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Organisational Best Practices
of Startup Studios
Taking a look at „Startup Studios“ from an academic perspective
December 2018
Tobias Gutmann – tobias.gutmann@hhl.de
Tobi Gutmann / HHL / 2
Disclaimer: This presentation is based upon two published research
papers which are all available online
Harmonizing corporate venturing modes: an integrative
review and research agenda – published in “Management
Review Quarterly”
Gutmann, T. Manag Rev Q (2018). https://doi.org/10.1007/s11301-
018-0148-4
Publisher Name: Springer International Publishing
Print ISSN: 2198-1620 Online ISSN: 2198-1639
Organizational best practices of company builders – a
qualitative study – published in “Research Journal / International
School of Management”
Rathgeber, Philipp; Gutmann, Tobias; Levasier, Maximilian (2017).
https://www.ism.de/images/downloads/research-journal-2017.pdf
Publisher Name: International School of Management
Research
Paper
#1
Research
Paper
#2
Tobi Gutmann / HHL / 3
This presentation was held at the International Startup Seminar within my role
of doctoral researcher at the HHL Leipzig Graduate School of Management
• The International Startup Seminar took place on the
19.12.2018 in Sophia Antipolis, France.
• Tobias Gutmann, an external Ph.D. candidate at the
HHL Graduate School of Management, was invited to
provide organizational Best Practices of Startup
Studios.
• The Seminar was organized by the SCS Cluster
(Secured Communicating Solutions) which brings
together the major players in microelectronics,
telecommunications and software, services and uses
of ICT in the French Provence Alpes Côte d’Azur
region.
• SCS brings together an ecosystem of more than 300
industrial players, large multi-national groups, SMEs
and startups, research laboratories and leading
universities in their fields.
Tobi Gutmann / HHL / 4
We unveil organizational best practices by taking a look
at Startup Studios from an academic perspective
1
Corporate Venturing
Baselining: Shedding light on corporate mechanisms which
accelerate innovation and new business creation
2
Startup Studios
Contextualizing: Launching new ventures based on a systematic
venture creation process
3
Organizational Best Practices of Startup Studios
Deep Diving: Presenting some insights from our case study
research on Startup Studios
Tobi Gutmann / HHL / 5
We unveil organizational best practices by taking a look
at Startup Studios from an academic perspective
1
Corporate Venturing
Baselining: Shedding light on corporate mechanisms which
accelerate innovation and new business creation
2
Startup Studios
Contextualizing: Launching new ventures based on a systematic
venture creation process.
3
Organizational Best Practices of Startup Studios
Deep Diving: Presenting some insights from our case study
research on Startup Studios
Tobi Gutmann / HHL / 6
The definitional basics of corporate venturing are necessary to pave the way
for a mutual understanding and delineations to other research fields
Definition of
Corporate Venturing
Burgelman, 1983 Corporate venturing refers to the investment in opportunities that are new to a corporation
Markham et al.,
2005
Strategic mechanism to attract, qualify, and monetize value from assets that originate
externally and/or are beyond a clear fit with the organization's existing strategic focus
Narayanan et al.,
2008
CV is the set of organizational systems, processes and practices that focus on creating
businesses in existing or new fields, markets or industries—using internal and external
means
We define Corporate Venturing as corporate mechanisms to accelerate innovation and new business creation
Tobi Gutmann / HHL / 7
We introduced a coherent corporate venturing framework along the
prioritization of objectives and the direction of innovation flow
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Dimensions of Corporate Venturing Framework
Prioritization
of Objectives
Direction of
Innovation
Flow
Corporate Venturing can be successful, when …
• there is a coherent corporate strategy,
• clear goals,
• a structure to deliver on them, and thus
• clarity on how the corporation plans to create,
capture and deliver value
• Innovation is the single common theme
underlying all forms of corporate venturing
• Corporate venturing already has been linked
to open innovation research
• Direction of innovation flow has been used
as a dimension to describe rather unexplored
forms of corporate venturing
Source: Gutmann (2018)
Tobi Gutmann / HHL / 8
We unveil organizational best practices by taking a look
at Startup Studios from an academic perspective
1
Corporate Venturing
Baselining: Shedding light on corporate mechanisms which
accelerate innovation and new business creation
2
Startup Studios
Contextualizing: Launching new ventures based on a systematic
venture creation process
3
Organizational Best Practices of Startup Studios
Deep Diving: Presenting some insights from our case study
research on Startup Studios
Tobi Gutmann / HHL / 9
Examples
The 'Venture Builder' creates new business validating and executing new
business models outside of the corporate boundaries
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Venture Builder
Description
• Corporations actively engage in the following activities:
• spinning off businesses
• engaging in joint ventures or joint business
endeavors
• supporting a company's network of customers,
suppliers and complementary business
• Activities of this type serve as explorative vehicles to
validate and execute new business models outside of
the corporate boundaries, mostly within new separate
organizational entities.
