What venture CEOs can learn from Louis van Gaal
When large corporations invest in new ideas or start-ups, they are engaged in so-called corporate venturing. There are various ways of doing this, such as through a fund (to acquire participating interests in strategically relevant and/or interesting start-ups) or by setting up a separate business unit to support the creation of both new business ideas and start-ups. Sometimes the ideas come from within the organization itself (internal venturing), but often corporates find it more interesting to get in on innovations occurring outside their firm (external venturing).
Over the past two years, we researched how eight large corporations organized their venture activities, with the participation of CbusineZ (health Insurance), Akzo Nobel, Unilever, Document Services Valley, Eindhoven University of Technology, Sanoma, Rabobank, and NRC (newspaper). Our findings are being published in a new book called Corporate Venturing: Organizing for Innovation, which describes the actual venturing experience of these firms. It provides interesting insight into the pitfalls and successes of corporate venturing, captured in ten best practices. In our blogs, we will share these best practices with you.
Last summer, the Dutch football team played an amazing tournament at the FIFA World Cup in Brazil. Getting there through the selection playoffs was no sinecure, but as soon as we played our first match against Spain (the winner of the previous World Cup), one thing became clear: Louis van Gaal had created a winning team. So, how did he do this and what can we learn from him?
Team selection is the first thing that comes to mind. One of our best players, Wesley Sneijder, was not automatically selected to join the football team. Van Gaal said he had to get into better shape first, before he could join the selection. So, being fit was one of the criteria that had to be met in order to make the team. But creating a winning team amounts to more than gathering a group of fit players: each of them must also bring different capabilities for meeting the challenges of the game. Another criterion that has to be met is positioning these talents in the right spots on the field, not to mention installing the optimum team formation. (Van Gaal used a 5-3-2 formation, rather than a 3-4-3 formation.)
Then, the team has to see itself as a unit, with the players willing to adapt, make changes, or grow so that they are fit for the job. Van Gaal replaced keeper Jasper Cillissen with Tim Krul when it came to penalties in the match against Costa Rica. He showed courage in changing the team to strive for the best results. But everyone agreed afterwards that winning the match was a team result. At the end of the day, a team has to be results-oriented in order to get what they want. Achieving their collective goal requires that individual team members create their own freedom of movement, but also support one another when things get tough. Together, the Dutch football team created an amazing experience, and although they came in third, it was the best Dutch team in years, thanks to Van Gaal.
In the CbusineZ case covered in our book, one of the company’s ventures (Psy Health Direct) was all ready to start but stagnated right before kick-off. Upon ample reflection, the CEO removed the impediment by replacing one of the two venture managers leading the venture. It turned out that although these two people had managed to produce a superb, perfect business plan, they lacked the ability to start implementing it. When framed in terms of Van Gaal’s best practices, you could say the fit was insufficient and the joint capabilities led to a deadlock. By replacing one of the venture managers with more of a go-getter, the CEO helped the plan ultimately reach the implementation phase and produce the results they were aiming for. It was still a joint victory for both venture managers, who had needed each other’s capabilities and support to reach their goal.
In all of our cases, it became clear that venturing requires entrepreneurial people who can work autonomously, while also being part of a multidisciplinary team. They are individually fit for the job, passionate about their task, and eager to get to their goal. The team should also fit in with the strategy of the company and be capable of executing the tasks needed for pursuing a winning strategy. Although the team members are part of a separate business unit, they need to have the ability and willingness to team up with the parent’s business units, because winning is not a solo but a group endeavor. Even a tactical genius like Van Gaal cannot win without the right set of players. Whereas realtors like to say that the three most important factors are “location, location, location,” in venturing we like to say it’s all about the “team, team, team.”
Jessica van den Bosch and Geert Duysters
Tilburg, August 18th, 2014
Jessica van den Bosch is managing director of the Tilburg Center of Entrepreneurship at Tilburg University. Geert Duysters is Professor of Entrepreneurship & Innovation at Tilburg University and academic director of the Tilburg Center of Entrepreneurship. Both are fellows at the Corporate Entrepreneurship Research Center of Tilburg University, and together they wrote Corporate Venturing: Organizing for Innovation, to be published in September 2014 by Edward Elgar.
Photo: Bron: Congres in Beeld, Flickr