Nearly eight years of interviews and more than 100 podcasts and videos have given us great insights into senior executives and leaders of Innovation and corporate venturing all over the world. The objective of this overview is to highlight some of the key messages that illustrate a number of the best approaches and learning. This does not mean that other interviews and organisations were not exemplars, but there is only so much space.
A key framework I will use to illustrate the approaches is taken from my book – Purpose to Performance: Innovative New Value Chains – which outlines the five Ps of innovation and venturing, used for over 15 years to help leading corporates drive their corporate venturing and strategic innovation.
- Purpose.
- Process.
- People.
- Partners.
- Performance.
The examples are taken from different industries, different technology changes, varying business model disruption, which means there is no one sizes fits all. The collision of new materials, the internet of things, mobile devices, cloud data and artificial intelligence is creating the new opportunities which require a better approach to strategic innovation and venturing.
Purpose
Understanding and communicating your strategic objectives and altering those strategic objectives as you learn more about the technology, startups disrupting your sector and changing business models is a key first step.
Mehmood Khan, PepsiCo’s vice-chairman and chief scientific officer, global research and development, illustrated the PepsiCo strategic objectives for achieving performance with purpose, and he outlined the purpose of the innovation and venturing initiatives.
“At PepsiCo, we believe the products we sell, the way we treat our planet and the opportunities we create for people around the world together are the true measure of a successful 21st century company. By improving the way our food and drinks are grown and made, we continue to reduce our environmental footprint and create more sustainable prosperous communities around the world.” He then outlined the deliverables and approaches.
Rob van Leen, chief innovation officer and member of the executive committee at Royal DSM, was interviewed in 2012 and 2017. Over this period it is interesting to see how the focus areas changed and innovation has been elevated to an executive committee role. The DSM example I illustrated in my 2006 book, and again in 2017, as it shows the long-term thinking and transforming business from Dutch State Mines mining coal in the Netherlands to bulk chemicals, speciality chemicals, becoming a “global science-based company active in health, nutrition and materials”.
The way that DSM looks across the various process of innovation and venturing from fund investments, direct investments, building “emerging business areas”, M&A and R&D to deliver the innovation and transformation is a good case. This chimes with many organisations where I see these different processes.
Process
To have effective strategic innovation there are a range of processes that need to be deployed effectively by corporates. The extensive range of interviews have illustrated over the years the different processes to align with the strategic innovation purpose.
Investment in a fund as a limited partner (LP) is an approach often used by corporates to understand the investment approach, gaining traction in a local ecosystem, achieving dealflow and gaining insights on ventures.
Min Zhou of China Materialia gave us great insights into the reasons for leading corporates, such as General Electric, Samsung, BASF and Sabic, to invest in its second fund.
Corporates can come together for a jointly managed fund, and an example is Mainport Innovation Fund which was described by Ignaas Caryn who led the KLM venture fund.
There is a corporate venture capital approach in which the corporate is the sole LP. Tony Askew, founding managing partner of REV Ventures – the fund formed by Reed Elsevier, now Relx – has been leading the independent investments in strategically important sectors. Ulrich Quay of iBMW Ventures describes the approaches BMW take and why the company has transitioned to a separate limited partner-general partner fund structure. David Atkinson of Circadia Ventures, of the Tate & Lyle fund, has also illustrated the longstanding success of an LP-GP fund.
There are pros and cons to the structures of the CVC and organisations need to understand the alignment of internal and external characteristics.
The more common form of CVC structure is an allocated budget from the corporate to be invested annually with an announced duration and objective structure. There are many examples of these in our series of interviews. The longest-running and most active in its industry and technology sectors is Intel, and the interviews with Arvind Sadhani the founding leader of Intel Ventures, and Abdul Guefor give a comprehensive overview of the purpose to drive Intel strategy, and the process for the sizable global team.
Tom Heyman of Johnson & Johnson Development Corporation outlined one of the oldest CVC units – it started in 1982 investing in the development of the health ecosystem.
There are numerous examples from a range of industries, such as financial services, for example Michael Smith of USAA and Ben Letalik of TD Bank.
