Building new businesses -- or corporate ventures -- is increasingly critical for growth. Not only is the creation of new products and services a defining aspect of many leading companies, it is also a means to address fast-shifting customer demands, sustainability challenges and technological disruption.
In a recent McKinsey survey, 71% of business leaders in Asia-Pacific said building new businesses was a top-five strategic priority for their companies. They also expect 28% of their future revenue to come from the new businesses they build in the next five years.
For these ventures to succeed in today's digital environment, they require a deep bench of tech talent, particularly in skills such as automation, cloud, customer experience, cybersecurity, data management, DevOps, and platforms and products.
It is also critical to consider leadership talent. Leading a corporate venture requires a blend of entrepreneurial and management ability. In fact, developing robust people and talent strategies are among the highest-value actions a business can take.
When it comes to assembling tech and leadership talent to build corporate ventures in Asia-Pacific, we observe three key factors: finding an experienced CEO, adopting a flexible recruitment strategy, and providing beyond compensation.
Experience matters: Ideally, the CEO of a corporate venture should be both an experienced entrepreneur who has built and scaled multiple new businesses, and a seasoned executive who is well-versed in corporate governance and navigating the workings of established companies.
The most successful CEOs of corporate ventures display four key attributes:
- The first is customer-centricity. A customer-centric CEO will focus the venture's value proposition and business model on addressing customer needs. For example, the CEO of a mobility venture in Indonesia personally engaged with customers to validate the venture's proposition and product before launch. By doing so, the CEO was able to make critical decisions to ensure the business was delivering the best value to customers.
- The second is a calibrated risk appetite, whereby the CEO is able to assess and take measured risks instead of being fixated on a fail-safe and "perfect" way forward. For example, the CEO of a digital marketplace in Singapore chose to beta-launch with a minimum viable product to expedite reiterations and capitalise on first-mover advantage.
- The third is a willingness to learn and pivot. As the saying goes, failure begets success. CEOs of corporate ventures must be prepared for the rockiness of building a new business and recognise when alternative approaches have to be taken. For example, six months after launching a sustainability venture, the CEO realised they were unlikely to achieve the required customer engagement. Hence, even though the venture had already launched, the CEO pivoted the business model after an extensive re-examination of its value proposition and purpose.
- Lastly, a knack for hiring the right talent. CEOs of corporate ventures have to bring in the right mix of talent for every stage of growth, which may involve looking in unexpected or previously untapped places. For example, the CEO of an e-mobility venture in Southeast Asia decided to complement local talent with expertise from regions with higher e-mobility maturity.
FINDING A BALANCE
Corporate ventures need a range of talent for each stage of growth -- from the CEO and founding team to tech and growth hacking experts -- and they need it fast. We often see corporate ventures following the parent company's recruitment process, which can take three to six months. This is far too slow for the venture's needs and the pace of new business.
At the same time, speed must be tempered with the right fit. Mentem, an edtech venture by the University of New South Wales (UNSW) in Australia, opted for a lengthier recruitment process as it was seeking learning designers with specific expertise in curriculum development. This was a necessary compromise in order to help Mentem deliver its value proposition of building and tailoring learning cultures for the workforce of tomorrow.
While the longer recruitment time affected the launch and initial business, focusing on the right talent fit enabled Mentem to scale quickly, which is far more significant. Our analysis shows that up to two-thirds of a corporate venture's value is only realised when scale is achieved.
Business leaders can also explore alternative channels to recruit for their new business. Referrals and industry events present good opportunities to identify prospective talent. Hackathons, for example, can attract a diverse mix of developers and engineers.
Partnerships with organisations that run entrepreneurship programmes, such as startup accelerators or universities, could also provide greater and wider access to talent.
"Acqui-hiring", or acquiring a company for its talent, is another option for corporate ventures with their parent company acting as a source of funding.
By embracing these varied appro-aches, corporate ventures can expand their access to high-potential candidates and expedite their hiring process.
RETAINING TALENT
A well-structured compensation model can incentivise employees to grow the business, encourage continuity and retention, and help identify when an underperforming venture should shut down.
Beyond compensation, McKinsey's research shows the importance of non-wage components of the employee value proposition and reveals a key priority: workplace flexibility.
This can be a tricky balance to strike, with the rise of remote and hybrid working and modularised work, which decouples goal setting and the completion of tasks from the traditional five-day work week. However, companies that get it right benefit two-fold -- attracting and retaining talent.
Launching a corporate venture can be a daunting prospect, but with the right leadership talent, a balanced recruitment strategy and a focus on creating a flexible and mentally healthier workplace, business leaders can focus on creating value and enabling their corporate ventures to take flight.
Vivek Lath is a Partner and Leader of Leap by McKinsey in Southeast Asia, and Rohan Jain is an Associate Partner at McKinsey & Company.
