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Vietnam and Finland partner to build startups across Vietnam

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Finland and Vietnam—what do these two countries have in common? At first glance, perhaps not much. Vietnam has a population of 90+ million and Finland’s population doesn’t even break the six million mark. Finland’s GDP per capita is almost $50,000 while Vietnam’s is approximately $2,000. And Helsinki is considered one of the most future-oriented governments in the world while Hanoi is known for its traditional elements; after all, it’s an over-1000-year-old city. So it might come as a surprise to learn that Finland’s Ministry for Foreign Affairs and Vietnam’s Ministry of Science and Technology have joined forces to foster innovation, support initiatives, and develop entrepreneurs via the Innovation Partnership Programme (IPP).

The IPP essentially supports the growth of the Vietnamese ecosystem; its role is to initiate and facilitate new activities, connections, and collaboration that can lead to the creation of sustainable ecosystem structures on the national level with regional integration and strong international linkages. Part of this effort includes a training course, an Innovation Accelerator, and events to bring the community–as well as potential partners and sponsors–into the fold.

Currently, 12 Vietnamese Innovation Champions are in the middle of a two-month “Training of Trainers” (ToT) program where they are learning lean startup methodologies, new ways to minimize risk, and how to develop ideas into products and services (and eventually sustainable businesses). Hailing from a variety of backgrounds in the public and private sectors, and with a median age of 35, these working professionals are led in sessions, workshops, and classwork by top international practitioners from startup hubs in Europe and the United States. Outside of the facilitated HATCH! space in Hanoi’s Ba Dinh District, the Innovation Champions have conducted fieldwork where they interview prospective customers, pen blog posts to share their perspectives, and connect with aspiring entrepreneurs in the community. They have already begun advising local startups in order to put what they have learned into practice—something they will continue to do in August once the training is over.

One major portion of fieldwork is the customer conversation, which drives the iterative model for a product or service that is being developed; some of the terms and tools used include “business model canvases” and “value propositions.” Entrepreneurship is a process and mindset—asking the right questions of the right people is key to developing solid products and services. But, sometimes, it needs to be taught and localized in order to become part of a local ecosystem.

Trainer Nick Norena of San Francisco is, by his own account, not only an entrepreneur but also an educator and coach, focusing his life on finding the most effective and engaging ways to teach entrepreneurship and innovation. Currently, he is focusing on Vietnam.

“Being here in Vietnam, I am eager to learn about a country and culture that is quite new to me,” said Norena. “Most importantly, I am incredibly humbled to work with the Trainees enrolled in this ToT program.

“The Trainees we work with are incredibly accomplished academics and professionals, and they bring valuable perspective to the classroom and fieldwork each week. This is crucial because one of their main goals and is to translate and adapt the materials and topics we cover to accurately fit the needs of the local startup ecosystem. I am encouraged every day by the team I’ve become a part of, and excited to see what the future of the Vietnamese startup ecosystem holds,” he said.

Innovation Champion Lan Phan, Deputy Director of NATEC–an organ of Vietnam’s Ministry of Science and Technology (MOST)–of Hanoi shares a similar excitement toward the future of the Vietnamese entrepreneurship ecosystem:

“It is great because I can learn the most updated knowledge in the startup world–the Lean startup movement,” said Phan. “And, having it taught by the experts and practitioners coming from Silicon Valley makes it even much better experience. Their sharing of real startup stories and the hands-on exercises that we have to take in class absolutely help us internalize the training principles much faster.

“Being one of the IPP trainees,” she said, “also means that I can develop a close relationship with other like-minded trainees, whose goals are not only to excel in their own careers but to give back and contribute to building this ecosystem a better place for startups to grow. Overall, I have so far been benefited greatly from this training course and would love to share my knowledge with others so that the impact of the course would be multiplied.”

The curriculum that Norena and the other trainers are developing—which is aimed at teaching academics and professionals in Vietnam the skills, techniques, and mindset required to successfully coach and mentor startups—is expected to be used in Vietnamese and perhaps even regional universities as a way to extend the impact of the first cycle of the Training of Trainers program and Innovation Accelerator. The IPP seeks to support and build the capacity of local key players in taking ownership of developing the ecosystem. Thus, this curriculum is a foundational resource for new and aspiring entrepreneurs in Vietnam and beyond.

So, what’s next? The entire program moved to Ho Chi Minh City last week (July 15) and will be based out of Hoa Sen University. Once the Training of Trainers program is completed, a six-month Innovation Accelerator led by the Innovation Champions will begin in both Hanoi and Ho Chi Minh City. The Innovation Champions will guide approximately 20 high-growth and innovative startups, as well as four system developers, to success.

