Intrapreneurship vs. Venture Building vs. Startups

Strategic Outcomes and Considerations (Part 2)

In Part 1, we compared intrapreneurship, venture building, corporate clienting and studio start-ups, outlining the key characteristics and strategic implications of each for organisations. In this second part, we explore the factors that determine the success of each approach and how companies can choose the best model for their innovation strategy.

Understanding the Organisational Context

The success of any innovation strategy is largely determined by the organisation’s culture, structure, and long-term goals. When considering intrapreneurship, venture building, or a start-up model, companies need to assess their internal and external environments to ensure they are choosing the path that aligns with their resources and capabilities.

1. Risk Tolerance and Corporate Culture

• Intrapreneurship and venture clienting tend to work best in organisations that are more risk-averse. Because the innovations happen within the company’s existing framework, employees feel safer to experiment, knowing they have the backing of corporate resources.
• Venture building, while less risky than start-ups, still requires a company to take on greater financial and operational risks than intrapreneurship. This approach is ideal for organisations that are open to moderate risks but want to ensure a structured process.
• Start-ups, by contrast, involve the highest level of risk. The complete independence of a start-up means that entrepreneurs must be comfortable with uncertainty and failure, making this path best suited for those with a higher risk tolerance.

2. Resource Allocation and Scalability

• Intrapreneurship often demands fewer resources upfront. Companies that want to innovate without a massive financial outlay or disruption to core operations may find this approach appealing. Intrapreneurship also allows organisations to capitalise on existing internal resources, including talent, infrastructure, and market knowledge.
• Similar to Intrapreneurship, venture clienting capitalises on existing internal resources, however, also depends on resources allocated from the start-up. This approach works well if the start-up also has the capacities to develop the product according to the client’s specific needs.
• Venture building requires a more significant commitment of resources, including dedicated teams, funding, and leadership. However, this investment can result in scalable ventures that are capable of becoming new revenue streams. Venture building works well for companies that have both the capital and appetite to build new businesses without straying too far from their core competencies.
• Start-ups require the most resources in terms of time, money, and effort. However, for entrepreneurs or companies willing to invest heavily, start-ups offer the greatest potential for high-growth, disruptive ventures.

3. Time Horizons and Innovation Goals

• Companies seeking gradual, sustainable innovation may opt for intrapreneurship. This approach allows organisations to align new ideas with their long-term vision without the need for rapid, large-scale changes.
• Venture clienting is ideal for organisation seeking for solutions to known problems within the core business. This approach allows to get access to new technologies & products that could not be developed inhouse with a time or cost-advantage.
• Venture building offers the potential for faster, more substantial innovations but requires a clear vision and an ability to allocate resources quickly. This model is ideal for organisations that want to enter new markets or industries but are not yet ready to take the leap of spinning off or buying entirely independent entities.
• Start-ups, on the other hand, are often pursued with short-term growth in mind. Many start-ups aim to disrupt industries rapidly and scale quickly. For those that succeed, the potential rewards can be enormous, but the time-to-market and scalability pressures are significant.

Strategic Implications: How to Choose the Right Path

To determine the right innovation model, organisations should assess the following critical factors:

1. Alignment with Core Strategy:

• Intrapreneurship aligns closely with the core strategy of the company, ensuring that any new developments remain consistent with the organisation’s broader mission.
• Venture clienting aligns with the core strategy, ensuring goals are met with the help of external innovations.
• Venture building can operate on the fringes of the core strategy, allowing companies to test new ideas that may not fit within the existing framework but still align with their growth goals.
• Start-ups offer complete freedom from the core strategy, enabling disruptive innovation that can redefine markets but also carries the risk of diverting attention away from the core business.

2. Speed of Innovation:

• Intrapreneurship tends to foster slower but steady innovation. It’s well-suited for companies that are in no rush to scale and want to experiment with new ideas in a controlled environment.
• Corporate clienting tends to follow a mid- to long-term approach. While the access to new solutions is faster, the implementation can be heavily dependent on the start-up's capacities and the organization’s level of bureaucracy.?
• Venture building can achieve faster growth than intrapreneurship because it allows for more flexibility and independence while still offering corporate support.
• Start-ups demand rapid innovation and scaling. This path is best for organisations or entrepreneurs aiming for quick market entry and high-impact disruption.

3. Control and Autonomy:

• Intrapreneurs work within the confines of the corporate environment, meaning control is maintained by the company. This can ensure alignment with overall business objectives, but it may also stifle the independence needed for truly disruptive ideas.
• Corporate clienting projects tend to adapt to the corporate environment and the client’s needs. However, control over product development and IP rights may be challenging to achieve without compromising the start-ups business.?
• Venture builders enjoy more autonomy but still report to a parent company. This allows for a balance between control and independence, fostering innovation while maintaining oversight.
• Start-ups have the greatest autonomy, operating entirely outside of the parent company’s control (if there is one). This can lead to groundbreaking innovations but also presents the risk of diverging from the parent company’s strategic goals.

Conclusion

Ultimately, the decision between intrapreneurship, venture building, corporate clienting and start-ups comes down to a company’s appetite for risk, available resources, and strategic objectives. Companies looking to innovate incrementally and leverage internal talent may find intrapreneurship or corporate clienting the ideal solution. Those seeking more aggressive growth and willing to invest in creating new ventures might opt for venture building. For organisations willing to take on significant risk, launching start-ups in a studio setting offers the chance for radical innovation and potential high rewards.

Each of these paths can lead to success, but understanding the nuances and requirements of each is crucial for making the right decision. At The Delta, we continue to explore these models, supporting organisations and entrepreneurs alike in navigating the complex landscape of innovation.

This piece builds upon The Delta’ s thought leadership series, with Kilian , COO of The Delta, and Elisabeth , Partner at The Delta, offering his expertise on how companies can strategically navigate the world of innovation.