Business leaders must juggle the challenge of meeting Wall Street's quarterly expectations while also nurturing the development of innovative technologies and products for long-term growth. To strike a balance, companies often opt for cautious expansion through product line extensions or entering new international markets. However, a more proactive approach involves starting and growing new ventures alongside the existing business, which can lead to significant earnings and profit growth. There are five key corporate growth strategies that can be applied using a venture approach, which can be a substantial source of growth for businesses of all sizes. Leaders focused on performance will leverage these strategies for notable growth, despite the complexities involved.
In this strategy, a new business venture is nurtured within the confines of an existing corporation, allowing the parent company to focus on delivering short-term results expected by Wall Street. Simultaneously, it enables the development of future revenue streams through next-generation products and services. This approach fosters innovation by providing valuable insights from established units and focusing on unmet customer needs or unique market insights. By staffing the venture with passionate individuals and applying a structured methodology, success can be ensured through building foundational knowledge, assessing market feasibility, developing and testing a prototype, confirming economic viability, and ultimately launching the product. The pace of the internal venture's progress can be adjusted based on allocated resources. If the venture falls short of expectations, team members can be reassigned within the organization to minimize risks. However, finding managers with the right blend of experience and entrepreneurial spirit, assembling cross-functional teams, and managing internal tensions and politics present significant challenges. Additionally, there is a risk that focusing on new ventures might distract from the core business, potentially opening doors for competitors. To navigate these challenges, it is crucial to understand the industry's history and culture, set realistic expectations, and rethink organizational structures to ensure autonomy and effective decision-making. Committing capital and establishing clear evaluation criteria signal serious intent and enable progress. Establishing necessary infrastructure and support systems upfront is essential, as is adopting a venture capitalist mindset that acknowledges not all investments will succeed but maintaining a flow of viable ideas is key. Allowing individuals to volunteer for the new venture can ensure that the team is both passionate and skilled. Reflecting on the period from 1990 to 2000, when $3 trillion of new wealth was generated on the NASDAQ largely by entrepreneurs and venture capitalists, it is evident that few large corporations participated in this growth. However, companies like Corning and Thermo Electron stand out for their success in creating new businesses by leveraging their technological, manufacturing, and marketing expertise. For instance, Corning generated eighty-four percent of its revenues from products developed in the last five years, thanks to its focus on the optical communications revolution. Similarly, Thermo Electron's strategy of spinning out new businesses led to a culture where young engineers aspired to create new ventures within their first five years. These examples highlight the potential for corporations to invent and grow new businesses internally, contributing significantly to their long-term success and innovation.
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