The startups have an initial Demo Day on October 31 and a final Demo Day in January before the call for new startups is opened up again. Before the first Demo Day, the IPP is looking for mentors (e.g., guest speakers) to support the IPP Innovation Accelerator as well as future partners to help pilot and scale the curriculum (open source, practical, and comprehensive innovation and entrepreneurship-pioneered—which does not yet exist in Vietnam) to universities and other training organizations customized to fit the needs of their respective stakeholders.

By design, the Innovation Champions will be the foundation of the future, driving the ecosystem forward even beyond the Innovation Accelerator. Hopefully, by the time Tet (Lunar New Year) rolls around in February 2016, we will start to see some of these selected projects emerge from the Innovation Accelerator ready to expand in Vietnam, into the region, or elsewhere. Also, we can expect that next year’s ToT Part 2 will feature even closer collaboration with university and training organizational staff.

Even farther down the road, Trainer Dan Toma of Germany projects even more success as a result of the program.

“Looking at the speed of their progress [Innovation Champions], I am highly confident that they will have a huge impact in the Vietnamese ecosystem once the training [is] over,” said Toma. “I’m looking forward to having a coffee in a nice restaurant somewhere in Europe in about three or five years from now, reading about the first Vietnamese company being successful on the international market, hoping that one of the Innovation Champions helped build that story directly.”

Three to five years out is a long time but, perhaps, Dan will be proven right. After all, the best way to predict the future is by helping to create it.

A version of this article first appeared in Tech In Asia.

Taking a Closer Look at the IPP

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In our last post, we outlined the IPP, explained its goals, and touched upon some of the challenges ahead for the program’s stakeholders. This week we are going to take a deeper look at the IPP and the cultural, comparative, and collaborative challenges ahead for the program in Vietnam.

Last weekend we sat down with Chris Zobrist, the Senior Innovation Partnerships Expert at the IPP, and he shared his thoughts on operating in Vietnam, the potential for entrepreneurship and innovation on a local level, and how the IPP factors into the changing landscape in Vietnam.

  • Can you share a bit about yourself? What’s your background, your role in your organization, and where are you located?

CZ: I’m currently working as Senior Innovation Partnerships Expert for IPP, which is a joint program funded by the Foreign Ministry of Finland and the Ministry of Science and Technology of Vietnam.  My background is as both an entrepreneur, having started many businesses over the last 15 years, as well as an entrepreneurship educator, spending part of my time teaching entrepreneurship and developing curriculum in several universities in Vietnam.

  • What kind of opportunities do you see in Vietnam over the next five years?

CZ: Vietnam has a lot of talent, especially in engineering and software development, and there are already a few high-growth companies as well as local start-ups planting entrepreneurial seeds here.

  • What’s the best way to establish trust with Vietnamese business counterparts?

CZ: It depends a lot on the individual with whom you are trying to build a relationship, specifically in terms of their background.  Generally, the best way to get to know someone is through someone they already know and trust, as in many cultures, Vietnamese really value social capital, and this can be transferred from one person to another through a proper introduction.  Besides introductions, sharing meals, and drinking together are also good ways of building trusting relationships which is an essential element of working together.

  • What’s the biggest difference between American and Vietnamese mentalities?

CZ: Coming from a developed country that churns out high quality products as well as infrastructure (roads, public buildings, etc), Americans as well as people from other developed countries have a natural expectation to see and make things at a high standard of quality.  Vietnam is still a developing country, so many things are made with what little resources were available, and so the expectation for quality coming from domestically produced goods is not high.

  • What’s the hardest part about doing business in Vietnam?

CZ: Ensuring high quality standards.

  • Do you have a favorite quote?

CZ: “I’m all for progress, it’s change I object to.” – Mark Twain, I like this quote because it is the most apt description of the greatest challenge facing entrepreneurs and innovators in almost every context, and especially true in a country like Vietnam.

  • What are the biggest differences between Hanoi and Saigon in terms of doing business?

CZ: Saigonese are generally much more open to new people and ideas, as long as there’s a clear opportunity and logic in place.  Hanoians are much more conservative, so even if they are presented with an attractive opportunity, they will be reluctant to mobilize the needed resources to capitalize on it.

  • What are the necessary attributes to succeed in Vietnam?

CZ: Social networks and building trusting relationships are keys to success in Vietnam.

  • Do you have any advice for expats/locals who want to be entrepreneurs in Vietnam?

CZ: Entrepreneurship is a team effort, so if you want to be successful, you need to learn how to network and collaborate with others to get things done.

Entrepreneurship, Innovation, and the IPP

During our discussion, Mr. Zobrist made it clear that the IPP is looking for people who have the necessary motivation, connections, and capacity to scale a company globally. That means that local companies will eventually have to implement international accounting standards, utilize English as an official working language (especially if looking to raise funding from foreigner investors), and clearly communicate a company’s Unique Selling Proposition (USP) across markets and cultures (differentiation).

