The Innovation Flywheel: Supercharging Corporate Ventures to Create Impact Through Smart Growth and Transformational Leadership

The Innovation Flywheel: Supercharging Corporate Ventures to Create Impact Through Smart Growth and Transformational Leadership

As I reflect on my recent experience in a corporate venture building program at another leading insurance company, I'm struck by the systemic failures plaguing these initiatives across the industry. This perspective is informed not only by this recent corporate venture experience but also by my background as a co-founder of several global startups where we collaborated with tier 1 global consumer goods, retail, and tech companies. Additionally, my role as an investor in seed to growth-stage startups in the UK, particularly those with an impact focus targeting top consumer product companies like Unilever, Danone, and Coca-Cola, has provided valuable insights.

The Multifaceted Crisis in Building Sustainable Growth

The challenge for sustainable, equitable growth is multidimensional, extending far beyond the confines of corporate venture programs. This complex landscape encompasses a web of interconnected issues that demand a holistic approach. As I've explored in my book "Smart Growth," the path to genuine progress is fraught with obstacles and opportunities that require innovative thinking and collaborative action.

Macro-Environmental Factors:

1. Global conflicts and geopolitical tensions: These not only disrupt supply chains but also create an atmosphere of uncertainty that stifles long-term investment and innovation.

2. Lack of cross-border collaborations: In an increasingly interconnected world, the absence of meaningful international partnerships hampers our ability to address global challenges effectively.

3. Insufficient regulatory protections for consumers: This leaves individuals vulnerable to exploitation and erodes trust in the market system.

4. Climate change and environmental degradation: These pose existential threats that require immediate, coordinated action across all sectors of society.

5. Rapid technological advancements: While offering immense potential, these also create new challenges in terms of job displacement and ethical considerations.

6. Proliferation of zombie companies and loss of startups and SMEs: The persistence of unproductive firms propped up by low interest rates, coupled with the decline of dynamic startups and small-to-medium enterprises, has led to increased economic fragility and reduced innovation capacity.

These factors have led to a cascade of negative outcomes:

• Reduced competition: As larger entities consolidate power, the playing field becomes increasingly uneven.

• Monopolistic and oligopolistic market practices: These concentrate wealth and influence in the hands of a few, stifling innovation and limiting consumer choice.

• Higher prices and fewer choices for consumers: This not only impacts quality of life but also exacerbates economic inequalities.

• Erosion of social cohesion: As disparities widen, societal tensions increase, further complicating efforts to build sustainable systems.

• Short-term thinking in business and policy: This myopic approach sacrifices long-term resilience for immediate gains.

This demands a fundamental overhaul of our approach to growth and development—one that prioritises long-term sustainability over short-term profits, addresses the unprecedented inequality and wealth concentration that has surpassed even the Pareto principle, and fosters inclusive learning, equal access to opportunities, and innovation. This new model must recognise the intricate interconnectedness of economic, social, and environmental systems. Only by confronting these challenges head-on can we forge a future that is not merely prosperous, but equitable and sustainable for all.

The Disconnect Between Corporate Culture and Entrepreneurial Spirit

The fundamental issue lies in the disconnect between corporate culture and the entrepreneurial spirit these programs claim to foster. The bureaucratic quagmire of corporate politics, coupled with outdated tools and methodologies, sometimes against a backdrop of parochial mindsets, creates an environment antithetical to true innovation. The much-touted "Agile" methodologies have become hollow buzzwords, failing to deliver on their promise of nimble, responsive development. These organisations are far from agile or nimble.

Onboarding and False Starts

In any race, you set the stance, pace and intentions early on. First impressions and posture count significantly. The onboarding experience at some of these corporate ventures is a good test, and many exemplified this lack of agility. It took weeks for the organization to arrange basic necessities like a laptop, ID card, and new starter essentials. This bureaucratic inefficiency directly contradicts the principles of removing obstacles and empowering team members that startups and new venture methodologies espouse. The idea is to create conditions for success, not to burden new CEOs and venture builders with administrative tasks. Such an environment stunts creativity and progress at every level. The very essence of agility and entrepreneurial spirit is suffocated under layers of unnecessary process and red tape. This also protects a layer of people in the organization who can be easily replaced with smarter automation. By failing to streamline these processes, the organisation not only hinders its own growth but also sends a clear message about its inability to adapt and innovate in a fast-paced business landscape.

Stagnation in Venture Building

This stagnation is particularly alarming in the context of venture building, where speed, flexibility, and rapid iteration are crucial. In an era where startups can pivot and scale at breakneck speeds, corporate ventures hampered by such bureaucracy are doomed to fall behind.

