Corporate venture building, an approach where corporations systematically create new ventures as a part of their innovation effort, is gaining in popularity. No wonder, as it is an effective approach to validating innovations and finding and creating new streams of revenue, in a more efficient way than would be possible if done as initiatives within the core organisation.
Is your company considering venture building too? Congratulations!
Before kicking off your venture building team we recommend you answer these three questions, which will tell you whether your company is really ready for venture building or if you had better rethink.
Do you have a clear agenda or strategy for innovation?
A well formulated innovation agenda or strategy clearly states what an organisation wants to achieve through its innovation efforts. It provides long term goals, strategic areas and direction. This can be a very strong Northern start for a venture building team, making sure that they are directing their efforts towards things that can bring value to the mother company. Without direction, you risk having your team spend time on exploring areas that are not aligned with the company’s strategic goals and would never be relevant even if opportunities were found.
Will you be recruiting the members of your Venture Building team for relevant experience and skills?
Finding the right people for your venture building team can be tricky. Tempting as it might be, simply picking talented people who have excelled in the company core business might not be the way to go. The skills required to find and create new ventures are often quite different from the ones required to excel in a large organisation. For this reason it is key to very clearly define skills and experiences that are needed and look broadly for people matching those characteristics.
Will the venture building effort be measured on short-term returns?
If the answer to this question is yes, go back to the drawing board. Among companies who haven’t previously worked with innovation or new ventures it might be easy to say yes to a venture building approach and without thinking too much about it expecting it to yield large returns short term. This inevitably leads to a lot of wasted time and money, as the initiative will be forced to close down after a year or two when the targets are not being met. It is key to set the expectations among all stakeholders: Innovation, and building new ventures, is a long term game. Even the most successful ventures wont start bringing returns during the first couple of years. And, the harsh reality is that most new ventures will fail. If you’re lucky, and good at what you do, you might have one big success in eight attempts.* Apart from that one success, a couple of those eight will be mediocre, and most of them will fail. For Venture Building to be a successful part of your innovation agenda, it needs to be managed and measured with a long term perspective, and with a high acceptance for risk and short term loss and failure.
If you answered yes to the first two questions above, and no to the last question, your organisation might have what it takes to make a success of Venture Building. Time to set up the team? Read more on that here.