• Company Builder (Excubator, Venture Builder, Venture
Studio, Startup Studio)
• Spin off
• Joint Venture
Source: Gutmann (2018)
Tobi Gutmann / HHL / 10
Source: Köhler & Baumann (2015)
Applying an organizational perspective, company builders can be distinguished
from traditional incubator models along the market-hierarchy spectrum
While traditional incubators lean toward the market end of the market-hierarchy spectrum, company builders
are true hybrid organizations in that new ventures are assembled and scaled up in a centrally-coordinated manner
Market Hierarchy
Decentralized Ownership
Autonomous Decisions
Output-based Rewards
Fixed-term Collaboration
Centralized Ownership
Centralized Orchestration
Input-based Rewards
Open-ended Collaboration
Company BuildersTraditional Incubators
Tobi Gutmann / HHL / 11
We unveil organizational best practices by taking a look
at Startup Studios from an academic perspective
1
Corporate Venturing
Baselining: Shedding light on corporate mechanisms which
accelerate innovation and new business creation
2
Startup Studios
Contextualizing: Launching new ventures based on a systematic
venture creation process.
3
Organizational Best Practices of Startup Studios
Deep Diving: Presenting some insights from our case study
research on Startup Studios
Tobi Gutmann / HHL / 12
Organization
• How are “startup studios” organized/structured?
• Which teams/departments are there?
• What tasks and competencies do they need?
Process
• How do startup studios organize the process from
“ideation to exit”?
Additional Interesting topics
• What are success factors of startup studios?
• What are challenges of startup studios?
The research design was based on the Venture Creation Framework of
Gartner (1985) with a focus on Organization and Process
Framework to describe the emergence of new ventures
(Gartner 1985) with a focus on Organization and Process
Out of Research Scope
Scope of Research
Individual(s)
Process
Environment Organization
Emergence of
new ventures
Tobi Gutmann / HHL / 13
Organization
In terms of organizational structure our data revealed that startup studios feature
either functional or matrix organizations depending on organizational size
• The differentiated structural approaches are not
related to different organizational strategies
pursued but are a mere matter of organizational
size
• Startup Studios with less than 50 employees do
not have the resources to provide a breadth of
services, offer depth of specializations, and
dedicated project team staffing resulting in line-
organizations
• Larger startup studios (with more than 50
employees) temporarily allocate dedicated
resources with specialist back-grounds to the
venture projects resulting in matrix-organizations.
• We also find that regardless of company size,
startup studios tend not to be “culturally”
hierarchical.
We mapped organizational structures of
startup studios …
…
… and analyzed their differentiated
structural approaches
Tobi Gutmann / HHL / 14
…
Process
We mapped the venture creation processes of startup studios first on a
standalone basis before we proceeded with a cross-case comparison of the cases
We also mapped startup studio‘s processes
from ideation to exit…
… and developed a combined process that
unitedly describes the procedural approach
Tobi Gutmann / HHL / 15
Company Building at Rocket Internet followed a highly standardized process,
unlocking learning curve advantages and synergies across the portfolio
LocalCentral
KICKOFF
Day 0
Design website & app
MVP web & apps
Marketing channels
CRM tools
Data-Warehouse
Legal entities, brand & domains, accounting
Rocket Operations Management Systems
Sales and Business Development processes
Call center and local support
Ventures Operationally Independent in < 200 Days
Landing pages, onsite search, onsite sorting, personalization,
multivariate testing
Iteration of product, agile development focusing on stability, security and
speed
Targeting, creative, bidding, with maximum granularity (e. g. keyword
level) and optimization of CAC vs. CLV
Segmentation, lifecycle management, content, automatization
Daily, weekly and monthly KPI reporting for Marketing, CRM, Sales,
Customer Care, Ops, etc.
Financial reporting & controlling, compliance
Improving efficiency in operations
Focusing on daily management of sales and business development
funnel in SalesForce
Increasing Net Promoter Scores
Capability to Launch a New Venture in < 100 Days
INDEPENDENCE
Day 200
LAUNCH
Day 100
Set up Rocket Best Practices Reporting & Optimization
Product & UX
Engineering
Marketing
CRM
Business Intelligence
Legal & Finance
HR
Operations
Sales
Customer Care
Continuous recruiting of central and local founders, 2nd level management talent and functional experts
Process (Example)
Tobi Gutmann / HHL / 16
Process
The aggregated venture creation process of our startup studio sample can be
divided into seven steps
Company Builder Founder Team
Solution
Validation
Problem
Validation
Marked
Exploration
Problem
Identification
Focus &
Framework
Conditions
GrowthOptimizationPhase
Responsibility
• Once the founder team has been recruited, its responsibility is increasing over time.
