Corporate Venturing Ch 8: Organizing the Venture

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Corporate Venturing Ch 8Organizing the Venture

• Chapter focuses on two key activities
• (1) Ventures focal activity
• Activity that drives the rest of the ventures
  activities
• (2) Key linkages
• Need to be established between the venture and
  the rest of the parent organization

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Crucial Variable Relatedness

• Relatedness degree to which the ventures
  product, market and technology are related to
  those three factors in the parent organization
• Issues to be addressed
• Highly related Capitalize on existing corporate
  know-how
• Not related greater learning challenges for
  venture
• Management focus on area where the greatest
  amount of learning must occur
• Linkages Established to enable the venture to
  tap useful know-how from parent
• Example If lack of experience involves market
  knowledge organize venture around dedicated
  marketing sales team.

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Principles to Guide Organization of Ventures

• Design focal activity to meet learning challenges
• Which activity should be the ventures focal
  point and driver?
• Development vs. production vs. sales service
• Design linkages to capture know-how
• Link ventures focal activity with parts of
  parent that possess needed know-how
• Goal design venture to maximize learning as soon
  as possible
• Learning def The process of obtaining
  information and discovering solutions to problems

4
Venture Intrusions

• Issue When venture management tries to tap into
  know-how, may be perceived as intruding or
  interfering with major on-going activities
• Passive Intrusions Ventures interaction with
  core business treated as a nuisance
• Venture manager disregarded when trying to secure
  support
• No real harm done
• Active Intrusions Ventures interaction with
  core business actually disrupts ongoing business
  of parent
• Real harm is done
• These intrusions need to be avoided, even if
  know-how sacrificed

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Types of Ventures

• 7 types of ventures based on combinations of
  product, market, and technology relatedness
• Type 1 Product Augmentation
• Type 2 Product Development
• Type 3 Technology Innovation

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Types of Ventures, Cont.

• Type 4 Market Augmentation
• Type 5 Vertical Integration
• Type 6 Technology Commercialization
• Type 7 Blue Sky

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Venture Organization Summary

• Organize to maximize learning
• Organize to maximize capture of know-how
• Organize to minimize and manage intrusions
• Use the simplest possible coordinating mechanisms
  to meet linkage needs