion 2025. In this strategy plan, some of the themes we are looking at include the challenge to achieve carbon neutrality, a way to expand and promote our other service offerings that are tailored to individual needs, and creating value with air. Naturally, we are also interested in relevant AI/IoT technologies to achieve the above key themes.

For example, for the “creating value with air” theme, as it relates to this challenge’s theme of remote/hybrid working environment solutions, IAQ sensors and occupant comfort analysis can be good examples.

Sibyl: Given the breadth of focus areas, how does a startup know if it’s potentially a good fit for this pitch challenge? What are some examples of startups you have been interested in in the past?

Dr. Piao: I prefer to keep the scope flexible because we want to broaden our reach with potential startups that may not yet recognize the HVAC industry and Daikin as a potential collaborator. However, I think it is important to keep in mind that Daikin is an air-conditioning manufacturer and service provider, who is trying to leverage AI/IoT to offer tailored solutions. In this sense, startups who have worked in the built environment space, knows B2B commercial streams, and/or understands a typical industry customer (Ex: building owner) may have an easier time empathizing with the industry’s current and future needs.

Some examples of startups we have been interested in the past include eLichens with their IAQ sensor system, Locix with their occupant monitoring system, and several predictive maintenance startups.

Sibyl: Dr. Piao, you have such an interesting background with a degree in engineering from Tsinghua University in China, you then went on to get a Ph.D from Keio University in Tokyo and then later got the venture capital certificate from UC Berkeley. You’ve worked at Daikin for 33 years. What sort of innovations and transformations have you witnessed during that time and how has that shaped the way you think about emerging tech and innovation?

Dr. Piao: I like to use Uber as an example of a creative solution whenever I onboard a new member to my team. When Uber first came out, I thought it was so innovative because it was a system allowing greater use of existing, underutilized resources, and didn’t need heavy hardware or resource development. From there, similar concepts such as AirBnB became popular. In this sense, I am starting to see that innovation is not necessarily about building something completely new, but creatively utilizing existing technologies and resources as well. As far as I know, Uber was not born out of an automotive company, nor was AirBnB born out of a hotel company. In this sense, I also think cross-pollination as well as thinking outside-the-box is important for companies like Daikin, where HVAC companies/industry should not limit itself to innovation just around HVAC technologies. This was part of the reason why I endeavored to start DSV with the vision to build an IoT platform so that it can act as a backbone for conducting various PoCs for Daikin using various types of data.

Furthermore, I think the innovation and the Tech industry in general is becoming more and more inclusive and dependent on the “who you know” factor compared to a couple decades ago. This is also the reason why I directed my team to create and maintain good relationships with Silicon Valley’s innovation ecosystem. Berkeley SkyDeck and UC Berkeley’s Center for Built Environment programs are just a couple of examples that we are a part of. Being in such an ecosystem is very important so that we have increased opportunities to be in touch with intelligent and creative minds, who can build innovative solutions.

Sibyl: What advice do you have for all the young startup founders out there looking to partner with big corporations like Daikin? Besides having stand-out technology, what else do you recommend for startups to do to get noticed by corporate innovation teams?

Dr. Piao: If I was to express this in a few words, it would be to maintain optimism, perseverance, and humility, as well as to plan ahead when working with big corporations. Corporations are focused on immediate profit because that is just the way our economics currently are. As big corporations, we also have to satisfy shareholders, so by default, it is very easy for corporations to go back to traditional, well-known ways of conducting business. Thus, we often have to choose our potential collaborators very selectively, not necessarily by choice, but by necessity. So, the first answer may usually be a “no.” But I strongly encourage those who still have the interest to work with companies like us to not be upset, to please try to understand the reason behind the “no”, and to come back again and again. That is, the reason why corporations say “no” is often because there is a pain point hidden behind the scenes, which may be as simple as the startup’s solution being too expensive, or that the startup’s business model and the go-to-market scheme is not clear and we would not know how to incorporate it into our own go-to-market plan. In this sense, I strongly encourage startups to try to research the corporation’s commercial model and propose a mutually beneficial plan, even if it might be preliminary. By understanding the reason behind the “no”, I am almost sure that a creative mind can come up with an even better proposal that could get noticed by corporate innovation teams.

Sibyl: Great answer, thanks for helping demystify the sales process a bit for startups looking to work with big corporate companies. I really appreciate your time and best of luck with this pitch challenge!

For startups interested in applying to SkyDeck’s Daikin Innovation Pitch Challenge, submit your application before October 10th:

Sibyl Chen is the Senior Director of Program at Berkeley SkyDeck, UC Berkeley’s premier tech accelerator.