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In the last few years, corporate venturing has become a mainstream staple in the growth efforts of top companies like Microsoft, Unilever, P&G and more. Corporate entrepreneurs worldwide are leveraging the strategy to expand beyond core offerings, tap into new markets and access new technologies faster and at a fraction of the cost—with stellar results.
Measuring success is a key part of this journey, helping to ensure ventures reach their growth targets and remain aligned with broader corporate objectives.
However, whether you’re building, buying or partnering, there’s a common challenge that doesn’t always get the attention it deserves: Selecting the right venture performance metrics. The right metrics will do more than just measure success; they’ll help:
- Guide your decision-making (e.g. pivot, scale, or exit)
- Keep you aligned with broader corporate goals
- Highlight the value and impact of your venturing efforts
- Ensure stakeholder buy-in and support
The challenge? Selecting the right metrics can be tricky because:
- Commonly used vanity metrics can mislead rather than indicate real progress
- While financial metrics are straightforward, strategic results are hard to quantify
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 listed some common metric selection challenges, along with some pro tips to help you avoid them.
Challenge 1. An over-reliance on quantitative metrics
While quantitative metrics are crucial for their objectivity and ease of tracking, they can overlook the nuanced outcomes of venturing activities. An excessive focus on hard numbers may ignore valuable qualitative results like strategic alignment or customer satisfaction.
How to avoid it:
Implement a balanced scorecard approach that includes both quantitative and qualitative metrics. For instance, financial return metrics can be complemented with nonfinancial metrics like the examples below:
Innovation & Growth Metrics
# of Spin-Out Ventures Led by Internal Founders
Tracks the company’s ability to support innovators taking ideas to independent ventures.
% of Non-Core Ventures
Tracks ventures expanding beyond the core business.
Market Position & Brand Metrics
Corporate Brand Perception
Assesses brand reputation for innovation via surveys, studies, or media analysis.
Market Position Impact
Measures how ventures influence the company’s market position, e.g., by expanding into new segments.
Engagement Metrics
# of initiatives by employees
The number of ideas submitted by employees indicating the health of the innovation culture.
Talent Attraction and Retention
Measures how well ventures attract top talent or retain key employees by offering new career opportunities.
Impact & Ecosystem Metrics
Impact on Core Business Processes
Evaluates how ventures improve core business efficiency, processes, cost savings, etc.
Ecosystem Engagement
Tracks how ventures engage external ecosystems, such as startups, customers, and suppliers.
Challenge 2. Misalignment between chosen metrics and strategic goals
Metrics should directly reflect and support the overarching strategic objectives of both the venture and the parent company. Misalignment can lead to pursuing ventures that appear successful on paper but do not contribute meaningfully to the company’s long-term strategic goals.
How to avoid it:
Regularly involving key stakeholders in the metric selection process can ensure that the chosen metrics comprehensively align with the broader strategic goals of both the venture and the parent company. However, it’s important to ensure that your metrics aren’t overly focused on corporate objectives (a common mistake). Your approach should strike a balance between demonstrating value to the corporation and measuring the venture’s own progress and success.
You can also use pilot testing for new metrics to evaluate their effectiveness in reflecting strategic goals before fully implementing them.
Challenge 3. Using metrics as targets
When metrics are treated as targets, there’s a risk of focusing on them too narrowly at the expense of broader objectives. This can undermine the metrics' original purpose and lead to suboptimal decisions.
How to avoid it:
There’s a difference between having a metric and setting a target. Some metrics don't need targets, while others need targets only in later stages.
Compare it with a balance sheet and a profit and loss statement (P&L), e.g.:
- Metric = EBITDA
- Target = EBITDA ≥ X EUR
Challenge 4. Balancing Short-term and Long-term
Corporate venturing often involves initiatives that will only show their full potential in the long run. Relying heavily on short-term metrics can make it difficult to justify the initial investments in these ventures, potentially cutting off promising opportunities prematurely.
