Six key factors to successfully build new digital businesses
Business survival in today’s climate relies on corporate innovation. For companies in North America (and globally) here are 6 factors to be considered.
Recent world events have left the global economy in a particularly volatile state. While the US, Canada, Mexico and other North American countries might have all been affected very differently by the ongoing pandemic, they are united in the economic challenges they face. In these unprecedented times, businesses cannot continue to operate as they always have. To be successful, they need to innovate - and they need to do so fast, sustainably and, above all, differently.
This is easier said than done. While corporations remain a suitable breeding ground for innovation, due to the assets, resources and the considerable network that they bring to the table, they often have the wrong corporate governance structure in place, little-to-no board involvement and lack the right talent (and the necessary incentives to attract that talent) to successfully conceive, execute and scale digital business ideas. Top entrepreneurs and startups often struggle to scale up their transformative ideas into a sustainable and impactful business model because they lack the necessary assets and network. The solution sounds obvious: corporations need to join forces with top entrepreneurs to collaboratively and rapidly develop, implement and scale innovations.
This approach - which has the potential to bring about meaningful change, not just in economic areas, but particularly in health and climate - is called Corporate Venture Building (CVB). Organisations in North America and across the world that want to channel the power of CVB to successfully innovate and create new sustainable and impactful digital business models, need to keep the following six success factors in mind.
- Board commitment and involvement - Innovation starts with dependable buy-in from the corporate board and direct access to it. Innovation is not always an overnight process and relies on long term commitment in order for it to be realised. By ensuring that the corporate board is committed - and more importantly engaged - innovators spearheading new initiatives and projects can guarantee they will have the support they need to create new digital business models.
- Activate and leverage corporate assets - Just as innovation is contingent on support from the corporate board, so too does it depend on corporate assets. Innovation does not occur in a vacuum and needs supporting technologies, expertise and funding to really thrive. Too often, organisations are trying to reinvent the wheel instead of activating and leveraging the assets they already own. Doing so is a major accelerator for successful corporate innovation.
- It's all about the team (and incentives) - It is critical that corporations put the right team with the right skill set and experience in place, if they want to successfully innovate. Today’s innovators are no longer the lone madcap geniuses of yesteryear. They value working with the right people and organizations as much as – sometimes even more than – having the right idea. Especially in the early stages it is essential to line up committed and enthusiastic partners that share the same sense of purpose. While they may love doing what they do, it doesn’t mean they want to do it for love alone. Incentives are equally important, and the big businesses that have been best at getting what they need from collaborations with entrepreneurs have always made sure their junior partners get their share of the spoils.
- Assemble the right people within the core organisation, it's a co-creation - Another critical factor for successful innovation is whether the business has an ‘internal champion’ with deep insights into the situation and the ability within the organization to carry out the task of “translating”. Successful innovation is ultimately a joint venture between an existing organisation and the external talent they bring in. The creation of an Entrepreneurial Growth Board - which brings together the senior executives and key decision makers of the group with the entrepreneurs and heads of the new ventures - is an important step to create cohesion between the innovation unit and the corporation.
- Work on eye-level - The leaders bringing this innovation must have a voice in the boardroom to discuss their ideas and any challenges they are facing at eye-level. They need to be treated as equals and their voices need to be heard. Corporations cannot expect entrepreneurs to work their magic without giving them the autonomy and decision making power they are so used to. Successful corporate innovation is a collaborative effort between the corporation and entrepreneurs in equal parts, and needs to be treated as such.
- Have strategic alignment and impactful cases you are delivering - Innovation for the sake of innovation is rarely a success. Only if there is clarity on what an organisation actually wants to achieve and there is strong alignment with the overall corporate strategy will innovation initiatives truly be a lasting success. While it is important to move at pace, it is critical for corporations to take the time and provide this direction to entrepreneurs right at the start.
If organisations in North America and the rest of the world approach innovation with these 6 key success factors in mind, the chances of successfully launching new and strategically relevant ventures that will develop into valuable businesses, benefit the core organization and even create the possibility of making the world a better place are very much higher.
But rethinking our approach to successful corporate innovation has to happen now. We need speed. We need scale. We need strategic direction. Organisations across North America and the world need a new approach of building digital businesses so that we can collectively make best use of our technologies to solve the big challenges that lie ahead of us. However, no tool will help us if we don’t muster the leadership and sense of urgency needed to become more proactive in mastering the tests of our times. The time to be brave and approach innovation differently is now.