Discover how to set effective performance metrics for your corporate venture, avoid common challenges and apply proven best practices using our NICE metrics framework.
Accurately measuring the performance and impact of corporate venturing activities can be a complex endeavour. It requires a balanced approach that captures both tangible results like revenue and strategic results like insights—the latter of which can be challenging to quantify.
Finding and leveraging the right metrics is a key part of the process, enabling you to:
Each venture requires a tailored approach that reflects its unique set of targets as well as the parent company’s broader corporate growth goals.
In this guide, we’ll walk you through the different types of metrics you can use, the challenges, the best practices and a balanced framework designed to help you accurately measure tangible and intangible gains.
Let’s kick things off with some context.
Corporate venturing metrics are quantitative and qualitative measures used to evaluate the performance, progress and impact of a company's venturing activities. They can be used to track:
These metrics provide a clear and objective picture of how well a venture is performing and contributing to the broader goals of the parent company. Here are just a few of the ways they can guide the corporate venturing process:
Adopting a comprehensive set of metrics can help companies overcome many of the uncertainties associated with corporate venturing and ensure that their investments yield both financial and strategic benefits.
Corporate venturing metrics typically fall into one of the following categories:
Financial metrics measure the monetary performance and returns of corporate venturing activities.
Examples:
Strategic metrics assess how well the venture aligns with and contributes to the parent company's overall strategic goals.
Examples:
Innovation metrics measure the venture's contribution to the company's innovation efforts and capabilities.
Examples:
Operational metrics evaluate the efficiency and effectiveness of the corporate venturing process itself.
Examples:
Learning and development metrics capture the knowledge, skills, and cultural changes that result from venturing activities.
Examples:
Risk assessment metrics help quantify and manage the various risks associated with corporate venturing activities.
Examples:
Each of these metric categories plays a crucial role in providing a comprehensive view of corporate venturing performance. The key is to select a balanced set of metrics that align with your specific venture goals, corporate strategy and the type of venturing activity you’re tackling (more on that below).
Each phase of your venture journey has its own unique set of challenges and goals, and your metrics should reflect that. For example, during the early stages, you might care more about problem-solution fit and market potential, while later stages call for metrics related to scalability and profitability.
Tailoring your metrics to your venture activities will help you make smarter decisions about resource allocation, manage risks more effectively, and communicate progress to stakeholders in a way that makes sense for each stage. Here are a few examples of how your metrics can evolve along with your venture stage:
In the early ideation phase, focus on metrics that assess market potential and problem-solution fit. Key indicators during this stage might include:
As concepts move towards validation, prioritise metrics that evaluate market traction and customer interest:
During incubation, track metrics that indicate growing customer engagement and product-market fit:
In the acceleration phase, the focus shifts to metrics demonstrating scalability and market penetration:
For maturing ventures, emphasise metrics that showcase market position and financial performance:
Think of it as a growth-oriented approach that adapts to and with your venture, and it moves through each stage of development.
Selecting the right metrics to evaluate corporate venturing efforts can be fraught with difficulties. Here are some of the most common challenges that companies face, along with some pro tips to help you avoid them.
While quantitative metrics are crucial for their objectivity and ease of tracking, they can overlook the nuanced outcomes of venturing activities. An excessive focus on hard numbers may ignore valuable qualitative results like strategic alignment or customer satisfaction.
How to avoid it:
Implement a balanced scorecard approach that includes both quantitative and qualitative metrics. For instance, complement financial return metrics with regular stakeholder surveys or case studies to capture intangible benefits.
Metrics should directly reflect and support the overarching strategic objectives of both the venture and the parent company. Misalignment can lead to pursuing ventures that appear successful on paper but do not contribute meaningfully to the company’s long-term strategic goals.
How to avoid it:
Review and align metrics regularly with corporate strategy. Involve key stakeholders from various departments in the metric selection process to ensure comprehensive alignment.
When metrics are treated as targets, there’s a risk of focusing on them too narrowly at the expense of broader objectives. This can undermine the metrics' original purpose and lead to suboptimal decisions.
How to avoid it:
Use a diverse set of metrics and avoid tying compensation or evaluations too closely to any single metric. Regularly review and update your metric set, encouraging teams to flag potential opportunities or risks that fall outside the current metric framework.
Corporate venturing often involves initiatives that will only show their full potential in the long run. Relying heavily on short-term metrics can make it difficult to justify the initial investments in these ventures, potentially cutting off promising opportunities prematurely.
How to avoid it:
Use milestone-based metrics for long-term projects and pair them with short-term operational efficiency metrics.
Many corporate ventures aim to achieve strategic benefits such as gaining market insights or developing new capabilities, which are crucial but challenging to measure quantitatively. Finding ways to quantify these intangibles can be a significant hurdle.
