How To Successfully Scale Corporate Ventures

Building Ventures - A Tried and Tested Method

In the past three decades, organizations have come up with a solid methodology for building businesses. There is a standardized roadmap made up of different phases and goals, with specific tools and processes to follow at each stage.

• In the ideation phase, venture builders identify a target market, map out the pain points of potential customers, and come up with possible solutions. When coming up with a value proposition at this stage it’s important they find something that’s a good strategic fit with their corporate partner.
• In the validation phase, they create their business model, building a testable prototype or Minimum Billable Product (MBP) that the customer would be willing to pay for, and putting together their investment case.
• In the incubation or startup phase, the new company launches their product and begins to acquire paying customers.

As Kilian Veer notes, most of the elements here are repeatable across different venture building activities and different markets. It’s hard work, but once venture builders have established a good way of working with their corporate partner or organization, they can rely on the methodology to guide them effectively through these different phases.

After the launch of the company, however, things start to become more difficult.

At this stage, when the product has been released to customers, venture builders need a much more bespoke approach that maps on to their specific circumstances.

As a result, there aren’t many methodologies leaders can follow to guide them through growing and scaling their business. When we also consider that the people running these ventures are typically former corporate managers with no experience as entrepreneurs, it’s a difficult challenge to navigate.

Reaching True Product-Market-Fit

Given these difficulties, how should ventures approach the scaling process?

For Kilian, companies should only start to focus on scaling once they’ve achieved a product-market-fit. This means they’ve identified what the product is, the value it offers, and its USP, and aligned this with the target market and their plan for selling the product.

Unfortunately, it’s quite common to focus too much on the product here - concentrating on adding extra features customers have asked for and not enough on the market.

It’s therefore really important to really dig into commercial factors, identifying, testing and analyzing all potential sales channels for the product to find the right ways of reaching customers.

Companies also must bear in mind that the product-market-fit is not a steady state. Even if an organization creates a brilliant product, which is really well-positioned in the market, they can’t rest on their laurels. As markets change, customers ask for new things, and the challenges faced by the organization evolve, the product-market-fit shifts. They therefore need to make sure they’re constantly analyzing the market and investing in developing their product.

Scaling, Not Failing

Once product-market-fit has been reached, the company can begin to scale. The aim here is to unlock efficiencies, and it requires a real mindset shift from how things were done before.

For example, the company should move from testing everything and “failing fast” in order to learn quickly, to instead not wanting to repeat its failures. It should look to standardize and automate the things that have worked well, to secure more significant gains. It should also hire specialist team members, with specific experience in relevant market and business areas, to take the company forward.

This last point is likely to significantly change the feel of the business. Difficult decisions will need to be made, as the company becomes more professional and the generalists with broad skill sets who were invaluable during the venture building phase may no longer add value.

The company will also need to invest in developing its systems and processes, such as onboarding, finance and HR, and put management hierarchies in place. As a result, the makeup of the business will likely change from more of a startup, family feel to more of a traditional company.

Assessing Scaling Readiness

Once they’ve got the right mindset, companies can determine their readiness to scale, by analyzing the status of their different business areas through a scaling readiness assessment.

“In a scaling readiness study, you ask yourself questions about certain business areas,” says Kilian. “This could be sales, it could be marketing, or it could be way more specific. For example, you might find out that you're generally good at sales, but your pricing isn't right, so you need to work on developing a standardized pricing strategy.”

“The results of the scaling readiness study will enable you to prioritize the areas that you need to work on. Prioritization is key, because trust me, I have not seen a single venture out there that only needed to work on one or two of these dimensions,” he adds.

Getting Started With Implementation

When all the areas of the company are ready to scale, it’s time for implementation. Kilian recommends a few key activities here:

• Find someone with the relevant skills and experience to scale the company, whether it’s a consultancy or an internal team member
• Set up a project management office (often led by a Chief of Staff or Entrepreneur in Residence) to run strategic projects and ensure the scaling process stays on track
• Revisit the vision, mission, strategy and business model to ensure it’s relevant for the company as it scales
• Ensure sales and marketing are aligned
• Adjust product development and production to meet additional demand

To prioritize the tasks and focus areas involved in implementation, Kilian suggests looking at their urgency: what has an influence on revenue, what has an influence on profit, and what will improve the organization and make the daily lives of the team easier.

This needs revisiting on a regular basis - perhaps every half a year - as the company evolves. This will undoubtedly result in a change of approach from the building phase.

Using software as an example, the building phase is all about building a product that fits customer needs. This means constantly developing new features, testing and integrating them into the product. But when scaling, this is no longer the only - and probably not even the most important - priority for the team.

“In the scaling phase, the focus is all on selling the software”, Kilian says. “Assuming this goes well, thousands of customers will then be using the software, which needs maintenance, and must be kept running 99.99% of the time. But what happens if the software itself is just not developed enough for that yet? You have to sort this out, because otherwise you cannot scale no matter how much you sell. If you can't deliver on your sales, you're screwed. Every venture that enters the scaling phase needs to look at what the business areas are they need to address during scaling.”

A Repeatable Methodology For Scaling Ventures

It’s these kinds of tasks, as well as the scaling readiness assessment, that can be standardized in the scaling process, enabling organizations to follow a kind of methodology as they transition from building to scaling their venture.

Killian also emphasizes that ventures really do need their own approach to scaling, and can’t rely too much on guidance from their corporate partners.

“Usually, the answer from corporates is, don't worry, we'll help you out,” he says.

“But I'll be honest here, that's bullshit. I've worked on the corporate side for a while, and I can tell you, it doesn't work. That's not a surprise, because using corporate approaches to scale a startup would be like using a sledgehammer to drive a nail into a wall. There's a thin chance you might actually put the nail into the wall, but there's a much greater chance you’ll take down the entire wall instead. And this is usually what happens.

Corporate processes are still, even in the scaling phase, way too overwhelming for the startup to use.”