Ask yourself: What type of people do you have in your organization? How do they develop their careers? And who is running the startups within your company?

Large organizations usually do not attract and retain entrepreneurial people. Acknowledging and changing this is important. It’s also only the first layer of the onion.

The second layer is this: The best people in your organization do not usually consider running a venture unit to be a savvy career decision. Promotions to VP, SVP, and EVP within large organizations continue to mainly be based on “power elements”, e.g., their overall responsibility of revenue, EBIT, and team size. Your best people know this, and they act accordingly when building their careers.

Those who are in the later stages of their career feel no differently. Your most senior people would never think of moving to your venture unit. By corporate metrics, switching from a corporate leadership position with a team of 1,000 people to the CEO of a startup of five people would likely be considered a disastrous decision. How many EVPs do you have as startup CEOs in your internal ventures? None? That’s a problem. Consider the seniority level of successful external serial entrepreneurs: EVP caliber.

Money and status need to be achievable and comparable in both realms despite the metrics being very different. Leaders on the corporate ladder usually measure their success based on size of team led, revenue generated, and profitability targets met. In the startup world, these metrics do not mean much. Investment raised, valuations multiplied, and the achievement of large growth rates from tiny revenue levels are preeminent.

Absent some understanding of how these “status symbols” compare, you will have a hard time tempting the experienced and ambitious dynamos you need to take a fledgling concept to a billion-dollar business unit.

The third layer is a product of the above: The absence of entrepreneurs and seasoned leaders leaves you with homogeneous staffing within your venture units: young, ambitious people who are motivated to “do something cool” but are not long into a traditional career track and therefore lack crucial experience in how to “get stuff done” in either a startup or corporate setting. Your team might end up literally headless.

These (and subsequent) observations may have a regional bias to them. While this has been our experience with the makeup of venture unit staffing in Europe, it is worth noting that this situation might not play out identically across the world. In Asia, for example, the role of an intrapreneur seems to have grown in attractiveness and piqued the interest of many corporate veterans, which is promising. If this is not yet the case in your organization, it should be the goal.

Our View:

‍• Make sure that becoming a venture CEO is considered a smart career move within your company and is valued as an important element of a classical corporate career.

• Consider making startup experience a prerequisite for advancement. In many corporations, rising within the ranks means meeting a defined set of requirements: international experience, cross-divisional experience, etc. Add entrepreneurial experience to that list.

• Ensure the people in charge of your venture building program, including senior management, are “product crazy”: people who are inventors and creative people themselves, people who fully immerse themselves in the solution of the startup and create a strong feeling of ownership and even love for what the startup plans to do.

• The possibility must exist that a venture unit CEO can earn as much as an executive in the highest salary band, and there needs to be a sidestep program in place so those at the highest level are willing to move to a venture unit. Track the number of those at the top salary level who are leading a startup. If there are none, you are doing something wrong.

• Don’t solely focus on attracting in-house leaders. Convince external talent to realize their venture ideas within your organization by making clear the advantages of doing so, including: reduced risk as an intrapreneur, a secure employment contract, and access to your corporation’s resources.

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We typically see corporate venture building units take one of two strategies to generate a healthy idea flow: an open approach that welcomes proposals from inside and outside of the company, and a closed approach that only invites internal ideas. If your strategy is the latter one, we recommend reconsidering.

It is surprising to us that most companies we encounter exclusively consider internal ideas, an approach that drastically reduces the number of strong concepts. Companies that only solicit ideas internally likely expect those ideas to be related to their core business and, as such, be a natural fit for a corporate venture program. While that is an understandable mindset, it can lead to initiatives that are too ‘inside the box’ and reduce the potential for disruption that more left-field ideas can bring.

Quantity matters, too. “The best way to have a great idea is to have many ideas” is a truism often credited to Linus Pauling, and it holds. Expecting a group of a few thousand employees to produce the same quality of “Top 10”  ideas as a community of a few million inventors seems oddly irrational.