• The startup studio itself gradually draws back from the decision-making and operations of the portfolio company.
• Collaboration only happens when needed but still there is an ongoing mentoring and coaching relationship.
• Additionally, financial controlling is conducted by the startup studio.
Tobi Gutmann / HHL / 17
Additional Interesting topics
Before exploring the market deeper, validate the problem and recruit
founders, ask yourself these four questions
:
Proximity
Is the business idea close enough to the startup studio’s strategy?
Feasibility
Is the business idea feasible within the startup studio context?
(technology, resources, know-how, market access)
Significance
Does the business idea address unresolved and significant customer problems?
Potential
Is the addressable market large enough to start a new company?
Tobi Gutmann / HHL / 18
Thank you! Live long and prosper!
Tobi Gutmann
External Ph.D. Candidate in Strategic Management and
Digital Entrepreneurship, HHL Leipzig Graduate School of
Management, Leipzig, Germany
Tobias.Gutmann@HHL.de
https://www.linkedin.com/in/tobigutmann/
Organisational Best Practices
of Startup Studios
Tobias Gutmann
tobias.gutmann@hhl.de
BACKUP
Tobi Gutmann / HHL / 20
Examples
The 'Internal Explorer' aims to develop and foster entrepreneurial spirit and
encourage corporate employees to develop internal ventures
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Internal Explorer
Internal Explorer
Description
• Corporation actively nurtures and grows internal
opportunities, thus over time, these opportunities
become sources of growth
• New venture development can be pursued within or
outside the core business.
• Funding of such activities usually comes from a captive
fund, which can be described as an internal venture
capital fund, managed by employees, owned by the
corporation and funded with corporate resources
• Idea challenges, internal hackathons, bootcamps
• Microsoft Hackathon
5
Tobi Gutmann / HHL / 21
Examples
The 'Intrapreneur' describes the phenomenon of
Intra-Corporate Entrepreneurship
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Intrapreneur
Intrapreneur
Description
• Employees internally generate, develop and
commercialize ideas within or outside the domain of the
corporation using internal resources in order to
generate and accelerate innovation and business
• Activities aim to pursue primarily strategic objectives
following an inside-out innovation flow
• Activities are inherently exploration-orientated and
internal
• Generally, these new venture opportunities are directly
funded through operating or strategic budgets
• Corporate Incubator
• Airbus Bizlab
5
Tobi Gutmann / HHL / 22
Examples
The 'External Explorer' strategically bridges the gap between
corporations and startups making external innovations accessible
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: External Explorer
External Explorer
Description
• Exploring strategic activities that arise outside the
boundaries of the corporation, where thus innovation
flows outside-in
• It encompasses all activities which help making use of
the potential value beyond the horizon of a company
bridging the gap between themselves and the startup
world
• This represents explorative models of engaging with
startups or other external partners to support innovation
and technology orientated entrepreneurial growth
• Startup Collaboration, Venture Client, Equity-free
Corporate Accelerator
• BMW Startup Garage
5
Tobi Gutmann / HHL / 23
Examples
The 'Educator' provides training and education programs to employees
to to create a more entrepreneurial culture
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Educator
Educator
Description
• Corporations invest in internal business opportunities in
order to create a more entrepreneurial culture
• This can have both financial and strategic reasons
• Aiming to drive innovation, creativity and calculated risk-
taking of employees, corporations provide training and
education programs.
• Innovation trainings
• GE FastWorks
5
Tobi Gutmann / HHL / 24
Examples
The 'Venture Builder' creates new business validating and executing
new business models outside of the corporate boundaries
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Venture Builder
Venture Builder
Description
• Corporations actively engage in the following activities:
• spinning off businesses
• engaging in joint ventures or joint business
endeavors
• supporting a company's network of customers,
suppliers and complementary business
• Activities of this type serve as explorative vehicles to
validate and execute new business models outside of
the corporate boundaries, mostly within new separate
organizational entities.
