How To Manage New Ventures?

Continuous innovation

In order to keep the company growing, some companies take M & A to enter new industries or complementary products of the same industry. For example, Google has acquired Youtube and entered audio-visual services; Orocle has acquired Sieble, and ERP has entered the CRM field; Hon Hai has continuously acquired companies in the IT industry value chain, contributing to its annual growth of 30%, becoming the largest foundry factory in the world.

however

Two modes

In the eastern enterprises, the direction of new ventures can be roughly divided into several modes.

The first is to find new products and opportunities in the industry market that is already familiar with them, and expand the ability to take root in the industry.

Japan's Toyota company is constantly innovating products in the car market, becoming the world's largest auto factory. Acer is focused on the development of computer market. This growth mode must be quality or cost control as the core expertise of the company.

The two is to use its core competence to enter other new industries or markets.

This growth mode is obviously much more difficult than the first one.

Because the barriers to entry into other fields or industries are relatively high and the general success rate is relatively low, it is also necessary to have psychological preparations for long-term resistance or failure.

HP once wanted to enter the IT consulting industry in 2000, but in less than a few years it hasty troops. Instead, IBM began to enter the consultancy industry successfully since 1993. So far, it has brought nearly $30 billion in consulting services to IBM every year.

IBM has made use of its management experience accumulated over the past hundred years to package the core expertise of these management experiences into a product and successfully create the blue ocean.

The success of this model requires a lot of innovative blood and a new cause of blue ocean based on value innovation.

No matter the first mode or the second mode, the chances of success are not high.

Why is the success ratio of new ventures not high? The reason is very simple, because new start-ups have the burden of successful companies. Instead, new start-ups generally focus on one product and invest in the company's resources. The chances of success are larger than those of successful companies.

The key to success in New Ventures

How can companies manage new ventures to make new ventures successful? I personally believe that the key factors for success in new ventures are:

CEO has to lead new businesses in person.

Because of this new business from scratch, there are many Critical decisions.

In the company, probably only CEO can decide, for example, to break through with a master, to purchase an expensive equipment, and sign strategic cooperation with other organizations.

Only CEO can make decisions quickly and decisively.

The fact that CEO leads the team in itself has a strong incentive for the new venture team. At the same time, the head of the company will recognize the company's commitment to new ventures and be willing to invest in new ventures.

Select excellent cadres with entrepreneurial spirit.

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New ventures are different from those that have already been successfully established. They are not only successful but also full of variables and difficulties. Only entrepreneurs with entrepreneurial spirit are willing and capable of doing such a difficult task.

In general, most of the executives in a company are reluctant to accept the challenge of new ventures. Some of them go back to the outside world, but foreign executives need to run through for a period of time. They often spend more than half a year, and most of them end up in failure. CEO

I suggest that the manager of a new venture must be selected by the company to be the head of venture capital, and the director of other departments will consider hiring outside. This is a very critical condition for the success of new ventures.

Constantly adjusting to target the market.

The market opened by new ventures is generally immature, and the rules of the game have not yet been formulated.

Perhaps Know-how is totally unfamiliar with the industry and its market variables are great.

Therefore, we need to constantly focus on the development of new businesses, constantly adjust the accuracy of targeting the market, allocate resources to follow up, combine the advantages of the company, enhance the strategy and avoid the short, and finally find the right location.

Give enough resources and time.

Resources and time are both opportunity cost and basic elements for career success.

The broad sense of resources, the strategic thinking ability, the efficient organization integration, and the abundant capital investment need to be achieved. In a narrow sense, there is no vision, talent and capital.

Small and medium-sized enterprises are flexible, but lack of resources and time.

Large enterprises have more advantages in terms of resources and time, but also depend on the patience of the top management.

Regardless of the size of the enterprise, the time and patience to invest in new businesses is a prerequisite for success. Excellent talents and continuous investment are the key to success.

Segregated from existing organizations.

Management practice shows that the higher the homogeneity of the organization is, the higher its cohesion and execution will be.

But on the other side of the coin, homogeneity is also likely to breed mental retardation or behavioral weakness.

Such an organization is not necessarily applicable to new ventures.

Why should new ventures be isolated from existing organizations?

With sufficient support, the new organization does not have much interference in the framework, making breakthroughs in thinking easier, organizing efficient actions and gaining the opportunity to occupy the market.

Rewarding excellent cadres who are successful in new ventures.

New ventures have no track to follow. The difficulty and risk of new ventures are much higher than that of their mature businesses. They also have to endure long failures or losses. Most executives are reluctant to accept the task of new ventures. Therefore, companies must have a mechanism to encourage new start-ups. Of course, they must reward highly, give stock options or large dividends, so that more executives will be willing to join the company's new ventures to find water for the growth of the company.

Even if new ventures are not successful, they should not be punished, because the success rate of new ventures is not high. If the new ventures fail to punish the executives, then there will be no more willing to accept the high risk errands, so not only should they not be punished, they should reward them, or even give them exceptional promotion.

In short, enterprises should not systematically punish innovators.

How much time should be given to new ventures? This is a very difficult problem to choose. It can only be judged by CEO's wisdom and vision. After all, the environment has been changing. When the environment has changed and the conditions for the success of new ventures no longer exist, they should be determined to give up or turn in.

Sometimes the conditions for success exist, but the scale of the market has not yet formed. If we give up too early, we may lose the great chance of success.

Conversely, if the market is not yet ripe or still in the process of brewing, if the scale of investment is not amended, it may not succeed at the end. If the money is burned or shareholders are already impatient and unwilling to invest again, they will be forced to end it.

The best way to do this is to narrow down the scale, keep the new business in one breath, and wait for the time to come, so you can take the lead in the competition.