Rita McGrath

“Managing Growth through Corporate Venturing”

Coauthor(s): Ian MacMillan.

Editors: Mark P. Rice and Timothy G. Habbershon


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Current corporate attention to growth sometimes borders on the obsessive, as executives are exhorted to grow their businesses and are evaluated on the basis of their success at doing so. Analysts look to companies' track records on growth to assess their value as investments. And a cacophony of voices—from the business press to institutional investors—cheers growing firms and jeers those that do not grow.

The pressure on firms to grow—at any cost—has resulted in a great deal of dysfunctional behavior. Most of this stems from some fundamental misunderstandings of the nature of lasting growth. It is the relatively rare acquisition, for instance, that adds value to the acquiring firm. Thus, the widespread practice of buying top-line growth typically ends up destroying shareholder value. Likewise, excessively ambitious growth targets can cause good, but small, new businesses within a firm to appear to be failures, because they cannot grow quickly enough to feed a voracious corporate appetite. Furthermore, some firms chase what appear to be huge growth opportunities in a misguided way—by throwing vast resources into "big bet" investments, which means that any failure is an enormous failure (think Webvan, Iridium, or London's Millennium Dome project).

Although we are not opposed to acquisitions, ambition, or even big bets, we have observed that executives focused on these things tend not to have a good grasp of those powerful but simple, consistent practices that generate continuous growth via expansion of current capabilities into new opportunity spaces.

This is the topic of our chapter, based on research that had its beginnings in a study of thirty-seven successful and failed corporate ventures in a major financial institution. It was followed by a five-company, thirty-five-venture study of the process through which new ventures lead to new competences for established organizations. It builds on earlier work on the corporate venturing process and our own observations of companies involved in venturing.

Source: Entrepreneurship: The Engine of Growth
Exact Citation:
MacMillan, Ian, and Rita McGrath. "Managing Growth through Corporate Venturing." In Entrepreneurship: The Engine of Growth, 21-48. Ed. Mark P. Rice and Timothy G. Habbershon. Westport, CT: Greenwood, 2006.
Pages: 21-48
Place: Westport, CT
Date: 2006