Some corporations have managed to build interfaces that let them tap into the creative power of the larger community, often framed as “Open Innovation.” Admittedly, this is typically used for incremental innovation, rather than finding “moonshot ideas.” LEGO, for instance, invites its fans to propose new LEGO sets via its LEGO Ideas and vote on the submissions. Sets that secure at least 10,000 supporters go into review with the LEGO team and, if approved, go to market. In the first eight months of 2024, 83 product ideas qualified for a review.

In a major push towards more innovation during the noughties, Procter & Gamble developed an approach they coined Connect and Develop, in which they scouted the world for innovative solutions that could either solve a concrete problem for them in place of their own R&D (like how to print text on potato chips) or that they could adopt wholesale and turn into marketable products (like the Mr. Clean Magic Eraser).

Courting a broader influx of ideas will be more work to manage and make the selection process more involved, but we see it as the more promising approach. It also comes with a potential bonus: Along with outside ideas, you might just attract entrepreneurially minded people to run with them. In the increasingly hot fight for global talent, that factor shouldn’t be overlooked.  

Our View:

‍• Corporate venturing programs should have strong connections to the innovation ecosystem outside the organization itself, and those connections should be baked into their core. This could include partnering with universities, incubators, innovation accelerators, or other professional innovators.

• Insert yourself where these ideas are being floated. Go to pitch events. Develop relationships with other corporate venture builders and VCs and ask them to pass along ideas they rejected that they feel would benefit from your environment and resources. An evergreen mantra from the field of user-centered design comes to mind. “Go find the best ideas. First hint: They’re not in the building!”

• To repeat what we stated when discussing talent, convince external talent to realize their venture ideas within your organization.

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Of course, there’s a big elephant in the room when it comes to how to motivate venture building units: equity. Research repeatedly shows that incentives drive success. Yet, to our knowledge, most corporate venture builders do not implement potentially life-changing incentive structures.

Large corporations have obvious limitations when it comes to how they design incentives: Compensation has to be fair throughout the organization, and there are restrictions when it comes to how equity can be distributed to employees, for instance. As such, most lean on classical corporate incentive structures.

But it is essential that your team has real skin in the startup game. A one-time generous bonus is not sufficient. The potential upside should be truly staggering, and equity is the most obvious way to provide it.

There are layers of complication though. The potential to sell the business, a typical exit scenario within the startup world, isn’t always matched in the corporate world, which would typically retain a successful unit. That’s an additional constraint, and one that demands a more nuanced solution.

Our View:

‍• If you want the team to be as focused and committed as an external startup, then some type of ownership structure is necessary. We don’t know exactly what this should look like, but there are various approaches to consider, for instance, virtual shares (voting or non-voting) in the startup.

• Because the decision on whether to sell or retain the unit rests with the corporation, there must be a road to a personal exit for team members regarding those shares. Should an employee decide to leave the unit, those shares should be paid out by the organization. Such a structure would be an advantage of corporate ownership; a startup forced to pay out a departing team leader could end up bankrupt.

• Those shares would obviously have to be based on a valuation, and valuing the company would also need to be done creatively. Selling a minority stake in the business to external investors might provide an interesting way to arrive at a valuation mechanism but would come with an increase in administration and complexity that corporations would have to be comfortable with.

• We understand the corporate reluctance to potentially create wealth for employees that outpaces the top executives’ compensation, but we believe that is the bullet they have to bite if they want the same focus and dedication from their startup teams.

• Decentralized Autonomous Organizations (DAOs) are one area that corporate venture builders can look to for inspiration. Wikipedia defines a DAO as “an organization managed in whole or in part by decentralized computer program, with voting and finances handled through a blockchain. In general terms, DAOs are member-owned communities without centralized leadership.” DAOs have a very similar challenge of incentivizing contributors and have found beautiful solutions for this. Incentive structures for DAOs are a topic in and of itself and comprise many different concepts like “streams,” “retroactive incentives,” “bounties” and “collective awards”—that last one being a concept we particularly like.

