Managing Internal Corporate Venturing Cycles

SUMMER 2005

VOL.46 NO.4

Robert A. Burgelman and Liisa Välikangas

Managing Internal

Corporate Venturing

Cycles

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REPRINT NUMBER 46407

Managing Internal Corporate

Venturing Cycles

Companies too often

vacillate in their

T

commitment to internal

corporate venturing

activities, leading to less

than optimal outcomes.

Executives need to

better understand — and

manage — the factors that

drive cyclicality in internal

corporate venturing.

Robert A. Burgelman

and Liisa Välikangas

hirty years of systematic study of internal corporate venturing has revealed

that many major corporations experience a strange cyclicality in their ICV

activity. (See “About the Research,” p. 28.) Periods of intense ICV activity are

followed by periods when such programs are shut down, only to be followed

by new ICV initiatives a few years later. Like seasons, internal corporate venturing programs begin and end in a seemingly endless cycle.

Consider Lucent Technologies’ New Ventures Group, which was set up to reap commercial value from Bell Labs technology. In January 2000, the group was acclaimed as

exemplifying best practice for a new-ventures division.1 Yet Lucent, in the aftermath of

the telecom downturn, in 2002 sold 80% of its interest in the New Ventures Group to

Coller Capital, a British private-capital management company.

Other ICV programs have substantially changed their character or mission. In its

first three years of existence, Baxter International Inc.’s nontraditional-innovation program, for example, transformed its mission from the pursuit of new technologies in

new markets to the exploration of business opportunities closer to the core business.2

(A new CEO has recently revived a broader search for new growth areas.) A few years

ago, Shell GameChanger, the radical...