What works for businesses today may not work for them in the next few years. This is true for all businesses whether big or small.
An unforeseen crisis can happen tomorrow and halt all of a business’s operations, similar to what happened over the pandemic.
More commonly, a more agile startup could pop up out of nowhere and its more innovative offerings will most likely eat into the market share of the leading corporation in its industry. This story ends with the startup eventually replacing the corporation as the market leader.
Because of these, businesses cannot rely on their current line-up of products and services forever as they are bound to become irrelevant or obsolete. The current market conditions require all businesses to innovate by creating new products and services or by improving their current offerings.
This is where corporate venture building can help. It is a proven innovation strategy that has empowered the growth and success of leading corporations around the world.
To build new ventures, a corporation establishes a business, separate from its main business, whose main task is to design and build new innovative products and services. The goal is to diversify an organization’s portfolio of offerings, and increase its bottom line. This new venture acts as the external innovation arm of a venturing corporation.
What can corporate venture building do for your organization?
1. It creates a new ‘core business’ for an organization.
Newly established ventures always start as small businesses similar to a startup, which is why they may not contribute much to an organization’s bottom line.
However, through the establishment of these new venture businesses, a venturing organization can access new markets and diversify its current offerings. When a venture is scaled, an organization stands to gain a lot from the new markets it entered and the new products and services it made through the venture.
At a certain point in a venture’s growth, it’ll begin relying less on the organization’s financial backing and relying more on its own profit. The venture will start looking and acting as its own independent business.
It is also at this point that the venture will start significantly contributing to the bottom line of the venturing organization. Thus, the venture can now be seen as an organization’s new ‘core business’ that is completely separate from its main business.
This new ‘core business’ makes an organization more competitive and resilient to crises as the organization no longer has all its eggs in one basket. Even with just one successful venture, an organization will have access to at least two markets, a more diverse portfolio of products and services, and a lesser probability of a complete failure of the organization.
2. It is the fastest and most effective path to corporate innovation.
Many major businesses today that seem like they were created independently as a startup, are actually ventures co-created by established corporations and corporate venture builders. These ventures fully illustrate how effective corporate venture building is at innovating an organization and increasing an organization’s bottom line.
One well-known venture is GCash, which was built by Globe Telecom Inc.’s corporate venture builder 917Ventures. Globe Telecom Inc. is one of the Philippines’ biggest telecommunications providers.
GCash is Globe’s foray into the Philippine digital banking and e-commerce markets, offering consumer financial services such as savings accounts, investments, insurances, and money transfers.
Furthermore, it allowed Globe to diversify its activities by entering a new market, e-commerce, and online banking. The fintech platform allowed Globe to dominate a new market in the Philippines, outside of its main telecommunications market, in a short timeframe.
GCash reported over 60 million users and a peak of 19 million transactions a day in 2022, just 18 years after it was established in 2004. It rapidly grew from a small business to being valued at over USD 2 billion in under two decades of existence, CNN Philippines reported.
3. It helps build solutions for the world’s most pressing problems.
Innovation is always grounded in solving a problem. The world has plenty of pressing problems, such as education gaps, climate change, poverty, and inaccessible mental health services.
By solving problems, newly built ventures have the potential to positively impact the communities they work for.
For example, the fintech innovation GCash enhanced the access of Filipinos to financial and banking services, in a country where only half the population owns a bank account.
Shell’s corporate venture builder StudioX is creating products that accelerate the pace of innovation in the energy industry. The venture builder built SixLab, an accelerator program that supports startups involved in creating green energy and emissions management solutions.
These two ventures prove that corporate venture building has a strong potential to create a positive social impact.
Any organization can build new ventures to make the world a better place to live in. Learn more about how you can start innovating through corporate venture building with Embiggen Digital Ventures.
Schedule a strategy session with our team of experts and let’s build meaningful growth.