• Take a page out of your own corporation’s patent scheme. Many companies already have a fairly elaborate way to create incentives in one area: intellectual property creation. There are usually programs in place that award employees a percentage of costs saved or revenue generated. Often these programs are backed by local legislation. We encourage you to evaluate if these structures can form a base for your corporate venture incentive structure.

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Consider a premium German automotive manufacturer that has for decades been implementing processes that are hyper-defined and adhered to. These processes allow them to produce millions of vehicles annually that are (mostly) free from defects and of the utmost quality. The processes function as maps and help eliminate variability and thus mistakes. They prescribe how to get from Point A to Point B to Point C and define the associated time frame and cost, making the business plannable. Many big businesses trust that a system of well-defined processes will spur results.

Effective and well-tested processes designed to drive rapid innovation, experimentation, and iteration also exist. Depending on their particular flavor and focus, they have been known as “design thinking,” “lean startup,” “open innovation,” or “agile development,” to name just a few. But they need to be applied with much more case-by-case consideration of the particularities of the individual challenge, team, and circumstances. Process that is imposed by a corporate entity upon the startup environment can get in the way if it’s implemented in a formulaic manner.

We often see innovation approaches pressed into process templates that were originally designed to eliminate variability and inefficiencies. Innovation instead requires us to embrace those things, to explore new paths without any qualms about having to backtrack or branch off in an unexpected way. Process assumes the inputs and outcomes are largely known, when in real-world innovation challenges, they are not. Plannability is largely an illusion in the startup space.

While it clearly helps to have a support infrastructure, its mere existence will never guarantee success and can even hinder it if it isn’t extremely flexible and adaptable. It can also be burdensome: We’ve seen corporations build and hire teams for each of their stated process steps, saddling the endeavor with high costs and rigidity from the get-go.

This stands in stark contrast to external startups, where “process” is typically limited to what might better be termed “approach”: something much less structured and much more malleable and iterative. Startup teams function less as navigators holding a map and more as experimenters producing chemical reactions: Ingredients are mixed, and what is added next depends on the outcome of the experiment before it. The lack of process can be inefficient and cause frustration, but it gives startups the ability to rapidly learn, make decisions, and quickly pivot in more successful directions.

To illustrate the difference between the two, consider a car made by that German manufacturer: After tens of thousands of kilometers on the road, a high-pressure hose in its turbo-system develops a coin-sized hole in it, audibly letting air escape. A visit to the brand-owned garage starts with a digital readout of the on-board error log, which flags low system pressure and the need to replace the hose. A local garage would probably listen to the hissing, find the hole, and replace the hose within half the time.

The first approach is process-based: It is systematic, can be followed by anyone, and leads to the identification of a broad range of potential problems reliably. It is also costly and slow, potentially infuriating the sponsor (aka customer). The second approach is toolbox-based and more reliant on people: It considers the challenge openly and uses a healthy dose of judgment and experience to solve it.

The mechanics likely had similar knowledge levels and the same awareness of both approaches. The difference in outcome (time-consuming, expensive, unnecessarily thorough vs. quick, risk-accepting, experience-based) would have been mostly due to policy. The level of process and flexibility that is baked into your policy matters. It will determine speed, cost, and whether a venture team focuses on the challenge at hand or on jumping through the next hoop.  

Dr. Christoph Peters, founder and CEO of Bosch Software Flow, offers a nuanced opinion when it comes to templatizing venture processes. He observes that “frameworks and processes definitely help us in building up our corporate venture, but we can't work with a fixed script. We continuously need to shift our priorities. As an example, we are having rather short cycles of user research, product definition, and realization with a comparably small data set but a lot of product iterations [for this particular venture, (ed.)]. This is unique to our product and does not qualify as a generic framework for other startups.”

Our View:

‍• Process provides predictability and plannability, which may indeed help the corporation feel more comfortable going into the venture building endeavor. But in the end, it can get in the way of achieving impressive results quickly by bogging down teams.

• While knowledge of innovation approaches is crucial and aligning on a leading framework for how to innovate is helpful, we believe it would be best to abandon the notion of “process,” if only mostly semantically. It is far more helpful to think about the associated frameworks, activities, and behaviors as tools in a toolbox to be applied as needed.

