Corporate Venture Building (CVB) is one of the tools for strategy execution. It aims at creating growth relays or counter-attackin in a "disruption" context.
The lever consists of a company creating its "own" startups, around its core business (neither too close nor too far away); once un-risked, the startup can either be integrated into an existing entity of the corporate or become its own entity within the coporate.
The adoption of CVBs has been growing rapidly in recent years. This could be an indicator of a growing awareness among managers of the digitalisation challenges (in terms of opportunities and threats).
CONTEXT
Agile innovation: from "why" to "how
Until recently, the traditional innovation toolbox (R&D, M&A, collaboration with startups, etc.) was sufficient to ensure the sustainability and development of companies.
But they are now being attacked from the wings, which means that new growth engines must be considered ("Engine 2", Bain & Co).
Sector boundaries are becoming blurred (Google is present in advertising, media, payments and soon in healthcare; Amazon is entering the Netflix game....).
Value propositions are increasingly challenged (neobanks are capturing the customer relationship "simply" with a better user experience).
... and sometimes completely reinvented (e.g. Uber vs G7 Taxi; office real estate vs WeWork; Accor vs ABnB; Sncf vs Blablacar).
Value chains are easier to penetrate (e.g. SeLoger in real estate).
New business models are emerging in all sectors (e.g. "it's free", where user data is the product sold to companies).
These developments are due both to new customer experience requirements and to the rise of agile entrepreneurial innovation symbolised by startups (although only 0.1% actually become Tit@ns).
The tremendous growth of the latter has been made possible by the lowering of barriers to entry for innovation: the democratisation of IT (cloud, nocode, etc.) and market access (social networks, seo, etc.) have thus generated a myriad of micro-Davids dreaming of taking a slice of Goliath's cake.
Against this backdrop of the sustained pace of agile innovation and its impact, the question facing companies has shifted from "Why should we do it?" to "How can we get (better) results?"
CHALLENGE
Yes, "digital is eating into the world",
but "culture eats digital"
Large companies operate globally, manage thousands of people, serve millions of customers (or other businesses) and have a duty to provide safe offerings (e.g. in the food industry).
To drive their business or deploy incremental innovations, their operating model is a strength: long term plan, rigorous processes, coordination teams, Taylorisation of tasks, profitability management, risk management...
But agility is not the ideal fiancée for an established company.
When it comes to thinking outside the box, iterating quickly (test, fail, learn, retest) or launching "we've never done it this way" business models .... this operational model is a weakness.
So, after trying several approaches with "variable" results, managers realised that they needed to complement their "core business" operational model with a model dedicated to the development of agile and innovative value propositions.
This is how Corporate Venture Building was born.