As a founder and entrepreneur, I left corporate environments precisely to innovate in areas such as employee engagement, value proposition development, vision-setting, culture-building, defining purpose, and constructing high-performing teams to create meaningful impact beyond profit, which is the 'oxygen' or runway for any small business. These elements are the lifeblood of successful ventures yet often become the first casualties in overly bureaucratic corporate innovation programs. The stark contrast between the agility required for true innovation and the reality of these corporate environments underscores why many entrepreneurs find such programs stifling and ultimately counterproductive.

Hierarchical Structures

The organisational structure of this particular venture building experience was archaic and hierarchical, focused on supervisory sign-offs and bureaucracy rather than effective leadership. As an experienced leader who created global best practices for some of the world's most admired brands in highly contested market spaces, I had dealt with poor structures and organisational silos before. In fact, this was a specialism we provided in our first startup, back in '08. Removing silo's and ineficient ways of working. I knew what this would lead to and predicted exactly what would happen next. Brought in as a CEO, I found myself reporting to 'senior manager' level supervisory types who acted more as blockages than facilitators. These managers, often with limited relevant experience, were tasked with policing ventures, rather than supporting them. The project sponsor was not senior enough, another top Their approach to portfolio management was antiquated, yet they did not want to hear of better 'best practice' systems elsewhere. This rigid adherence to outdated methods not only stifled innovation but also created an environment where true entrepreneurial spirit could not thrive. The disconnect between the venture's needs and the corporate structure's limitations became increasingly apparent, highlighting the fundamental challenges in integrating startup agility with corporate processes.

The top 10 reasons why corporate innovation/ventures fail:

1. Bureaucratic Inefficiency: Slow processes and excessive red tape hinder agility and responsiveness, which are crucial for innovation and venture building.

2. Disconnect Between Corporate Culture and Entrepreneurial Spirit: The rigid corporate environment often stifles the creativity and flexibility needed for successful ventures.

3. Outdated Leadership Structures: Hierarchical structures focused on supervisory control rather than facilitation and support impede innovation.

4. Lack of Relevant Experience in Leadership: Managers with limited entrepreneurial or venture-building experience are often tasked with overseeing innovative projects.

5. Misalignment of Incentives: Corporate KPIs and incentive structures often don't align with the needs and realities of venture building.

6. Insufficient Resource Allocation: Ventures are often underfunded or lack access to necessary resources within the corporate structure.

7. Short-term Thinking: Focus on quarterly results and short-term gains conflicts with the long-term nature of venture development.

8. Failure to Retain Talent: High turnover, especially in key leadership positions, disrupts continuity and knowledge accumulation.

9. Lack of Clear Vision and Strategy: Absence of a coherent, long-term strategy for venture development leads to directionless efforts.

10. Resistance to External Best Practices: Unwillingness to adopt or learn from successful innovation practices outside the company limits growth and improvement.

These factors collectively create an environment where corporate innovation initiatives struggle to gain traction and deliver meaningful results.

Despite raising these issues early on in this latest venture, the 'sponsor', who had been newly drafted into the innovation hub from elsewhere in the business, seemed at a loss for how to address them. Instead of tackling the root causes, the company chose to change course which meant new metrics, a new -end-goal- focus of 'proposition development' over actual venture scaling. This now meant having to eliminate venture builders while retaining bureaucrats. This decision underscores misplaced priorities and a fundamental lack of understanding of what drives true innovation. It highlights the stark contrast between transformational leadership—which fosters innovation and empowers employees—and the limited transactional mindset that the company seemed to embrace. By clinging to bureaucratic structures and dismissing those with entrepreneurial spirit and intent that was agreed upon at the project scoping stage, they demonstrated a profound misunderstanding of how to cultivate a culture of innovation and adaptability in today's rapidly changing market landscape.

Implications for Leadership and Organisational Culture

The systemic issues observed in corporate venture programs highlight a critical need for a fundamental reorientation in leadership approaches. This section explores the characteristics of effective leaders and the implications for organisational culture, while also addressing concerning trends in leadership selection and skill imbalances.

Evolving Leadership Landscape

Over the last decade, there has been a troubling tendency towards prioritising 'investment banking and McKinsey or BCG' types in leadership roles within global scaling startups. These individuals, often securing top team positions through connections rather than relevant experience, frequently lack expertise in leading profitable, sustainable businesses. This trend has led to a disconnect between leadership and the practical realities of building and scaling ventures. The rapid rise and fall of quick commerce, and the billions lost, is a good case study here. There are plenty more cases of 'investment' led decisions serving investors, versus actually addressing and solving for customer needs and wants. I have spoken at length about the top-down investment-led focus on for instance plant based foods, where parity tests for future innovation and funding rounds has focused on pricing (to enable switch before ecomomies of scale are reached) and mouthfeel/ texture rather than health and producing 'clean' meat substitutes for the future. I have yet to see a global at scale plant-based player leading with science backed claims on the nutritional density and levels of processing involved, and how this affects consumer and public health at scale, over time.

