VERTICAL STRATEGY PERSPECTIVE
Wrapped in a vibrant start-up culture and infused with global partnerships, the innovative consultancy Vertical Strategy specialises in creating new business models, incubation and customer experiences. Their portfolio counts cutting edge projects such as the Future Mobility Concept at Airbus, revolving around the development of flying cars, and the MobileLife incubator at Danske Bank. In this creative hub of entrepreneurship and innovation, there is no lack of ideas – or desire to challenge conventional truths. Meet Vertical Strategy, part of the QVARTZ civilisation.
Karsten Petersen and Joachim Allerup,
Founders of Vertical Strategy
Karsten is an engineer gone consultant, who then moved into an array of businesses before co-founding Vertical Strategy. Joachim Allerup had a stint at QVARTZ many years ago, before moving to Australia, founding a couple of start-ups and then joining forces with Karsten. Both gentlemen admit to being adrenaline junkies, and while Karsten loves fast motorbikes, Joachim prefers rock-climbing. Somewhat surprisingly, says Joachim, Karsten is the undefeated office champion in Ping-Pong, despite never practising and age being against him.
If I owned this business
When stepping into Vertical Strategy’s office in the colourful, casual and multicultural northwestern part of Copenhagen, you are hit by an instant start-up vibe. The door on Bygmestervej leads directly into a bright white, gallery-like space measuring four metres from floor to ceiling, dominated by a big wall filled with large peek holes. The room is slightly messy with nerf guns, a Ping-Pong table and a bunch of Polaroids hung on the walls – but no reception, water fountains, suits and ties or pencil skirts in sight. Vertical Strategy is like that super brainy but slightly bum-like kid in class, with unmatched socks and unruly morning hair, but with an ability to ask the most unexpected questions. The one who’s really fun to hang out with, because you never quite know what will happen next.
Among the 25 or so people cohabiting the office space, a question repeatedly asked is, “what would I do if I owned this business?” Just sitting around being annoyed or indifferent is not an option, whether on or off client engagements. Here, development isn’t just an opportunity but also an obligation. “Being able to keep asking yourself that question in any situation is the key to keeping the balance between making cool innovations based on technology, and making sensible business decisions. Those two always need to go hand in hand”, explain Vertical Strategy’s two founders, Joachim Allerup and Karsten Petersen.
Turning incumbents into rebels
Vertical Strategy is a fusion between a consultancy and an innovation agency, made up of a team of diverse profiles with a strong record of building agile growth cultures and innovative business models. The companies they work for all have one thing in common: they want to identify growth – whether inside or outside of their core business. “It doesn’t matter if you’re Grundfos and you’re selling a pump, or you’re Danske Bank delivering a financial service, in the future you know that you need to sell a new and complete experience. Or if you’re Maersk and you feel that your core business is under pressure, and you know you need to reinvent and move into completely new business areas”, explains Joachim.
The Vertical Strategy team helps clients detect new growth avenues and ventures by applying a different set of capabilities – with an emphasis on strategic understanding, customer insights, entrepreneurial executions and concept design. “We help our clients design and execute new ventures by utilising a different set of tools that are new to strategic thinking”, explains Karsten. “It can either be as standalone growth projects or as larger transformation projects where we help organisations find a new way of working by applying these capabilities, tools and mode of execution into their existing organisation. That way, they make the move towards being digital rebels or growth rebels rather than being caught as incumbents in the old world”.
Why corporates are left behind
Karsten and Joachim’s motivation behind founding Vertical Strategy was sparked by the many new digitalisation technologies and business models that are changing the rules of the corporate game as we know it, and also the way we behave as consumers. With these changes come many new opportunities to create growth, and right now, large tech companies like Google and Amazon, combined with a lot of start-ups, are reaping a lot of these opportunities. “The reason why they can do this is that they work in a different way,
leaving corporates behind”, explains Joachim. “They involve customers more, they have more digital capabilities, they experiment in their way of execution and they are much faster and bolder in their decision-making”. Vertical Strategy’s approach has been to look into these ways of working and into the new toolbox that has created growth adventures in the new economy. “We anchor our approach in this toolbox, but also in a new set of capabilities where we combine strategic thinking with customer understanding, concept design and entrepreneurial execution”, says Karsten. “Then, we tie those different competences together in a strong team that is able to design and execute in a unique way”.
