How can External Corporate Venture Builders help disrupt within non-disruptive spaces?

Disruption happens 90% of the time in Startups or in very young companies, whereas established companies tend not to be so disruptive, but, How can a established company be disruptive? There is a way.

For those who don’t know what a Venture Builder is, here we have a little description:

A Venture Builder is an organization dedicated to systematically produce new companies. These entities provide a framework that facilitates the creation, development, and growth of startups by offering shared resources, expertise, and infrastructure.

Last week I wrote about disruption and why established companies are not likely to disrupt in their businesses. However, I did not mention the fact that this mantra can be broken into a thousand pieces. How?

Venture Builders are businesses, within larger corporations or independent, that dedicate their entire activity to build businesses, either for themselves or for their “customers”, this depends on the focus the company has. As a consequence, this is a way to brake the “disruption rule”.

The workflow in a Venture Builder typically starts with an idea generation and it often ends with a network access, but in between there are several other tasks and steps.

Idea Generation

Venture builders generate ideas for the businesses they launch or help launch, however, this ideas do not come from random moments or by artistic inspiration. It has a methodology and a previous work. They usually start with a base of expertise, a business area that their customers or founders know enough to be able to succeed or to see the pros and cons for each idea.

For example, a snack distribution company would have in front of them 6-8 ideas which are somehow related to their core business, but with enough potential to be disruptive or be able to stand out from their competitors and add value somewhere else.

Validation

These ideas that have been generated must be validated, check that apart from having a nice appearance there is a market need or that the value they can add is significant and potential customers are willing to pay. During this process, it is likely that some of the ideas that have been generated previously drop from the list, as they will not pass the validation step.

Choose

Once the validation step is over, and some ideas have been dropped, the team chooses the idea that will be pursued. Depending on the case of venture builder, this election will be made by the venture builder and their members, or by the customer, we will dive into this later on.

Funding

If the Venture Builder is not a corporate one, they usually need to go get external funding, due to a risk segmentation strategy. Corporate Venture Builders or External Venture Builders are more likely to skip this step.

Start building

Usually, Venture Builders are powerful yet lean organisations. Whether the idea is a software or something more tangible, they have capabilities to build and industrialise bussiness concepts. Does not matter is a SaaS or an electric motorcycle, they have very qualified teams and partners to bring those live.

If the particular case involves an external corporate venture builder, this process, as well as most of the previous ones, are done very closely with the customer, in order to get insights and feedback about each of the steps.

Prototype presentation & Integration

Once the product is almost built, there is an internal presentation, where the final result is unveiled, and where the last aspects are decided in order to go to the next step, but before, there is an integration process where, if the product has been built for an existing company, it is integrated into the company’s organization chart so it is coherent with the company, even though it is disruptive.

Launch

Once all the previous aspects have been closed and cleared, the product is launched. For this step, the Venture Builder is key, has they are the ones who have conducted most of the market research and distribution channels and they know how the product or service can get better reach and impact.

Why External CVB are a key to disruption for established companies?

Just think of a very big market player, which has been around for +150 years, name it Coca-Cola. Their business model, as Warren Buffett says, it is perfect, their business consists in mixing water with powder and selling it x15 more expensive than water. You might think this is an unrealistic description, which it is, however, it would be quite natural to think that a company which does something pretty basic would have more difficulties in finding other more sophisticated and disruptive revenue streams.

Good news is that Coca-Cola does not need to hire (And pay) 250 brilliant entrepreneurs from all over the world in order to generate disruptive businesses within the Coca-Cola holding, they can hire an External Corporate Venture Builder and work together with their assets (The Venture Builder team) to build disruptive businesses within (Or outside) their expertise and make them stand-out from the crowd.

To sum-up, there are a bunch of reasons why External Corporate Venture Builders can help established companies disrupt:

Lack of Bias

Most of the times, established companies carry with them a heavy bias, because of which they are unable to take disruptive decisions or even, one step back, generate disruptive ideas. Venture Builders do not have that bias, and they are more prone to generate disruptive, realistic and applicable ideas.

On Point Talent

Disruptive creators are expensive, and so are Venture Builders staff, which means that hiring a wide-range team of fully qualified people for just a project might not be the smartest decision. This comes along with the next reason.

Experience

Teams at Venture Builders have navigated the technicalities involved in the process of launching a disruptive business idea, those that even established companies may not know or they wouldn’t even bother to research. Also, these teams see 5-6 projects every year, and they combine experience in various fields that can serve as inspiration and could even help establish the roadmap for the newborn company.

Risk Mitigation

Existing companies are rarely risk tolerant, which means that their risk levels would not allow them explore and exploit very lucrative alternatives. Also, the fact that the idea has gone through so many steps and so many people from so many fields and environments has heard the idea and how it will be implemented, makes much easier to detect defects, misunderstandings or anything that could potentially not help the new company succeed.

All these constitute reasons for existing companies to go and talk to Venture Builders and try see them as the partners who can help them bring disruptive businesses to their spaces and start building the future in their industries.

It is important to remember that if you don’t do it, somebody else will come and do it.

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