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Developing a talent strategy to build new businesses
CEOs of corporate ventures must be prepared for the rockiness of building a new business and recognize when alternative approaches have to be taken.
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Tesla CEO and Twitter owner Elon Musk speaks virtually with Anindya Bakrie (left), chairman of the Supervisory Board of Indonesian Chamber of Commerce and Industry, at the B20 Summit as part of the G20 dialogue in Nusa Dua, Bali, on Nov. 14, 2022. (AFP/Aditya Pradana Putra )
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uilding new businesses – or corporate ventures – is increasingly critical for growth. Not only is the creation of new products and services a defining aspect of many leading companies today, it is also a means to address fast-shifting customer demands, outsized sustainability challenges and ongoing technological disruption.
In our recent survey, 71 percent of business leaders in Asia-Pacific report building new businesses as a top-five strategic priority for their companies. They also expect 28 percent of their future revenue to come from the new businesses they build in the next five years.
For these corporate ventures to succeed in today’s digital environment, they require a deep bench of tech talent, particularly in skillsets such as automation, cloud, customer experience, cybersecurity, data management, DevOps, and platforms and products. It is also critical to consider leadership talent. Leading a corporate venture requires a blend of entrepreneurial and management nous. In fact, developing robust people and talent strategies are among the highest-value actions a business can take.
When it comes to assembling tech and leadership talent to build corporate ventures in Asia-Pacific, we observe three key factors: finding an experienced CEO, adopting a flexible recruitment strategy, and providing beyond compensation.
Ideally, the CEO of a corporate venture should be both an experienced entrepreneur who has built and scaled multiple new businesses, and a seasoned executive who is well-versed in corporate governance and navigating the workings of established companies.
The most successful CEOs of corporate ventures CEOs display four key attributes.
The first is customer-centricity. A customer-centric CEO will focus the corporate venture’s value proposition and business model on addressing customer needs. For example, the CEO of a mobility venture in Indonesia personally engaged with customers to validate the venture’s proposition and product before launch. By doing so, the CEO was able to make critical decisions to ensure they were delivering the best value to customers.
Second, a calibrated risk appetite, whereby the CEO is able to assess and take measured risks instead of being fixated on a fail-safe and “perfect” way forward. For example, the CEO of a digital marketplace venture in Singapore chose to beta-launch with a minimum viable product (MVP) to expedite reiterations and capitalize on first-mover advantage.
Third, a willingness to learn and pivot. As the saying goes, failure begets success. CEOs of corporate ventures must be prepared for the rockiness of building a new business and recognize when alternative approaches have to be taken. For example, six months after launching a sustainability venture, the CEO realized they were unlikely to achieve the required customer engagement. Hence, even though the venture had already launched, the CEO pivoted the business model after an extensive re-examination of its value proposition and purpose.
Lastly, a knack for hiring the right talent. CEOs of corporate ventures have to bring in the right mix of talent for every stage of growth, which may involve looking in unexpected or previously untapped places. For example, the CEO of an e-mobility venture in Southeast Asia decided to complement their local talent with expertise from regions with higher e-mobility maturity.
Corporate ventures need a range of talent for each stage of growth – from the CEO and founding team to tech and growth hacking experts – and they need it fast. We often see corporate ventures following the parent company’s recruitment process, which can take three to six months. This is far too slow for the venture’s needs and the pace of new business.
At the same time, speed must be tempered with the right fit. Mentem, an edtech venture by the University of New South Wales (UNSW), opted for a lengthier recruitment process as they were seeking learning designers with specific expertise in curriculum development. This was a necessary compromise to help Mentem deliver its value proposition of building and tailoring learning cultures for the workforce of tomorrow. While the longer recruitment time impacted their launch and initial business, focusing on the right talent fit enabled Mentem to scale quickly, which is far more significant. Our analysis shows that up to two-thirds of a corporate venture’s value is only realized when scale is achieved.
Business leaders can also explore alternative channels to recruit for their new business.
Referrals and industry events present good opportunities to identify prospective talent. Hackathons, for example, can attract a diverse mix of developers and engineers.
Partnerships with organizations that run entrepreneurship programs, such as start-up accelerators or universities, could also provide greater and wider access to talent.
Acqui-hiring, or acquiring a company for its talent, is another option for corporate ventures with their parent company acting as a source of funding.
By embracing these varied approaches, corporate ventures can expand their access to high-potential candidates and expedite their hiring process.
A well-structured compensation model can incentivize employees to grow the business, encourage continuity and retention, and help identify when an underperforming venture should shut down.
Beyond compensation, our research shows the importance of non-wage components of the employee value proposition and reveals a key priority: workplace flexibility. This can be a tricky balance to strike, with the rise of remote and hybrid working and modularized work, which decouples goal setting and the completion of tasks from the traditional five-day work week. However, companies that get it right benefit two-fold – attracting and retaining talent.
Prioritizing employees’ mental health and wellness is also key, and a recent study by the McKinsey Health Institute on workplace mental health found that nearly one in three employees are experiencing symptoms of burnout. By addressing toxic workplace behaviors, providing tailored support to serve employee needs and improving workforce listening, leaders can create an environment for employees to thrive and prosper.
Launching a corporate venture can be a daunting prospect, but with the right leadership talent, a balanced recruitment strategy and a focus on creating a flexible and mentally healthier workplace, business leaders can focus on creating value and enabling their corporate ventures to take flight.
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Vivek Lath is a partner and leader of Leap by McKinsey in Southeast Asia. Rohan Jain is associate partner at McKinsey & Company.
