Building Corporate Sustainability Ventures

Building corporate ventures with a positive impact mission is challenging.

The sustainability transformation is inevitable and rewarding from different angles. Previous research shows that 81% of a globally representative selection of sustainability-driven companies outperformed their counterparts in 2020, despite a market downturn. The large majority of corporates however still mainly focus on CSR and business-as-usual innovation, rather than developing new products and services that can positively impact the planet and people.

This is likely caused by them not having the right approach, mindset or tools to make that shift.

During our recent Innov8rs Learning Lab on Venture Building & Scaling, Sebastian Mueller (Founding Partner at MING Labs) shared six key lessons about building corporate sustainability ventures.

How To Build A Corporate Sustainability Venture?

Almost all large corporations are working toward zero CO2 emissions. As such, they primarily focus on ESG criteria in an attempt to reduce the damage they’re causing and be bottom-line neutral. However, sustainability is more than CO2 emissions alone.

Today, corporates are being asked to shift their focus from "reducing damage" to "creating a positive impact", which equals having an active, positive impact on the planet, people, and profit simultaneously. Easier said than done? The following six key lessons can help you build corporate ventures that have an impact in the sustainability space.

1. Synergize Your North Star With The Corporate

Whenever we talk about the sustainability impact of ventures, there’s a solid element of purpose. And this purpose – the North Star, or the mission – is often rooted in a problem the venture builders feel strongly about. It helps them face the everyday adversity they may encounter and even attract the right people and collaborators.

In a corporate context, the more the venture’s North Star is aligned and overlaps with the corporate’s vision and purpose, the easier it will be to protect the venture itself and secure buy-in and support. And so, to align your North Star with the corporate, consider to:

• Conduct visioning sessions with leadership
• Identify aspects of the corporate purpose and vision you can adopt for your venture and frame your North Star accordingly. The Ikigai concept can help you in this sense. The Japanese word “ikigai” means “life purpose” or “reason for being” and refers to defining the personal meaning of life in relation to talents, passions, profession, and more. In a corporate venture-building context all of this translates into how the venture’s purpose takes into account:
  • What the company is uniquely good at (the corporate should have some exposure to what you’re dealing with for them to find the endeavor meaningful);
  • What the people at the company are passionate about;
  • How the venture can create economic value;
  • What the world needs.
• Story tell your purpose and vision as the “Why” of your venture early on and repeatedly. According to Sebastian, corporate venture builders can use the United Nations SDGs (or Sustainable Development Goals) to provide a good framework in this sense. For instance, you could start looking at your corporate to identify its impact on some of the 17 areas the SDGs highlight. Thus, take those specific SDGs into account to set up ventures. This will help you create a strong North Star that synergizes with what the corporate cares about sustainability-wise.

2. Have A Theory Of Change That Leverages Corporate Assets

Sustainability ventures are meant to tackle complex subject matters, systemic in nature. As a result, they may need to develop a Theory of Change to address the system as a whole rather than just one component. A Theory of Change is a comprehensive description of how and why a desired change is expected to happen, a clear articulation of how inputs and activities translate to outputs, outcomes, and impact that changes the problem you’re trying to address.

“If you want to change the system and find a new equilibrium, you must understand the system first”.

Yet it can take decades to fully implement the set-out change. Thankfully, corporate ventures can supercharge this process by leveraging their corporate assets to gain an impact advantage. “You can have 10x more impact than a venture in the wild if you learn how to leverage the corporate assets in your Theory of Change”, says Sebastian. But how do you go from inputs to impact? And where does that unfair corporate advantage come in?

To answer these questions and develop a Theory of Change that leverages your corporate assets, consider to:

• Look at corporate assets from a viability and impact lens to find amplification.
• Map out which part of the system you are addressing is in any way in touch with the corporate already.
• Identify influence points within the corporation that could support the change you want to affect.

Once you find what matters to the corporate and the leaders, they will protect the venture and give you the resources you need.

3. Find And Shape Asymmetric Impact Opportunities

The type of impact you want to create and how you amplify it is critical. Every venture will have positive and negative impacts- nothing is 100% positive. The important thing is to be mindful of the positive and negative impacts and ensure that the former scales very fast as the business grows while the latter does not. Analyzing your original idea is crucial to evaluating and measuring its impact, and amplifying the “good” ideally to a point where it becomes regenerative.

“Great impact ventures find a way to limit the negative impact they can have while leaving the positive impact uncapped, creating an asymmetric impact model”.

And so, to shape asymmetric opportunities for your impact, consider to:

• After identifying your solution and business model, iterate to amplify the positive and limit the negative impact.
• Iteratively apply different frameworks of circular design and related disciplines to get new ideas.

4. Define And Align Your Business Boundaries

Impact-driven ventures are launched to address specific sets of problems. By definition, there are floors and ceilings for various aspects of their operation. There’s a limit to how much you can scale a particular solution.

"Nothing should be strategized to keep growing forever. Every product or service should have a clear vision for itself”.

Boundaries help determine what is healthy and what is not., and set the right expectations. They must be established early on and communicated to the corporate. And it's important that ventures do not overshoot them to stay on track with their mission.

And so, to define and align your business boundaries, consider to:

• Challenge the various aspects of your business model canvas to establish clear boundaries for the business.
• While remaining on a mission, define minimum and maximum states for various input and output factors.
• Communicate and workshop those boundaries with your team and the corporate to foster alignment.

5. Design A Sustainable Organization

Sustainability is about the overall impact you want to create. Therefore, sustainability is more than just creating a new product or service. Instead, it's also about ensuring the corporate is designed as a sustainable system to keep the negative impact manageable when expanding your mission. Otherwise, you might scale good intentions into bad results and negative effects.

"If you want to build a sustainability-oriented venture, you also need to ensure that the organizational structures and everything the corporate does is sustainable".

When every corporate decision is made with sustainability in mind, the venture’s mission is reinforced and stays relevant as it scales. The sustainable business model canvas is one of the tools you can use to ensure that all parts of your business are thought of from a sustainability angle. By reframing and adapting some of the standard questions, this tool can help define what to keep and what to replace.

And so, to design a sustainable organization, consider to:

• Design your operating procedures to minimize, for example, energy and material usage. Also, source what it’s used sustainably.
• Set metrics to measure your corporate’s footprint and regularly review them.
• Forecast and measure how your footprint will scale as you grow, and design a sub-linear scaling model.

6. Measure Your Impact Obsessively

All we have discussed so far goes hand in hand with obsessively measuring the impact across the new venture’s lifecycle as part of the regular business checkup.

“Only what gets measured gets managed. Measuring your impact should be part of your business checkup, just like measuring your customer loyalty and sales”.

Today, the sustainability space is overrun with founders claiming to create a positive impact. At the same time, there’s little evidence beyond their ambition. Especially corporate ventures will be challenged and scrutinized regarding their authenticity in this space. There’s no standard way to measure sustainability across different types of projects. "Every case is unique," – says Sebastian – "you always have to establish how to measure sustainability from scratch. Doing a custom analysis and even involving an outside expert can help you in this". Hence, consider to:

• Turn your Theory of Change into a clear KPI system that you can work with to measure your impact over time.
• Treat that KPI system as your compass and review/course-correct regularly to increase your impact.
• Make impact KPIs part of your board reporting to the corporate to ensure they are treated with high priority. Being transparent is extremely important, both internally and externally.