About the Book
"Corporate venturing is key to achieving our growth goals. Harnessing external as well as internal innovation is critical to continually improving our competitive position." -- Rich Kiley
Director of the Venturing Group at Procter & Gamble
"Venturing is something Eastman knew it had to do as a part of its plan to fuel continued growth and innovation." -- Earnie Deavenport
Former CEO (retired) Eastman Chemical
Growth and innovation are priorities on the to-do list of any successful company. Produce and market successful new ideas and the company will thrive; fail to innovate and the company faces significant risk and potential demise.
Continuous innovation is critical for success, yet it has proven difficult for companies to achieve. And most corporations understand they can no longer rely solely on innovation from the inside, but need to reach outside, as well. But those using various forms of venturing to stoke innovation have frequently failed, resulting in the view that corporate venturing is a risky game that companies mostly lose. Because of the effort required to do this well and the historically high failure rates, many conclude that corporate venturing is simply impractical to implement and tangential to mainstream corporate strategy.
In this groundbreaking new book, Heidi Mason and Tim Rohner send a loud and clear message to the corporate world: Venturing must be viewed as a core component of corporate strategy - and, if done correctly, it is the best means to intelligently and successfully launch innovative corporate growth strategies.
According to Mason and Rohner, lack of understanding and poor implementation is to blame for the lackluster track record of corporate venturing. They called on 40 years of combined venturing experience to create a new, holistic approach to aid in building successful corporate venturing programs - while systematically reducing the risks associated with them.
In revealing the science and art behind successful innovation, Mason and Rohner:
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Talk about the need for corporate venturing and why it is so hard to do well |
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Unveil a unique structure, focused on a new kind of corporate organization called the Venture Business Office (VBO), that creates a nurturing environment for investing in as well as launching successful ventures, both inside and outside of the corporation. |
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Provide a four-stage process and roadmap to navigate a company from the initial steps in changing corporate thinking to the final stages of launching a venture and measuring its strategic and financial results |
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Describe the Bell-Mason Venture Development Framework, a "manual" to chart the course and evaluate progress of ventures |
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Include dozens of examples relating how companies such as Cargill,
Eastman Chemical, and Motorola are succeeding in corporate venturing |
The Venture Imperative delivers a world-class guide for those seeking a process, structure, and strategy for successful corporate venture programs.
Why We Wrote It and Why You Should Read It
We wrote this book because we believe every company must venture if it is to be successful in the long run and in a technology-intensive world. The historical performance of corporate venturing as an industry is, well, not very good. Yet we've both seen some extraordinary and unique value created from corporate venturing program; the kind of value that transforms companies and puts them on new growth curves. Unfortunately, the landscape is so littered with failures that the successes have been hard to notice.
Our perspectives on corporate venturing are from a practitioner's point of view - taking lessons from prior corporate venturing failures and successes as our road map. Heidi has spent the last twenty years in Silicon Valley as a start- up consultant and strategist working with the venture community, independent start-ups as well as corporate programs. Tim, who currently leads DiamondCluster International's digital strategy and ventures practices, has spent the last two decades as a senior strategy and technology partner with leading management consultancies, assisting and guiding big companies in their efforts to innovate. In addition, we have a "visceral" understanding of the venturing process, having started and dealt with the challenges of running multiple ventures of our own. This combined experience gives us a clear perspective on how corporate venturing can succeed, and why it fails.
The trigger for actually writing the book was the "dot-com" boom, when we saw how much money people were throwing at ventures - good and bad, VC and corporate. It had all the makings of an ugly train wreck, and ultimately it was. The good news was that this age of exuberance and over indulgence motivated many companies to get some skin in the venturing game. The bad news was that in the end the skin had a lot of painful road rash that added to thirty-five years of accumulated error.
What this period of intense experimentation clearly showed was that venturing, done right, offered several things to the mature corporate that couldn't be obtained anywhere else: access to exceptional talent, the means to focus on important new opportunities that didn't fit into the established mold and culture, and the ability to experiment with different ways of organizing and operating that were more suitable to the issues at hand and future growth. This period also demonstrated that established corporations offered things to the fledgling start-ups that they couldn't obtain through any other method: access to rich resources, including deep domain experience and knowledge, technology, established brand, supplier, and customer bases.
