Okay, so you’re convinced that Corporate Venture Building (CVB) could be a game-changer for your company. But the hard truth is, many corporate-backed ventures fail. It’s not as simple as throwing money at a problem and expecting startup magic to happen. Success takes a careful strategy to navigate some predictable challenges.
Pitfall #1: Culture Clash
Let’s be real – most big companies aren’t exactly hotbeds of entrepreneurial risk-taking. Processes, bureaucracy, fear of failure – this can suffocate a startup venture before it ever gets off the ground. The solution? Carve out a space, whether physical or organizational, where your CVB team can operate with autonomy. This means different reporting lines, decision-making speed, and a tolerance for the kind of trial-and-error that might make your core business folks squirm.
Pitfall #2: The Talent Gap
You need people who understand the agility and scrappiness of startups, but who can also navigate the complexities of a large corporation. Finding this hybrid breed is hard. Don’t make the mistake of just re-assigning internal folks who don’t truly get the venture mindset. Instead, build a team that blends experienced entrepreneurs, external hires with fresh perspectives, and a few key players from within your company who can bridge the divide.
Pitfall #3: Misaligned Incentives
If your venture team is judged on the same metrics as your core business units – slow, steady growth, predictable quarterly targets – you’re setting them up for failure. CVB requires a whole different set of KPIs focused on experimentation, customer learning, and the potential for exponential, not linear, returns. Get buy-in from top leadership to adjust expectations and reward your venture builders for operating differently.
Case Study: When Structure is Key
I’ve advised companies where their CVB arm was essentially in the wilderness – no clear reporting lines, no alignment with overall strategy…it’s a recipe for wasted resources. In contrast, take xLab Digital. They’ve implemented a “stage-gate” process where ventures must present proof-of-concept at increasingly demanding milestones, while being supported with the right mentorship and resources to succeed. This balance of freedom and accountability is paying off.
The Takeaway
Don’t let these challenges discourage you. With intentional planning, you can create an environment where CVB thrives within your company. Think about where you might have friction in these key areas and start proactively addressing them now.
Up Next: So, you’ve built a solid CVB foundation. Now, how do you future-proof your company by leveraging venture building? We’ll explore that in Part 3 of this series.