• Discard the map and opt for a North Star instead. Keep orienting toward it, whether that means veering left or right or sailing into the wind. Make progress by whatever means are right at the moment.

• If you must have a map, chart a different one for each venture. The map should not be dictated by any corporate process but decided in dialogue with people who have gone through these types of innovation processes repeatedly.

• We are aware that allowing for a more toolbox-based policy could come as a hard shift for corporations, whose operations are so dependent on defined processes. And we are aware that its application requires a level of mastery of innovation approaches that is not commonly found within corporations. External support might be key in achieving this one.

• Work with flexible resources like freelancers or external consultants who can ramp up and down based on need. Doing so allows you to hire competences that perfectly match the needs of the startup and stay lean and cost-efficient.

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In the startup world, time is the most precious commodity. We find the same view doesn’t persist among corporate venture units. In the former, a blocking item is seen as an existential threat that must be fought through within days or weeks. In the corporate venture, more time—months, even—might be afforded to solve the same issue.

We believe having real skin in the game is the differentiator, so this point is essentially an amalgam of the previous ones: A sense of ownership creates prestige that is at risk; the prospect of a big payout focuses the entrepreneurial mind; a healthy dose of pressure to establish product-market fit facilitates fast and bold decision making; and avoiding too much protocol eliminates the potential for red tape and being a prisoner to process. These “ingredients” are what make startups so much faster than corporate ventures.

The reality of corporate venture building units is that while they are usually progressing much faster than the corporation they’re housed within, they do not attain that same sense of urgency and speed as external startups.

While urgency can be generated by the promise of making a lot of money eventually, in the startup world we know, it is more often driven by the opposite: The possibility the money will run out. Every early-stage startup knows what its so-called runway is, and for some the time is impressively short. For them, there is no guarantee there will be a next round unless they are very successful.

That contrasts with corporate ventures, where annual budgeting cycles typically ensure sufficient funding for an extended period. Our impression is that, within the corporate venture building environment, ventures can too easily assume continued funding even in the absence of convincing results. That can foster a lack of urgency: Making progress quickly to get to results fast becomes less crucial in this scenario.

Our View:

‍• While not the sole motivator, the prospect of making lots of money on a personal level does focus the entrepreneurial mind. Using larger-than-usual incentives to align everyone’s efforts is a good idea. See Hypothesis 3.

• Corporate venture funding should be seen as an investment, not a cost center. The units in your portfolio should compete for whatever money is there to be invested rather than assume continued funding as the default.

• Team up with external investors so that there is an outside force applying pressure to deliver results. Traditional VCs will most likely not be the optimal partners, as the possibility for a big exit is usually absent. Look instead to family offices, whose typical goal to generate consistent healthy returns aligns with those of a corporate innovator.

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Establishing a separate unit for your startups might create an environment of freedom and independence for them, which is conducive to exploration and pivoting. That is a good thing in many ways, but this approach is not without its challenges.

In reality, the unit is typically not far enough removed from the corporate constraints to truly act like an external incubator might and not aligned closely enough with existing business divisions for easy integration down the line. While these existing business units are the likely future integration targets, they end up lacking a sense of ownership in the startups.

We often see organizations ultimately decide to re-integrate the startups, but walking backwards can be tough. Without preexisting support from existing divisions, it will be tough to find a host division at all. You can avoid this by creating ample buy-in from future partner divisions.

But there’s a flip side to the coin. The startup shouldn’t have to conform. They should be able to make good use of the existing administrative frame and overhead that’s in place without that getting in the way of how the startup unfolds.

Sven Scheuble, partner at Siemens Advanta Consulting and former head of Siemens Technology to Business, describes the delicate nature of getting this right: “Like a satellite in orbit, a startup must maintain the perfect balance—not too close to be pulled down by corporate gravity, yet not too distant to lose its connection with the core business.”

