Building a Robust Growth Engine: Navigating Common Pitfalls

If your company has started building and investing in ventures and failed, I have good news: your competitors likely flounder for similar reasons. This is the first in a series of articles where I'll dive deep into the common pitfalls of building a growth engine (and how to dodge them).

I am what you might call bi-lingual. Not in terms of language, but because I’ve been a founding member of three startups and I’ve also built six new businesses inside large organizations. (I have also built three companies solo, but I digress). In short: I like innovation and I like building new

things.

I’ve been asked this same question frequently: If you have tasted ‘independence’, why did you even think of working in a large corporate environment?

My answer is simple - the potential advantages of launching a new business inside a large corporation are too good to ignore. Those advantages are usually a combination of brilliant people, capital, domain expertise and, of course, existing customers. More often than not, the large corporation also asked nicely - because they really, really wanted to do the new venture!

Large organizations are increasingly seeking innovative ways to renew and stay competitive. A Growth Engine, when effectively constructed, can be the catalyst that propels these companies forward, and I’m thrilled that I’ve been a part of designing and building Growth Engines for some of the largest companies in the world.

At its core, a Growth Engine comprises four key pillars: Venture Building, Venture Investing, Strategic Partnerships, and M&A (Mergers and Acquisitions). Each of these components plays a vital role in driving innovation and growth, yet their potential is often not fully realized due to common mistakes made by large organizations. Let's delve into these pillars and then – based on my personal experience – explore the pitfalls that can hinder their success.

Common Mistakes in Building a Growth Engine

No Methodology

Many corporations fall into the trap of mimicking traditional VC and startup accelerator models, focusing solely on providing capital and mentorship. This approach overlooks the necessity of a customer-driven, repeatable, and scalable methodology for venture creation. Unlike VCs and accelerators, which can sustain high failure rates in anticipation of a few standout successes, corporations require a much higher success rate. The key to achieving this is not just in funding ideas but in rigorously validating and developing them through a structured, customer-centric process.  Bottom line - just as with the corporate processes and gates that are required to run a large global, scaled organization - Process begets Trust - period!

Mothership Friction

The 'Mothership'—the core of the corporation—holds a treasure trove of resources that can significantly advantage corporate ventures. These resources include ideas, talent, assets, competencies, capital, and an existing customer base. However, leveraging these advantages is often easier said than done. Companies encounter internal inertia, resistance ('antibodies'), and entrenched ways of doing things ('orthodoxies') that can stifle innovation. Moreover, corporate accelerators frequently fail to effectively integrate ventures with the Mothership, neglecting necessary shifts in metrics, compensation, procurement, and policies. To truly harness the Mothership advantage, companies must navigate and overcome these internal barriers, ensuring their ventures can reach escape velocity and thrive.  As with the first section where a solid methodology begets trust, so solid policies, especially around the opportunities that venture driven growth initiatives present to employees, dramatically reduces Mothership friction.  

Executive Decision-Makers Fail to Grow

The final tripwire lies in the mindset of senior executives. Stuck in a traditional management review board perspective, they often miss the discipline and outlook required of top-tier venture capitalists. Executives need to embrace a portfolio strategy, focusing on seeding multiple ventures whilst avoiding the pitfalls of overspending too early. They should prioritize option value over net-present value, aiming for customer acquisition and revenue growth rather than immediate profits. Embracing a philosophy of making a series of small, calculated bets allows for learning, standardizing, and then scaling, thereby removing significant amounts of risk with minimal capital. This shift in mindset is crucial for nurturing a successful Growth Engine.

Conclusion

Building a robust Growth Engine is a complex but rewarding endeavor. By understanding and addressing these common mistakes—adopting a structured, customer-centric methodology, leveraging the Mothership advantage while overcoming internal friction, and cultivating an executive mindset aligned with venture capital principles—large organizations can significantly increase their chances of success. The journey of innovation is fraught with challenges, but with the right approach, the rewards can be transformative.

I’ll be writing three articles exploring the main pitfalls large organizations face when pursuing a venture driven growth strategy.