Extracting Value from Corporate Venturing

A study of Nokia’s venturing program revealed eight important lessons that can help companies benefit from their investments in new ventures.

Reading Time: 26 min 


Permissions and PDF

Executives wax and wane in their enthusiasm for launching new ventures outside an organization’s core business. In their more enthusiastic moments, leaders often see corporate venturing initiatives as sources of organic growth and vitally important engines of renewal. However, in their more disenchanted periods executives may see new ventures as high-risk, foolhardy distractions from effectively running the core business. What’s more, such pessimism isn’t wrong. Corporate ventures are risky and they usually do not produce hoped-for results.1

Executives thus face a dilemma. Creating vital innovation and organic growth generally requires investing in new ventures. The venturing process, however, is unpredictable and failure-prone. Is it possible to invest sensibly in corporate ventures, despite their risky nature? And how do new ventures contribute to the overall renewal of organizations? These questions stimulated us to consider how managers can extract value from venturing while recognizing its risky nature. To research these questions, we launched an in-depth investigation of the venturing process at Nokia Corp. of Finland, the world’s leading mobile phone supplier and a company respected for its innovative capabilities. (See “About the Research.”) Our research yielded eight key lessons relevant to executives grappling with the challenge of corporate venturing. One overarching conclusion of our research is that to extract value from the ambiguous and uncertain world of venturing, companies need to apply different management practices than they use in their mainstream businesses.

About the Research »

The New Ventures Division at Nokia

Nokia is familiar to many business readers worldwide for its well-known brand and its leadership in the telecommunications industry.



1. R. Farson and R. Keyes, “The Failure Tolerant Leader,” Harvard Business Review 80 (August 2002): 64–71; R.G. McGrath, “Falling Forward: Real Options Reasoning and Entrepreneurial Failure,” Academy of Management Review 24, no. 1 (1999): 13–30; and N.F. Matta and R.N. Ashkenas, “Why Good Projects Fail Anyway,” Harvard Business Review 81 (September 2003): 109–114.

2. T. Tukiainen, “The Unexpected Benefits of Internal Corporate Ventures: An Empirical Examination of the Consequences of Investment in Corporate Ventures” (D. Sc. Tech., doctoral dissertation, Helsinki University of Technology, Department of Industrial Engineering and Management, 2004), http://lib.tkkfi/Diss/2004/isbn9512271222/isbn9512271222.pdf.

3. V. Govindarajan and C. Trimble, “Building Breakthrough Businesses within Established Organizations,” Harvard Business Review 83 (May 2005): 58–68.

4. B.M. Staw and J. Ross, “Knowing When to Pull the Plug,” Harvard Business Review 65 (March–April 1987): 68–74.

5. S. Nunes, “IBM Research: Ultimate Source for New Businesses,” Research Technology Management 47, no. 2 (2004): 20.

6. R.D. Hof, “Building an Idea Factory,” Business Week, Oct. 11, 2004, 198.

7. F.W. Taylor, “The Principles of Scientific Management” (New York: Harper & Brothers, 1911).

8. R.G. McGrath and I.C. MacMillan, “The Entrepreneurial Mindset: Strategies for Continuously Creating Opportunity in an Age of Uncertainty” (Boston: Harvard Business School Press, 2000).

9. C.A. O’Reilly and M.L. Tushman, “The Ambidextrous Organization,” Harvard Business Review 82 (April 2004): 74.

10. Z. Block and I.C. MacMillan, “Corporate Venturing: Creating New Businesses within the Firm” (Boston: Harvard Business School Press, 1993).

11. Y.J. Sohn, “Samsung’s Myth of Invincibility Crashes,” Business Korea 16, no. 8 (1999): 20–24; and “South Korea (Lex column),” Financial Times, July 1, 1999, p. 26.

12. Z. Block and I.C. MacMillan, “Milestones for Successful Venture Planning,” Harvard Business Review 63 (September–October 1985): 84–90; and R.G. McGrath and I.C. MacMillan, “Discovery Driven Planning” Harvard Business Review 73 (July–August 1995): 44–54.

13. J. Ross and B.M. Staw, “Expo 86: An Escalation Prototype,” Administrative Science Quarterly 31, no. 2 (1986): 274–297.

14. C.F. Camerer and D. Lovallo, “Overconfidence and Excess Entry: An Experimental Approach,” American Economic Review 89, no.1 (1999): 306–319.

Reprint #:


More Like This

Add a comment

You must to post a comment.

First time here? Sign up for a free account: Comment on articles and get access to many more articles.