The STEM Imbalance

Simultaneously, there has been an over-emphasis on STEM skills in the workplace. While technical expertise is crucial, this focus has often resulted in an imbalance of skills, particularly in leadership roles. This imbalance impacts various aspects of organisational dynamics:

1. Team Leadership: Technical leaders may struggle with the interpersonal aspects of team leadership.

2. Cultural Development: An overly technical focus can lead to a culture that undervalues what have been erroneously referred to as "soft skills." In reality, these skills - such as emoting, sensing, and emotional intelligence - are durable and essential.

3. Energy and Gravitas: Leaders from purely technical backgrounds may lack the charisma and communication skills needed to inspire and motivate diverse teams. As a startup founder entering this environment, I was acutely aware of the difference in communication styles and leadership presence, often hesitating to speak freely for fear of being perceived as threatening by insecure managers more accustomed to traditional corporate hierarchies.

4. Ownership and Smart Thinking: While technical skills are valuable, they need to be balanced with strategic thinking and a sense of ownership over business outcomes.

Organisational Culture Implications

To address these leadership challenges and create a more balanced, innovative culture, organisations should:

1. Diversify Leadership Selection: Look beyond traditional pedigrees to individuals with proven entrepreneurial experience. HR is a repeat offender here. We need smarter recruitment criteria, less race, nationality and social engineering criteria, more merit and 'get shit done' mindsets. The results of these practices are obvious to see right now, particularly in 'stalled' or low growth economies.

2. Implement Holistic Skill Development: Create programs that develop a balanced set of durable and non-durable skills in leaders and team members. Focus on cultivating enduring capabilities often mislabeled as "soft skills" - such as emotional intelligence, adaptive learning, critical thinking, effective communication, empathy, and resilience. These should be developed alongside necessary technical competencies, recognising that many technical skills may become obsolete over time.

3. Foster Cross-functional Collaboration and Silo Busting: Implement robust strategies to break down organisational silos (brands and functions) and encourage meaningful interaction between diverse teams. This, coupled with automation/digitalisation, has been a cornerstone of our building and transformation work since 2007. By facilitating genuine collaboration across departments, disciplines, and hierarchical levels, organisations can cultivate a more holistic perspective that drives innovation and adaptability. This approach not only enhances knowledge sharing and problem-solving capabilities but also creates a more nimble, cohesive and responsive organisational culture. Effective silo busting requires deliberate effort, including cross-functional projects, rotational programs, and collaborative platforms that enable diverse teams to work together towards common goals. It also improves team morale and engagement.

4. Prioritise Sustainable Growth: Shift focus from short-term gains to long-term, sustainable business models.

5. Cultivate an Innovation Ecosystem: Create an environment that values both technical innovation and business model innovation.

Developing Future Leaders for Smart Growth

To drive sustainable, equitable growth, we must cultivate a new breed of leaders equipped with a diverse set of skills that go beyond traditional management competencies. Drawing from our own mission at FlowLabs for transformative growth, we need to focus on developing leaders who can tackle complex challenges and seize opportunities for sustainable success. This involves nurturing both individual agency and peak performance, while also fostering a broader set of human-centred business and leadership skills/ character.

Key Areas of Leadership Development

Effective leadership requires a diverse set of skills and competencies. The following key areas of leadership development are crucial for navigating the complexities of modern organisations and driving transformative growth, particularly in building ventures to create meaningful impact:

1. Cognitive Agility

- Developing both left and right brain skills

- Balancing analytical thinking with creative problem-solving

- Focusing on durable vs. non-durable skills to ensure long-term adaptability

2. Emotional Intelligence

- Enhancing empathy and self-awareness

- Improving communication and relationship-building skills

- Developing the ability to navigate complex social dynamics

3. Domain Expertise Leadership

- Recognising that leadership extends beyond traditional managerial roles

- Valuing and cultivating subject matter expertise

- Encouraging 'growth' stances as part of a growth mindset

4. Adaptive Learning

- Continuously evolving with market trends and pain points

- Embracing lifelong learning and rapid skill acquisition

- Developing the ability to synthesise large amounts of information quickly from diverse sources, and then ACT fast on the back this data