While it might sound challenging, what the IPP is seeking to achieve isn’t impossible because it’s already been done before in Japan. Mr. Zobrist pointed out that Japan went from a ravaged post-World War 2 economy to the world’s second largest economy in the 1990s. What enabled Japan to be successful in its economic transformation was a stark shift in the workforce mindset, which even facilitated new vocabulary to implement innovative solutions.

Before this paradigm shift in Japan, specific industry terms did not exist to describe small batch, high quality production to factory workers. The Japanese created their own processes with their own resources to drive economic growth in 20 years; Japanese engineers, managers, and leaders took innovative ideas, applied them to manufacturing and processes and the result was innovative products from brands such as Sony, Honda, and Toyota. Thus, the development of a new technical language was necessary, which involved a social level (individuals, units, company culture, etc.) of change in innovation, and ultimately led to a change in output of manufacturing (lean manufacturing).

Vietnam currently has a similar language challenge ahead of it; for example, the terms doanh nhân and doanh nghiệp can mean “entrepreneur” or “businessman” and are used interchangeably (and sometimes ambiguously) in Vietnamese. Along those same lines, sáng tạo means “creation” while đổi mới means “renovation” so combining the two (sáng tạo đổi mới) is the closest meaning to “innovation” (literally “creative renovation”) in Vietnamese. The language will have to evolve in order to reflect the high standards and creative thinking that are necessary to maintain a competitive advantage in the global marketplace.

An ecosystem like Vietnam’s needs both entrepreneurship and innovation in order to foster the creation of high growth and innovative companies with a global outlook. If a company chooses to keep the status quo then it will stagnate, or worse, die. Copying existing models can be valuable, yes, but not nearly as valuable as new ideas that lead to the creation of value for a large number of customers or stakeholders. High growth companies are innovative and innovation requires change–there is no getting around this fact.

New language can shape new segments of a culture and creating new and/or dedicated Vietnamese words for entrepreneurship and innovation will allow the exchange of new ideas more efficiently and also help to facilitate a change in mindset–goals that the IPP hopes to realize once its integrated system is fully operational (good inputs producing good outputs).

The IPP seeks to perfect the way of building innovation systems in order to turn them loose and harness the innovative and entrepreneurial resources here in Vietnam. Then, the IPP can develop iteratively by building and expanding on foundational knowledge (training individuals and teams who can then train other individuals and teams and so on). In short, the IPP is building a Minimum Viable Product (MVP), learning from the outcomes, and making the necessary changes (quickly and fully) in order to make the process of creating high growth and innovative companies more effective and efficient in the future.

When the first phase of IPP finished at the end of 2012 there were some major lessons that were learned, leading to a promotion of transparency, accountability, and momentum for IPP Phase 2 (which began in January). This public-private partnership, comprised of a core curriculum and fellowship program, will eventually fully integrate entrepreneurship and innovation–but this process will require time, talent, and commitment at the individual, community, and governmental levels if it is to succeed in its mission.

Toward the end of our conversation, Mr. Zobrist pointed out that the IPP will have its final evaluation in 2018 but for now, the short term focus is on capacity building and making grants available to suitable applicants in this “wilderness stage.” However, the first significant indicators of progress could be as early as the end of this year or in early 2016 as the Fast Track training draws to a close and the New Innovative Companies are eligible for external funding on Demo Day.

With approximately 200 Expressions of Interests submitted to the IPP for New Innovative Companies, we look forward to seeing what kinds of teams are selected for the IPP–and more importantly, what kinds of teams, trends, and lessons emerge from the other side of the Fast Track Training.

Thanks to Chris Zobrist for sharing his time with us.

The Innovation Partnership Program

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Can innovation and entrepreneurship be taught? Does Vietnam have the ability to produce innovative and high growth companies to take on global markets? Are there people here who have the time, talent, and commitment to make an impact in the Vietnamese ecosystem?

The governments, donors, and people behind the Innovation Partnership Program (IPP) certainly believe so and with good reason.

Well, what is the IPP?

According to the IPP website:

“Innovation Partnership Program (IPP) is an Official Development Assistance (ODA) program financed jointly by the Governments of Vietnam and Finland. IPP is in its second phase running through 2014-2018.

Working closely with key national and international partners the program aims to scale up innovation training in Vietnam and improve support mechanisms for new innovative companies targeting international markets. Besides providing seed funding and connections for the best teams in Vietnam, IPP builds the capacity of public and private stakeholders through entrepreneurship and innovation training programs.”

The IPP focuses on three different but related areas: developing people, developing companies, and developing the ecosystem.

The Fellowship Program will develop future business leaders and entrepreneurs in Vietnam who will then lead the Fast Track training for the New Innovative Companies.

The New Innovative Companies component will help high growth Vietnamese companies bring a product or service to the global marketplace via Fast Track training and expense reimbursement.