• Company Builder, Excubator, Spin off, Joint Venture
• WattX (Viessmann)
5
Tobi Gutmann / HHL / 25
Examples
The 'Strategic Investor' performs strategic equity or equity-linked
investments in young, privately held companies
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Strategic Investor
Strategic Investor
Description
• Overall, those activities are related to Corporate
Venture Capital
• They can incorporate various forms being described
differently, e.g. as direct-external venturing, corporate
accelerators, enabling or emerging investments
• While the corporation can access new business models,
capabilities, markets or technologies, it simultaneously
participates in the success of the company it has
invested in.
• Corporate Venture Capital, Corporate Accelerator, (M&A)
• BASF Venture Capital
5
Tobi Gutmann / HHL / 26
Examples
The 'Exploiter' focuses on exploiting the company's resources to
optimize its endeavors of new business creation and innovation
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Exploiter
Exploiter
Description
• Main focus is on exploiting the company's resources
to optimize its endeavors of new business creation and
innovation.
• It is aimed to derive financial profit by leveraging
industry expertise and channels as well as improving
performance
• Efficiently providing internal mechanisms to manage
the interfaces and the flows of financial and other
resources to develop radical innovations.
• Excellence Programs, Venture Optimization Programs
• Procter & Gamble Connect + Develop
5
Tobi Gutmann / HHL / 27
Examples
The 'Commercializer' increases the company’s cash resources by
harvesting existing intellectual property or other assets
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Commercializer
Commercializer
Description
• Pure financially orientated CV activities with innovation
flowing from the inside-out are exploiting the existing
company's assets with the aim of monetizing them.
• It is a way of leveraging assets such as patents,
technologies, managerial talent and license them or
spinning out businesses that do not fit into the corporate
strategy
• Commercialisation, Licensing, IP Trade Sales
• Siemens Technology Accelerator
5
Tobi Gutmann / HHL / 28
Examples
The 'Financial Investor' applies the independent venture capital model
to the corporate context solely for financial reasons
Corporate Venturing Framework along two dimensions
Direction of Innovation Flow
PrioritizationofObjectives
Inside-In Inside-Out Outside-In
Financial
Investor
Exploiter
Strategic
Investor
Commercializer
Venture
Builder
Educator
External
Explorer
Intrapreneur
Internal
Explorer
VII VIII IX
IV V VI
I II III
Balanced
Primarily
Financial
Primarily
Strategic
Introducing a coherent Corporate Venturing Framework: Financial Investor
Financial Investor
Description
• In this context, a corporation has several options:
• become a limiting partner of an external venture
capital fund
• invest in an internal corporate venture capital fund
managed by corporate employees
• syndicate with independent venture capital firms
• hire a venture capital firm to run a dedicated fund
where the corporation is the only investor
• invest in a targeted "pooled fund" with other investors
• Fund Investments, Pension Fund investments
• Sapphire
5
Tobi Gutmann / HHL / 29
Academic discussions of Corporate Venturing are framed within
Corporate Entrepreneurship research
Breakdown of Corporate Entrepreneurship
Source: Kuratko et al., 2015, Covin and Miles 1999; Hitt et al. 2001; Ireland et al. 2003; Ireland and Webb 2007; Morris et al. 2011.
Corporate
Entrepreneurship
Corporate
Venturing
Strategic
Entrepreneurship
External Venturing
Internal Venturing
Sustained Regeneration
Domain Redefinition
Organizational Rejuvenation
Business Model Reconstruction
Strategic Renewal
Description
Adoption of a new strategy
Introduction of a new product into an
existing category
Reconfiguration of existing product or
market categories
Internally focused innovation for
strategy improvement
Redesign of existing business model
Building blocks and logical breakdown of Corporate Entrepreneurship Research
New business creation that originates
within the corporate structure
New business creation that originates
outside the corporate structure
Tobi Gutmann / HHL / 30
Process
The aggregated venture creation process of our startup studio sample can be
divided into seven steps
Tobi Gutmann / HHL / 31
Process
Venture Creation processes have also been described before (Vogel 2016)
VENTURE OPPORTUNITY DEVELOPMENT & EXPLOITATION
Venture
Concep
t
Individual-Level Factors (Personality, Human Capital, Social Capital, etc.)
