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Metrics act as a guiding star for corporate ventures, helping to ensure ventures reach their growth targets and remain aligned with broader corporate objectives. They also provide a common language for communicating the value and progress of venturing activities to stakeholders, helping to justify investments with hard data.
However, there is no one-size-fits-all approach to measuring venture success, and the process of selecting the right metrics can be a tricky endeavour. The challenge? Each venture has its own unique set of goals and targets, and what works for one might not suit another.
To help guide you through the process, we’ve highlighted three key pillars of metric selection:
- Venture stage
- Goals and strategic purpose
- Context and environment
Selecting your metrics based on these three pillars will help you:
- Select metrics that reflect your venture's progress and potential
- Align your venturing activities with overall corporate strategy
- Make data-driven decisions that drive growth
Let's explore each pillar individually, focusing on how each one can help you choose the most effective metrics for your corporate ventures.
Pillar 1. Venture stage
The growth stage of your venture plays a crucial role in determining which metrics will provide the most valuable insights. Different stages require different focuses, and your metrics should reflect that, continuously evolving as your venture progresses.
Early-stage ventures (ideation and validation)
At this stage, the focus should be on learning and development metrics rather than financial returns. Consider metrics that measure things like customer satisfaction, pilot success rates and MVP adoption. Example metrics include:
- Product engagement: Daily active users (DAUs), monthly active users (MAUs), session duration, and retention rates.
- MVP success rate: How effectively the MVP meets target market needs.
- Customer satisfaction: Surveys, Net Promoter Score (NPS), and reviews.
These types of metrics help measure how well the venture responds to market needs and how quickly it can move from concept to market-ready product.
Growth-stage Ventures (scaling and integration)
As ventures mature and begin scaling, the focus should shift to demonstrating tangible value and potential for significant returns. Consider metrics that measure market traction, financial performance, and integration with core business units. Example metrics include:
- Financial performance: Customer acquisition cost (CAC), customer lifetime value (LTV)
- Market Traction: Market share growth, adoption rates
- Strategic Value: New patents filed, strategic partnerships formed
These types of metrics help quantify how well the venture is integrating with and adding value to the parent company's core business.
Pillar 2. Goals and strategic purpose
Every venture is unique, and so are the metrics needed to measure its success. It's important to tailor the metrics you choose to the strategic goals of your initiative. For example, an environmentally focused venture will require different metrics than a financially focused one.
Below, you’ll find a table with examples of how the specific goals and the strategic purpose of your venture impact its metrics.
By tailoring your metrics to your venture's strategic purpose, you'll be better equipped to track progress, demonstrate value, and make informed decisions that fuel growth.
Pillar 3. Context and environment
The context and environment in which your venture operates play a role in metric selection. This involves considering various factors like industry dynamics, competition, regulations, and overall market conditions. Let’s dive into how each of these factors can help shape the metrics you choose.
Industry-specific metrics
Different industries often have unique metrics that are particularly relevant to their specific challenges and opportunities. For example:
- Tech: Monthly recurring revenue (MRR), churn rate, customer acquisition cost (CAC)
- Retail: Same-store sales growth, inventory turnover, average transaction value
- Financial Services: Assets under management (AUM), net interest margin
Tailoring your metrics to industry standards allows for easier benchmarking against competitors and provides stakeholders with familiar data points.
Competitive landscape
Your venture's position relative to competitors can also influence your metrics. Consider metrics that highlight your competitive advantages or areas for improvement:
- Market share growth
- Feature adoption rates compared to competitors
- Share of voice in the market
Regulatory environment
In highly regulated industries, compliance-related metrics can be valuable:
- Compliance rates
- Time to achieve regulatory approvals
- Cost of compliance
Market conditions
Economic conditions and market trends can impact which metrics are most relevant. For example:
- During economic downturns: Cash flow, burn rate, customer retention
- In rapidly growing markets: Customer acquisition rate, market penetration
- In mature markets: Profitability, operational efficiency
By considering the context and environment, you ensure that your metrics are not only relevant to your venture's internal goals but also reflect the external factors that can impact its success.
Bringing it all together
As you apply these pillars to your corporate venturing initiatives, consider the following best practices:
- Create a balanced scorecard: Combine metrics from each pillar to get a holistic view of your venture's performance.
- Set clear benchmarks: Establish industry-specific and internal benchmarks for each metric to contextualise performance.
- Review and adapt regularly: As your ventures evolve, be prepared to adjust your metrics to ensure they remain relevant and actionable.
- Communicate effectively: Use data visualisation tools to present metrics in a way that resonates with both innovation teams and corporate stakeholders.
Final thoughts
Remember, metric selection is not a one-time task. As your venture evolves, market conditions change, and corporate priorities shift, it's important to regularly review and adjust your metrics to ensure they continue to provide valuable insights and drive informed decision-making.
By following these three pillars, you'll be well-equipped to select metrics that not only measure success but also guide your corporate venturing initiatives towards sustainable growth and meaningful impact.
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