Championing corporate venturing
Shaker A. Zahra
Corporate venturing (CV) is the process by which an organization enters a new market, either domestically or internationally. This process can be undertaken internally or externally. Internal CV refers to those formal and informal activities that foster new business creation within an organization. External CV focuses on those activities that enable the firm to gain access to new business fields through acquisitions and alliances. Internal and external CV activities often take the organization into fields in which it typically does not have extensive skills or competencies. Developing these competencies requires patient investments in building the organizational infrastructure and complementary assets. It also requires building and expanding the firm’s absorptive capacity that allows it to spot, identify, acquire, and assimilate new knowledge. These activities entail considerable risks for the firm, a factor that can make executives reluctant to support CV. Therefore, champions are needed to spur CV efforts and build momentum for them among senior executives (Sathe, 2003).
Champions are individuals who recognize the importance of an idea for organizational success and then expend their energy and political capital to refine this idea, make it visible to management, and ensure that the CV idea is considered and fairly evaluated (Schon, 1963). Champions undertake these activities because they believe in an idea or see its potential value for the company. Many of these champions do so voluntarily and, oftentimes, take important career risks in pursuit of CV ideas. Backing projects that have little strategic merit or that fail to gain the support of senior management might damage the reputation of the champion.
Roles CV Champions Play
Research suggests that different champions play different but complementary roles in positioning and promoting CV initiatives (Shane, 1994). Early in the CV process, a champion may work to revise an idea to match an important challenge facing the organization or ensure that the opportunity associated with the initiative is relevant to the firm. Once this is accomplished, another champion may dedicate their energies to make senior executives aware of the strategic implications of the opportunity. Toward this end, the champion may explore ways to test the idea and conduct market analyses that will show the magnitude of the opportunity implied in the initiative. A champion may also work to develop awareness of the idea among colleagues, setting the stage for gaining the political support needed for the project to flourish. The champion may use their position to gain access to senior executives and formally or informally draw their attention to the merits of considering and evaluating ideas.
Some champions opt to work within the system and do so diligently to make their organization receptive to radical CV ideas. These champions excel in building and using their social capital to garner and maintain support for their ideas. They build bridges and networks across organizational boundaries and gain the trust and support of others. However, other champions may find it essential to challenge the prevailing culture and existing systems to bring about change that favors CV. These renegade champions have an important role to play in promoting strategic change, especially when the proposed CV initiative represents a radical shift in the organizational mindset (Shane, Venkataraman, and MacMillan, 1995). Renegade champions often put their careers and reputations on the line, risking counter attacks by existing units and others in the organization who disagree with or fear the proposed change.
Essential Championing Skills
Champions need different skills in order to succeed in promoting CV initiatives. They need to envision the firm’s future and the changes that are likely to occur in their firm’s competencies should CV initiatives receive approval. This cap ability, in turn, requires an understanding of the firm’s strategy, markets, and capabilities. Champions need also to understand how CV initiatives may influence different organizational units quite differently and how to work around these issues. The resource implications of pursuing new initiatives are also another area of great importance for CV champions, who not only have to consider the resources needed but also the sources from which these resources can be obtained.
Building momentum for the CV idea also requires social intelligence, meaning the ability to understand the motives and priorities of different actors throughout the organization. This social intelligence is an important component of the social capital champions develop and use to gain support for their entrepreneurial initiatives. Champions have to create support for CV pro jects and neutralize opposition throughout the organization. Social intelligence is also import ant for choosing the right approach to draw the attention of senior managers to gain their confidence and support. The champions’ timing is influenced by their social intelligence when approaching senior executives with the idea for the CV project.
The Dark Side of Championing
Though championing behavior is essential for the success of entrepreneurial activities within a company, it has serious organizational costs. Renegade champions, for example, can create serious tensions throughout the organization and these tensions can escalate into dysfunctional conflicts and hostility between units. Such conflicts can stifle, rather than promote, cooperation and the flow of information necessary for CV ideas to take hold in the firm. These conflicts are often exacerbated by renegade champions’ dispositions to go around the existing systems, undermining managers’ existing power bases. Some champions also work to neutralize opposition to their ideas, creating acrimony and distrust. Further, to prove the worthiness of their ideas, some champions may siphon resources away from ongoing operations to support their proposed CV projects, creating serious misalignments between existing goals and resource allocations.
Finally, some champions do not know when to let go of a successful CV idea. While champions may excel in positioning and promoting an idea, they may lack the managerial skills needed to manage the new business that is sanctioned by the firm. When this occurs, some champions are unable to distance themselves from their idea and let other and perhaps more capable man agers assume leadership of the new units. This urge to remain in control can undermine champions’ credibility and ability to have any influence in the new venture’s operations.
Nurturing Champions
The role champions play in fostering innovation and promoting receptivity to CV projectssug gests a need for senior executives to develop a strategy that will encourage these individuals to lead strategic change. Many of these champions are middle managers who are well positioned to understand the changing dynamics of competition and shifting customer expectations. Middle managers serve at the nexus of information flows at a central position in their firms, making it possible for them to spot promising opportunities and innovative ideas. Given their access to important resources and information, middle managers are uniquely positioned to champion new initiatives in their companies. Therefore, sharing the firm’s vision with middle managers is an important initial step towards encouraging championing behavior. Empowering these man agers to support experimental CV activities is also essential. The use of seed funds that allow champions to explore innovative CV ideas is one useful approach. Tying formal CV programs, if they exist, to informal championing behavior is another important step in creating the context that encourages exploration and implementation of CV efforts. This link is an important framework within which to assess CV efforts. Providing incentives to support champions’ hard work to encourage CV projects is also important. Likewise, punitive and retaliatory actions by established power centers should be reduced. Finally, given that CV activities are complex and require considerable patient investments, it would be useful to capture the experiences, skills, and competencies of successful champions. Similarly, it is useful to examine the experiences of unsuccessful champions and identify lessons to be learned from these experiences.
Bibliography
Sathe, V. (2003). Corporate Entrepreneurship: Top Man agers and New Business Creation. Cambridge: Cambridge University Press.
Schon, D. A. (1963). Champions of radical new inventions. Harvard Business Review, 41 (2): 77 86.
Shane, S. A. (1994). Are champions different from nonchampions? Journal of Business Venturing, 9: 397 421.
Shane, S. A., Venkataraman, S., and MacMillan, I. C. (1995). Cultural differences in innovation championing strategies. Journal of Management, 21: 931 52.
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