External Factors (Industry and Market Characteristics, Regulatory and Socio-Demographic Environment, etc)
TRIGGER
Ressource Push
and/or
Market Pull
and/or
Desire to Start
VENTURE IDEA GENERATION
Intentional
Idea Generation
Accidental
Discovery
Legacy
Ventur
e Idea
Path
Venture
Opportunit
y
Incubation Evaluation
Desirable
Feasible
Pivoting
Exploitaion
Tobi Gutmann / HHL / 32
Rocket Internet Platform
Rocket
Internet
Platform
Infrastructure
ProcessesTechnology
Rocket Network of
Companies
Infrastructure
Processes
Technology
Rocket Network of
Companies
• Proven business models
• Standardized Master-Launch-Process
• Highly structured best practices
• Centralized IP with regional execution
• Proprietary technology
• Same technical platforms
• Partnerships and framework agreements
• Predictable and repeatable
• Leveraging on country knowledge
• “never make the same mistake twice”
• Learning curve effect
• Deep technical and operational expertise
• Experience in world-class internet business

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Organisational Best Practices of Startup Studios

  • 1. Organisational Best Practices of Startup Studios Taking a look at „Startup Studios“ from an academic perspective December 2018 Tobias Gutmann – tobias.gutmann@hhl.de
  • 2. Tobi Gutmann / HHL / 2 Disclaimer: This presentation is based upon two published research papers which are all available online Harmonizing corporate venturing modes: an integrative review and research agenda – published in “Management Review Quarterly” Gutmann, T. Manag Rev Q (2018). https://doi.org/10.1007/s11301- 018-0148-4 Publisher Name: Springer International Publishing Print ISSN: 2198-1620 Online ISSN: 2198-1639 Organizational best practices of company builders – a qualitative study – published in “Research Journal / International School of Management” Rathgeber, Philipp; Gutmann, Tobias; Levasier, Maximilian (2017). https://www.ism.de/images/downloads/research-journal-2017.pdf Publisher Name: International School of Management Research Paper #1 Research Paper #2
  • 3. Tobi Gutmann / HHL / 3 This presentation was held at the International Startup Seminar within my role of doctoral researcher at the HHL Leipzig Graduate School of Management • The International Startup Seminar took place on the 19.12.2018 in Sophia Antipolis, France. • Tobias Gutmann, an external Ph.D. candidate at the HHL Graduate School of Management, was invited to provide organizational Best Practices of Startup Studios. • The Seminar was organized by the SCS Cluster (Secured Communicating Solutions) which brings together the major players in microelectronics, telecommunications and software, services and uses of ICT in the French Provence Alpes Côte d’Azur region. • SCS brings together an ecosystem of more than 300 industrial players, large multi-national groups, SMEs and startups, research laboratories and leading universities in their fields.
  • 4. Tobi Gutmann / HHL / 4 We unveil organizational best practices by taking a look at Startup Studios from an academic perspective 1 Corporate Venturing Baselining: Shedding light on corporate mechanisms which accelerate innovation and new business creation 2 Startup Studios Contextualizing: Launching new ventures based on a systematic venture creation process 3 Organizational Best Practices of Startup Studios Deep Diving: Presenting some insights from our case study research on Startup Studios
  • 5. Tobi Gutmann / HHL / 5 We unveil organizational best practices by taking a look at Startup Studios from an academic perspective 1 Corporate Venturing Baselining: Shedding light on corporate mechanisms which accelerate innovation and new business creation 2 Startup Studios Contextualizing: Launching new ventures based on a systematic venture creation process. 3 Organizational Best Practices of Startup Studios Deep Diving: Presenting some insights from our case study research on Startup Studios
  • 6. Tobi Gutmann / HHL / 6 The definitional basics of corporate venturing are necessary to pave the way for a mutual understanding and delineations to other research fields Definition of Corporate Venturing Burgelman, 1983 Corporate venturing refers to the investment in opportunities that are new to a corporation Markham et al., 2005 Strategic mechanism to attract, qualify, and monetize value from assets that originate externally and/or are beyond a clear fit with the organization's existing strategic focus Narayanan et al., 2008 CV is the set of organizational systems, processes and practices that focus on creating businesses in existing or new fields, markets or industries—using internal and external means We define Corporate Venturing as corporate mechanisms to accelerate innovation and new business creation
  • 7. Tobi Gutmann / HHL / 7 We introduced a coherent corporate venturing framework along the prioritization of objectives and the direction of innovation flow Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Dimensions of Corporate Venturing Framework Prioritization of Objectives Direction of Innovation Flow Corporate Venturing can be successful, when … • there is a coherent corporate strategy, • clear goals, • a structure to deliver on them, and thus • clarity on how the corporation plans to create, capture and deliver value • Innovation is the single common theme underlying all forms of corporate venturing • Corporate venturing already has been linked to open innovation research • Direction of innovation flow has been used as a dimension to describe rather unexplored forms of corporate venturing Source: Gutmann (2018)
  • 8. Tobi Gutmann / HHL / 8 We unveil organizational best practices by taking a look at Startup Studios from an academic perspective 1 Corporate Venturing Baselining: Shedding light on corporate mechanisms which accelerate innovation and new business creation 2 Startup Studios Contextualizing: Launching new ventures based on a systematic venture creation process 3 Organizational Best Practices of Startup Studios Deep Diving: Presenting some insights from our case study research on Startup Studios
