New York, December 10, 2001 – Contrary to public opinion, corporate venturing is not dead but refocused on strategic goals and joint venture opportunities according to a survey of executives conducted by Accenture. Fifty-nine percent of executives undertake corporate venturing for strategic reasons, verses twenty-nine percent that do it for financial ones.
The survey findings also reveal that regardless of the reason, eighty-five percent of executives in the United States still believe in the promise of corporate venture and have no plans to stop this activity of investing in or creating new businesses leveraging their assets and capabilities such as intellectual property, brand, physical assets, human resources, and business capabilities.
In fact, corporate venture remains a top strategic priority for executives. According to the survey, nearly half are engaged in as many as 5 initiatives and another quarter are engaged in 6 to 10 or more corporate ventures.
Corporations began primarily in corporate venturing activity as a source for profit or as a way to keep tabs on new technologies. According to the survey, 7 out of 10 executives now believe corporate venturing is also important for realizing the value of their company’s intellectual property, brand and physical assets.
“By creating or investing in new entities, companies can leverage their distinctive assets and capabilities, harvest innovation, drive growth and increase shareholder value. But to do so requires getting it right the first time. That’s the challenge companies face with corporate venturing,” said Larry Leisure, Partner in Accenture’s Strategy and Business Architecture practice.
However, signs that the slowing economy has impacted the pace of corporate venturing can be seen by an increased desire among executives to mitigate risk by spreading it around through joint venture initiatives.
“But companies at the same time need to be weary about these initiatives and take a close look at their business partners and their joint ability to form a successful venture,” added Leisure.
According to the survey, fifty-five percent of executives plan to pursue corporate venturing through joint ventures. Only seventeen percent said they would undertake the investment as a new stand alone business unit, followed by seven percent who said they plan to pursue opportunities through incubator deals and a mere two percent said they’d take the spin- or carve-out approach.
According to Accenture research, corporate venturing programs can fall prey to four common causes of failure. These include: venture program management inexperience, poor definition and alignment of strategic intent, weak portfolio strategy, and lack of appropriate governance skills and a poorly designed incentive structure.
Accenture is the world’s leading management and technology consulting organization. Through its network of businesses approach — in which the company enhances its consulting and outsourcing expertise through alliances, ventures and other capabilities — Accenture delivers innovations that help clients across all industries quickly realize their visions. With more than 75,000 people in 47 countries, the company generated net revenues of $11.44 billion for the fiscal year ended August 31, 2001. Its home page is www.accenture.com.
Accenture conducted the survey in conjunction with Wirthlin Worldwide. Wirthlin’s periodic Executive Omnibus survey is designed to find out what the nation’s top corporate leaders think about the issues affecting business today. Executive Omnibus provides a comprehensive source of information about current attitudes of leading executives in Fortune 1000 companies, including CEOs, chairmen, and executive vice presidents.
Wirthlin interviewed, by telephone, a representative sample of a 150 of the leading executives in the Fortune 1000 in October 2001. A broad range of industries, services, locales, land sizes of companies are equally represented. Breakdowns of executive opinion by type of industry or service, geographic location, company size, level of executive and other variables that help explain attitudes and behavior.