How to build a successful venture studio: The venture building process

The process of building digital products and ventures can be divided into two phases: a venture creation phase that is optimized for speed and flexibility, and a venture growth phase focusing on execution and scaling. The purpose of the first phase is to discover, validate and pilot a product or concept, while the latter one focuses on go-to-market, launching and scaling the new venture. In order to understand how the venture building process works, it is helpful to break it down into four steps.

Discover

Length: 1-3 months

Having decided to build a new digital product or venture, the first thing you should do is to validate the customer problem. A useful way to think about the problem is to evaluate it from the customer’s perspective and ask yourself; is the problem frequent, growing, urgent, mandatory and/or expensive. From there, you can start to explore possible solutions and define a value proposition. By the end of the discovery phase, you should have validated the problem and identified a feasible solution to proceed with. 

Critical questions to address at the Discover stage: Is the problem real and important? What is the solution? Who is your ideal user/customer?

Pilot 

Length: 3-6 months

Now that you know that the problem is real and you have a solution, it’s time to validate demand and feasibility. The best way to do this is by conceptualizing an initial version of your solution and build a minimum viable product (MVP) that you can test against real users. It is at this stage that you start acquiring your very first users and learn as much as you can from them. Use the feedback you receive and continue improving your solution until you reach a point where your target customers are buying, using, and telling others about your product. Usually we call this point in time product market fit.

Critical questions to address at the Pilot stage: What drives demand? What drives cost? What creates value for users? What is the customer willing to pay for?

Launch 

Length: 6-24 months

The second phase of the venture building process is about launching and scaling the venture. The ideal venture model is decided before launch: should the venture be a new business unit, a corporate startup or perhaps a product in an existing portfolio. The decision should be driven by conditions that allow the venture to thrive: independence to continue experimentation with tactics such as channels, pricing, and communication or a need to integrate and leverage key assets (e.g. CRM data and systems) of the parent company. For most ventures, a high degree of independence is needed for success. 

Critical questions to address at the Launch stage: How effective are the various demand, cost and performance drivers? Which is the best venture model: spin in or spin off?

Scale 

Length: 24+ months

The final step is growing and scaling the venture, adding revenue at a significantly higher rate than costs. These later stages of venture growth require focus on structured execution and scaling with an entrepreneurial mindset and a team that is more specialized, with experts in the domain, marketing, and sales, to name a few. As the venture matures, more conventional metrics such as revenue, volume, customer, and profit growth becomes increasingly important. 

Critical questions to address at the Scale stage: What are the enablers and constraints for growth in a corporate context? Can we add revenue at a higher rate than cost?