  • 9. Tobi Gutmann / HHL / 9 Examples The 'Venture Builder' creates new business validating and executing new business models outside of the corporate boundaries Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Venture Builder Description • Corporations actively engage in the following activities: • spinning off businesses • engaging in joint ventures or joint business endeavors • supporting a company's network of customers, suppliers and complementary business • Activities of this type serve as explorative vehicles to validate and execute new business models outside of the corporate boundaries, mostly within new separate organizational entities. • Company Builder (Excubator, Venture Builder, Venture Studio, Startup Studio) • Spin off • Joint Venture Source: Gutmann (2018)
  • 10. Tobi Gutmann / HHL / 10 Source: Köhler & Baumann (2015) Applying an organizational perspective, company builders can be distinguished from traditional incubator models along the market-hierarchy spectrum While traditional incubators lean toward the market end of the market-hierarchy spectrum, company builders are true hybrid organizations in that new ventures are assembled and scaled up in a centrally-coordinated manner Market Hierarchy Decentralized Ownership Autonomous Decisions Output-based Rewards Fixed-term Collaboration Centralized Ownership Centralized Orchestration Input-based Rewards Open-ended Collaboration Company BuildersTraditional Incubators
  • 11. Tobi Gutmann / HHL / 11 We unveil organizational best practices by taking a look at Startup Studios from an academic perspective 1 Corporate Venturing Baselining: Shedding light on corporate mechanisms which accelerate innovation and new business creation 2 Startup Studios Contextualizing: Launching new ventures based on a systematic venture creation process. 3 Organizational Best Practices of Startup Studios Deep Diving: Presenting some insights from our case study research on Startup Studios
  • 12. Tobi Gutmann / HHL / 12 Organization • How are “startup studios” organized/structured? • Which teams/departments are there? • What tasks and competencies do they need? Process • How do startup studios organize the process from “ideation to exit”? Additional Interesting topics • What are success factors of startup studios? • What are challenges of startup studios? The research design was based on the Venture Creation Framework of Gartner (1985) with a focus on Organization and Process Framework to describe the emergence of new ventures (Gartner 1985) with a focus on Organization and Process Out of Research Scope Scope of Research Individual(s) Process Environment Organization Emergence of new ventures
  • 13. Tobi Gutmann / HHL / 13 Organization In terms of organizational structure our data revealed that startup studios feature either functional or matrix organizations depending on organizational size • The differentiated structural approaches are not related to different organizational strategies pursued but are a mere matter of organizational size • Startup Studios with less than 50 employees do not have the resources to provide a breadth of services, offer depth of specializations, and dedicated project team staffing resulting in line- organizations • Larger startup studios (with more than 50 employees) temporarily allocate dedicated resources with specialist back-grounds to the venture projects resulting in matrix-organizations. • We also find that regardless of company size, startup studios tend not to be “culturally” hierarchical. We mapped organizational structures of startup studios … … … and analyzed their differentiated structural approaches
  • 14. Tobi Gutmann / HHL / 14 … Process We mapped the venture creation processes of startup studios first on a standalone basis before we proceeded with a cross-case comparison of the cases We also mapped startup studio‘s processes from ideation to exit… … and developed a combined process that unitedly describes the procedural approach
  • 15. Tobi Gutmann / HHL / 15 Company Building at Rocket Internet followed a highly standardized process, unlocking learning curve advantages and synergies across the portfolio LocalCentral KICKOFF Day 0 Design website & app MVP web & apps Marketing channels CRM tools Data-Warehouse Legal entities, brand & domains, accounting Rocket Operations Management Systems Sales and Business Development processes Call center and local support Ventures Operationally Independent in < 200 Days Landing pages, onsite search, onsite sorting, personalization, multivariate testing Iteration of product, agile development focusing on stability, security and speed Targeting, creative, bidding, with maximum granularity (e. g. keyword level) and optimization of CAC vs. CLV Segmentation, lifecycle management, content, automatization Daily, weekly and monthly KPI reporting for Marketing, CRM, Sales, Customer Care, Ops, etc. Financial reporting & controlling, compliance Improving efficiency in operations Focusing on daily management of sales and business development funnel in SalesForce Increasing Net Promoter Scores Capability to Launch a New Venture in < 100 Days INDEPENDENCE Day 200 LAUNCH Day 100 Set up Rocket Best Practices Reporting & Optimization Product & UX Engineering Marketing CRM Business Intelligence Legal & Finance HR Operations Sales Customer Care Continuous recruiting of central and local founders, 2nd level management talent and functional experts Process (Example)
  • 16. Tobi Gutmann / HHL / 16 Process The aggregated venture creation process of our startup studio sample can be divided into seven steps Company Builder Founder Team Solution Validation Problem Validation Marked Exploration Problem Identification Focus & Framework Conditions GrowthOptimizationPhase Responsibility • Once the founder team has been recruited, its responsibility is increasing over time. • The startup studio itself gradually draws back from the decision-making and operations of the portfolio company. • Collaboration only happens when needed but still there is an ongoing mentoring and coaching relationship. • Additionally, financial controlling is conducted by the startup studio.
