Setting Up a New Business Building Organization: A Guide for Established Companies

In today’s fast-paced, innovation-driven market, many established companies are exploring ways to remain competitive and relevant. One effective approach is by creating internal venture studios dedicated to building new businesses. These studios focus on developing innovations that go beyond the company’s core offerings, leveraging existing assets, and exploring new business models. In this blog post, we’ll delve into the key elements necessary for setting up a successful business building organization, highlighting strategic planning, asset utilization, innovative business models, and effective governance structures.

1. Strategic Planning: 

Focusing on New Business Beyond the Core with Ecosystem Thinking
The first step in setting up an internal venture studio is to define a clear and strategic focus. This strategy should aim at identifying and developing new business opportunities that are not just extensions of the current core business but rather explore new markets and value propositions. A critical aspect of this strategic focus is ecosystem thinking.

Ecosystem Thinking

Ecosystem thinking involves looking beyond the traditional boundaries of your business to understand and leverage the wider business environment. This means identifying potential partnerships, customer needs, and market trends that can shape new business ventures. By adopting an ecosystem perspective, companies can create a holistic strategy that includes:

Collaborations and partnerships: 

Working with startups, technology providers, and other industry players to co-create solutions.
Customer-centric innovation: Understanding and anticipating customer needs that are unmet by the current market offerings.
Scalable solutions: Developing business ideas that can scale quickly through network effects or platform dynamics.

Aligning with Long-Term Vision

The venture studio’s strategic focus should align with the company’s long-term vision and goals. This alignment ensures that the new business ventures not only contribute to immediate financial goals but also build towards the company’s future positioning and market relevance.

2. Leveraging Assets of the Company

Established companies have significant advantages over new startups due to their extensive resources and capabilities. When setting up a venture studio, it is crucial to effectively leverage these assets to accelerate new business development.

Key Assets to Leverage

• Brand recognition: Utilizing the company’s established brand can provide new ventures with immediate credibility and trust in the market.
• Customer base: Access to the existing customer base allows for direct feedback and rapid iteration of new concepts.
• Operational capabilities: Using existing supply chains, distribution channels, and operational processes can lower the cost and speed up the market entry for new ventures.
• Integrating with Innovations
  While leveraging existing assets, it is essential to ensure that these resources are effectively integrated with the innovative ideas being developed. This might involve adapting operational processes or rethinking customer engagement strategies to better suit the new business models.

3. Focus on New Business Models: Platforms and AI

In the digital age, some of the most successful new businesses are based on platform business models or utilize artificial intelligence (AI). A venture studio should consider these areas as they offer significant opportunities for growth and scaling.

Platform Business Models
Platforms create value by facilitating exchanges between two or more interdependent groups, usually consumers and producers. They are powerful because they create a network effect—the more users a platform has, the more valuable it becomes to each user. When developing platform-based business models, consider:

• User engagement: Strategies to increase user participation and retention.
• Monetization strategies: How the platform will generate revenue, whether through subscriptions, advertisements, transaction fees, or premium services

Leveraging AI
AI can provide a competitive edge by enabling better customer insights, automating operations, and personalizing user experiences. Ventures that effectively use AI can significantly enhance their value proposition by:

• Improving decision making: Using AI for predictive analytics and better decision-making processes.
• Enhancing customer experiences: Employing AI for personalized services or recommendations.

4. Setting Up the Right Governance Structure to Bridge the New with the Core

A key challenge in setting up a venture studio is ensuring that the new business initiatives are effectively integrated with the core company. This requires a robust governance structure.

Beyond the Core Growth Board
One effective governance mechanism is the establishment of a ‘Beyond the Core Growth Board’. This board should include senior leaders from various parts of the organization and should have the following responsibilities:

• Oversight and guidance: Providing strategic oversight and direction for the venture studio.
• Resource allocation: Deciding on the allocation of resources between core activities and new ventures.
• Performance monitoring: Tracking the performance of new ventures and ensuring they align with the company’s overall strategic goals.
• Balancing Autonomy and Alignment
  The governance structure should strike a balance between giving the venture studio enough autonomy to innovate and ensuring alignment with the core business’s goals and strategies. This involves setting clear boundaries and communication lines between the venture studio and the core business units.

Conclusion

Establishing an internal venture studio is a strategic decision that can lead to significant business growth and innovation. By focusing on strategic planning with ecosystem thinking, leveraging company assets, exploring new business models like platforms and AI, and establishing a solid governance structure, established companies can effectively navigate the complexities of building successful new businesses. This approach not only ensures the relevance in an ever-evolving market but also maximizes the potential for sustainable growth and innovation.