Corporate venturing has become a vital tool to gain competitive advantage, access new markets, and foster strategic growth. However, for the majority of corporations, making corporate venturing work is a challenging task.
VC firms function with a significantly higher risk-reward profile than most companies. The economics of venture capital dictate that a substantial portion of investments will fail to deliver their promised returns, and those that do succeed often require several years to yield results.
All these factors are hard to embrace in a corporate culture that favours stability, short-term results, and risk mitigation. To navigate these challenges, C-suite executives need to adopt a strategic approach. Here are ten tips.
Establish a Clear Strategy
C-suite executives should begin by establishing a clear strategy. One strong framework for approaching corporate venture is the Product-Led Growth (PLG) Flywheel. The PLG Flywheel centres on enhancing the user experience through product investment. By prioritising this approach, corporate ventures can align their efforts with market dynamics and customer expectations, ensuring a sustainable competitive edge, helping corporations beat the market consistently and deliver the shareholder growth they need.
Invest in the Appropriate Resources
Having the right talent in the right place is key to success. While product teams are essential, some innovations require dedicated, specialised teams or in some case dedicated standalone units or teams. Recognise that not everything should be developed within existing structures. This will enable efficient resource allocation and increase the chances of success.
Focus on Long-Term Results
Striking a balance between short-term goals and long-term vision is crucial. It’s easy to get caught up in the immediate demands of the market, but C-suite executives must keep their eyes on the horizon. Successful corporate venturing requires delivering quick wins while also building for the future and hedging against disruptive threats.
Incentivise Talent
Offer rewards and recognition that motivate teams to work towards innovation. When the right incentives are in place, teams will be more motivated to think creatively and take calculated risks.
Balance Risk
C-suite executives must be willing to embrace calculated risks to achieve consistent growth. By conducting thorough risk assessments and developing contingency plans, the organisation can mitigate potential downsides.
Minimise Bureaucracy
Bureaucracy can stifle innovation. Implement the right controls and processes to ensure efficient product delivery without burdening the process with unnecessary red tape. Streamline decision-making and empower teams to act swiftly is key to success in corporate venturing.
Minimise Resistance to Change
To overcome resistance to change, develop and communicate clear policies that support innovation. Create an organisational culture that embraces change, encourages experimentation, and rewards adaptability.
Provide Strong Leadership
Leadership is paramount in corporate venturing. Ensure that leaders at all levels are aligned with the innovation strategy. The executive team must lead by example, championing the cause and providing support from the top down.
Foster Collaboration
Foster an environment of collaboration where teams from various departments work cohesively. Break down silos and encourage the free flow of ideas and information.
Focus on Market Research
The constant feedback from customers and clients is at the core of successful corporate venturing. Establish feedback loops to gather insights and adapt strategies accordingly.
By embracing these 10 principles, C-suite executives can effectively navigate the challenges of corporate venturing and position their organisations for long-term success.
