On June 5th we invited 4 innovation leaders to share their experiences in building, launching and managing Corporate Startups as a part of their innovation strategy:
Opinions weren’t always unanimous, but we consolidated four essential pieces of advice about using corporate venturing as a growth strategy for large organizations.
Like everything in life, Corporate Venturing has its advantages and disadvantages.
And within a corporate ecosystem, it should never be seen as the one and only solution to generate new growth.
Our innovation leaders agree that a decentralized approach is key to creating a healthy innovation culture within organizations. Strategies such as M&A, accelerators, incubators, and partnerships should are essential (learn more about the Corporate Venturing Toolkit here), but innovation can’t be confined to a small group of people within the company.
Innovation teams should lead by example to nurture a culture of innovation. They should be open and transparent and create opportunities for the whole company to contribute with creative ideas, feedback, and concerns. And they should be the engine that transforms those ideas into real products or businesses.
“Innovation should happen everywhere in the company. But there is a small risk related to having corporate ventures or centralized innovation hubs, that is that people in the wider organization think ‘Hey, that’s where the innovation is happening and I don’t need to be innovative anymore.’”
Finding the right team members for a corporate innovation track could be compared to finding a needle in a haystack.
Every project needs a specific set of skills, and a few of those roles can be filled with someone from within the organization. But the vast majority of the people working in a large corporation don’t really want to take on a more entrepreneurial role. Besides, the success of every venture lays on collecting the exact right talent to take it to the next level. Investing in a new hire might seem financially unappealing, but it will pay off in the long-term.
However, most entrepreneurial talents are busy being actual entrepreneurs, working at a startup, or developing products with smaller companies that offer ‘startups as a service’. They want to work for the big brands, but not for the employers. They are driven by a purpose, by building something that will have an impact on society.
“With the financial rewards, you can compensate them well, but it’s not like a startup where there will be exit possibilities. (...) if I look at why people work at the venture team today, it was really to have this purpose to create a new business pillar that will reassure the future of bpost as a company, and that we can look back in 10 years and say ‘do you remember we were at the beggining of that new type of service, and today it’s a major pillar in revenue, and creates the salary for a lot of employees’. And that’s really how you can attract people: to make a difference. Because if we find something tomorrow, we can have a huge impact.”
The best way to attract such professionals is to have a vision that transcends the company’s products and services. Some companies focus on sustainability, wellbeing, safety, health, education, poverty, equality, animal rights… The right vision combined with a strong focus on growth and innovation creates an inviting environment for purpose-driven individuals.
But if you prefer not having the talent in-house, or if you just need a set of skills temporarily, you should definitely...
It might seem counterproductive to hire an external party when you just assembled a brand new in-house innovation team. Except the two aren't mutually exclusive.
The best way to work with an external party is to build a collective team that works very closely together. The external party won’t know your business inside-out, and that’s a good thing. They will look at a situation with a completely fresh perspective, spotting problems you didn’t see coming, or finding solutions that never crossed your mind. They will ask how and why things work the way they do, challenging the status-quo. They will have an easier time looking at your business from the customer’s perspective. They will ask the questions you asked yourself on your first day but eventually forgot.
When an innovation track is venturing far from the company’s core business, you need experience and knowledge on areas that your employees aren’t familiar with. These firms worked with several industries and markets, and likely have partnerships with experts in different areas.
Finally, working with an external party will give you the freedom to operate outside the corporate walls, by-passing several bureaucratic procedures. It will accelerate your projects to a startup-like speed.
“Bundl can help us to bring a prototype, a real working product to the market in a few weeks, under a brand that isn’t ours. (...) I don’t have to pass through all the validation cycles within the company, to ask legal, compliance, etc, for their approval, because then it takes 6 months. So from that perspective, it’s really a way to accelerate things”
3 years ago the go-to growth strategy for large corporations was to invest in startup companies. Today, corporate venturing is taking over the role.
Our innovation leaders agree that it’s a buzzword, but they also share the opinion that it’s changing the way companies work in a fundamental way.
Employees might feel less pressure to succeed than entrepreneurs with their own startup, but they also have the freedom to make objective decisions and to take higher risks.
Creating a corporate startup might be a slow process. But once a product lands on the market it has really high growth potential, creating a competitive advantage versus conventional startups.
Corporate venturing is bringing transparency into large budget projects, allowing them to prosper or die in a healthier way when compared to traditional R&D.
It’s shifting from a KPI-minded mentality towards a long-term innovation vision. The end goal will always be to generate growth and increase revenue, but enforcing financial targets too early in the startup process forces people to make erratic decisions.
“I’m going to be very bold and state that corporate venturing will become how companies will work [in the future]. (...) venturing as we’re doing it is a kind of pioneer in the future way of business, and I think this way of doing business will become embedded in the core fundaments of organizing a company.”
Corporate venturing is a faulty methodology, but practice makes perfect. It will hopefully evolve into a next level, led by a new generation of business leaders. It will empower them to create new, better strategies for their companies, and it will help build the world of tomorrow.
Watch the full webinar here to find out what the 4 innovation leaders think about innovation governance, agile organizations, targets, KPIs, and the very definition of corporate venturing.