Contextual Background and the Selected Cases

The case companies are North Sea-based suppliers to the maritime energy production industry, which is often viewed as one distinct industry, yet can also be

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described as two distinct industries; oil extraction and offshore wind installation. Both companies serve both the offshore wind installation and offshore oil extraction customers. Both maritime oil extraction and o f f s h o r e wind customers rely heavily on suppliers such as the case firms (Olesen, 2015). Both oil rigs and offshore wind turbines are installed and operated in stormy waters and on challenging seabeds. As mistakes can result in environmental damage and loss of profit, assets, and even lives, these factors place substantial demands on the technical ability and risk of suppliers. Suppliers must maintain high levels of innovation in order to solve these serious engineering challenges. Both case firms are from the Danish Esbjerg region, a known powerhouse for maritime offshore production. They were both established by founders frustrated by their employment in larger companies. As is typical for these type of suppliers, both were founded on technical innovation, though have become more commercial over time. There are differences too: the establishment of one was mainly the work of one founder, the other, of a team. One is more than twenty years old; the other, less than ten. While both were founded on technical insight, the educational background of the founders is very different. Both firms describe themselves as being agile and alert: “Small is beautiful,” as the chief executive officer (CEO) of Ocean Team Group (case 1) says, while the CEO of World Marine Offshore (case 2) states, “It has to be fun.” Such statements align well with the paper’s theoretical foundations and add further validity to the case selection and findings.

The choice of cases is argued to be sufficiently representative of companies of this size, in this market, and in this region, while also teaching us about why they specifically commercialize in the manner that they do. Commercialization is the main goal of both firms, and they focus substantially on return on investment, both for themselves and for their customers. The cases provide new, in-depth insights

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into typical commercialization processes, as they are well matched with the general reality of SME commercialization (Oyson, 2011), which is dynamic (Lowe, Henson, & Gibson, 2006; Sternad, Jaeger, & Staubmann, 2013).

SME suppliers to the maritime energy production industry often find themselves pressured because both their customers and their suppliers tend to be larger and more powerful than they are. It is hence not uncommon for these customers and suppliers to transfer business risks and cash-flow exposure to firms such as the case firms in this paper; for instance, larger customers often impose a de facto extra cost on their suppliers by placing the responsibility of meeting health and safety and environmental regulations on the suppliers. Further business uncertainty is represented by the derived nature of energy production itself (Marshall, 1920; Stopford, 2013). A typical feature of derived demand is that capital investments are “sticky” (Bylund, 2015) and asset-specific (Williamson, 1996), which means that changing the focus of the business is difficult and costly. In terms of the BAR framework, the cost of wrong Belief is high. When derived demand drivers reduce the size of the market, companies such as those in this case study are stuck with their capital choices while revenue dries up as their customers operational expenditures and capital expenditures follows the development of derived demand for oil. For their wind-related customers, the focus is on constantly decreasing the price of offshore wind installations to make them a broadly and non-subsidized competitive energy source in a world of low electricity prices. Added to this is the desire of most customers to operate non- stop, which involves technical and commercial challenges in both good and bad times. In summary, maritime offshore energy supply is a market with substantial uncertainty that requires continually updated technical knowledge and both a short- term operational focus and a long-term strategic focus. These tough conditions

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make it an interesting market for investigating entrepreneurial judgment and commercialization using a mental processing approach.

2.5.1 The case firms

The backgrounds of the case companies are briefly described in what follows.

2.5.1.1 Case firm 1: Ocean Team Group A/S (Incorporated)

Ocean Team Group (OG) was founded in 1995. It is a specialized service company that undertakes the cleaning of technical fluid-carrying systems using customized purification methods, especially in hydraulic, lubrication oil, and process systems in the energy sector, heavy industries, and maritime industries. Despite its small size, it is among the world leaders in purity-system solutions. Its products are highly important to its customers as 80% of the damage sustained in hydraulic and lubrication oil-based systems originates in unclean systems. Such damage may involve significant financial costs. The firm was hence founded on providing innovative solutions to existing problems. When pipes become dirty, they lose their carrying capacity, which ultimately leads to an operational shutdown. Most cleaning technology requires operations to cease; however, OG can clean without requiring an operational shutdown. Furthermore, the equipment can be permanently placed with the customer and requires only two people to operate, as opposed to the industry standard of six. Such features have enabled OG to move their value proposition from maintenance to pre-maintenance—as the CEO asserts: “We do not clean, we keep clean.” Over time, it has become apparent that hydraulic technology can also prolong the life of offshore installations.

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2.5.1.2 Case firm 2: World Marine Offshore A/S (Incorporated)

World Marine Offshore (WO) was founded in 2011. The company’s founders come from an industry background and worked for the same company, with investors having backgrounds in ocean fishing and the maritime oil industry. The f o u n d e r s primarily built their company around a new and patented ship-type, the Windserver, but have expanded into areas such as diving services and fiber- optic cable installation. Despite the young age of WO, it is a well-established and successful supplier in the industry. Its products provide tangible cost-saving benefits to its customers. The firm has gained a reputation as an innovative problem solver, for instance, solving the task of packing ships for offshore wind installation more efficient: If equipment is missing or lost on the voyage, ships must return to the dock, resulting in a loss of production hours and, potentially, a loss of wind park output. If, on the other hand, ships are overpacked, they are more expensive to fuel, which has a negative environmental impact and cost effects. In addition, the crane system on wind turbines has a limited lifting capacity. Based on an internal idea and subsequent conversations with a large wind turbine producer. WO won the concession to design a new ship logistics system that solves these problems. The solution is now being used by WO on its vessels, as well as on vessels owned and operated by other firms.