Most companies rightly have a Chief Executive Officer (CEO) (aka Chief Everything Officer) who is the “highest ranking person in a company, ultimately responsible for taking managerial decisions” relating to the P&L, operations, and so on. Larger companies tend to organise themselves into business units, which in theory look like little businesses themselves, but which in reality act a lot like the parent — as they say in French: “Les chiens ne font pas des chats” (“dogs don’t make cats”).
This is precisely why many — myself included — believe you cannot disrupt yourself and need to separate innovative businesses from the core. Dayton-Hudson traded for 60 years before finding the formula for Target in 1962, and you’ve probably never heard of its parent. Had they tried to build this within the structure of a “legacy” department store it certainly would have failed if only because of well-meaning people, policies, and controls. You need to be a company that creates companies.
Indeed when the late, great Clayton Christensen developed his theories about the capabilities of a company, he discovered that it’s the resources, processes, and priorities (the latter renamed profit model by the time I got to doing his excellent Disruptive Strategy course with HBS) that define what it can and can’t do. He would say that to assess a company’s activities, don’t look at what the CEO says it does, but what is actually being done on the ground. Even if she has all the right people and tools (i.e. resources) in place, and they efficiently use them to create offerings customers want (i.e. processes), you still fail when the salesperson prioritises selling products like licenses and servers over services like cloud to hit short-term targets (i.e. profit model). This is all in the domain of the savvy CEO, yet too many fail to simply say what they do and do what they say.
The very largest of companies like General Electric (GE) and Procter & Gamble (P&G) are often conglomerates “consisting of a number of different and distinct parts or items that are grouped together” (though the latter’s CEO denies the charge). These too tend to impose limits on subsidiaries that independent firms would be free of, whether relating to performance expectations, regulations and controls, or even as trivial as budgeting, procurement, and expense processes and systems. Even if they succeed with the business strategy around competing to win, they can still fail at the corporate strategy of deciding what businesses they want to be in in the first place.
The venture studio is the model we need right now, but a venture studio — a startup that creates startups — is different in that these are truly independent enterprises with their own entities, people, beliefs, and boundaries. “The venture studio model cultivates better entrepreneurs by providing them with more integrated resources, expertise, technologies, and perhaps most importantly, time, [matching] experienced operators with a company ready to take on a market”.
Innovation experts advocate for “a person at the same hierarchical level [as the CEO], who creates framework conditions for radical ideas, opens up new areas of growth and ‘reinvents’ large companies. This “Chief Entrepreneur” could steer the future of the company while the CEO looks after the existing business”:
However a venture studio — outside of “lowest common denominator” shared services it provides so portfolio companies don’t waste limited resources reinventing wheels for undifferentiated activities like accounting and infrastructure — has no “existing business” to speak of, and therefore no need for a traditional CEO.
Enter the Chief Entrepreneur Officer (aka the Chief Entrepreneurial Officer or Chief Entrepreneurship Officer) who is more of a peer and servant leader whose job it is to support and ensure the success of the co-founders of portfolio companies than “decider of decisions” at the head of the hierarchy.
I truly believe the venture studio is an idea whose time has come, and to that end coordinated a seamless transition to Singapore’s new Tech.Pass with the country’s Economic Development Board earlier this year given it specifically allows technology executives to (among other things) “start and operate one or more tech companies” — a prerequisite for a company that creates companies.
Acumino (“A Singapore venture studio focusing on emerging technologies and disruptive innovation”) was subsequently founded, and this week acquired a social video startup to grow the portfolio and accelerate a several existing initiatives: Singapore venture studio Acumino acquires Melbourne startup Speakeasy.
Acumino already has three companies at prototype, minimum viable product (MVP), and production stages, with more on the way:
- Saku: A digital human for interviews that eliminates unconscious bias.
- Speakeasy: A social video streaming platform for large-scale live events.
- Work Sleep Live: Productivity optimised accommodation for professionals.
If you are or know someone who believes in the venture studio model as I do, and would like to come along for the ride — whether as a co-founder of a portfolio company or investor in one — then please get in touch. I look forward to working with you!