Dring the height of the dot-com boom, many large firms turned to corporate venturing as a way of promoting innovation, creating a window on new technologies, retaining entrepreneurially minded employees and spurring growth. Taking their cue from the venture capital industry, firms as different as Nokia, Cargill, Roche and Marks & Spencer created “venturing units” and charged them with the job of investing in a portfolio of new ventures.1
Now, four years later, corporate venture investment levels have fallen by 75%. Many venturing units including those of Diageo, Marks & Spencer and Ericsson have closed down, and others are struggling to justify their continued existence. Only a relatively small number, including those of Intel, Johnson & Johnson and Nokia, are continuing undeterred with a good track record and proven business models.
What went wrong? Our research indicates that the biggest mistake companies made was setting up venturing units with mixed objectives and mixed-up business models.2 However, companies that pursued a single objective with an appropriately designed venturing model — and avoided the strategy’s common pitfalls — were more successful.
Our analysis of nearly 100 venturing units (see “About the Research,” p. 32) identified five main objectives that drive the decision to set up a venturing unit. Although one common objective — the creation of substantial new businesses and... To read the complete article, login or sign-up using the form below.
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