Large corporations have historically been successful in carving out market share, dominating various industries and launching products and services. However, with more and more newer, smaller, more agile challengers, incumbents must re-evaluate their strategy for launching new products.
While partnering with startups to achieve quick wins and solve key corporate business challenges is undeniably good practice, to achieve even more impactful change and growth, corporations should also look to shake up their entire way of working. There has never been a better time to try something new, and what could be newer than launching your own corporate startup to test new propositions in a space that has previously been unavailable to you? Here’s how…
Previously we’ve discussed why and we’ve discussed how corporates should build startups, but now it’s time to take a deeper look into the initial steps you should consider when starting on your corporate startup journey.
A corporate startup is a venture created by a corporation where a new method of product and proposition development is employed in a corporate environment. Instead of utilising traditional methods of product/service development, the corporation will create a new team (startup) that can be free to build, test, launch and most importantly fail, away from the constraints of the core business.
As discussed more thoroughly in previous blog posts, there may be exciting opportunities that sit outside your core operations but it’s unfeasible to simply pivot your whole business into a new space. Corporate startups enable you to operate differently, without the constraints of your brand or company legacy. For instance, you may be a FMCG company best known for mass market products – but the growth opportunity is in the premium end of the market and you want to play there. Operating free from the constraints of your parent organisation can help you achieve this!
If a corporate startup sounds exactly like what your organisation needs, great! Bringing a corporate startup to life, however, requires a great deal of introspection and consideration. You will need to consider how to identify the right opportunities for the market and the parent organisation, what the key success metrics are, how to achieve buy-in from key stakeholders, and finally what team you will need to give it the best chance of success.
Identifying appropriate opportunities with high potential is a key jumping point in your corporate startup journey and it is not as straightforward as you may think. These opportunities should not be part of your core offerings but rather something that sits either completely outside (transformational) or adjacent to your current portfolio. But remember, when pursuing transformational or adjacent opportunities, it is still advantageous to leverage the pedigree of your parent organisation whenever possible. Perhaps you are an FMCG company known for producing mass market goods but would like to launch a premium brand. While the proposition will still benefit from being launched as a startup, taking advantage of your current resources and rich heritage in the space you currently sit in could propel your success even further. Of course, with this example, these new opportunities could one day cannibalise your current business or shake up your organisation. However you shouldn’t fear these untouched territories as they hold a lot of potential.
At the same time, you may be ready to jump at a completely new opportunity but it’s important to consider: yes, I have found a gap in the market but is there a significant enough market in the gap? It’s quite easy to think of new ideas and it is even easier to see and be swayed by new tech. Oftentimes, the newest, shiniest technologies are not the solution to problems you want to solve in the market. Both corporates and startups can be guilty of becoming overly married to an idea – feeling that it addresses a need but in actuality the market for this idea does not exist. Therefore it is crucial to validate the opportunity you want to pursue with consumers and figure out what your total addressable market is, in order to understand if it is big and valuable enough in the first place.
Are you being truly customer centric? It’s instinctive to try and solve problems that affect you. As a large corporation you may want to address a drop in sales of a certain product or obsess over your gross margin. And while yes these problems are wholly important to your business, they are not problems you should be looking to solve with a corporate startup. Corporate startups should first, and foremost solve consumer problems not corporate problems. It is crucial to understand what problem you are trying to solve in the world, the bigger picture if you will, rather than a gap in your product range you are trying to fix.
Finally, don’t jump to conclusions. Based on your knowledge and expertise you may think you know what the market needs, but the question is, can you prove that the market will really pull the product out of the startup? The market is always more important than the product or the team itself, which is why testing and validating the opportunity is extremely important. If the market opportunity is big enough there will be consumers ready to take advantage of the product. If both the market opportunity and consumers are there then they will naturally pull the product (even if the product isn’t necessarily the best or the most innovative!), and the business behind the product, into it, giving you real traction.
Identifying the right opportunities and getting started can be difficult. If you want to launch your own challenger brand to capitalise on new growth opportunities then get in touch. We’ll help you identify the right opportunities to successfully build your corporate startup.