10 Reasons Corporate Venture Building is Unlocking Growth at Modern Organisations
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In today's relentlessly evolving corporate landscape, mere sustenance isn’t a viable strategy. The urgent call to adapt is echoing louder than ever, compelling corporations to either advance or face the risk of becoming redundant. In PwC’s recent 26th Annual Global CEO survey, it was found that 40% of global CEOs think their organisation will no longer be economically viable in ten years’ time, if it continues on its current course.
Amidst this shifting landscape, a solution is crystallizing: corporate venture building. In a recent report from Mckinsey, 74 percent of companies that chose business building as their main strategy grew at rates above the average of their industries. Corporate venture building involves the ideation, nurturing, and scaling of new business ventures under the sheltering umbrella of an established corporation.
Here are 10 reasons compelling corporations to embed this transformative paradigm into their strategic plans.
Traditional research and development channels in corporations, often trapped in layers of bureaucracy, can hinder the pace of innovation. Enter corporate venture building, the modern-day answer to these challenges. This approach brings a paradigm shift, radically transforming the way corporations conceptualize and implement new ideas. Unlike traditional methods that may take years to go from an idea's inception to its actual realization, venture building accelerates this journey, ensuring that innovative concepts rapidly materialize into market-ready solutions. It's akin to having an in-house startup incubator that operates with agility, yet is armed with the resources and expertise of an established corporation.
The advice of Peter Drucker offers a fitting perspective, "If you want something new, you have to stop doing something old." Corporate venture building encourages corporations to break free from outdated practices and embrace a more nimble, adaptive, and forward-thinking approach to innovation.
Well-established corporations, with their years or even decades of operation, resemble vast gold mines of resources and assets. These aren't just physical or tangible assets like buildings or machinery. More crucially, they encompass a wealth of specialized talent, proprietary data, institutional knowledge, and a web of established relationships with partners, suppliers, and customers.
The presence of such in-house assets is undeniably valuable. However, their true value is only realized when they're optimally deployed and harnessed.
All too often, these assets lie underutilized, failing to deliver the maximum value they are truly capable of.
Corporate venture building presents a compelling opportunity to change this narrative. By integrating venture building into their strategic framework, corporations can tap into these reservoirs of assets more holistically. For instance, proprietary data collected over the years can be analyzed and used to inform new product development or market expansion. Skilled talent, who might be working in siloed departments, can be brought together in cross-functional teams, fostering innovation through diverse perspectives. The expansive infrastructure, which may be underused in certain segments, can be repurposed to support new ventures, reducing the capital expenses that would otherwise be required.
Moreover, when these ventures are built leveraging the corporation's existing assets, they're not starting from ground zero like most startups. They're already a step ahead, benefiting from a foundation of resources and insights that independent startups might spend years trying to accumulate. This inherent edge translates into a swifter go-to-market strategy, better risk management, and a heightened chance of success. By unlocking the full potential of their in-house treasures, corporations can drive innovation that's not only groundbreaking but also deeply rooted in their foundational strengths.
In the fluctuating world of business, it's a well-acknowledged truth that over-reliance on a singular source of income can be a precarious strategy. While a single-point operational focus might bring substantial rewards in the short term, it leaves corporations vulnerable to market shifts, technological disruptions, or unforeseen challenges in that particular sector. Essentially, by placing all their eggs in one basket, companies risk significant financial turmoil if that primary source of income dwindles or faces setbacks. 40% of today’s businesses will fail in the next ten years, according to former Executive Chairman and CEO of Cisco, John Chambers.
Corporate venture building emerges as a strategic countermeasure to this vulnerability. By facilitating the development of multiple business ventures within the larger corporate framework, it inherently diversifies the revenue streams. Each venture acts as an individual pillar, collectively holding up the financial structure of the corporation. When one venture faces challenges, others can compensate, ensuring a steady flow of revenue and reducing the risk of substantial financial downturns.
Warren Buffet's profound observation, “Someone is sitting in the shade today because someone planted a tree a long time ago,” aptly captures the essence of this approach. By investing in venture building, corporations are, in essence, planting multiple trees today, ensuring that they have a canopy of diverse revenue streams to provide shade in the unpredictable future.
Bill Gates once offered a candid observation, suggesting that corporations have a propensity to "overestimate the change in the next two years and underestimate the change in the next ten." In the fast-paced world of corporate dynamics, it's not just about staying afloat; it's about leading the way. The landscape of industries is constantly reshaping, and the line between being at the forefront and playing catch-up is exceedingly thin. For corporations, the difference often lies in their ability to not just anticipate the future but to actively shape it.
Many organizations become so engrossed in immediate goals and short-term strategies that they overlook the larger, more transformative shifts on the horizon. By the time they recognize these shifts, they are already playing catch-up, trying to adapt to changes that competitors have already embraced.
By continuously engaging in the ideation, development, and scaling of new ventures, corporations are not just passively responding to industry trends. Instead, they are actively setting them.
In an era marked by rapid technological advances and the war for top-tier talent, a corporation's human capital has become its most valuable asset.
Renowned leadership consultant, Simon Sinek, once declared, "Customers will never love a company until the employees love it first." This sentiment accentuates the importance of drawing in and retaining exceptional professionals.
Corporate venture building, with its promise of innovation and disruptive endeavours, offers a dynamic setting reminiscent of startups. For passionate professionals, this setting promises more than just a desk job; it offers a platform where they can bring their innovative ideas to fruition, make a tangible impact, and contribute to groundbreaking projects. The chance to be part of such transformative ventures, combined with the stability and resources of an established corporation, creates a compelling proposition that's hard to resist. It's not just about monetary compensation anymore; it's about purpose, growth, and legacy.
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The WorkFlow podcast is hosted by Steve Glaveski with a mission to help you unlock your potential to do more great work in far less time, whether you're working as part of a team or flying solo, and to set you up for a richer life.
To help you avoid stepping into these all too common pitfalls, we’ve reflected on our five years as an organization working on corporate innovation programs across the globe, and have prepared 100 DOs and DON’Ts.
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