And finally, the IPP will work with Innovation System Development Teams by providing funding for organizations that will raise standards, develop new resources, and positively impact the entrepreneur ecosystem in Vietnam.

In short:

“IPP supports Vietnam’s overall goal of becoming an industrialized middle-income knowledge economy by the year 2020. The program objective is to boost sustainable economic growth in Vietnam through the increased production and export of innovative products and services.”

One can think of the IPP as a pilot program, leading the way for other actors in the local ecosystem to continue on and influence the course of Vietnam’s entrepreneur development from a global perspective. The IPP is currently in its second phase; the conceptual portion started in September and the implementation phase has been ongoing since December. The Fellowship program is scheduled to begin around April, 2015.

The Innovation Fellowship Program

The Fellowship Program will consist of 20 fellows who will be trained by top international and local talent. The fellows will focus on innovation entrepreneurship, and once trained (over the course of two months), they will lead the Fast Track Training (six months) for selected new innovative companies. Trainers from Silicon Valley and other startup communities will come to Vietnam and work with the 20 motivated young people.

In addition to the fellowship requirements, the fellows will be selected on the basis of two primary criteria:

  1. Can they learn how to be entrepreneurs and innovators?
  2. Can they take best practices from the fellowship program and teach others?

In other words, do they have the capacity and attitude to make an impact after graduating from the fellowship program?

The fellowship requires a 40 hour per week commitment and will consist of some classroom and about 80% field work. Fellows will spend most of their time figuring out what customers need and how to find/create value in fulfilling those needs. Each week, the fellows will cover a new framework and ultimately practice and reinforce the learned concepts by the end of the week. The fellows will each receive a $1,000 allowance per month for duration of the fellowship program; the goal is to focus and train a core group of people to have all the tools necessary to create successful companies in Vietnam.

The IPP is currently seeking two local trainers who, if selected, will receive two weeks of training at Stanford University in the US, in addition to a highly competitive salary for the two months of training.

New Innovative Companies

Innovation, high growth, global; these are the words used to describe the kind of companies that the IPP is looking to fund, and eventually, is looking to see created here on a consistent basis.

The New Innovative Companies to be selected will be held to milestones and operational requirements for the duration of the program. The IPP will restrict what funding is used for (which is intended to be used on salaries and training related to development) and will cover only up to 70% of total expenses incurred by the new innovative companies. If people within the new innovative company are being paid, or external consultants are used, then the fees and services must be directly related to business activities. Thus, the new innovative companies will need to show accounting records, show payroll stubs, and show that a bank transfer took place or that the fees were paid out accordingly.

Once new innovative companies are selected, they will be injected into the six-month Fast Track Program (led by the Innovation Fellows) which will culminate in a demo day with the hope that 20 or so investors will be present and ready to look at each new innovative company for potential investment. The IPP does not to take any equity share in exchange for funding (because ODA requires it). Also, there will be no corporate governance oversight by the IPP for the new innovative companies. However, the IPP will have the power to remove teams, whether it’s because of a violation or if it’s clear that a new innovative company won’t be ready to present a compelling final pitch when the fast track training is completed in December 2015 or January 2016.

Innovative System Development Team

Local or international companies that want to be involved in Vietnam’s entrepreneurship ecosystem transformation can opt to form a consortium and submit their plans for developing specific new parts or for enhancing existing parts.

According to the IPP website:

“IPP’s grants are for covering 70% of internal and external human resource costs related to the innovation project. The first phase grant is approx. €50,000 [approximately 1.2 billion VND]. The most successful teams can receive an additional grant of maximum €200,000 [approximately 4.8 billion VND].

The potential content of the projects may include, but are not limited to, development of a new incubator, creation of new services for existing incubators, planning of a new funding program in the province, adding startup services to existing technology park or initiating a regional cluster growth program.”

To that end, expansion and funding activities, and, most importantly, imagination will be critical to finding new ways to leverage the funding to provide new resources to aspiring and dedicated Vietnamese entrepreneurs.

What’s Ahead for the IPP

February 23 is the deadline to apply for the Fellowship Program, but there is no set deadline to submit an Expression of Interest for the New Innovative Company and Innovation System Developers portions. In the longterm, IPP seeks to train individual people—not just companies. The real value of IPP is in developing people–the human talent–and getting them to share their newfound knowledge with others. Building teams takes time, and even longer to reach the point of creating high-growth companies so things won’t change here overnight, but the program is a great opportunity to head in the right direction.

One huge part of the challenge ahead for all those involved with the IPP is creating a proper technical vocabulary in Vietnamese, and in the long term, a cultural shift for attitudes toward entrepreneurship and innovation within the training programs. While the IPP has a fund amount of approximately $10 million—and it will certainly go further in Vietnam than elsewhere in the west—it will be the people on the ground, in the training sessions, and taking risks to create something great who will show the world just what’s possible in Vietnam.