Leaders usually see venturing as sources of organic growth and vitally important engines of renewal. However there is always a high risk involved with this and they do not produce the intended result (always).
So, the new venture cycle though rewarding is prone to risk but equally important. This paper looks at some guidelines (8 key points) that have been developed that can be used by organizations who want to look into opening up new ventures by researching one of the largest multi national corporations in the world i.e. Nokia.
Year: Fall 2006
Goal: A in-depth study of Nokia’s venturing program which saw how, and what goes into successful corporate venturing
Result: 8 important lessons that can help companies benefit from their investments in new ventures.
Grade: B
Lessons learned:
- New ventures can benefit the core businesses: If they are structured in a way that it can be absorbed by the core business in the future
- Volunteers are not automatically competent: You need champions and high performing professionals handling new ventures in an organization.
- New corporate ventures cannot deliver the same result as the company’s core business: Losses are part and parcel of new ventures and they cannot be judged or solved based on expected deliverables that core businesses usually have
- Manage with portfolio mindset, not a project mindset, to maximize the company’s benefits from venturing: Have many projects going on simultaneously do not focus or put in your resources for just one particular project at a particular time. Since new ventures take time to develop their progress determines the amount of resources put into them.
- New markets are seldom like existing ones; be prepared to learn your way in and approach learning as an activity that may require several phases and changes in direction: New ventures usually are very fragile like new born babies, they have to be dealt with a lot of care and support. There is no set market for them so accelerating their growth in a premature market (or even if market is visible) can lead to early paralysis or cardiac arrest of the project. There is also a possibility that the project might lead to a different direction than compared to what it initially promised.
- Manage new ventures in stages, with stage-specific reviews by a committee of stakeholders: Projects in new ventures have to be reviewed periodically and in stages but not with metrics that are used to judge a core business. Deliverables have to be decided by an expert team of stakeholders who define progress or setback based on set deliverables for a particular period.
- You can gain a lot from a losing venture if you cut your losses: Businesses should know when to move out of a particular project
- When designing the venturing divisions build in learning transfer mechanism: Teams should share knowledge in an organized manner so that projects which are successes or even failures help the organization succeed in the future.
-Altaf Hajiyani
Corporate Entrepreneurship Blog 