From Start-Up to Scale-Up

FROM START-UP TO SCALE-UP: HOW
CORPORATE STARTUPS SURVIVE THE
TRANSITION
Excubate GmbH, March 2016

2
WHAT WE DO:
„WE HELP CORPORATES
INNOVATE LIKE A STARTUP
AND BUILD THEIR
DIGITAL BUSINESS MODELS”
COPYRIGHT 2016 | EXCUBATE GMBH I NOT TO BE USED FOR COMMERCIAL PURPOSES WITHOUT EXCUBATE'S WRITTEN CONSENT

5
QUESTION IS NOT
„HOW TO EXPLOIT“

6
QUESTION IS
„HOW TO SCALE“

9
EXPLOIT
EXPLORE
Innovate
• radical
• autonomous
• creative
• ...
Optimize
• incremental
• efficient
• excellent
• ...
Implement
• fast, agile
• aggressive
• repeatable
• ...
SCALE

11
„HOW TO SCALE A
CORPORATE STARTUP“

12
”If managed effectively,
a corporate startup has
the resources of a large
organization and the
entrepreneurial momentum
of a small one.”

13
BUT…DOES THAT
ACTUALLY WORK WITH
CORPORATES?!

14
EXPERIENCE
SHOWS WHY…

ACCESS TO RESOURCES
AND CAPABILITIES COULD
BECOME INFLEXIBLE
LIABILITIES.
…blocking the scale process as assets
are tailored to execute the existing
business model, not to help search for
a new one and scale it.
1

INTERNAL VENTURES MUST
FIGHT ON TWO FRONTS
RISKING FOCUS AND
ENERGY.
…externally achieving product market fit
and scaling the new business AND
internally obtaining the permissions,
protection, resources, etc. needed to
launch the venture initiative, and work to
retain that support over time as conflicts
arise
2

STRATEGIC & RESOURCE
DEPENDENCY LEAVES NEW
VENTURE AT CORPORATES
MERCY.
...increasing risk to get stopped before
showing profits, e.g. imagine one bad
quarter for the company or the arrival of
a new CEO who wants to clean house
3

FINDINGS FROM 42 INDUSTRY
EXAMPLES SHOW THAT ASKING:
“SHOULD WE SEPARATE
THE NEW BUSINESS
MODEL
OR SHOULD WE KEEP THE
TWO TOGETHER?”
IS THE WRONG WAY TO APPROACH IT.COPYRIGHT 2016 | EXCUBATE GMBH I NOT TO BE USED FOR COMMERCIAL PURPOSES WITHOUT EXCUBATE'S WRITTEN CONSENT 18

A MORE USEFUL QUESTION IS:
“WHICH FUNCTIONAL
COMPETENCE AREAS DO I
OPERATE SEPARATELY AND
WHICH CAN I OPERATE
TOGETHER AND WHEN?”

TO FIND OUT,
THREE THINGS
MATTER:

21
STRATEGIC SUCCESS
FACTORS (HOW TO WIN)
1

STRATEGIC SUCCESS FACTORS (HOW TO WIN)
WHAT DOES IT TAKE TO SCALE THE NEW VENTURE?
Management
Capabilities
HR management
and culture
Operating
Capabilities
Customer
relationship
Proprietary
Assets
Tied customer
network
Portfolio
management
and finance
Supply chain
and logistics
Tangible assets
M&A, JV,
Partnering
Production and
operations
Scale
Regulatory
management
Development
and innovation
Technology & IP
BU strategy
and driving
priorities
Go-To-Market
Brand
INTERNAL CUSTOMER FACING
 How do we differentiate tomorrow (vs. today)?
 Which of these factors would make the new venture even stronger?
 Which are the strengths of the existing core organization and which can be brought
into a the new venture?
 Where are gaps that need to be closed by the new venture to successfully scale?
Overlap New/Core: Low/none high
Industry Example:
Little overlap on
management
capabilities, but
leverage/synergies
of assets
1
CLIENT EXAMPLE

SIMILARITY OF
BUSINESS MODELS
2

BUILDING BLOCK SPECIFICATION AT
CORE & NEW
BUSINESS
ELEMENT
SIMILARITY
SYNERGY
POTENTIAL
CONFLICT
POTENTIAL
CHANNELS
 Through which
communication,
distribution, and
sales channels
are we reaching
our customers?
CORE
 Same companies
but other contacts
 Core to act as
facilitator
NEW
 Other communi-
cation channels
(i.e. LinkedIn, FB)
RECOMMENDED
SEPARATION LEVEL
Fully
Integrate  Fully
separate
CUSTOMER
RELATIONSH
IP
 What type of
relationship have
we established
with each
customer
segment?
 How are they
integrated with
the rest of the
business model?
CORE
 Account Executive
(Incentives,
bottleneck,
compliance needs)
 Quarterly driven
NEW
 Campaign driven
 …
RECOMMENDED
SEPARATION LEVEL
Fully
Integrate  Fully
separate
EVALUATION OF NEW AND CORE BUSINESS MODELS
BY BUILDING BLOCK (EXAMPLE EXTRACT)
2
CLIENT EXAMPLE

25
VALUE CHAIN ANALYSIS
3

ANALYSE VALUE CHAIN BY PROCESS
PROCESS STEPS, DEPENDENCIES CORE/NEW, BOTTLENECKS RE SCALING
e.g. SALES PROCESS
TERRITORY
MANAGEMENT
LEAD
GENERATION
OPPORTUNITY
GENERATION
QUOTE
GENERATION
CONTRACT /
DEAL CLOSURE
 <<disguised>>
1 2 3 4 5
 <<disguised>>  <<disguised>>
1) Capacity and
capability bottlenecks of
Account Executives
6) Reporting requirements of core business
 <<disguised>>
2) Standard margins to
be used (> discount
Corridor?)
3) Account Executive
Involvement, danger of
affecting customer
relationship
 <<disguised>>
4) Bottleneck due to
country head signature
need for each order
5) Acceptance of terms
of existing contracts
Dependencies CORE/NEW &
Potential Bottlenecks/ Risks re Scaling
3
CLIENT EXAMPLE

27
FOUR POSSIBLE SETUPS
TO USE/BUILD FUNCTIONAL
COMPETENCE AREAS RESULT
FROM EVALUATION

SEPARATION
STRATEGY
FOUR POTENTIAL SETUPS
INTEGRATION
STRATEGY
PHASED
INTEGRATION
STRATEGY
PHASED
SEPARATION
STRATEGY New
Core
New
Core
New
Core
New
Core
Source: Costas Markides, Competing with dual business models: A contingency approach; Excubate analysis

29
NOW, OPERATIONALIZE FOR SCALE…
Really understand for each new
business how similar / different
the new business is (how to win,
business model, value chain)
Define workable future state
(decision logic, separation /
integration approach)

SEPARATION
STRATEGY
TAKE ONE OF YOUR CORPORATE
STARTUPS – WHERE WOULD YOU PUT
IT?
INTEGRATION
STRATEGY
PHASED
INTEGRATION
STRATEGY
PHASED
SEPARATION
STRATEGY New
Core
New
Core
New
Core
New
Core
Source: Costas Markides, Competing with dual business models: A contingency approach; Excubate analysis

NEED TO SCALE? CONTACT EXCUBATE!
OFFICE: YOUR CONTACTS:
Im Mediapark 5, 50670 Köln Tammo Ganders, MBA Dr. Markus Anding
innovate@excubate.de ganders@excubate.de anding@excubate.de
www.excubate.de +49(0)152 5367 8314 +49(0)177 5630 950
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