Incubation is another approach to encouraging and supporting innovation, such as developing an organisation’s own incubator space, like Microsoft Accelerator as outlined in the interview with Zack Weisfeld, and the connection with the Microsoft Venture fund outlined in the interview with Nagraj Kashyap.
Running an incubation process without a fixed location is another approach highlighted by PepsiCo Greenhouse, which was supported by the Aimava team, to develop the organisation’s capabilities and processes. Jan Amat outlined the process. From more than 120 applications, eight startups were chosen and received €25,000 ($30,000) and entry into a six-month incubator program. The winner of the first program was Erbology which gained another €100,000.
Unilever Foundry is an approach that worked with many global incubators and innovation centres to collaborate on promoting innovation. This approach was outlined in an interview with Jeremy Basset.
Connecting the startups and technologies to create new business models is the most strategic process and mature corporate venturing approach. Two interviews with Bill Taranto illustrate the approach of investment, collaboration and then private equity consolidation most effectively. Examples from GE in its transformation to digital service company and changes in the transport and automotive sectors are others that illustrate the change to strategic venturing approaches.
Making innovation and corporate venturing truly strategic is a whole topic in itself and was outlined in the book Purpose to Performance: Innovative New Value Chains
People
People are central to the success of strategic innovation and venturing. People are key in the interviews with their vision, communication, aligning of objectives and motivations. In addition to the interview cases I have already mentioned, I would highlight Sue Siegel at GE Ventures on the importance of diverse teams and engaging the business change. Dominique Mégret at SwissCom has spoken on programs I have led and in interviews on the importance of building trust and delivering results to be able to make CVC truly strategic.
Jacqueline LeSage Krause of Munich Re also illustrates the engaging the business and venturing in the change process.
The people we discuss in the interviews cover the executive leadership of the corporate, leaders of the innovation and venturing, team members, business unit leaders, startup founders and the relationships among these. The motivations and rewards for the various people are often also addressed.
Partners
Organisations are innovating outside their current abilities and perspective and therefore they need to work with partners. In this strategic innovation and corporate venturing context, there are a range of partners who have been illustrated by a number of very informative interviews.
Gerald Brady of Silicon Valley Bank spoke of the role of an important partner in the financing and support of ventures and VCs. Peter Cowley, who has been recognised as a global business angel, shared his perspective on attributes and benefits of early-stage ventures. Tal Badt of XLab at Tsinghua University and Quentin Compton-Bishop outlined in their interviews the role of universities, tech transfer and incubators.
Many more partners can be an inspiration and support for innovation and venturing, such as government, with Paul Morris of UKTI illustrating that role. Iain Bomphray of Williams Advanced Engineering illustrates another approach to partnering with technical expertise from a corporate to other corporates and startups to develop new solutions and business models.
The interviews with Wendy Lung and Claudia Fan Munce of IBM Ventures show that partnering can be a more significant approach to corporate venturing and it is not necessary to invest to work effectively with startups.
Performance
Organisations need to show their benefits and that they are delivering on their purpose. There is often a debate on whether the innovation and venturing are strategic or financial. In a number interviews we have shown that to be effective, organisations need to gear their venturing for financial returns in strategic areas. “You do not stay strategic for long if you are not making a financial return” is the bottom line we hear from leaders of CVC units that have been successful over many years and are respected inside and outside their organisations.
Abdul Guefor of Intel in his interview talked about the metrics that have been used over the years and the methods of aligning the investment and corporate strategic objectives.
In this review of nearly eight years of interviews I have not been able to cover all the key messages or insights from all the interviews of some great leaders of global organisations.
For a full list of interviews and categorisation of industries, process approaches, technology and geography interests, contact Marie O’Connell at Aimava: marie.oconnell@aimava.com, and see www.globalcorporateventuring.com for the Gaule Question Time archive.
You can listen to all the interviews on a podcast, subscribe at gaulesqt.podomatic.com. Andrew Gaule supports innovation programs and collaborations with “innovative new value chains” in global organisations. If you have interview ideas, email andrew.gaule@aimava.com or James Mawson jmawson@globalcorporateventuring.com