After many years in business, working in large companies as well as startups, I’m no longer surprised at why mature and successful companies struggle with introducing innovative new ventures as the market and environment changes. Their track record is dire, with only twelve percent of the companies in the Fortune 500 from fifty years ago still even in business today.
Even with advantages that independent startups can never hope to match, including brand recognition, customers, financial capital, and distribution, I don’t often see the entrepreneurial passion for innovation, agility, and team perseverance exhibited by new startups. Your challenge is to balance the challenge of providing a stable return today, with meeting future customer value.
Thus, I was happy to see some real actionable advice on this challenge in a new book, “The Unicorn Within: How Companies Can Create Game-Changing Ventures at Startup Speed,” by Linda Yates, the founder and CEO of a leading growth incubator for global businesses. I agree with her set of preconditions for success, and offer my own insights to complement her specifics:
- Select a full-time highly qualified and motivated team. You need a minimum of four to six top performers full-time for at least twelve weeks. You can augment this internal team with outsiders to complement internal skills, but take care to avoid the not-invented-here problem. Make sure everyone comes with an entrepreneur mindset for real innovation.
In my experience, team members with an entrepreneur mindset are rare in mature companies, due to a growing focus on low risk fixed processes, narrow job roles with specialized expertise, and long-term tenure. Entrepreneurs crave more ownership.
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Choose a trusted team lead with executive sponsors. The team lead will serve as the new venture’s interim CEO/GM, and should anticipate a long-term, rather than a temporary startup role in the new venture. Of course, someone with more operating experience may be brought in once the new venture has been successfully launched.
Somehow, it always seems that the most high-potential leaders in large companies are offered the keys to the current business first, leaving the new venture opportunities to second-stringers or long-term loyalists whose view of innovation is all company internal.
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Commit a source of internal or external seed funding. There is no point incubating an innovative new venture if you don’t have the funds to launch and expect quick self-sustaining revenue. Don’t count on friends and family, crowdfunding, angels, or other external investors. A documented business plan for the new venture is critical here.
Even though the funding cycle for external startups is often long and arduous, I find that big business funding processes are even longer, and more political. If you wait to start until your new venture really needs the money, the project will likely die of starvation.
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Assemble an engaged new venture advisory board. These should be senior executives in the existing business. In essence, the executives will serve as the new venture’s internal venture capitalists. In my experience, new ventures are fragile things, and more likely to be derailed by in-house politics than a lack of market acceptance.
If you are really serious, this is a good time and place to commission a couple of external advisors, who are industry experts or experienced in related businesses. I’m sure you already do this for your real Board of Directors, and a new venture needs them badly.
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Get prepared for the accelerate and scaling phase. Incubating is not enough; successful new ventures must be quickly scaled to stay ahead of competition and show a level of acceptance by customers as well as your financial executives. Feedback from pilots and early experiments must be integrated to maintain momentum.
Scaling any new initiative globally these days takes a large ongoing investment, and a carefully thought-out plan and execution. Don’t let early success dilute your focus, or demand that the new venture quickly meet your mainline financial and growth metrics.
If your company practices these initiatives, you should feel confident in joining a new venture project, and contributing your creativity with low risk to your career, and a high probability of team success. If now where you are today, look around for new job opportunities. The time to start is now, with all the volatility and change in the market, and customers looking for answers.
Marty Zwilling
*** First published on Inc.com on 10/24/2022 ***
via https://www.AiUpNow.com
November 7, 2022 at 09:09AM by MartinZwilling, Khareem Sudlow
