We’re seeing a lot of new corporate ‘growth hubs’ or adjacent team structures emerging. The basic idea is to try to leave the core business to operate with as little distraction as possible whilst the capability is built to develop large, transformative ventures.
It’s been long recognised that the processes and systems that drive a company are not optimal for doing new things. They’d designed for governance, risk management, co-ordinating thousands of people and moving parts. In short, they’re designed to do one job but are not great at doing other jobs.
This is where ‘growth hubs’ or new structural ideas are emerging. If the way in which the core business is designed is not optimal for building big new ideas, then we need something else, right?
The idea is great, but as usual, the devil is in the detail.
Here’s a recent case study that worked well.
A client engaged us with an objective to find new growth opportunities outside their core business.
They’d taken some early steps already, recruiting some top talent to figure it out. The team were provided freedom-to-operate, and the organisation anticipated the answer may contain some new thinking. However, the path was not clear.
The Root Problem
One quick reality to emerge was that the company’s purpose was bigger, broader and bolder than its current product portfolio. We see this in a number of mature companies. Instead of setting a ‘purpose’ and going after it, instead, they find a label for what they currently do. The label envokes a higher-order idea, and that’s the purpose.
Unfortunately, they don’t really deliver them though. Unless of course, it fits the operating model and brands. In other words, deep down, the company’s core operations and assets drive everything, regardless of what a purpose may state.
But Food-Co had acknowledged this and was determined to deliver its purpose. And to do this, operations-led thinking would need to be complemented by an ability to expand beyond what they knew how to make today. If the future was going to be somewhere else, they needed to get there.
The challenge was ‘how’?
From our experience, showcasing structural ideas would be of great benefit to them. Immersing in new structural ideas and the benefits and weaknesses of each allowed an objective and analytical way to peek-in to what others had tried, and how things played out.
Corporate venture capital was an initial focus, as were innovation labs. We discussed open-innovation, Agile work teams and separate structures. We discussed innovation processes, project management, financing and governance. Each dimension was pulled-apart and analysed for its core benefits and disadvantages.
The bottom line was that once clear on the mandate and the ambitions, a model needed to fit the objective.
In the end, a ‘growth hub’ design was selected. A new unit within the core organisation would be established, complete with its own strategic platforms, processes and financing model.
Over the course of a nine-month engagement, Food-Co secure business case approval for the new unit. Governance and operating processes were implemented as was a front-end innovation model to build and test new initiatives. The hub was fully operational.
Radiocarbon hosted the client’s venture teams in our own lab space. Over a sixteen-week accelerator program, we validated a portfolio of transformative ventures. The lead venture secured funding, despite a 40% rollback in global innovation investment for the broader organisation. In addition, we ignited the fledgling team’s capability in front end innovation “through the roof” (quote).
[‘Work’ posts are short case-studies of Radiocarbon’s client activity. *Client names are changed for confidentiality]