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Organisational Best Practices of Startup Studios

This document discusses organizational best practices of startup studios from an academic perspective, focusing on corporate venturing frameworks to accelerate innovation and new business creation. It analyzes the structure and processes of startup studios, emphasizing the importance of coherent strategies, team organization, and venture creation processes. The findings are based on research papers and case studies, presented at an international startup seminar.

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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 ofStartup 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 ofStartup 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