How to build a successful venture studio: Governance mechanisms

As with most organizations, a corporate venture studio requires careful consideration of governance mechanisms in order to maintain transparency and responsibility. A well-defined governance structure helps ensure the ventures are managed effectively and the studio achieves its long-term goals. But what are the key roles and mechanisms for governing a venture studio, and who should be involved?

The board of directors to guide the overall direction

When a company undertakes venture building activities, the board of directors has an important role to play. Having strong support from the board is essential for the success of the venture studio as it will give the studio greater freedom in running its day-to-day operations. At the same time, the board is instrumental in overseeing the venture building activities and must ensure that they stay aligned with the company’s other strategic initiatives and long-term objectives. Here, it is important that the board is represented by individuals who understand the essence of venture creation – ideally with some relevant experience of building ventures themselves – to prepare for the journey ahead. 

A venture board that oversees the studio up close

Another crucial component of governing the venture studio is the venture board, which should play a more active role in providing strategic guidance and directing the venture studio. This group is also responsible for making funding decisions and ensuring that they are aligned with the strategic goals and made in accordance with established investment criteria. (In a more strictly corporate venture capital environment, this would be the investment committee). A good venture board setup entails kidnapping someone from the board of directors and bringing them aboard. Apart from that, it is wise to include relevant C-level executives from fields such as strategy, innovation and finance (venture board setup). 

Govern the individual ventures using performance metrics and benchmarks

Apart from these key roles and individuals governing the venture studio as a whole, another important mechanism is using clear performance metrics and benchmarks to measure the progress of individual ventures. A venture’s progress will determine what metrics to use. In the early stages, the focus should be on understanding customer desirability and tracking user engagement, while later-stage ventures will benefit from more mature metrics such as growth rate, customer acquisition, and recurring revenue (metrics in venture building). By establishing and communicating clear performance metrics, the studio can track its initiatives’ progress and make adjustments as needed.

Considering the above mentioned mechanisms and clearly defining a governance framework can help to establish accountability and ensure that everyone involved in the venture studio understands their roles and responsibilities. Ultimately, a well-defined governance structure is the key to effective operations and management practices so that your venturing teams can focus on the important stuff – building groundbreaking ventures.