FAQ's
Authors Heidi Mason and Tim Rohner answer some Frequently Asked Questions:
 | Why Did You Title Your Book "The Venture Imperative?" |
It seemed natural and exactly right to get our message across loud and clear.
The dictionary definition of venture includes three variations:
to expose to hazard---risk or gamble (venture a buck or two on the race)
to undertake the risks and dangers of---brave (venture the stormy sea) to offer at the risk of rebuff, rejection or censure (venture an opinion).
Not to be avoided or evaded----necessary (an imperative duty) is how imperative is defined.
We believe companies must take risks. Without risk, there is no innovation, without innovation there is no growth or competitive advantage. And without growth or competitive advantage companies are on a slow decline (if they're lucky).
| If corporate venturing is crucial to corporate growth, why aren't more companies doing it? |
Because many believe a number of myths that suggest venturing isn't for them. They have fallen prey to a fear of venturing, as we like to call it, which prevents otherwise innovative companies from even getting started.
| What are the most common myths about corporate venturing? |
The misconceptions tend to fall into three different categories. First is the idea that venturing is irrelevant to the business. Some managers, for instance, believe that venturing is strictly for companies introducing disruptive technologies, and not for mature brick-and-mortar companies. Another misconception is that venturing is too expensive, and that it is difficult to measure and tough to capture. Some managers believe, wrongly, that R&D, corporate development, and business development can achieve the same results with less expense and risk. New ventures can capture value only through IPOs, which themselves depend on bull markets. And finally, many managers believe that venturing is too risky. The company may have tried it once unsuccessfully or managers may generally fear that new ventures fail too often to be a viable strategy. And some believe that corporate venturing burst along with the Internet bubble. Unfortunately, these misconceptions paralyze most companies with the fear of failure, a mind-set that sends companies off in the wrong direction, right from the start.
| You say that "corporate antibodies" can also stand in the way of ventures. Explain. |
Large, established companies are well set up to guard against risks, not to take them. Look at a company as a living organism. Like most organisms, it is protected by antibodies. In this case, the antibodies are practices, procedures, habits, and attitudes that help keep the parent corporation healthy. A corporation's antibodies help shield it from risk, maintain focus, preserve continuity, and uphold corporate harmony. But they do something else: They repel anything that is new and potentially threatening to the system they inhabit. While appearing to keep the corporate parent healthy, they also stunt its growth and prevent it from advancing to new stages of its life cycle. Because they have been shaped by the status quo and reflect its values, they defend the status quo like a mother hawk protecting her young. The antibodies will invariably perceive new ventures, which carry the threat or promise of potentially radical change, as a challenge to this corporate defense system.
| You describe a new kind of corporate organization: the venture business office. Does this help protect ventures from the antibodies? |
Yes, among other things. Successful venture programs begin with creating the right environment, and the right environment begins with the establishment of the Venture Business Office, or VBO. The VBO is a separate organization-not just another department, office, or division-within the company where the standard corporate rules are redefined for venture success. The VBO provides the structure that makes venturing a permanent, integrated fixture in a corporation's business model. It is the platform, or centralized foundation, for the ongoing corporate venturing operation, requiring the same position and visibility as other mainstream strategic operations like R&D or Corporate Development. The VBO is able to leverage all the parent company's resources, relationships, and knowledge in building its linkages to the outside world; but it is designed to operate just outside the reach of the corporate culture that may impede or prevent its success. The VBO is part oasis, part isolation unit. 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.
| In the book, you outline a four-stage process for developing a venture. Briefly describe each of the stages. |
In stage one, the Venture Vision, the objective is to put a plan together that outlines the product and why it's different, the market and why it's attractive, the team and why they are qualified, and a high-level business model and how much money is needed.
In stage two, the Alpha Offering, the first version of the platform and first product or service is created. This version should demonstrate how the venture will deliver the customer solution from end to end, albeit in a controlled environment.
In stage three, the Beta Offering goes to the field. The objectives are to test and refine the product/service and, by implication, the rest of the venture's programs; gain early market acceptance and customer testimonials from using the product; and use these results to secure funding to do a full market launch.
In stage four, the Market Calibration and Expansion Stage, the objective is easily stated, but not easily accomplished: find customers, become profitable, and get the next version of the offering to market. In the book, we discuss each of these stages in-depth, including common mistakes, checklists, questions, and case studies.
| How much detail exists underneath this four-stage process? |
In our corporate venturing practices, we use the Bell-Mason Venture Development Framework (VDF), which was created by Gordon Bell (legendary technologist and father of Digital Equipment Corporation's VAX family of computers) and the co-author of this book, Heidi Mason. The Bell-Mason VDF offers an objective means to chart the course and evaluate the progress of early-stage ventures by using hundreds of questions on best practices derived from direct experience with hundreds of start-ups. The premise behind its development is that you shouldn't have to understand the technology to ask the right business questions. The means for determining progress can be stated this way: "Look for the evidence of milestones achieved and incremental performance - and of doing the right things at the right time." The Bell-Mason approach is a rule-based system, documenting and embedding venture development "best practices."
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