On Venturing MGT 709 New Venture Creation

Agenda  Adams  Readings  Fortis  IMTrader

Adams On Corporate Venturing  How can mature companies act like a startup?  Make sure everybody is creating value  Reward great people, give them a voice  Get back to market validation  Every presentation around customer pain  Communicate a common vision  Don’t waste resources on internal competition  Align new products with the sales model  Harness entrepreneurial energy  Reward great ideas, give people autonomy, establish safe havens

Adams ctd.  How can mature companies act like a startup?  Make decisions and act fast – speed wins  Cut the bureaucracy, take risks  50% of time in meetings  Listen to customers or lead people  Stick to your core competency  work with people who will get the job done  Create smaller, dynamic units  16 person teams in military, minimal org overhead  Keep R&D alive

Ambidextrous Organizations

Future of Corporate Venturing  Ecosystem venturing  Supports and encourages a network of customers and suppliers  Value of benefits for existing businesses divided by invested capital – don’t lose focus  Innovation venturing  Spend a proportion of an existing functional budget in a ‘venturing’ way (e.g. R&D)  Focus on commercializing new technologies for existing business  Make sure it stays under a functional head rather than become a general ‘innovation fund’

Future of Corporate Venturing  Harvest Venturing  Convert existing corporate resources into commercial ventures and then into cash  Must not be needed by current or future org  Danger of becoming a ‘new growth’ unit rather than focusing on existing resources  Private Equity Venturing  Setting up a VC operation  Need privileged access to deals in early stage of lifecycle and some value-added for new firms  Danger of being bringing nothing special to the table but thinking you do (hubris)

Why ‘new legs’ venturing fails  Focus on low probability projects  Little attention or commitment from core  Not given enough time or funds (due to competition with core business)  It’s a tough business  Even VC firms earn below cost of capital on average

IMTrader  Composition  Half the class role-play ECI  Half the class role-play IMTrader  Task – negotiate an agreement  Develop a valuation of the company based on the financial exhibits and use the result to develop a position on the first six issues in Exhibit 2  At any time, attempt to negotiate an agreement on the six issues with the other side

Fortis  Is the time right to move from the HR department to Corporate Strategy?  How should the performance of the venturing team be measured?  Should the venturing team shift from a process orientation to a results-oriented style (like VC firms)?