How to strengthen the innovation power of established companies through corporate venturing?
Are you already using the tool of corporate venturing for the strategic orientation and success of your company?
Corporate Innovation refers to the process of creating new products, services, processes, or business models within an existing company. It can involve the development of new technologies, the introduction of new products or services, the implementation of new business models, or the improvement of existing products and services. Corporate Innovation can take many forms, such as internal R&D, Open Innovation, Corporate Venturing, and strategic partnerships. Corporate Innovation aims to drive growth and create new value for the company and its customers.
But why is it so important to be aware of corporate innovation?
Since Porter, we know that companies can achieve competitive advantages with various innovation activities including new technologies and new ways of approaching things. In research, it is common sense that innovation is critical for economic change.
Companies can benefit from innovation in several ways:
- Increased revenue: Innovation can lead to the development of new products and services that can generate additional revenue for the company.
- Improved efficiency: Innovation can improve the way companies operate and make them more efficient. This can lead to cost savings and increased productivity.
- Attracting new customers: Innovation can help companies to attract new customers by providing unique products and services that meet their needs.
- Brand differentiation: Innovation can help companies to differentiate their brand and stand out in a crowded marketplace.
- Adaptability: Innovation can help companies adapt to marketplace changes and stay relevant.
Target disruptive Innovation with corporate venturing
Focusing on the implementation side, the golden rule for innovation and growth follows a 70-20-10 approach. That means, 70% of the resources are used for innovation in the core business, 20% for innovation close to the core business, and 10% for completely new innovation projects beyond the core business.
When it comes to innovation beyond the core business (10% of the resources), corporate venturing is the secret superpower and offers a high potential for innovating a company’s current business. This strategic approach is used by companies to identify, develop, and invest in new business opportunities outside their core activities. It allows companies to access new technologies, business models, and markets, as well as to build relationships with startups, entrepreneurs, and other innovators to ensure the future readiness of the whole firm.
One of the main benefits of corporate venturing is that it allows companies to stay ahead of the curve by identifying and investing in disruptive technologies and business models before they become mainstream. By doing so, companies can gain a competitive advantage over their peers and increase their chances of success in the long term.
Corporate venturing also provides companies with access to a diverse range of talent and expertise. Startups and entrepreneurs often bring new ideas and fresh perspectives to established companies, which can help to boost innovation and drive growth. Additionally, corporate venturing can help to strengthen a company's relationships with its customers and partners, as well as the broader ecosystem in which it operates.
The form of corporate venturing needs to fit the strategic goals
Corporate venturing can take many forms, such as venture capital investing, corporate incubation and accelerators, innovation/digital labs, venture building, venture clienting and strategic partnerships. Innovation labs, for example, are focusing on the development of more core business-related Innovation with their own employees and aim for differentiation. In contrast, venture builders develop startups outside the core business to achieve diversification.
Each form has its own set of benefits and disadvantages, and companies have to choose the approach that aligns best with their strategic goals and resources.
In summary, it is absolutely necessary for each and every company to deal with the ambidexter of exploitation and exploration. On the one hand, efficient further development of the current products is fundamental to securing the existing business. On the other hand, the broader view is important to learn new competencies and find new ways to set up the future business.
But how can this trade-off be handled from an organizational point of view?
Both forms are not easy to handle in one organizational structure. That leads to the necessity of new and separate innovation units, especially focused on their strategic targets within the whole company innovation strategy.
We, as the INC Innovation Center, are sure that the successful business of the future needs a wide range of different competencies and knowledge about the domain, market, technology, and customer needs as well as expert know-how and experience in line with building and scaling of products, services, and ventures. For that reason, we strongly believe in the co-creation and co-building of new products, services, and ventures from the first steps of ideation and validation until scale and growth together with our partners.
Our team consists of experienced experts with an entrepreneurial mindset and background, with a strong network in the startup hot spots in Germany as well as access to the local ecosystems to successfully support your innovation goals and future-proof your business.