Karsten and Joachim both have backgrounds within management consulting, and their extensive resumes include a number of start-ups within innovation and digitalisation. However, with time, they have found that experience isn’t always a good thing. “We have actually had to unlearn a lot of what we knew because we have understood that 20 years of experience is to some extent a limitation as much as it is a benefit”, explains Joachim. People have asked him and Karsten numerous times why they have spent 20 years being good at strategy, only to decide to start over and rethink it all. “If they don’t understand that, if they only think it’s a benefit, then they miss out on some of the opportunities that require you to think totally differently”, explains Karsten. The ability to rethink and relearn is what give the two Vertical Strategy founders the possibility to assess themselves and know when their experience is of value and when it’s actually a limitation. This, says Joachim, is something that many consultancies are struggling to figure out.
Speed is of the essence
Often in consultancy work, the solution presented to a client is the result of a very thorough and step-by-step process. In Vertical Strategy, this approach is often turned upside down. “Usually, what we see among corporate clients is they create ‘maximum validated products’, taking 3-4 years to do a certain project of a certain size. We want to go in there and help them create a new business in half the time”, says Karsten. And it’s not because Vertical Strategy is twice as good as competition, but because they believe in prioritising speed and making fast decisions. “We seek out situations where hierarchy isn’t standing in the way of moving ahead”, explains Joachim. “Then, we design the absolute minimum of what we can bring to market and that’s what we start building, rather than imagining a perfect product and trying to build that. That’s a pretty big distinction between us and how a lot of other innovation is happening”.
In a steady attempt to avoid confining decision-making and process development only to pre-scheduled meetings, Vertical Strategy aims to involve the clients in the entire innovation process. To many, this is an unusual way of doing things. “Showing solutions and decisions in design opens up the eyes of a lot of people, as opposed to ‘death by PowerPoint’. It’s actually easier for them to see what we’re trying to get at when we can show something that’s a little more tangible”, says Joachim. To him and Karsten, creating the right setting for innovation and speed boils down to postponing the corporate inertia or immune system, which prevents people from making decisions. “There are so many things that people want answers to, which they can’t have until they actually get out there and do it”, says Joachim.
However, while working hard to challenge “death by PowerPoint”, tedious processes and inflexible strategy frameworks, Vertical Strategy is still much closer to a consultancy than a design agency. Joachim, Karsten and the others don’t build experiences and products because they are great for the customer per say; instead, they build for profit. “We understand the strategy, we understand how to build big, valuable businesses and we have that in mind all the way through”, says Joachim. “But we also take into account what the customers like and want, because we strongly believe that this drives profit”.
In continuation of the pursuit of speed lies an ability to see the value of something failing. Joachim and Karsten explain that in many businesses, when something starts to fail, people start covering up. Once they have covered up the failure, it becomes more complex and people spend a lot of time working on something that should have been shut down, because no one believes that a failure can be a success. However, by having a very involving process, where decisions are made fast and ideas are continuously tested, there is a built-in room for failure, ultimately resulting in a much more proof-tested and robust end product, believe Karsten and Joachim.
No end game in sight
With more and more corporations facing the challenges of the new technologies and changing customer behaviour, focusing on the customer view alongside innovation and technology is going to be essential in any strategy project going forward, say Karsten
and Joachim. And this development is what motivated the merger between Vertical Strategy and QVARTZ in the spring of 2017. “By combining our competences, we can offer a better and more holistic support to any large corporation out there”, says Karsten. “Clients are very happy to see the combined knowledge we can bring. And I believe this is a very good value proposition; the combination of our innovative strength and QVARTZ’ strategic structure”. Also, adds Joachim, the company cultures have many common traits, with very flat hierarchies and a strong belief in the power of people.
Going forward, Joachim and Karsten see no full stops on Vertical’s journey. “The end game is change”, explains Karsten. “We need to build a business that is actually capable of transforming itself as part of its DNA, rather than trying to find the right formula for doing these things now”. On the Vertical wish list, however, lie a couple of new offices in new locations. Joachim and Karsten have had some close collaboration partners in Tel-Aviv and will open in both New York and Hamburg within the next 3-6 months. “We want to create small tribes where innovation is happening, and where it makes sense”, says Joachim. Yet, to him and Karsten, expansion must never ever overrule the core of Vertical Strategy. “We want to build smaller tribes in more countries faster, that’s the start-up way of doing it”, they say unanimously.