Over the last few years, corporate venturing has emerged as a proven catalyst for growth and innovation in almost every industry. Companies all over the world are building new ventures from scratch and gaining a bona fide plethora of benefits:
- Testing new technologies and business models.
- Gaining access to untapped markets.
- Expanding beyond their core business.
By strategically leveraging their existing corporate assets, these companies are successfully creating new revenue streams, diversifying their portfolios and future-proofing their businesses.
We recently analysed 50 corporate ventures from some of the world’s leading enterprises, and here’s what we learned.
1. Tech is facilitating non-core growth.
New technologies are enabling companies to expand their services far beyond their core offerings and reach more people than ever. These companies are leveraging their existing expertise and resources to create entirely new products and services for a whole new range of customers.
For example, Sysco, a restaurant food supplier, leveraged its partnerships, industry knowledge, and IT capabilities to build a startup called Cake. Unlike its parent company, Cake is a technology platform that seamlessly integrates front and back end restaurant operations.
Through this venture, Sysco has stepped far from its core service and created an important new revenue stream to supplement its existing business.
2. More companies are test-driving D2C.
A growing number of companies are building corporate ventures to experiment with new D2C offerings. By cutting out the “middlemen” like wholesalers, retailers and distributors, they’re taking more direct control of their brand and increasing their profit margins.
The new service, developed in-house within a few months, enables customers to get snack kits of their favourite Pepsico products delivered right to their door. No middleman, no extra costs and Pepsico gets to retain control of how they market the service.
3. It’s all about strong customer connections.
Acquiring new customers is notoriously more challenging and more costly than having a loyal base of returning ones. With that in mind, more and more companies are building new ventures that foster strong customer relationships.
Corporate ventures like Samsung’s HumOn and Google’s Keen are using the “everyone-is-a-creator” philosophy to connect to their customer base and keep them coming back. Torf’s Avail, on the other hand, has built an exclusive community that enables fashion lovers to curate valuable content and purchase the items they love through micro-stores right on the platform.
4. Expertise is increasingly being democratised.
Much of the technology and knowledge, previously reserved for experts, is being democratised on a corporate scale. L’Oréal’s color&co, for example, enables its customers to get expert quality hair colour delivered right to their door. What previously took a trip to the salon, can now be done in a 5 to 10-minute video session with a professional colourist.
With this new venture, L’Oréal has essentially packaged the salon hair colouring experience and made it available to everyone in the comfort of their own home.
5. Digital assistance yields valuable customer data.
Customer data has become a new type of currency, enabling companies to improve their products and services, identify unmet customer pain-points and even create new offerings. By providing different types of digital assistance throughout the customer journey, many companies are creating valuable new feedback loops to learn more about their customers.
For example, Lufthansa’s RYDES is a travel engagement platform that rewards its customers every time they travel around the city (e.g. by bus, intercity rail, e-scooter, taxi and even when they ride a bike). Besides providing a valuable service, RYDES is also an excellent source for Lufthansa to learn more about their customers’ travel preferences beyond flying.
6. New offerings focus on simplicity and personalisation.
Many of today’s most successful corporate ventures have reinvented existing offerings in new and creative ways. By simplifying the original product, adding personalisation options and offering it through new channels, these new ventures are appealing to a whole new segment of younger customers. Corporate ventures like Mattress Firm’s Tulo, Adobe’s Spark and MassMutual’s Haven Life have all followed this formula with some pretty great results.
Verizon’s Visible is another good example of this approach. Their new service has no physical stores, no annual contracts and offers unlimited data, minutes and messaging for a flat fee of $40 a month. This straightforward, no-fuss phone plan has been a hit with younger customers, enabling Verizon to connect with millennials and Gen-Zers.
Why corporate venturing is right for you.
In today’s rapidly changing business landscape, corporate venturing is a great way to branch out, accelerate your digital transformation and prepare for an uncertain future. With careful planning, preparation and an entrepreneurial mindset, the sky’s the limit in terms of new growth and increased opportunities to innovate.
The best way to gain inspiration and find out if the approach is right for you is to see real corporate ventures in action, and we’ve put together a brand new deck to help you do just that.
Check out our downloadable list of 50 Corporate Venture examples, to get a first-hand glance at how corporate ventures are changing their industries.