How mature businesses can create game-changing new ventures at startup speed.
Conventional wisdom has it that companies grown fat on the profits of a mature business model are incapable of doing something new and surprising.
There is a long list of firms that either no longer exist or are mere shells of themselves because they struggled to respond to emerging threats.
However, another reality has also emerged.
There are plenty of examples of large firms making multiple reinventions within 20 years and flatly contradicting the notion that only startups can lead disruption.
How do they do it? Without being crushed by internal politics, conscious neglect, and all the other manifestations of corporate antibodies that typically kill innovation?
In each case, these mature firms realised that they had a head start compared with entrepreneurs. They have resources and capabilities they could leverage. They have financial muscle, skilled people, production capacity, customers, and a whole host of assets that are beyond those of even a well-funded early stage firm.
But there’s more to it than that.
1. They focus on opportunities not ideas.
Most companies typically run a funding competition among employees to generate ideas. A lot of these ideas go nowhere.
Because ideas are cheap. They are speculative concepts that *could* *might* *maybe* used to make money.
Opportunities are far rarer - and way more valuable. There's evidence that they could lead to a desirable, feasible and viable venture, product, or service. And more importantly, they are aligned with the firm’s strategic ambitions.
Finding them however, is the first piece of the corporate innovation funnel. It starts with identifying an unmet customer need.
Then marrying that need with the art of the possible in terms of the technology or trends available to solve it. Then testing the reality of the solution in the marketplace by making small bets and rigorously selecting the winners along the way.
2. They test their assumptions.
VCs can afford high failure rates because just one or two successes can return their funds.
Mature businesses need much higher success rates, which come with customer-driven, repeatable and scalable methodology for venture creation.
Going from idea to value is never a straight line – it’s squiggly. By implementing methodology and metrics from the start, large companies can kill off their assumptions early.
Assumptions about: Who their customers are. What the customer relationship might look like. How they might reach those customers. What their value proposition is. Which key resources they’ll need to leverage. What key activities they’ll need to undertake. Which key partners they might need to work with. How much their idea will cost. And how many customers there are, and what they might pay.
To avoid the high cost of failure of taking untested ventures to market.
3. Executive decision makers own their responsibility to incubate growth.
A new venture business unit lives with high uncertainty - testing and learning its way to a successful model.
C-suite executives play a critical role in incubating growth - making go/no go decisions; providing funding to launch and accelerate the new venture; providing access to customer, channels and markets; providing access to the Mothership's core competencies, assets, expertise, or capabilities and removing frictions that may prevent it from reaching escape velocity.
Often internal startups fail because senior managers simply try to run them like they run their core and legacy businesses. Not as the germ of something that may one day become a major source of company revenue.
Build your own Growth Engine
In a survey by McKinsey, 84% of CEOs believe innovation is critical to growth but just 6% are satisfied with their innovation performance.
Capitalising on opportunities is probably the biggest focus for you today, and also your biggest challenge.
But here's the truth:
- You can succeed against clever new startups and beat them at their own game.
- You can disrupt from within and build your own incubator and accelerator, your own Growth Engine.
- You have advantages that startups can never hope to match -- ideas, talent, capital, brand, technology, channels and best of all, you have customers.
You need a learnable, repeatable, scalable methodology for disrupting from the inside out - helping you create, build and launch a pipeline and portfolio of new ventures to drive meaningful growth.
And Studio Jigsaw can help.
A new venture builder for mature businesses looking to 10x their innovation pipeline, success rate and time to market.
If you'd like a demo of our approach, drop a 'yes'.