This is a balance to strike with prescience and care. We believe there is no one right way to go, no easy answer here. Indeed, Sungene Ryang—CEO of Korean conglomerate GS Group’s open innovation arm, “Beyond”—offers a more radical and even opposing view on this topic: "I don’t think at the early stages of any venture or startup ideas it’s good to be connected to the core at all. The internal rules, KPIs, team objectives and incentives, inertia of the big corporate culture may bring it down."

So how do we build in just enough corporate infrastructure, alignment, and corporate buy-in for it to be helpful to the startup, but not so much that it hinders them?

Hinder how? In some cases, by expecting them to conform to an industry that they’re trying to disrupt. For example, if a hotel chain’s corporate venture had contemplated an idea like Airbnb and presented it to the board, we suspect the board would have kindly suggested they keep looking for ideas a little closer to “reality”—and we’d all still be booking standard rooms with two queen beds for family vacations.

In other cases, allowing maximum freedom can lead to incompatibility with the rest of the corporation. Consider a startup within a pharma company known for its blood pressure medication that has developed a fantastic solution for preventing chronic disease through behavior change. Short of this startup becoming its own business unit, and then likely competing with the others, it would be next to impossible to integrate it into a business unit whose metrics of success are structured around drug sales figures, market share, and licensing revenues. The result would likely be the same as in the prior example: The pharma firm would probably not want to keep supporting the venture internally and likely not want it to succeed externally, either.

Our View:

‍• Set an expectation with everyone that the startup might eventually be re-integrated into the prospective “landing pad” business unit or might end up being sold to thrive externally. Think hard about how the supporting business units might benefit in the latter case.

• Create virtual joint ventures including the startup itself and the potential future host organization, bridging some of the gaps between the venture building environment and the reality of the daily core business.

• Build a network of supporters by contracting key people from the core business to help build up the startup without fully integrating them in your team.

• Involve management from future host or partner divisions by including them in advisory boards.

• Deliberately create mentorships or partnerships, e.g., through joint sales or marketing activities, to build connections into the core business gradually before full integration.

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Deel.com offers hiring, payroll services, and team management in 100+ countries. It had to invest a tremendous amount of money and effort to build the structures needed to run the business, but that investment has borne fruit: The company is valued at $12 billion.

But guess what? Your organization likely already has a global HR structure in place, plus a strong brand. Had you set out on Deel’s day one to build what Deel was building, you would have been miles ahead from the get-go. These are the types of opportunities you should be looking for.

We believe there are not enough ideas that fully leverage the strength of the organization to create an unfair competitive advantage. Sungene Ryang, who heads up GS’s venturing group “Beyond”, echoes that, saying, "Corporations should figure this out and systematically put resources in place to help venture teams take advantage of the vast potential of the corporate infrastructure."

The assets that corporate entities bring to the table are amazing: brand, customers, distribution, international set-up, existing support organization, and on and on. These are dream conditions that the vast majority of startups do not have. But we find that most corporations do not focus on what its unfair competitive advantages are and build startups around them.

What if you had a list or catalog of assets and skills your corporation provides and cross-referenced all ideas against it? Can you buy a locally successful technology and scale it through your organization fast? How much value can you add through your brand? Can you charge a premium based simply on that brand? Can you create a copycat venture building machine that combines the best ideas out there with all your corporate unfair advantages?

Our View:

‍• Make your organization’s tangible and intangible assets explicit and make sure everyone involved in the corporate venture team knows them well. If you find them hard to spot from within, enlist some help to gain an externally informed perspective.

• Then select and filter startup ideas to take full advantage of them. Don’t evaluate a startup’s value in “general” terms. Always evaluate it in the context of how it can be accelerated by being part of your organization’s fabric.

• Ensure that everyone in the organization understands the value and importance of providing this strategic support to corporate venture teams. It may require a way to officially account for the time and resources those in the core business spend on moving a corporate venture building unit ahead.

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The corporate venture building setup we outline starts wide, allowing for a range of ideas and initially giving teams the freedom to explore broadly. At the same time, we don’t deny that at least a plausible connection to the corporate core needs to be retained (see Hypothesis 6). Also, making use of the corporate infrastructure to strategically create “unfair advantages" (see Hypothesis 7) might require that certain boundary conditions be put in place.

