10 Step Guide to Launching a New Venture Inside our Company
The fast pace of the modern world is a big challenge for everyone, especially for businesses.
There are many possible answers, yet the accurate one is change itself. And it will only accelerate, you are aware of this, right? The average age of an S&P 500 company is under 20 years, down from 60 years in the 1950s, according to Credit Suisse.
The pandemic has proven to be a catalyst for transformation. When the world as we know it changes, consumers’ needs alter, and market opportunities are created. Around the world, individuals and companies are rising to adapt to this moment with ingenuity and focus.
Companies of all sizes have realized that they need to reinvent prevailing ways of working in order to remain relevant. It is easier said than done. Some decided to pivot to new distribution channels such as digital equivalents for printed materials PDFs, Google docs, ebooks, etc, direct-to-consumer model, whilst others went for a complete business model overhaul including cinemas switching to temporary outdoor car cinema, DJ's host live paid concerts on Zoom, AirBNB offers 50 experiences from around the world "live" etc.
If there’s one assurance in this whole uncertainty, that is the crisis is pushing businesses to plant a new seed in order to adapt or to adopt a new business plan in order to survive. Or, it might be an opportunity to discover the overlooked intrapreneurs, talents within your company that can help you make a firm step forward.
Where there are challenges, there are opportunities. Probably one of the most common mistakes among larger corporations is delaying significant investment in growth ideas until they see very severe declines.
As a CEO, you should lead the innovation agenda showing long-term financial commitment, a delegation of authority, aligned incentives, commercial freedom, and placing multiple bets, etc.
Starting a new venture might seem risky, the reason being the odds of success. Yet, when you realize the importance of a new path, you have to acknowledge that you already have a lot of cards in your hand, which, if played right, can lead to future growth.
First of all, you already have an established database. This is one of the most important things because this is the list of people that already trust you.
The second advantage is the human capital that, again, you already possess: the know-how, the expertise, the creativity that lays around and waits to be put to work.
Another thing to mention is this: if the initiative comes top-down, the odds of success significantly increase. When there is a real commitment from the top management, middle and low management seem to be more inspired and open to new challenges.
And the last is capitalization. Compared to a startup, established companies have the unfair advantage of sitting on a sheer volume of scarce resources including access to capital.
Where should you start? Here is a 10 Step Guide to launching a new venture inside your company:
- Do not get caught in the red ocean. The writers of the Blue Ocean Strategy, W. Chan Kim and Renée Mauborgne called it value innovation. “Value innovation is the cornerstone of blue ocean strategy.” It means that you do not try to beat your competition, instead, you focus on making it irrelevant by giving your customer new value, something that is not yet available on the market. You open a new door for them, by taking care of their needs and unfulfilled desires, that nobody thought of up to this moment.
- Do not think about the new business as a short-term gain, but as an engine of future growth. Remember that you embark on this long journey to keep, or if possible, to increase your market share. You will need your best people for this, people willing to work hard and that can help you breed new ideas. You can be project-oriented, either within or across departments; you can promote debates, brainstorm sessions, workshops to generate new ideas, new business models, or maybe a new product or service.
- Do think BIG! If you are not thinking big enough, if you do not want to give your best, maybe there is no need for you to even go after it. You will need to have a well-written business plan as well as a thorough understanding of the idea and its potential.
- Choose the people for the project carefully. It is possible that you’ll have to look for them outside of your company. Maybe there are some new types of skills that you did not use before. Maybe there are only a few people within your company, with the needed talent, available to work on a new project. The people you choose are the central factors needed for the innovation to happen, their open-mindedness, curiosity, and questioning are indispensable, as is the merging of different ideas, know-how, and backgrounds.
- Think about the new business as a way to accelerate and innovate the core of your business. Think about it, like a hand that will come and helps you in your future achievements. If you think about Sony, Nintendo, Sega, and Microsoft’s Xbox business war, in 1999 Microsoft made a strategic investment of $1B to get into the video gaming market and more money with the passage of time. Today the global gaming console charts are shared by 3 global brands: PlayStation, Nintendo, and Xbox.
- Brainstorm. You can’t just “go to war” with one strategy, one idea, and think it is going to work. Progress happens only where there is hard work involved. As mentioned before, brainstorm sessions, workshops, debates; you can even do this while working remotely, using the right technology. This way you can help your team talk and come up with innovative, SMART ideas. There are for sure intrapreneurs in your team: give them the independence they need, allow them to take the risk, and work on a new project. By “setting them free”, you can do more than you ever imagined.
- Remember that your customer is the answer to all of your problems. You have to figure out what customer needs you are solving and come up with dozens of creative solutions. You can emphasize in the idea generation phase on trends because they can draw you a new perspective on your customer’s latent or potential needs.
- Meet as least once in 3 months with the whole team, in order to evaluate the progress. You need to learn if there are any drawbacks, and fix them at an early stage; learn about your new clients; if there are marketing campaigns involved, what is your cost of acquisition.
- Another important thing you will need to have is a set of parameters, carefully chosen, that would create a clear image regarding what is really going on with your new business. You should estimate the revenue you expect, as well as the margin profile for your new business. But don’t get your hopes too high, it is going to take at least one or two years for you to get there.
- When the time comes, think about the potential of the new business. Do you need investors, a partnership? Is it going to be a spin-off? Do you build it as a standalone venture? Are you going to integrate it within your existing structure? This is a critical point because you have to make a strategic choice: you either have to further explore or you can take a step back and let the new business be where it belongs (ex. spin-off, exit, buy-out).
And remember that you have a lot of advantages: a customer base, a balance sheet, well-established processes, human capital, years of expertise, things that start-ups and small enterprises only start to build. If you don’t take no for an answer, deliver the right level of engagement, honor your promises, ask for feedback as much as thought necessary, you will make it work. If you approach, right from the beginning, the tactical and strategic challenges, this will allow you to act on it, and if you act on it quickly, you will have the chance to move faster and grow exponentially.
So, what do you say? Challenge accepted?