  • 17. Tobi Gutmann / HHL / 17 Additional Interesting topics Before exploring the market deeper, validate the problem and recruit founders, ask yourself these four questions : Proximity Is the business idea close enough to the startup studio’s strategy? Feasibility Is the business idea feasible within the startup studio context? (technology, resources, know-how, market access) Significance Does the business idea address unresolved and significant customer problems? Potential Is the addressable market large enough to start a new company?
  • 18. Tobi Gutmann / HHL / 18 Thank you! Live long and prosper! Tobi Gutmann External Ph.D. Candidate in Strategic Management and Digital Entrepreneurship, HHL Leipzig Graduate School of Management, Leipzig, Germany Tobias.Gutmann@HHL.de https://www.linkedin.com/in/tobigutmann/
  • 19. Organisational Best Practices of Startup Studios Tobias Gutmann tobias.gutmann@hhl.de BACKUP
  • 20. Tobi Gutmann / HHL / 20 Examples The 'Internal Explorer' aims to develop and foster entrepreneurial spirit and encourage corporate employees to develop internal ventures Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Internal Explorer Internal Explorer Description • Corporation actively nurtures and grows internal opportunities, thus over time, these opportunities become sources of growth • New venture development can be pursued within or outside the core business. • Funding of such activities usually comes from a captive fund, which can be described as an internal venture capital fund, managed by employees, owned by the corporation and funded with corporate resources • Idea challenges, internal hackathons, bootcamps • Microsoft Hackathon 5
  • 21. Tobi Gutmann / HHL / 21 Examples The 'Intrapreneur' describes the phenomenon of Intra-Corporate Entrepreneurship Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Intrapreneur Intrapreneur Description • Employees internally generate, develop and commercialize ideas within or outside the domain of the corporation using internal resources in order to generate and accelerate innovation and business • Activities aim to pursue primarily strategic objectives following an inside-out innovation flow • Activities are inherently exploration-orientated and internal • Generally, these new venture opportunities are directly funded through operating or strategic budgets • Corporate Incubator • Airbus Bizlab 5
  • 22. Tobi Gutmann / HHL / 22 Examples The 'External Explorer' strategically bridges the gap between corporations and startups making external innovations accessible Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: External Explorer External Explorer Description • Exploring strategic activities that arise outside the boundaries of the corporation, where thus innovation flows outside-in • It encompasses all activities which help making use of the potential value beyond the horizon of a company bridging the gap between themselves and the startup world • This represents explorative models of engaging with startups or other external partners to support innovation and technology orientated entrepreneurial growth • Startup Collaboration, Venture Client, Equity-free Corporate Accelerator • BMW Startup Garage 5
  • 23. Tobi Gutmann / HHL / 23 Examples The 'Educator' provides training and education programs to employees to to create a more entrepreneurial culture Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Educator Educator Description • Corporations invest in internal business opportunities in order to create a more entrepreneurial culture • This can have both financial and strategic reasons • Aiming to drive innovation, creativity and calculated risk- taking of employees, corporations provide training and education programs. • Innovation trainings • GE FastWorks 5
  • 24. Tobi Gutmann / HHL / 24 Examples The 'Venture Builder' creates new business validating and executing new business models outside of the corporate boundaries Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Venture Builder Venture Builder Description • Corporations actively engage in the following activities: • spinning off businesses • engaging in joint ventures or joint business endeavors • supporting a company's network of customers, suppliers and complementary business • Activities of this type serve as explorative vehicles to validate and execute new business models outside of the corporate boundaries, mostly within new separate organizational entities. • Company Builder, Excubator, Spin off, Joint Venture • WattX (Viessmann) 5
  • 25. Tobi Gutmann / HHL / 25 Examples The 'Strategic Investor' performs strategic equity or equity-linked investments in young, privately held companies Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Strategic Investor Strategic Investor Description • Overall, those activities are related to Corporate Venture Capital • They can incorporate various forms being described differently, e.g. as direct-external venturing, corporate accelerators, enabling or emerging investments • While the corporation can access new business models, capabilities, markets or technologies, it simultaneously participates in the success of the company it has invested in. • Corporate Venture Capital, Corporate Accelerator, (M&A) • BASF Venture Capital 5
