Sustainable Growth:

Venture Strategies

Spinouts

Managing Innovation Separately through Creating External Start-Ups

Vadim Kotelnikov personal logo Vadim Kotelnikov

Founder, Ten3 Business e-Coach Inspiration and Innovation Unlimited!

 

 

"In the existing business, it is the existing that is the main obstacle to entrepreneurship... If an entrepreneurial business is placed inside an established management system, it is more than likely to fail." ~ Peter Drucker

 

5 Critical Success Factors for New Ventures

By Peter Drucker

  • For in-company ventures in an established business, insulating the new venture from the main business... More

 

 

Features of Established Companies that Prevent Successful Implementation of Entrepreneurial Ideas Internally

  • Policies, people, and practices build along set lines

  • Lack of motivation due to highly structured rewards schemes

  • Return-on-investment targets

  • Lack of clear accountability for the venture

Benefits of Spinouts

  • Higher flexibility

  • Analyzing all the available opportunities and selecting the best one

  • Exploiting the chance to create a new, profitable business

  • Better staff motivation and incentive compensation

  • Area of pioneering offering entrepreneurs a large degree of creativity

  • Tax benefits

Corporate Venture Strategies

Technology Commercialization: Venture Options

Radical Innovation

Managing New Ventures

Venture Management versus Corporate Management

Radical Project Management

Managing Innovation Through Internal Startups

Implementing Projects through Spinouts

Case Studies

Thermo Electron

Bunsha

 

 

References:

  1. "Innovation and Entrepreneurship", by Peter Drucker

  2. "The Frontiers of Management", by Peter Drucker

  3. "Managing in Time of Great Change", by Peter Drucker

  4. "High-tech Start Up", John L. Nesheim

  5. "Venture Catalyst", Donald L. Laurie

  6. "Project Manager's MBA", Cohen E. Graham

The Five Things You Should Know To Win

The Art of War, Sun Tzu's

You must know five things to win:

  • Victory comes from having a capable commander and the government leaving him alone... More

Entrepreneurial Leader: 4 Specific Attributes

Blue Ocean vs. Red Ocean Strategy

10 Commandments of Innovation

The Need for Managing Innovation Separately

A new product or service may be launched either from within an established management system or from a brand-new operation. In both cases, autonomy is a precondition of success however.

Innovation needs to be managed separately as the established company would load insupportable burdens on the new venture: burdensome examples include highly structured reward schemes, return-on-investment targets, and lack of clear accountability for the venture. There is the fundamental difficulty in converting a large and/or non-flexible organization, which has built up policies, people, and practices along set lines, into the anarchic modes of the entrepreneur. To picture the problem, just imagine you forcing your right leg to run while your left leg and the rest of your body keep walking.

The Jazz of Innovation

The Jazz of Innovation: 11 Practice Tips

"The most important caveat is not to mix managerial units and entrepreneurial ones" in any way. Venture values are different from established corporate values. Technology spinouts are designed to provide independence and space for action and allow management to enhance market capitalization.

Entrepreneurial management of the venture-building process is fundamentally different  from corporate management that is focused on delivering the annual operating plan. Not only must "the entrepreneurial, the new" be organized completely separately from "the old and existing", but "there has to be a special locus for the new venture within the organization, and it has to be pretty high up". However small the new ventures may be in relation to its parent, "somebody in top management must have the specific assignment to work on tomorrow as an entrepreneur and innovator" and be responsible for developing and implementing corporate venture strategies.

Entrepreneurial Creativity: 4 Keys

Managing Innovation through Spin-outs

A spin-out enterprise differs from a spin-off. Spinouts remain closely tied to the company that developed them. In most cases, the ties are both financial and operational. Financial ties can be enforced through interlocking of stock ownership and financial oversight by the parent company. Operational ties may include shared professional and administrative services as well as marketing and leadership support.

New ventures established as independent companies can more readily fulfill their potential. In this case, the entrepreneurs do not have to argue with superiors or put up with interference.