This interesting codependency - each side getting what each needs and find difficult to obtain in other ways - is at the crux of the matter and the argument for corporate venturing. But if the dual-value propositions for corporate venturing are so clear, why is the track record so abysmal? The list of post mortem causes is long, and we explore them throughout the book. But we can also learn a lot from the successful corporate venturing efforts that form the bright and often overlooked part of this history. Not surprisingly, business journalists find the failures better reading, and it's certainly easier to catalog and analyze problems than it is to define success. We believe that a careful examination and consideration of this history reveals a clear path for success-a new model for corporate venturing, one that lives up to its potential and is sustainable over time. That model, and how we formed it, is the backbone of the book.
The Difficulties of Venturing
But back to the difficulties of venturing. The problems of blending new ventures and big-company operation are significant. In the case of talent, how do you meld the opportunities of a small company - freedom of operation and upside pay for performance - with the constraints of a big company that strives to be fair to all employees? How do you take advantage of the big company's rich resources without suffering the same limitations that the company does - the constraints of the corporate culture and institutional knowledge that form the very basis of mainstream success?
The challenges in solving conundrums like this are significant, but the stakes are already high, and we think they're about to get much higher. Peter Drucker, for one, seems to agree. Assessing the impact of the information revolution on the corporation, Drucker sees more or less everything in flux. He indicates that the future success of a company hinges to a considerable degree on the ability to move from a traditional organizational structure to "confederation" models of strategic cooperation and alliance. According to Drucker, the time to prepare for this is now (2001), "especially in working with alliances, partners and joint ventures, and in defining new structures and new tasks for top management." This certainly sounds to us like a call for new kinds of innovation in the face of inevitable decline, and a problem for which corporate venturing is at least a very good answer, and quite possibly the best answer.
In this struggle for change in an uncertain and rapidly evolving technological world, entrepreneurism and innovation are synonymous. Big companies must face the challenges head-on and create an environment that nurtures innovation without eroding what makes a big company strong. Our proposal is a structure we call the venture business office (VBO) - a "demilitarized zone" that connects the big company, the outside venture community, and start-ups, whether they emerge from inside or outside the corporate walls. The VBO is the logical conduit between these very different yet potentially synergistic worlds.
We think there is any opportunity to learn from the successes of venturing, and create tools, organizational structures, processes, and - most important - a point of view that will make venturing work for most companies that are willing to take the matter seriously - as one that may ultimately amount to corporate life or death. Based on the successful implementation of these methods and tools, all of which are within the reasonable reach of every enterprise today, corporate venturing will join the other corporate programs that foster innovation and transformation of the core business. It will work as radar for mergers and acquisitions, it will work as a commencialization function for research and development, it will work as a fast-cycle version of business development, and it will work as a core execution and tool for corporate strategy groups. Corporate venturing is an essential mechanism and agent for change in the enterprise, one that uniquely insures its future.
Who Should Read It and How
This is a book for a broad spectrum of readers, from the curious to the committed. The curious are those that know little about venturing, or know a bit more and don't believe in it. The committed are those who see the light but aren't sure whether it's the other side of the tunnel or the train - and want some help. The job titles that fall into these categories are many, and they start at the top of the corporate hierarchy with the CEO and others involved with venturing such as the CFO, head of R&D, head of M&A or corporate development, head of the venturing group, and everyone in each of the organizations. Also, this book can be helpful to those building the ventures, with lessons on how to interact with corporate partners.
We have organized the book into three logical groups. Chapters 1-3 talk about the need for corporate venturing and why it is so hard to do well. Chapters 4 and 9 define the structure we call the venture business office and detail how it works and how strategic value is measured and captured. Chapters 5-8 provide the "bird's-eye view" of how to recognize a successful or failing venture at each major stage of development and prescribe what to do about it, whether you're investing, building, or triggering actions with the parent corporation. Gordon Bell, in addition to his ongoing support, was kind enough to articulate his view of the value and future of corporate venturing in the afterword. As appendixes, we've included useful reference material, including corporate venturing tools and templates for ready application.
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