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Corporate venturing medellin carter williams final
The document discusses corporate venturing and provides lessons from a case study. It begins by outlining reasons for corporate ventures including making money, subsidizing R&D, finding new technologies, and attracting talent. It then details a case study of a chairman's initiative at one company that provided funding and support for employee ideas. Key lessons from the case include the importance of an internal innovation ecosystem and barriers to corporate innovation. The document concludes with next steps around sourcing talent, assessing venture risks, studying past innovation histories, and setting goals.
Corporate venturing medellin carter williams final
- 2. Corporate Venturing Teaching Elephantsto Dance Not Afraid to Fail 2
- 3. J. Carter Williams SerialEntrepreneur & Managing Director Open Innovation Ventures & Founder MIT Corporate Venture Consortium & Founder Boeing Ventures Corporate Venturing Email: carter@oiventures.com Web: www.oiventures.com Twitter: oiventures Outline of a Discussion Medellin, 09 March 2011
- 4. • Why CorporateVentures • How to do it: Case Study • Key Lessons Learned • Next Steps 4 Today’s Discussion
- 5. • Entrepreneurs: 25%of US GDP growth, 12% of population • S&P 500’s top quartile performers are only 10 years old • Over 80% of new jobs are generated by small business • 34M new jobs since 1980 while Fortune 500 lost 5M Jobs • 71% of ideas are modified ideas encountered in employment • 80% of start-up funding is from customers and savings • 80% of Forbes 400 are first generation • 20% of downsized managers over 40 start a business 5 U.S. Innovation Data Why Corporate Ventures
- 6. Integrating Two Worlds WhatCorporations Do Well • Deliver large scale systems without compromise • Build enduring relationships with current customers • Leverage processes to deliver value • Manage Programs What Entrepreneurs Do Well • Make scale and legacy irrelevant • Find whole new customers and build new relationships • Leverage talent to deliver value • Manage Opportunity Corporations can achieve top decile S&P 500 performance by integrating entrepreneurial DNA into Corporations world class systems, processes, relationships and opportunities. Why Corporate Ventures 6
- 7. Reasons to Venture…. •Make Money – Pension Fund – No better place to put money • Subsidize R&D – Spin Out and Re-acquire – External capital is momentarily cheaper than internal • Disruptive Technology – Prevent “Corporation” from killing good ideas • Talent – VC model attracts talent – Compensate Innovative Employees • Find Technology – Search the Earth – Hedge – Leverage company's distribution and marketing • Set Standards – Get developers on board – Intel A-64 7Why Corporate Ventures
- 8. 8 A Case Study 2001 1Million parts flying in formation
- 9. • Find andImplement Growth Opportunities • Eliminate the Barriers to Opportunities • Gain Recognition as an Innovative Company • Capture and Grow Employee Enthusiasm • Create Multiple Paths to Growth Chairman’s Initiative Chairman’s Innovation Initiative Provides Every Employee the Opportunity to Identify Growth Opportunities 9How to: Case Example
- 10. Disciplined Investment Innovator Decides & Acts Phase1 Phase 2 Gate 1 Review Gate 2 Review Phase 3 Gate 3 Review Gate Reviews 2 page white paper (WP) Refine WP 54 6 $30- $60K $50- $100K Prototype and market validation Product and market dev. Market expansion Innovation Resource Center resources assigned Develop Business Plan Improve Business Plan BPBP Board of Advisors (BOA) Oversight Needs more work BV Mentor assigned: Coaches innovator, helps with WP and process Value RealizationValue Creation (Chairman’s Innovation Initiative) WP BV Partner/ Advisor assigned: Assists and coaches in planning phases Idea $0.5- $1.0M $5 - $10M BV Partner: Advisor Portfolio Manager Implement Business Plan Boeing Ventures Investment Commitment Re-work and re- submit How to: Case Example 10
- 11. • Entrepreneur – Someonewith a new business idea who wants to build a business • Prospective Team Members – Self Nominating list of people interested in joining new ventures • Mentors – Business Generalist who coaches teams, through all phases, on marketing, engineering, finance, etc. • Specialists – Tech Fellows, Venture Capitalists and other non-technical skills that are available on an ad-hoc basis to help answer specific questions Internal Ecosystem 11How to: Case Example
