In our previous post we explored corporate startups and how to identify the right opportunities when getting started. This time, we are looking at the next steps and focusing on what success looks like once you have decided on the opportunity to pursue. In order for your corporate startup to operate effectively, it is critical to understand your success metrics. This understanding of clear success metrics will not only help you in your day-to-day operation, but will also be crucial in helping you secure buy-in from the key budget holders and decision makers within your organisation.
As discussed previously, a corporate startup is a venture that leverages an entirely new method of product development and launch within a large organisation. So, while we can’t tell you exactly what your key metrics and measures of success should be, they will likely look quite different to that of your core business.
But what does this mean? Because corporate startups are customer centric, so should your success metrics. As mentioned above, your success metrics are likely to look different to that of your core business because you don’t have the same objectives – the objective of a corporate startup is to solve consumer problems. Therefore, while your first inclination may be to duplicate your parent organisation’s success metrics, this is an ineffective way to look at success in the case of a corporate startup. While you understandably care about gross margin, customer acquisition costs, and improving your P&L, your customers do not. Therefore you need to avoid thinking like a corporate and aim to centre your metrics around solving consumer problems rather than corporate problems. This bottom-up, grass-roots approach should enable you to test quickly, find out what resonates, and see how customers respond to your offer. Based on their response, you can iterate before you commit to further product development cycles.
So why are success metrics important? Clear and defined success metrics will not only steer you in the right direction and facilitate day-to-day operations but will also help you obtain buy-in (which will make the growth of your corporate startup much smoother). Well-defined success metrics are a great foundation when trying to get key stakeholders to understand what you want to achieve. And in turn, this understanding will be crucial when securing budget or funding for your corporate startup. Ultimately, while typical success metrics (i.e. profit, gross margin, etc.) are critically important later in the growth cycle, they are less relevant when you first embark on your corporate startup journey.
Again, we cannot tell you what your key metrics should look like, but gaining traction should be key consideration. Traction is a good indicator of success, and can be broken down into things like growth in usage and demand for the product. Metrics that contribute to traction, rather than profitability and revenue, is something to focus to prove to your ‘investors’ that your corporate startup is rearing the desired results. To get here you will need to be able to test and build quickly, to obtain proof that your method works, and to turn assumptions and hypothesis into real data and understanding that will help you refine your product. Only after building this initial traction should you look to optimise and further develop your product around it.
Now that you have determined what your success metrics look like, you will want to direct your attention to funding. As a startup, you’re most likely to answer to investors – so you will need to consider who the ‘investors’ are within your organisation and whether you are solely looking for internal investors. You may find that you will require a combination of both external and internal ‘investors’ but whoever these investors are, their buy-in is essential. You will need to be able to explain your process, differentiate it from existing projects, and be able to create a growth story for your investors to unlock future rounds of investment. This is where your clear and defined success metrics will come into play.
Understanding who your investors are and making sure your success metrics resonate with them is important. Your ‘investors’, the stakeholders within your organisation (and perhaps a few external investors), hold the key to the funds you will need to unlock to create your corporate startup. But as a corporate startup, funding alone will not be enough. These stakeholders will also need to have the necessary appetite to go through this entire corporate startup journey with you to ensure you are also maintaining traction within the parent organisation.
Your end goal may be the launch of a challenger brand, or an entirely new proposition unrelated to the area of industry you currently sit in. You will need to define your success metrics and determine who your ‘investors’ are. We have a lot of experience in defining and delivering success so don’t hesitate to get in touch with any questions! We’d love to arm you with the right tools and help you navigate these crucial steps.