ACV

Nov 29, 2021

5 min read

The Possibilities of the CVC

Photo by Matt Ridley on Unsplash

Nowadays, innovation in business is vital. Facebook is launching the metaverse, Google with Waymo is going to give people autonomy in their transportation and SpaceX wants to reach Mars.

However, 90% of businesses in the United States have less than 500 employees and 78% have sales of less than USD$500k. As such, innovation, like many other elements of business, must be tailored to the size and needs of the organization in order to have the right impact. (NAICS)

Organizations, regardless of size, should consider that innovation can occur in products and services, processes, and new business models. In addition, innovation can be incremental, disruptive and breakthrough (Tools for Corporate Innovation).

The tools that are available to organizations are:

  • R&D — Research and development has been a feature of large organizations for many years. Small and medium-sized companies could conduct small experiments with minimal capital investments that are in a controlled environment and that allow them to define elements of value for the business.

Leadership within companies is the determining factor to look beyond the current situation and think about those disruptive elements that add value to the organization in the short, medium, and long term. Innovation, beyond being a necessity for leadership, must be a conviction, which is demonstrated by adapting the organizational culture to promote diversity and discussion of ideas, empowerment, tolerance for risk-taking, and acceptance and resilience in the face of change and failure.

Next, innovation objectives must be defined for the entire organization and structures must be adapted so that the innovative culture permeates the entire business and really adds value. Afterwards, metrics must be defined to measure the impact of the innovative process, seeking feedback to the business processes in each phase. It is important to recognize that the goal is to have an organization that lives innovation and not to have it become just another department of the company.

Consider telecommunications companies that have gone from offering connectivity services and infrastructure to being players with a diverse product portfolio for different audiences, such as production and streaming of series and movies on their own channels, cloud services, and even technology manufacturing.

The banking sector has perhaps been one of the most disruptive sectors. There is a myriad of startups that offer solutions for payments, transfers, asset management, insurance, and loans, among others that compete with traditional banking. This has led banks and other industry institutions to consider the use of blockchain and cryptocurrencies within their operations and portfolio.

Even in sectors that seemed to have no evolution, such as agriculture, innovation has made it possible to have crops audited by drones, automated tools in irrigation and production processes, and even verticalized crops in urban areas.

Just as internal combustion machines revolutionized industrial activity in the 20th century, today the internet and technological development have brought us into the digital era. Innovation is becoming faster and faster and has a greater impact on the daily activities of individuals and companies. All organizations, large or small, can have access to these innovations, probably the tools vary a little according to the size of the organization; however, the most important thing is that the conviction of the leader and the culture of innovation permeate the entire organization.

Hector Shibata Salazar, adjunct Professor at EGADE Business School and Director of Investments and Portfolio at AC Ventures Fund

Ana Maury Aguilar, VC Investor at AC Ventures

ACV is an international Corporate Venture Capital (CVC) fund investing globally in Startups & VC funds.

Stay updated about Venture Capital, innovation, entrepreneurship and more! Sign up for AC Venture’s monthly Newsletter.

Follow us on LinkedIn: ACV_VC

Follow us on Twitter: acv_vc

Follow us on Spotify: ACV_VC