- 12. Spin-Outs 3 7 in Phase4 784 Submittals 7 in Phase 3 30 in Phase 2 60 Active Projects 190 Concepts Mentored 12How to: Case Example
- 13. Barriers to CorporateInnovation “Can We Innovate” vs. “Can we remove the barriers to Innovation” Risk Tolerance New businesses share the companies balance sheet, but have different investment patterns Oversight The governance for core vs. growth businesses differs greatly Talent Employees from the core business rarely have skills to lead new business Procedures Indemnification, benefits, compensation, annualized systems, etc 13Key Lessons Learned
- 14. • 99.7 %of corporate venturing groups cease operations within 3 years, regardless of performance. • Many firms will re-start corporate venturing activities every 5-10 years. 14 Corporate Indecision It takes 7 Years for classical ROI success Talent is the leading indicator Key Lessons Learned
- 15. Real Growth TakesTime 15Key Lessons Learned
- 16. Premise1: A firms mostenduring asset is its customers Corollary 1: The importance of marketing and distribution exceed that of R&D Premise 2: Corporate Venturing is about renewing a corporation’s innovative aptitude, its aptitude of understanding customer value. 16Key Lessons Learned Innovation is harder than Invention
- 17. • Immerse…. ……employees inentrepreneurial endeavors ……decisions makers in entrepreneurial leadership ……technologists in entrepreneurial innovation • Expose barriers to entrepreneurial models …….legal, risk, HR, finance etc. • Shift from “Omnipotent” to “Market Validation” based decision making • Tap into the unutilized talent of employees (under-employed) Create the Culture Next Steps 17
- 18. The Ecosystem andThe Goal Corp. Partner IPO Other Trade Sale Education Tech Transfer Forum Mentor Network BioGenerator Nidus Center for Emerging Technology Source Qualify Mentor/Angel VC University IP Company IP Entrepreneurs Plant & Life Sciences Advanced Manufacturing Information Technology Referrals incubators, corporate, Venture Capital Investment Conferences Advocate Wash U Idea Bounce Hatchery University Enterprise Forum Bio Tech Committees Real Time Embedded Systems Groups Bio Informatics Communities Incubators Local Midwest National Steady State GOAL: 3 to 5 $50 million companies/year 20 Funded 100 Qualify 50 Mentored 200-300 Technologies External Sourcing (Non St. Louis) County Incubators Layoffs Exit Arch Angels 3-5 Exits Next Steps 18
- 19. • Pursue Companyand Regional Alumni – Smart people who left region: 30-50 years old – Value Prop: Life in Medellin is easier and affordable – Make a difference for your community • Corporate Network – Pickup talent local corporations identify but don’t use – Link to Layoffs/Early Retirement/Down Sizing • Database for Talent: LinkedIn, Etc • Recruiters – Search firms / In country reps / Speeches • Venture funding with feet in talent pools (Boston, India) • Angels – Match fallen angles (“Talent”) with money • Leverage Parents and Grandma Talent is Vital Next Steps 19
- 20. • Technology Risk:High, Medium or Low? – BioMed, Energy, Agriculture, Steel, Textiles, etc – Natural advantage? • Market Risk: High, Medium or Low? – Inventory our relationships with potential corporate acquires against the region’s technology base and large companies. – Relationships with bigger markets? • Funding Risk: High, Medium or Low? – How much money do we need to succeed? – Money follows people – Can someone tap into regional wealth? • People Risk: High, Medium or Low? – Entrepreneurs / Boards / Angels / Investors Exercise #1: Venture Assets Next Steps 20
- 21. • What isthe history of company’s greatest success? – What is the product considered most responsible for company success…… ….a product you had little to do with…. ….something that “made the company” – Find the original employees and customers from that time, and ask them: • How did the product come to be? • Was it always deemed a success? • Did you ever think it was going to fail? • What made it a success in your company? – Do the same study for a project that became a failure. 21 Exercise #2: Innovation History Next Steps
- 22. • Have agoal in mind (10M? 20M?) • Would an Entrepreneur want to do business with your corporation • Customers are the only validation of Innovation • Bill Gates, Steve Jobs and Mark Zuckerburg have the same 24 hours in their day • It will take 7 Years to see classical ROI results, so focus on Revenue growth 22 Next Steps? Next Steps