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In-Company Ventures Managing Radical Innovation through Internal Ventures |
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By Vadim Kotelnikov, Founder, Ten3 BUSINESS e-COACH – Innovation Unlimited, 1000ventures.com
"Victory comes from having a capable commander and the government leaving him alone" – Sun Tzu
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Why In-Company Ventures? By 2000, in-company ventures, or internal start-ups, a new form of creating and financing a high-tech company has become more popular. The growing need for radical innovation and diversification, both related and unrelated, added another dimension of complexity to managing a large firm. This complexity is managed through the creation of "virtual" small companies within the large company. Corporate management focuses on the performance of these in-company ventures as wholes, while business unit management tends to everyday matters.3 New ventures established as independent companies, or spinouts, can more readily fulfill their potential. In this case, the entrepreneurs do not have to argue with superiors or put up with interference. In contrast, the in-company venture enjoys the benefits of the company's greater resources, brand name and corporate image. Getting autonomy for a new in-company venture may help it operate more like an independent. But, Drucker warns, established business is also "the main obstacle to entrepreneurship". How To Break Down Barriers To Communication New Upper Management Approaches to Support In-Company Ventures Many organizations, willing to exploit the benefits of new product/service development as internal ventures, will need to change their mindset, redefine their concept of organization and loose controls in order to expand their capacity for speed. Mastering of the new business systems approach to managing projects aimed at development of innovative products and services will help corporations to move with speed to capitalize on emerging technology and market opportunities. Corporations should broaden their tolerance to mistakes and encourage entrepreneurial approaches not only verbally, but by creating conditions by which you can be an entrepreneur. Top management should be ready to face the fundamental conflict between the mainstream organization and the radical innovation team, and manage the relationships between them. If the new business is significantly different from the parent company, you may need to break cultural ties that could get in the way. Top management should also create an upside opportunity for people in order to retain key staffers who may wish to leave the corporation and form a startup on their own. Using vehicles as phantom stock and stock appreciation rights (SAR), in-company ventures can provide the feel and reward of a startup. Success Case Corning
As a result of this Corning business building strategy, in 1998, 57% of the company's sales were from products less than five years old; in 2000, that portion had grown to 84% of sales... More Project Leadership Having a sound research, development, and innovation process is not enough. It's leadership that makes the process work. The key is to select project leaders on the basis of their cross-functional understanding of technology, marketing, and manufacturing, as well as their leadership skills and judgment. Organizations should also provide an enabling environment to empower the project leaders to act as a CEO and thus to contribute their best to the corporate strategy. Entrepreneurial approach to project management that understands the dynamics of the marketplace and competition may require radical change in the project success measurement and control systems of most organizations. Business-oriented controls should focus on market performance, timing and investing for higher return rather than on meeting fixed specifications and constraints. They must resist the temptation to use operating-plan logic to manage new ventures.
Radical Project Management (RPM)... Fuzzy Front End... Specific Skills of Radical Project Managers... Strategic Intent... Launching a Crusade... Corporate Vision and Core Technological Competence... Disciplined Approach to Managing Innovation... Five Steps to Turning an Idea into a Successful New Product... Employee Motivation... Developing Technological Strategy together with Suppliers and Customers... Developing and Managing Project Portfolio... Involving Cross-Functional Teams...
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Bibliography:
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"High-tech Start Up", John L. Nesheim
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"Venture Catalyst", Donald L. Laurie
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"The Centerless Corporation", Bruce A.Pasternack and Albert. J. Viscio
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"Radical Innovation", Harvard Business School
