Strategy & Innovation

Structure, Requirement & team perspective

A.     Structure

The new business has to be organized separately from existing one,

There has to be special focus for the new venture within the organization, &

Keep away the new venture from the burden it can not carry (traditional ROI analysis)

B.     New venture has FOUR requirements

Focus on market – ready for unexpected success & unexpected failure, your product or service may find a new market for itself, be ready to accept what market demands.

Financial foresight (cash flow, capital need planning)  

o   Lack of financial foresight is greatest threat in stage of growth for a new venture,

o   Fall of rapidly growing venture has same reason of failure – lack of cash, inability to raise    capital needed, loss of control (expenses, inventories, receivables).

o   Cash flow, Capital & Control should be priority rather than focus on profit. Growth needs to come through cash and capital infusion. Profit at an early stage is a liability.

o   A successful new venture should outgrow it capital structure by every increase in sales.

C.     Building top management team

Management of people and management of money are only two common activities in organization, rest team needs to discuss and identify key areas.

Start early building a team, informally or formally but need a top management like structure from the beginning.  

D.    Role of founders in the new venture – founder needs to identify his/her strength and take up role accordingly, otherwise he may destroy the business and himself.

Need for an outside advice – if not board of directors then someone from outside to counsel and advice on the problems he/she is not a part of. It needs an independent, objective outside advice.