How to avoid it:
Use milestone-based metrics for long-term projects and pair them with short-term operational efficiency metrics.
First, establish a set of interim milestones that can indicate progress in the short term without undermining long-term potential. These milestones should be realistic and provide early signs of viability or areas needing adjustment. Then, maintain a clear vision of the long-term outcomes and ensure that these are communicated and understood across the organisation. Regularly revisiting and discussing these goals can help keep ventures on track and prevent premature decisions based on initial performance.
Challenge 5. Quantifying intangibles
Many corporate ventures aim to achieve strategic benefits like gaining market insights or developing new capabilities, which are crucial but challenging to measure quantitatively. Finding ways to quantify these intangibles can be a significant hurdle.
How to avoid it:
Develop proxy metrics or qualitative assessment frameworks for intangible benefits. For example, track the number of insights shared across the organisation or use capability maturity models. You can also consider alternative ways of visualising information.
Challenge 6. Comparing apples to oranges
Different ventures often have vastly different goals, timelines, and contexts, making standardised comparisons challenging. This diversity makes it hard to apply a standardised set of metrics across all ventures without losing meaningful insights from specific contexts.
How to avoid it:
Use tailored, context-specific metrics for different types of ventures. For example, you can differentiate between different types of startup collaborations (e.g., supplier, co-developer, potential acquisition), and develop a tailored set of metrics that can capture the distinct characteristics and performance indicators relevant to each.
Implementing a flexible metrics framework that allows for adjustments as ventures evolve will also help maintain relevance and accuracy in measurement, ensuring that comparisons are meaningful and contextualised.
Challenge 7. Effectively visualising information
Often, metrics are presented as a long list without consideration for how to present and visualise the data effectively. This can result in many of your key insights going unseen and preventing stakeholders from recognising important trends and patterns.
How to avoid it:
Invest the necessary time and effort to present your data intuitively. Doing so will ensure clarity and understanding, facilitate decision-making, and increase the impact of your findings. Here are a few tips to get you started:
- Choose the right tools: Use tools like Tableau, Power BI, Qlik Sense, or Google Data Studio. These tools offer a wide range of options for displaying data dynamically and interactively, enabling users to grasp complicated information quickly.
- Tailor your visuals: Understand the preferences and expertise of your audience (e.g. executives may prefer high-level dashboards with KPIs, while analysts might need more detailed reports).
Challenge 8. Present insights, not just data
Providing raw data is not enough; it's crucial to translate that data into actionable insights. Data without interpretation fails to aid decision-making and can lead to missed opportunities for strategic advancements.
How to avoid it:
Focus on analytical capabilities that not only report data but also interpret it, providing clear insights that directly inform business decisions.
For example, you can make your findings more actionable using data storytelling. This involves framing the data to highlight trends, explain anomalies, and draw connections between data points and strategic objectives.
Challenge 9. Metrics that don’t align or drive decision-making
It's essential that metrics do more than just track performance—they should guide and influence strategic decisions.
How to avoid it:
Design metrics that are actionable and directly tied to strategic decision-making processes. When developing metrics, ask, "What action will this metric prompt?" If a metric does not have a clear action associated with it, reconsider its utility.
Metrics should have clear thresholds or targets that, when reached, trigger specific actions or decisions, like scaling or redirecting resources.
Final thoughts
Remember that the ultimate goal of metrics is to provide actionable insights that drive better decision-making and improve outcomes. They should serve as tools for learning and improvement, as opposed to being rigid benchmarks.
While the challenges are numerous, they are manageable. By maintaining a balanced approach, regularly reviewing and adjusting your metrics, and staying attuned to both quantitative and qualitative indicators, you can create a robust framework for measuring success.
For more insights about corporate venture performance metrics and how to set up a balanced framework, be sure to check our report: How to effectively measure corporate venturing success.
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Want to test a new or existing venture with real customer data? We can help you leverage cutting-edge validation techniques to identify the ideal product-market fit, pricing, and features that your customers will love.
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