Book Excerpt - the VBO

Authors Mason and Rohner propose a new concept in The Venture Imperative called the Venture Business Office, or VBO. The VBO is designed to ensure successful corporate venturing. Here is how they introduce this new corporate entity:

After many years of experimenting with different strategies for corporate venturing, we have learned that getting the corporate venturing environment right is the key to everything that follows. In this chapter, we demonstrate how to create that environment, beginning with the establishment of a new kind of corporate organization: the venture business office (VBO).

Many companies make the mistake of pursuing venturing with spirit and funding - but with no real structure to make venturing a permanent, integrated fixture of their business model. The VBO provides that structure. It is the platform, or centralized foundation, for the ongoing corporate venturing operation, requiring the same position and visibility as other mainstream strategic operations likes R&D or corporate development. The VBO is able to leverage all the parent company's resources, relationships, and knowledge, but it is designed to operate just outside the reach of the corporate culture that may impede or prevent its success.

An effective VBO will achieve four critical goals:

		Protect new ventures from corporate antibodies.
		Launch and invest in new ventures while leveraging corporate assets to make them successful.
		Define, measure, and analyze financial and strategic return from these ventures.
		Link the internal corporation to the outside venture community.

To achieve these goals, the VBO demands a structure that shields it from the political, budgetary, and psychological environment of an established company. In this sense, the VBO is part oasis, part isolation unity. It operates significantly different from the traditional corporation. It requires different skills, different funding mechanisms, different criteria for "success," different culture, and even different compensation packages.

The good news is that the VBO can be built quickly, efficiently, and at modest cost, relative to other corporate growth mechanisms and offices. Like the ventures it nourishes, it must think big, start small, test often, and scale fast. And as with the ventures it invests in or builds, the VBO needs to observe and refine its strategy of operation as it modifies its own road map to the future.

Unfocused? Frenetic? Seemingly all over the map? Yes, at times the VBO appears guilty of all these charges. Nothing more irritates the prevailing corporate culture of a successful company-which is one of the reasons why so many venturing initiatives get shut down after a first milestone "failure," and why a separate environment needs to be created for venturing needs.

A proven structure to manage venturing will safeguard against this understandable corporate reflex. This chapter describes the venture business office, and how it ensures four essential ingredients of successful corporate venturing:

		Governance: providing the right balance of corporate control and VBO latitude for decision making
		People: lining up venture experienced management, a proven board of advisors, and valuable partners inside and outside the corporation
		Portfolio: investing based on a diversified, risk-balanced strategic plan
		Practice: creating a continuous pipeline of ideas, quality management for investing and building, financial and strategic performance metrics, and continuous tracking of results.

Each of the four essentials and the role of the VBO in bringing them to fruition is detailed in Chapter 4 of The Venture Imperative.