To square this circle, we suggest organizations adopt a sensible system of progressive filters. Initially, teams should be granted the freedom to find their path through the proverbial fog via exploration, reframing, and pivoting. As the fog lifts and potential paths reveal themselves, the filters should become more rigorous and selective, with expectations and milestones clearly defined.

Venture capitalists know that while most startups pursue promising ideas, very few succeed, and success is based on the outcome of many more factors than just the original concept: team, timing, partners, technology, luck, etc. Some are within the startup’s control, some not so much. VC firms are therefore quick to admit that while they do their best to pick only the most promising proposals, they are also quite ready to let them fail should things not go as hoped.

What we observe in the corporate venture building world is that filters are often not applied ruthlessly enough. We wonder why this is.

Is it a case of sunk cost fallacy? Is it out of concern that the corporate venturing program will be tarnished if too many of its ventures fail? Is it that no one wants to make the uncomfortable decision to close ventures down? Is “pulling the plug” too easily avoided because the cutthroat financial logic of VC firms is not in place? Are the people who are in charge simply not engaged enough to tell a promising venture from a faltering one? Do they have the right mindset and the right skillset to do so?

Our View:

‍• Support new venture teams. Offer benevolent guidance within a broad corridor of exploration at first.

• Try to research and test your product market fit as early as possible. Don’t let venture teams get hung up on perfecting their solution before presenting it to potential users for feedback (see Hypothesis 9).

• As the venture matures, set clear expectations and put increasingly strong filters in place in order to be able to focus the resources of the venture building program on the few truly outstanding ventures. These filters should be driven by real-life data as early and as often as possible.

• Follow venture capitalists’ lead from a KPI perspective. When they evaluate whether one of “their” startups is on the road to success, they prioritize indicators for product market fit, followed by growth rate and market share metrics. Revenue and profitability are typically not the primary metrics, and similarly should not be more important than KPIs like compound average growth rate for venture units.

• Simone Bosatelli, CPO at Bosch RideCare, goes deeper on that point: "When it comes to early-stage ventures, prioritizing Value-Delivery metrics like engagement, retention, and referrals is crucial. Corporate stakeholders, however, often rely on Value-Capture metrics such as EBIT and sales to measure success, leading to potential mismatches in decision-making.”

• There is a ruthlessness present among VCs who stand to profit or lose a great deal by making the right or wrong decision. It would be beneficial to have the same paradigm in place here. That means making sure the people who are making the selection are incentivized in the right way (see Hypothesis 3).

• Define clear milestones and deliveries including product development targets, market entry points, revenue development, and team set-ups. Regularly review and adjust milestones based on the progress of the startup and potential new upcoming challenges.

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In the external startup world, product market fit is the first thing that investors will drive the startup toward: There must be a demonstrated need for and appreciation of what is being built. We do not see the same rigor around product market fit in the corporate startup world.

External entrepreneurs are typically driven to understand their markets in detail, be that through VC pressure, hope for a shortcut to riches, or for fear of being wiped out. They desire user feedback and try everything they can (testing prototypes, kickstarters, presales) to attempt to understand if the product will be a success in the market.
But they have a limitation that the corporate world does not: It’s very difficult for them to be heard.

Corporations have a slew of advantages on this front—but also act much more fearful: Users know the brand and the quality level; sales and distribution channels are in place. Soliciting valuable feedback is often as simple as reaching out into the existing network and asking the world, “Do you like this?” But corporations are typically saddled with concerns about reputational risks to their brand and fears that floating a product too early could lead to blowback from the market, should the product end up changing or being unfeasible.

That said, we have seen some companies buck that trend and hold them up as examples worth emulating. GE’s FirstBuild used Indiegogo as a platform to test interest for its products in the past. Its Opal nugget ice maker was one of Indiegogo’s most successful campaigns ever. Hasbro started its own crowdfunding platform, HasLab, where limited-edition collectibles are proposed and ultimately built if a minimum number of backers commit to purchasing the product.

