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Last week we were joined by Rob Kerner, interim CEO/COO for tech scale-ups and consultant for Corporate Venture Building for our latest Leaders Talk webinar. He shared his practical insights on CVB, drawing from his extensive experience working with companies pursuing this strategy.
What is Corporate Venture Building (CVB)?
Corporate Venture Building (CVB) is a strategic approach employed by established companies to foster innovation and drive growth by creating new ventures within their organisation. It involves the process of developing and launching new businesses or startups from scratch, leveraging the resources, expertise, and market presence of the parent company.
Throughout the webinar Rob talked through valuable takeaways ideal if you’re leading a company pursuing CVB or are part of a corporate venture yourself.
Leaders Talk is our Leadership webinar series where we invite thought leaders and business leaders as our contribution to creating knowledge, learning and thought leadership, by discussing new technologies and ways of leading.
Who is Rob Kerner?
Rob has had three careers in his life and it has been in the last few years that he has seen them all coming together. In his younger years he was an F14 fighter pilot in the US Navy. However, as this came to an end, he realised he didn’t want to stay in the Navy or move into the aviation industry. Instead he started to pursue a career in corporate roles, mainly in finance, operations, strategy and innovation for companies including HP, RBS and John Deere in San Diego. Interspersed with these corporate roles, he has worked with start-ups and scale-up businesses as CEO, in business development, finance or marketing roles.
He has found that working with the start-up community allows him to help them understand the corporate world and working with the corporate world allows him to help them understand how to grow ideas and work with start-ups.
What is the Role of CVB in the Corporate World?
CVB in the corporate world involves taking internal ideas and understanding that they won’t progress if you try and push them through the internal systems of large organisations. This is because most big organisations are not set up for risk as the appetite for it is low. This is understandable due to the constraints placed on businesses that are listed on the stock exchange. They can’t just make changes that are incompatible with their core business.
This is where large corporates need the energy and pace that entrepreneurs who are used to bending rules, moving fast and, most importantly, failing fast, have. These two sides often talk different languages.
So, with CVB, you take whatever the idea is that you want to develop out of the business and let it grow. It is important, with this process, to take a few people from the inside with it. These should be a combination of the ‘intrapreneurs’, who are frustrated they can’t get ideas going, as well as those who understand how the business works, who to talk to get financing and how to open the right doors within the organisation.
Pair these up with external experts from the start-up world and start growing the idea alongside the existing business. This will allow you to go much faster in developing whatever the idea is. With any innovation the key thing is how fast you can test the idea. The last thing you want it for the idea to be sitting on a shelf not going anywhere. But you also don’t want it to sit within the main organisation and spend two years of corporate time investing in something that is not going to go anywhere.
With CVB you get to incubate an idea, at pace, outside of the organisation to see whether it will take one of these three paths:
- If it is growing and the company wants to keep it – it will be brought back internally to the business.
- If it is never going to go anywhere – it will be stopped.
- If it is successful but the company doesn’t want to keep it – it will be licensed or sold.
There will always be a natural path for any idea and an end point.
What are the Benefits of Being Part of a CVB?
As previously stated, you will always need some people from the inside of an organisation to work with external experts. These external entrepreneurs bring a fresh new perspective as they are wired differently and think differently. What you will tend to find is that the internal people love being involved in CVB as it gives them the time to think differently and see a live environment of how the entrepreneurial world works. They will often come back into the organisation with new ways of viewing things. On the flipside, entrepreneurs also see how the corporate world works and gain a greater understanding and mutual respect for it.
Who is the Ideal Internal Person for CVB?
Ideally it should be the frustrated ‘intrapreneur’ who has a corporate role but is always looking at new ideas, technologies and someone who wants to do something differently. If you don’t nurture these people you are always in danger of losing them as often they leave to start a new business. These are the people who know where the holes are in the corporate world. Often they leave to create solutions to these problems.
This is where CVB can play a crucial retention role as you can give them an external CVB project to develop to satisfy their entrepreneurial leanings in a safe way that keeps them connected to the company, offers them further training and career progression.
When they come back into the business they are often changed, with new innovative ideas that can then infiltrate through the company. The real-life experience they have gained means they have a greater appreciation of the pace at which you can work, the clarity of new ways of thinking and the new tools that can be used.
What About Leaders Who Don’t Want to be Part of CVB?
There is a danger you will alienate them as they haven’t been part of developing an innovative idea. But, if they are resistant to being involved, this shines a light on whether they need to change. All companies need more innovative leaders and the challenge will always be how to develop them. If these people want to stay static, a company should focus on how to make them become more innovative, which could ultimately lead to them being part of subsequent CVBs.
Is Governance Important with CVB?
There should always be a governance model applied to any CVB although it is important to realise the bulk of work is running outside. However, a company should always evaluate any risk as there should still be a level of scrutiny to make sure laws aren’t broken in the development of any idea.
Disadvantages of CVB for Organisations and Leaders
Internal Tensions – there is a risk that others within a company will feel someone involved in a CVB has been given a shortcut to developing an idea. This can be frustrating and create tensions with those still developing more standard projects within an organisation.
Cost – CVBs cost money as a company will be paying external people to be involved within the project and questions could be asked as to whether a company already has internal people who could do this development. With this objection it is always important to scrutinise whether they are the right people to do the job.
Brand Risk – the risk that comes back from a brand perspective needs to be looked at as, even though the project will be external, people will know that a corporate is behind it.
Lack of Understanding – with any CVB there is a risk the external entrepreneur doesn’t understand how a major organisation works with its structure and governance.
When CVB Comes Back into the Company
When an idea that has been developed through CVB comes back into a company it is vitally important the development doesn’t start over again. The worse things that can happen is for the idea to go backwards, get reinvented, watered down or forgotten about.