5 Innovation Challenges Solved by Corporate Venturing

In this article, we’re going to walk you through some of today’s most common business challenges and how you can use corporate venturing to overcome them.

We’re in a highly competitive and rapidly changing corporate landscape, that’s become more challenging as startups are moving in and disrupting established enterprises. Just look at how disruptors like Amazon, Tesla, and Apple completely changed the way their industries worked, leaving their larger corporate competitors outpaced and outdated.

Many forward-thinking companies like Google, Lufthansa, and GE have turned to corporate venturing as a way to future-proof their businesses with stellar results. Some of the tools in the corporate venturing arsenal include incubators, accelerators, corporate venture capital (CVC), and venture development studios, just to name a few.  

We’re going to walk you through some of today’s most common innovation challenges and how you can use corporate venturing to overcome them.

Challenge 1: A lack of agility

Everyone wants to take advantage of growth opportunities (i.e. adopting a new technology or business model or putting out a new offering) quickly, before a competitor steals your thunder.

This can be a challenge for corporations that work with strict rules, hierarchies, and established bureaucracies which prevent fresh concepts ever moving beyond a Powerpoint. In the time it takes for the paperwork to be done and the approvals to be granted, smaller more flexible players have already put out an MVP and are already preparing to launch their beta product.

Corporate challenges - Lack of agility - from design to product quickly

How corporate venturing can help

Corporate venturing helps enterprises bypass all the regulations and high chains of command by investing in their own independent ventures. In doing so they can experiment with new technologies, offerings and business models, quickly and efficiently, the same way startups do.  

In the case of Daimler, its innovation unit Lab1886 built Car2go, a startup that enabled users to reserve and rent a car via a free smartphone app, anytime and at a low cost. In this way, they were able to launch the new offering at a fraction of the time and before many independent startups.

Challenge 2: Limited access to new technologies

Established corporations that have been around for years often get stuck in their own way of doing things. This “if it ain’t broke, don’t fix it” mentality can be detrimental considering how fickle customer loyalty is.

In addition, testing out new technologies is hard within corporations because of their sheer size and the potential risks involved in making an unvalidated change at that scale.

In many cases these corporations lack the know-how, initiative and exposure to technologies that can potentially revolutionize their industries. It’s a huge missed opportunity that smaller players can exploit to steal market share and dominate markets.

image that depicts new technologies.

How corporate venturing can help

Startups are renowned for accessing, utilizing and producing next generation technologies. They have the flexibility and know-how to leverage new technologies in out-of-the-box and exciting ways.

Corporations that build their own startups have direct access to these new technological advances which can be leveraged to gain a competitive edge. The insights gained can turn into a new offering or improve a corporation’s existing business model, product or service.

RBC has used its subsidiary, RBC ventures to step beyond the traditional banking space and try out new fintech technologies to enhance its business.

Challenge 3: Out-dated customer experiences

What people consider to be a good customer experience is changing as quickly as the markets are. For one thing, it’s moving further away from selling products to selling services – subscriptions for products fit into this. In other words, people are placing less value on actual products and leaning more towards companies that offer them a memorable experience. This is becoming an increasingly significant trend as younger generations gain spending power (e.g. Gen Z).

So how are corporations that are traditionally product-focused going to effectively contend with startups that are all about innovative customer experiences?

Image Credit: Unknown

How corporate venturing can help

Corporate startups are a great way to experiment with new models for your customer experience without hurting your brand. Their small, flexible nature enables them to test out different growth marketing, branding and selling strategies to quickly pin-point what works and what doesn’t.

New ventures often attract creative entrepreneurs with a passion for growth hacking and a knack for connecting with their target audience. As a corporate backer, you’ll have full access to these key learnings which can be scaled to infuse your own customer experience.  

Hancock, the 156-year-old investment firm built 2019’s best fintech mobile app “Twine” so it could offer young couples a new way of using their savings and investment services. And that’s just one example, for 50 more, check this out.

Challenge 4: Trouble accessing new markets

As generations change, so do their demands, expectations and preferences. What worked for the baby boomers and Gen X is totally different than what works for millennials and Gen Z.

Large enterprises that have built their success on meeting traditional customer demands can have a hard time reaching and connecting with newer generations. These days it’s all about convenient digital offerings, customised experiences, and a story that reflects the customer’s values (e.g. minimalism, sustainability, eco-friendliness, etc.).

ipad browsing pictures about corporate venturing
Image Credit: Didid

How corporate venturing can help

Having your own corporate startup can help you bridge the generational gap with an influx of fresh new messaging and digital offerings. With it’s own branding it can enter a market without any preconceived notions that may be attached to the corporation’s branding and offering.

Mattress Firm’s Tulo was able to offer mattresses online, with a new brand, easy choices and simple messaging that appealed to younger demographics.

Challenge 5: Difficulty testing and validating new concepts

There are a myriad of lean and agile ways to test new concepts including smoke testing, customer interviews and online surveys. In fact, your customer lifetime value (CLV) and customer acquisition cost (CAC) can be calculated and compared to gauge the efficiency and profitability of your sales and marketing strategy.

The challenge is that many corporations have not yet optimised their approach and are still doing research and development the old fashioned way (e.g. telemarketing). This can be highly expensive and inefficient.

User testing, employees brainstorming with post its
Image Credit: Unsplash

How corporate venturing can help

Corporate ventures are a highly effective way to test out new ideas and concepts. New startups work like sounding boards, validating new technologies, products and services in small, controlled environments. A rapid, iterative, experimentation approach is often used to weed out weaknesses early and pin-point what works.

This type of validation is done with real potential clients, not just asking about their preferences, but getting detailed feedback about improvements that can be made and how many people would actually buy the product. It essentially enables you to answer the question “Will this concept make money?” before you even build a prototype.  

At Google’s Area 120 for example, all new projects go through several stages of testing and iteration. Only after careful validation do the most promising projects move forward to become startups (e.g. Niantic, Grasshopper, etc.).

Final thoughts

A solid innovation strategy is the key to future proofing your business and corporate venturing is a powerful way to enhance it. You’re bound to encounter one or more of these challenges sooner or later, and the best time to innovate is now.


Are you looking for new ways to fuel company-wide innovation and create new revenue streams? We can help you leverage existing corporate assets to build your corporate venturing unit and pave the way for the future growth of your business.

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