The Difference between Corporate Innovation and Corporate Venture Building

Embarking in 2021, Corporate are seeking new future for all, In one way at 2020, corporate innovators faces many challenges, starting from shifting strategic priorities, mandate, to changing even on the personal level such as team collaboration, day activities.

It’s nothing new that the innovation function is a point to grow impact for corporate, it is one of the hottest topics in Fortune 500 board rooms (Forbes).

So what is Corporate Innovation ?

Corporate innovation can be defined as the process of enterprises implementing new innovation opportunities into existing business model — PlugAndPlay

So what is the process, and implementation method?

We can see the corporate innovation blocks through these 4 alternative building block : Build, Partner, Invest, Buy. Which then correspond to the 4 corporate function : Research and Development, Business Development, CVC, and M&A.

Forbes — Scott Lenet

Then we also need to see the commitment and willingness to take risk of this innovation program:

• Operational control — this asks whether the corporation is responsible for running the innovation effort (options include full responsibility, partial responsibility, or a passive approach)
• Purchase of equity — this asks whether the corporation is acquiring ownership in an entity that it did not previously own (options include majority ownership, minority ownership, or no new ownership)

Forbes — Scott Lenet

Corporate then decide how much operation commitment and financial commitment to the new equity. Over all the higher the equity and operation commitment you put into the highest risk you will also take.

Corporate Innovation or Innovation Lab does experimentation to iterate on project .

But do they actually add value and generate growth? According to a report from Capgemini, the vast majority of innovation labs — up to 90%, one expert says — fail to deliver on their promise. Check on this awesome article by Innov8rs and see how corporate innovation will (have) to change in 2021.

So what is Corporate Venture Building ?

Gustavo Vinacua, Global Head of Venture Creation at BBVA’s New Digital Businesses. Defines corporate venture building:

‘It’s a way to leverage specific assets that let you mimic startups. Small teams are empowered to go and build something without friction or a ton of processes.’

Essentially, corporations pool their resources with a venture builder to oversee a new company. That organisation is run by an entrepreneurial team of internal and external staff. Ideally, the new company is given the freedom to build out a new product while the corporation and venture builder offer oversight and strategic guidance.

Unlike corporate innovation, and innovation lab where Banks have thrown fortunes into labs and accelerators with the sole aim of imitating disruptors, and what do they have to show for it? A lot of innovation theatre and few meaningful outcomes for the business. Turning to corporate venture building as a way to achieve some vague notion of progress isn’t likely to offer different results.

In a way corporate venture building is part of the corporate innovation effort that unlike most able to take less risk but acquire more equity.

So how does it look? Is it similar to startup ? How will it be implemented? This can be discussed on a future discussion.