  • 26. Tobi Gutmann / HHL / 26 Examples The 'Exploiter' focuses on exploiting the company's resources to optimize its endeavors of new business creation and innovation Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Exploiter Exploiter Description • Main focus is on exploiting the company's resources to optimize its endeavors of new business creation and innovation. • It is aimed to derive financial profit by leveraging industry expertise and channels as well as improving performance • Efficiently providing internal mechanisms to manage the interfaces and the flows of financial and other resources to develop radical innovations. • Excellence Programs, Venture Optimization Programs • Procter & Gamble Connect + Develop 5
  • 27. Tobi Gutmann / HHL / 27 Examples The 'Commercializer' increases the company’s cash resources by harvesting existing intellectual property or other assets Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Commercializer Commercializer Description • Pure financially orientated CV activities with innovation flowing from the inside-out are exploiting the existing company's assets with the aim of monetizing them. • It is a way of leveraging assets such as patents, technologies, managerial talent and license them or spinning out businesses that do not fit into the corporate strategy • Commercialisation, Licensing, IP Trade Sales • Siemens Technology Accelerator 5
  • 28. Tobi Gutmann / HHL / 28 Examples The 'Financial Investor' applies the independent venture capital model to the corporate context solely for financial reasons Corporate Venturing Framework along two dimensions Direction of Innovation Flow PrioritizationofObjectives Inside-In Inside-Out Outside-In Financial Investor Exploiter Strategic Investor Commercializer Venture Builder Educator External Explorer Intrapreneur Internal Explorer VII VIII IX IV V VI I II III Balanced Primarily Financial Primarily Strategic Introducing a coherent Corporate Venturing Framework: Financial Investor Financial Investor Description • In this context, a corporation has several options: • become a limiting partner of an external venture capital fund • invest in an internal corporate venture capital fund managed by corporate employees • syndicate with independent venture capital firms • hire a venture capital firm to run a dedicated fund where the corporation is the only investor • invest in a targeted "pooled fund" with other investors • Fund Investments, Pension Fund investments • Sapphire 5
  • 29. Tobi Gutmann / HHL / 29 Academic discussions of Corporate Venturing are framed within Corporate Entrepreneurship research Breakdown of Corporate Entrepreneurship Source: Kuratko et al., 2015, Covin and Miles 1999; Hitt et al. 2001; Ireland et al. 2003; Ireland and Webb 2007; Morris et al. 2011. Corporate Entrepreneurship Corporate Venturing Strategic Entrepreneurship External Venturing Internal Venturing Sustained Regeneration Domain Redefinition Organizational Rejuvenation Business Model Reconstruction Strategic Renewal Description Adoption of a new strategy Introduction of a new product into an existing category Reconfiguration of existing product or market categories Internally focused innovation for strategy improvement Redesign of existing business model Building blocks and logical breakdown of Corporate Entrepreneurship Research New business creation that originates within the corporate structure New business creation that originates outside the corporate structure
  • 30. Tobi Gutmann / HHL / 30 Process The aggregated venture creation process of our startup studio sample can be divided into seven steps
  • 31. Tobi Gutmann / HHL / 31 Process Venture Creation processes have also been described before (Vogel 2016) VENTURE OPPORTUNITY DEVELOPMENT & EXPLOITATION Venture Concep t Individual-Level Factors (Personality, Human Capital, Social Capital, etc.) External Factors (Industry and Market Characteristics, Regulatory and Socio-Demographic Environment, etc) TRIGGER Ressource Push and/or Market Pull and/or Desire to Start VENTURE IDEA GENERATION Intentional Idea Generation Accidental Discovery Legacy Ventur e Idea Path Venture Opportunit y Incubation Evaluation Desirable Feasible Pivoting Exploitaion
  • 32. Tobi Gutmann / HHL / 32 Rocket Internet Platform Rocket Internet Platform Infrastructure ProcessesTechnology Rocket Network of Companies Infrastructure Processes Technology Rocket Network of Companies • Proven business models • Standardized Master-Launch-Process • Highly structured best practices • Centralized IP with regional execution • Proprietary technology • Same technical platforms • Partnerships and framework agreements • Predictable and repeatable • Leveraging on country knowledge • “never make the same mistake twice” • Learning curve effect • Deep technical and operational expertise • Experience in world-class internet business