How to avoid it:
Develop proxy metrics or qualitative assessment frameworks for intangible benefits. For example, track the number of insights shared across the organisation or use capability maturity models.
Different ventures often have vastly different goals, timelines, and contexts, making standardised comparisons challenging. This diversity makes it hard to apply a standardised set of metrics across all ventures without losing meaningful insights from specific contexts.
How to avoid it:
Use tailored, context-specific metrics for different types of ventures.
Being aware of these challenges and the possible solutions will enable you to develop more effective metric frameworks for your venturing initiatives.
Now that we’ve covered some of the key challenges let’s explore some actionable best practices to help you more effectively measure your corporate venturing efforts.
Set specific metrics that reflect the unique risks, goals, and timelines of various innovation activities like accelerators, incubators, or venture building.
Pro tips:
Make sure the success factors and corresponding metrics you select are aligned with your strategic corporate goals. This is crucial to securing sustained internal support for your activities, which is a key driver of corporate venture success.
Pro tips:
For ventures focused on sustainability, combine environmental impact assessments with traditional business metrics.
Pro tips:
Regularly review and update KPIs to reflect evolving corporate strategies, venture stages and changing market conditions.
Pro tips:
Design innovation frameworks to allow for flexibility and ongoing refinement, focusing on metrics that track customer loyalty and engagement.
Pro tips:
Ensure that the metrics used to evaluate venture performance align with the incentives and rewards offered to the venture team.
Pro tips:
While there is no one-size-fits-all approach to selecting the right metrics, considering these three key factors will help guide your decision-making process:
The growth stage of your venture plays a significant role in determining which metrics are most relevant. For example:
The underlying objectives of your venture should guide your metric selection. For example, an environmentally focused venture will require different metrics than a financially focused one:
The context and environment in which your venture operates plays a role in metric seletion. This involves considering various factors like industry dynamics, competition, regulations, and overall market conditions.
These metrics are tailored to the unique characteristics and demands of your specific industry. They help assess how well your venture performs against industry-specific benchmarks and standards.
Understanding the competitive landscape allows you to select metrics that gauge your venture’s performance relative to competitors. This includes tracking market share, competitor growth rates, and innovation in your sector.
Metrics related to the regulatory environment ensure compliance with laws and guidelines crucial to your industry. These metrics help monitor adherence to regulations, the impact of legislative changes, and risk management.
These metrics reflect the broader economic and market trends affecting your venture. They can include consumer demand, economic indicators, and market volatility, which help in making informed strategic decisions and adjusting business models.
By considering the context and environment, you ensure that your metrics are not only relevant to your venture's internal goals but also reflect the external factors that can impact its success.
The NICE framework was created in collaboration with Bundl Venture Club members to help corporate entrepreneurs select metrics that accurately and effectively measure corporate venturing efforts. The framework was designed to enable you to make data-driven decisions with data that goes beyond the often simplistic financial markers of success.
Let's take a closer look at how it works.
Stakeholders gravitate towards financial metrics because they're clear, readily available, and easy to convey. However, focusing too heavily on these metrics can divert attention from the broader value that innovation activities bring.
The pitfalls of using only financial metrics include:
Examples of non-financial metrics include:
Innovators should focus on metrics that genuinely aid in decision-making. This means prioritising implementable metrics over vanity metrics, which may look impressive but offer little real value in guiding business choices.
The pitfalls of vanity metrics include:
Implementable metrics that help decision-making include:
When selecting metrics, it's crucial to choose ones that can predict a venture's success well before it launches. However, the venture's phase (startup vs. scaleup), the business model (B2B vs. B2C), and the target audience are all critical factors that must be taken into account.
Why context matters:
Metrics that consider context include:
The process of measuring innovation should not be static; it needs to adapt as an organisation’s innovative capabilities develop. A set of metrics should be built step-by-step as the organisation's innovation expertise grows.
The pitfalls of static metrics include:
Metrics that can reflect your corporate venturing experience include:
The NICE framework was designed to accommodate industry changes, allowing it to be completely customisable as your strategy, customers, and ventures evolve. Download the full report for more information on how it works and to access the interactive canvas that goes with it.
Remember, the goal of corporate venturing metrics is not just to measure performance but to drive better decision-making, foster innovation, and ultimately contribute to the long-term success of your organisation. Be sure to use the insights above to guide your efforts moving forward.
By thoughtfully selecting and implementing the right metrics, you’ll be able to effectively measure your venture's success, make data-led decisions on how to move forward, and effectively showcase its value to stakeholders.
For more information on how to create a tailored and accurate metrics framework to measure your corporate venture efforts, contact us. We’d love to hear from you!
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