The Value of Company Building

The concept of company building has grown and evolved over the past few years. Four or five years ago we saw the structure of venture building becoming a mainstream idea, and it has since grown into a massive and highly influential industry in its own right.

It is the nature of innovation that there is no right/wrong or black/white approach to company building, but there is an underlying structure and an overarching focus on capital.

In fact, there are companies that are created with the express purpose of developing innovative ideas and bringing those ideas to fruition, so that they are ready for venture capital investment. Once they have reached the investment phase, these companies generally exit the process and give it over to the standard investment cycle.

While this is a useful means of approaching new startups and individual businesses, corporate investment in ventures are different. Due to the fundamental organization of corporations, they require a more strategic and structured approach to innovation.

Objectives of Corporate Investment

Corporate investment has two primary objectives, strategic and financial. Taken separately, they can stifle innovation and growth; however, with a healthy balance, you can use both strategic and financial focus to contribute to company building.

Strategic Objective

The parts of the organization with a primarily strategic focus include the innovators and explorers who take into account both internal and external opportunities for growth and change.

Financial Objective

The primarily financial parts of the organization will focus on ways to exploit new ideas internally and commercialize them externally for profit. This is also the aspect of an organization that will focus on financial investment in new ideas and concepts.

Balanced Objectives

Directly between your primarily strategic and primarily financial objectives, you have a balanced approach that incorporates both perspectives. At this junction, you have internal educators, company builders, and strategic investors.

With a well-balanced set of objectives that incorporates both strategic and financial focus, you have sufficient structure and adequate financing to achieve your innovation goals.

Why Companies Are Struggling With Innovation

As technology continues to advance and more businesses than ever are entering the market, established industry leaders are struggling to find ways to innovate. Manfred identifies three specific reasons that companies are struggling with innovative transformation:

Value Chains are Changing

Due to growing technology and increased market transparency, it has never been easier for a new business to enter the market. People are stepping into industries and creating new platforms at high speed. These game changers are taking market shares from already established industry leaders that do not have the ability to make changes to compete with new players.

Nobody Can Do it Alone

Although it may be tempting for companies to try to create new business using their own knowledge and resources, it is unlikely that your highly efficient organization with an established core business has the knowledge and skills necessary to successfully innovate and expand. There are many organizations out there to help small businesses and startups with financing and advice.

In fact, startups can often get funding from multiple sources, so they don't have to focus on only one source of financing. Corporate investment, on the other hand, faces more challenges due to the financial structure of the existing organization. For this reason, it can be more beneficial for corporations to view their ideas as an entirely new business, rather than a separate startup under the corporate umbrella.

New Business, Not Startups

Organizations and corporations with established structures and efficient business models tend to work from the perspective of the core business. Instead of focusing on ways to use innovative ideas to expand your current business, reframe the discussion. You are building new business, not expanding old business. Approach the structure and financing from this perspective, and you remove many of the limitations imposed by the corporate structure.

The Role of Trust in Business Innovation

No matter how big and powerful your company is, and no matter how interesting or valid your ideas are, it is still fundamentally people who handle the business. Whether you are working with an established industry leader or a small, brand new business, collaboration is about trust between the people who are involved in the development of your ideas.

it is important to remember that trust works both ways, so if you want someone to trust you, you need to be trustworthy. This can be a particular challenge for large organizations, whose cultures have been developed to do away with trustworthiness.

Rather than focusing on personal and interpersonal development, large companies tend to focus on efficiency. Everyone is trained to be as impersonal as possible. They are identified by their number within the process, by their job description, or by the role they play within the larger workings of the company's internal system. With this approach, there is no personality, and how can you trust someone who has no personality?

How to Grow Trust Within Your Organization

Fortunately, it may still be possible to establish trust between large organizations and other partners in the innovation process. In order to do so, you must realign the cultural and organization motivations to focus on training people to grow trust. In order to help foster trust within your organization and your innovative partnerships,

Manfred suggests reframing your approach in the following ways:

It's Not Yours, It's Ours

Rather than approaching ideas, innovations, and even businesses as belonging to one particular organization or member of the partnership, remember that you are all in this together. Every one is equal in an innovative partnership, and creating a business can only be successful if you come from a place of trust and equality.

It Won't Hurt to Make Mistakes

Remember that in order to grow, you must be free to make mistakes. Failure is a necessary part of innovation and transformation, and mistakes on the path to growth are inevitable. Embrace mistakes so that you can learn from them and enhance your strategy.

It's a Long-Term Game

Although it can be easy to focus on short term development and financial return of an idea, it is important to keep in mind that innovation is a long term game. When you are establishing a new business, you need to plan for the future of your idea. Consider ways that your idea can grow and expand, and consider who you can bring into the game as the process continues and you need different skills and solutions.

Ask yourself: how can this product evolve to remain strategically relevant? Imagine it in the marketplace three years from now. Will you be willing to buy the product? Will it still be useful in three years?

Don't try to project using only internal resources, reach out to your suppliers, partners, service providers, and customers to obtain a realistic view of your product's projected viability. Use this information to hone your idea and project improvements over the long term.

Keep the Contract Simple

Keep your contract with your innovation partners simple. Not only does it establish trust between you and your partners, it makes it easier to create a functional partnership. Outline exactly what you hope to achieve with your partnership, and avoid trying to plan for every possible eventuality. You can't predict what will happen, and you simply create unnecessary complication with detailed contracts.

None of You Knows Anything

Along the same lines, it is important to remember that nobody knows the future. We don't know what may happen in two days, two weeks, or two years. Rather than trying to plan for every potential downfall, be brave and willing to take risks. Follow your instincts and don't be afraid to make mistakes. Above all, establish an atmosphere of trust between your organization and all of the partners involved.

This Is Not a Project

There is a huge difference between a project and a company: Projects have an end. When you are embarking upon a journey of change, it can be tempting to couch your innovation or drive for new business as a project. It is important to remember that the modernization of your business is not an individual project with a start and an end date.

All projects eventually end, but a business will continue to grow. In order to facilitate this growth, businesses must create a fundamental structure that fosters continuous development and growth.

Growth and development of your business are dependent upon creation of a culture of trust not only within your business but between your business and your innovation partners, suppliers, and customers. It is only through trust that you can truly create new business and business growth.

Don't be afraid to take the risks necessary to foster change. Mistakes are part of the process of innovation, and having trusted partners on your company's  journey will help you ensure lasting, measurable growth.