It's no secret that research is important for any startup. After all, you need to know your industry, your target market, and your competition. A focused validation of a new idea is extremely valuable for de-risking. But there's a point where too much research can actually kill your startup before it really gets off the ground.
This is especially relevant for corporate ventures. They often enjoy special advantages, like customer knowledge, international distribution networks, or managerial experience. But they also face specific challenges, e.g. aligning with strategy, involving stakeholders, and budgeting.
Specific challenges like these can lead to slower build times vs VC-financed startups**,** and the cost related to this lack of momentum can easily negate the corporate startup’s resource advantages. Doing too much research is the leading cause of how corporate ventures can lose momentum.
Here are the 3 main reasons why:
1. Too much research creates a false sense of progress
When starting a new venture, it’s easy to get caught up in the details and lose sight of the big picture. Research can help with this, but it can also lead to an obsession with perfection that can stall the team’s progress. As insights pile up and get refined, the truth that the venture is not making any actual progress in-market is obscured. The key is to find the right balance. A corporate venture should validate its idea, but it should not get bogged down in research. Making sure that the venture has a bias towards action will keep things on track and moving forward.
2. Too much research can lead to scope creep
All projects have an inherent tendency to increase scope gradually over time, and in many cases, this can add value. But this tendency can become a major problem when extensive research keeps finding new problems, opportunities, and ideas, which are then added to the project. The ballooning of complexity that follows can easily stall the team’s progress and lead to frustration and disillusionment. It’s an even bigger problem for corporate ventures, because scope creep increases the number of stakeholders that need to be involved. Giving research a precisely limited mandate is a good strategy to avoid scope creep.
3. Too much research supports a culture of waiting for approval
In a corporate environment, it’s easy to get caught up in the need for approval from higher-ups. One of the ways to answer this is by providing results from research before moving forward. On the one hand, this is a functional band-aid during the venture-building process. But it also builds a venture culture that is counter to the entrepreneurial quick decision-making that ventures need in the market. The key to building a culture of taking action is to empower teams to make decisions.
What is the alternative?
It’s definitely not no research. Some risks can be identified and addressed with a lean research setup. It’s also clear that a corporation can not simply release half-baked ideas - they have a reputation to lose. But the most valuable insights are gained in-market: selling is research, delivering is research, and losing customers is also (painful) research. Therefore, efficient corporate venture builders should build a framework for getting to execution quickly, in a way that keeps learning fast but avoids the pitfalls of relying on research to lead.
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