|
Why In-Company
Ventures?
Today, in-company ventures, or
internal start-ups, a new form of creating and financing a high-tech company
are very popular. The growing need for
radical innovation
and
diversification, both related and unrelated, added another dimension of
complexity to managing a large firm. This complexity is managed through the
creation of "virtual" small companies within the large company. Corporate
management focuses on the performance of these in-company ventures as
wholes, while business unit management tends to everyday matters.3
New ventures established as
independent companies, or spinouts, can
more readily fulfill their potential. In this case, the entrepreneurs do not
have to argue with superiors or put up with interference.
In contrast, the in-company
venture enjoys the benefits of the company's greater resources, brand name
and corporate image. Getting autonomy for a new in-company venture may help
it operate more like an independent. But, Peter Drucker warns, established
business is also "the main obstacle to
entrepreneurship".
New Upper
Management Approaches to Support In-Company Ventures
Many organizations, willing
to exploit the benefits of new product/service development as internal
ventures, will need to change their mindset, redefine their concept of
organization and loose controls in order to expand their capacity for speed.
Mastering of the new
business systems approach
to managing projects aimed at development of innovative products and
services will help corporations to move with speed to capitalize on emerging
technology and market opportunities.
Corporations should broaden their tolerance to mistakes and encourage
entrepreneurial
approaches not only verbally, but by creating conditions
by which you can be an entrepreneur. Top management should be ready to face
the fundamental conflict between the mainstream organization and the
radical innovation
team, and manage the relationships between them. If the new business is
significantly different from the parent company, you may need to break
cultural ties that could get in the way.
Top management
should also create an upside opportunity for people in order to retain key
staffers who may wish to leave the corporation and form a startup on their
own. Using vehicles as phantom stock and stock appreciation rights (SAR),
in-company ventures can provide the feel and reward of a startup.
Success Case
Corning
Corning, a Fortune 50 company,
presents an excellent example of harnessing the benefits of the
business systems approach
to new product development. Managers of the company operate within a shared
context that encompasses anticipation of future events that might have an
impact on industry. The innovation process is the lifeblood of the
corporation. It is a highly competitive process - not all projects get
funded. New business creation is central to achieving strategic and
financial objectives. It's project leadership, not control by top
management, that makes the process work.
As a result of this Corning
business building strategy, in 1998, 57% of the company's sales were from
products less than five years old; in 2000, that portion had grown to 84% of
sales...
More
Project
Leadership
Having a sound research, development, and innovation process is not enough.
It's
leadership
that makes the process work. The key is to select project leaders on the
basis of their cross-functional understanding of technology, marketing, and
manufacturing, as well as their leadership skills and judgment.
Organizations should also provide an enabling environment to empower the
project leaders to
act as a CEO
and thus to contribute their best to the
corporate strategy.
Entrepreneurial
approach to project management that understands the dynamics of the
marketplace and competition may require radical change in the project
success measurement and control systems of most organizations.
Business-oriented controls should focus on market performance, timing and
investing for higher return rather than on meeting fixed specifications and
constraints. They must resist the temptation to use operating-plan logic to
manage new ventures.
Success Case
GE
Digital X-Ray Project
The Digital X-Ray technology
development project at GE was about to die several times. This radical
innovation initiative survived and finally prospered mainly due to
entrepreneurial .skills of the project leader..
More
7 Challenges in Managing Radical
Innovation...
Fuzzy Frond
End and Fuzzy Logic...
Keys to Effective Radical Innovation
Project Management...
Case in Point
Corning...
Case in Point
3M...
Case in Point
Quantum...
|