Our view:

‍• We mistakenly think that the way to avoid bad news is to not ask. But in the innovation context, that just delays the inevitable.

• Relentless dialogue with potential users is necessary. Consciously solicit meaningful feedback—preferably super early on. As mentioned in point No. 7, you might be able to leverage the competitive advantages of your company in pursuit of this. This is also true for the way you test markets with your existing brand, customer, and structures.

• For B2C products, consider pre-sales activities and product kickstarters, running trial campaigns, product clinics, releasing beta versions, and iterative qualitative user testing.

• For B2B products, consider pitching mock-ups and concepts, studying target users’ workflows and needs in detail, creating MVPs, and running early pilots—way before your team thinks they’re ready.

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Corporate ventures fail. But too often we see teams continue to ride a dead horse simply to reduce their own personal risk in the short term. The fear of getting fired or going backwards in their career is a powerful driver, but one that does not make sense for anyone.

The winding down of internal start-ups needs to be made easier, and that’s best achieved by reducing the personal consequences for the team, preparing a playbook for what happens in the event of a failure, and communicating that plan very clearly to those involved.

It might be common for an external start-up founder to assume the negative consequences that failure can bring, but the dynamics are different in a corporate venture-building program. There, you shouldn’t punish people for taking on additional risk. Make it clear from the get-go that you won’t, and that it’s better to initiate the closure of an unsuccessful idea sooner rather than later. The message you need to convey is this: “Don’t worry. You are safe and we will take care of you.”

What if half of all start-ups that begin each year came from start-up teams that failed and pitched a new idea? What if the prevailing sentiment was, “Sorry you haven’t been successful; next time you will be.” We don’t see this now because these teams don’t come back. There’s a failure and they are gone.

Our View:

‍• Position the shutting down of a corporate venture unit as a normal part of the corporate venturing life that frees up a capable team to tackle higher priority challenges next.

• Work actively against the intuitive expectation that failure will be viewed as disastrous and likely lay waste to the careers of everyone involved. If failures occur, the consequences should not be stronger than those for failures that might occur in the core business.

• Have a failure playbook ready and share it with the team at the outset. Be generous, e.g. with re-integration guarantees into the corporate structure, moves to other start-ups, or options for management-buy-outs. Hand out “return tickets” to the core business for the teams in case of failure, much like you would for your expats.

• Failure is never preferable to success, but in the start-up world, failure is often seen as qualifications for your next try. Venture capitalists will prefer someone who has led two start-ups and run them into the ground to someone who has never tried their hand at running one. The same applies here: The employees tied to a corporate venture that fails are eventually going to make some start-up successful for you or will be highly trained problem solvers who can provide a unique skill set to other teams within your organization.

• Failure doesn’t have to exclusively mean closure. Set yourself up such that selling is a possible scenario. Just because a venture doesn’t succeed within the confines of your organization doesn’t mean it couldn’t elsewhere. In theory, selling a start-up to an outside entity can be a good move for both the corporation and the venture. Assuming that the start-up team owns (virtual) shares in the business (see point No. 3), it could also be a lucrative transition for them.

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Building ventures is getting cheaper, faster, and less risky year by year, accelerated by:

• Ultrafast ways to build & test new products and services

• Rapid advances with AI

• Scalability by using hyperscalers like AWS and Azure

• Reduced competition from external start-ups that are currently having a harder time raising capital

• Numerous established platforms for efficient marketing and distribution

• Faster market testing with evolving design research tools, online testing, direct customer feedback and customer pre-orders

We believe now is the time to challenge your internal venture building activities, future-proof them, and get ready for the next growth cycle. McKinsey comes to a similar conclusion in a recent piece titled “Now is the time to create new corporate ventures.” It found “nearly two-thirds of surveyed investors say it would be advantageous for organizations to increase their investment in new-business building over the next year.”

Reach out to us if you like to discuss how corporate ventures should be built in the future.

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