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Collaboration between companies and startups through established models, known as Corporate Venturing (CV), generates mutual benefits such as: innovation, commercial capacity, value generation, stability, scalability, among others. For this reason, every day more companies decide to venture and seek formal ways to generate this collaboration, in the search to accelerate the digital transformation, retain existing customers or attract new ones through differentiating products and services. However, the path is not so easy, so the following 5 points should be considered, before launching a Corporate Venturing initiative.
1. It’s not all about the CEO
To launch a successful collaboration program with startups, senior management should be considered, but it is also important to have a local sponsor , who will allow streamlining processes, open conversations and motivate teams that will benefit in the long term.
Getting on board the middle managers or area heads is essential, they will execute the strategy, that implies finding the balance between the daily work, and the initiatives of the open innovation areas or CV planned for the business units. It is an issue that requires significant cultural preparation and commitment from the heads, who undoubtedly have the focus on the results and the operation of the business.
2. Real knowledge of Core Business
The core of the business is not what the company is good at, instead, it is the reason why you have customers, for example, the core of Disney is the ability to entertain through interesting stories, it has built a empire around this value, with animation and film studios, sports channels, theme parks, television channels and even real estate companies.
In order to see the existing opportunities around the core of the business, it must first be clearly defined, exploring and considering the reasons why customers choose one company over another, or analyzing the Jobs to be done in depth. When the core is well defined and clear to the entire company, it is much easier to find external innovations from startups to strengthen, nurture and expand it.
3. The company does not always know what it wants
The business areas are very clear about what they want: cheaper suppliers, faster workflows, more efficiency and customers. But when a Corporate Venturing area focuses only on solving these problems, it is mortgaging its own future. Startups and technologies allow the business to take the next step, and rarely hide behind the challenges defined by the areas, management or even the company.
Instead of answering “With what solution could the workers be more efficient?”, For example, the question of the CV unit should be “What will the Job to be done of the area be in the future, and how will it be achieved that job faster? ”. This is the difference between a purchasing area and a Corporate Venturing unit. It should not be assumed that everything the company asks for is what it really needs.
4. It is a game of risks and returns, and should be treated as such
Having a CV program is part of the company’s survival and transformational efforts. It is not without risk – what if the solutions are not correct? How to ensure that the program has returns?
When financial investments are made, they are diversified so as not to compromise the entire budget in one effort. You should think about a portfolio logic: keep it healthy and diversified. Successful companies have a mix of Corporate Venturing mechanisms (for example, Challenges, CVC and Venture Building ), some allow exploring the future and others generating short or medium-term returns. The perfect match will depend on the company’s ecosystem, culture, goals, industry, and capabilities.
5. It is a synergistic relationship, not hierarchical
One of the most common mistakes is to think that by making their intentions public, companies will attract thousands of exceptional entrepreneurs eager to collaborate, and will unilaterally choose who they work with. In reality, there are many companies competing for a limited number of exceptional startups.
In addition to a clear and differentiated value proposition for the CV program, it is important to consider a synergistic relationship: the company does not choose the startup ; Good startups also choose companies, they are so focused on their growth and development, that many times participating in a CV program could be of less impact than continuing with their roadmap .
Planning and executing a Corporate Venturing program and defining the mix of collaboration mechanisms is not an easy task; allies such as Wayra , the corporate innovation arm of Telefónica Movistar, can be sought. Every year more companies dare to take the next step, contribute to the enrichment of local and regional ecosystems, and open the door to better possibilities for everyone involved, attracting better and better startups.