When Building a New Venture, Friction Isn’t Just Inevitable—It’s Invaluable

When Building a New Venture, Friction Isn’t Just Inevitable—It’s Invaluable

Nine lessons from the front lines of corporate venturing
Katherine Londergan
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For large corporations, the process of creating new ventures can be tricky. Big companies are organized for efficiency rather than entrepreneurship: They look for ways to systematically reduce friction and cost as they optimize their core business. And they are rewarded for it. But this approach isn’t compatible with the conditions that allow new ventures to succeed—and that friction can kill budding corporate ventures on the vine.

Or, it can help them thrive.

Friction illuminates what could be. It can show you the difference between how you’ve been operating, and how you need to be. We’ve been creating new ventures with clients for years, and studying others that have successfully maintained their traditional business model while launching something entirely new. One thread that ties them together: the decision to embrace friction and use it as fuel for organizational adaptation. It’s the difference between hoping a new venture can grow in your current model, and making sure that it does.

So how, exactly, do you make that happen? We’ve found the key to dealing with frictions is to anticipate them, name them, and develop smart responses. Here are a few of the frictions we’ve encountered, and solutions for dealing with them.

Put aside ingrained mindsets

Many new ventures have radically different business models than the core business. That means company leaders have to clear their minds of decades of experience with their core offering to evaluate and support something entirely new, or risk tanking a new venture before it begins. When American Family Insurance (AFI) realized that its customers were having trouble saving enough money for an emergency fund, they created a service to help families bridge the gap between their paychecks and their financial security threshold. The platform enables businesses to tap into an on-demand workforce, and allows workers to access extra short-term employment when it’s convenient for them. Though the concept was outside AFI’s core offering, and a totally different model, the venture allowed the company to pursue a new opportunity while meeting its mission of helping people.

Empower employees to throw out the rule book

New ventures require creative talent that isn’t abundantly available in a large company— founders, designers, developers, writers, and others. And corporate HR often biases towards candidates with traditional skill sets and experience, rather than focusing on entrepreneurial skills, like comfort with ambiguity. One way to get around friction in hiring: Have a designated recruiting partner with venture leadership who looks specifically for what candidates are capable of, rather than what they’ve already accomplished. Give them the freedom to bypass typical recruiting methods, and find the right fit.

Cut down on hierarchy

Traditional companies have formal approval processes for marketing messages and compliance with brand standards. Startups don’t have time for that. Their timelines are shorter, their messaging has to evolve quickly, and they do their best work when they have direct channels to test new offers with new sets of customers. How do you sync those rhythms? By creating autonomy for the new venture. Let it have an identity, voice and conversation separate from the parent company; and give it new, shorter approval pathways for marketing campaigns. At one large pharmaceutical company, the new venture’s social media manager had a direct line to corporate marketing to rapidly edit and approve social media and advertising content, which enabled them to reach audiences faster.

Formulaic recruiting, ingrained mindsets, and stymied marketing approval are just a few of the frictions we’ve encountered in our years of venture building. Recently, we created a learning tool to help leaders set the conditions for solid ventures: a deck of cards that lays out common frictions, how each could derail you, and how someone else has used them to fuel success.

We’ve also left some of the cards blank, so you can put a name to new frictions that arise in your own venture building. From there, you can create systems and processes to help new ventures—and the core businesses that support them—thrive. We’re hoping this deck can help start conversations that convert venturing friction from an impediment into an advantage. And we’d love to hear about the frictions you add to your deck.

You can download the cards here.

Visuals by Louisa Liu

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Katherine Londergan
Katherine loves designing new ventures with rich brands, products and service experiences—whether for large corporations that need to find new growth, or start-ups getting ready for launch. She's fascinated by different models of how corporations innovate and design new businesses.
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