5. Visionary Thinking

- Inspiring the art of the possible

- Coaching and mentoring beyond direct reports

- Influencing without formal authority

6. Ethical Decision-Making

- Integrating sustainability and social responsibility into business strategies

- Balancing profit with purpose and impact

- Navigating complex ethical dilemmas in a rapidly changing world

7. Digital Fluency

- Understanding and leveraging emerging technologies

- Navigating the human-AI symbiosis

- Applying big data and AI-driven insights to strategic decision-making

8. Cross-Cultural Competence

- Developing global perspective and cultural sensitivity

- Facilitating cross-border collaborations

- Navigating diverse markets and stakeholder groups

9. Systems Thinking

- Understanding interconnected economic, social, and environmental systems

- Identifying leverage points for systemic change

- Developing strategies that address root causes rather than symptoms

10. Resilience and Adaptability

- Building personal and organisational resilience #grit

- Thriving in uncertainty and ambiguity #antifragile

- Rapidly adapting to changing market conditions and societal needs #adaptability

By focusing on these areas, we can develop leaders who are not just manager-supervisors, but true domain experts and visionaries capable of driving transformative growth. These leaders will be equipped to break systemic headlocks, activate our collective potential, and create a legacy of impact that goes beyond profit.

This approach recognises that the future of work favours not just the brave but those who can combine deep domain expertise with strong people skills – the "snow leopards" of the corporate world. By nurturing these rare individuals and creating environments where they can thrive, organisations can build high-impact cultures that are agile, innovative, and capable of sustained excellence in an increasingly complex global marketplace.Human Cost of Poor Leadership

The human cost of such poor policies and management practices cannot be overstated. This is exactly what people have come to despise about toxic workplace cultures. There appears to be no consideration given to the impact of this bad leadership on individuals involved, their teams, or even their families at home. The stress and frustration of working in an environment that stifles creativity can seep into personal lives, affecting mental health, work-life balance, and overall quality of life. Moreover, constant turnover created by these flawed practices can lead to financial stress and career setbacks for talented individuals who bought into the promise of these venture programs. It's a stark reminder that behind every failed corporate initiative are real people whose lives are directly affected by shortsighted management decisions.

Lack of Vision and Execution

The program's failure to set conditions for success at inception resulted in a rudderless vision with low execution despite significant resource churn. The relationship between the innovation hub and core business was fraught with tension, leading to silos, duplication, and misalignment between roles.

A particularly alarming practice that exemplifies systemic issues in this company's approach is their recurring recruitment for CEO positions every few months. This can be seen in their recent job posting for a Venture CEO role. This constant turnover is not just a symptom of poor management; it's a glaring red flag indicating deep-rooted problems within the organization.

Implications of High Turnover

The recurring recruitment for CEO positions every few months is not just a symptom of rudderless vision and management; it's a systemic issue that reveals deep-rooted problems within the organisation. This revolving door of leadership has far-reaching consequences that extend beyond mere operational inefficiencies. Let's delve into the key implications of this high turnover rate:

1. Fundamental Inability to Retain Talent:

• Suggests a toxic work environment or unrealistic expectations (possible nepotism)

• Indicates potential issues with compensation, work-life balance, or career growth opportunities

• Reflects poorly on the company's reputation in the industry, making future recruitment challenging

2. Lack of Clear Vision or Strategy for Ventures:

• Points to inconsistent or poorly communicated organizational goals

• Indicates frequent shifts in priorities, leading to strategic whiplash

• Suggests a disconnect between corporate leadership and venture realities

3. Misalignment Between Corporate Expectations and Venture Realities:

• Highlights unrealistic performance metrics or timelines

• Indicates a lack of understanding of the startup ecosystem within the corporate structure

• Suggests potential conflicts between short-term corporate goals and long-term venture development needs

4. Insufficient Support or Resources for Venture Leadership:

• Points to inadequate budgeting or resource allocation for ventures

• Indicates a lack of necessary autonomy for venture leaders to make critical decisions

• Suggests a failure to provide the tools, team, or infrastructure needed for success

5. Disruption of Team Dynamics and Project Continuity:

• Each leadership change can reset progress and morale

• Frequent changes can lead to inconsistent management styles and priorities

• Team members may struggle with constantly shifting expectations and relationships

6. Financial Implications:

• High costs associated with repeated recruitment and onboarding processes

• Potential loss of investor confidence due to leadership instability

• Inefficiencies and lost opportunities during transition periods

7. Impact on Innovation and Risk-Taking:

• Short tenures may lead to risk-averse behavior and short-term thinking

• Disrupts long-term innovation projects that require sustained leadership

• May result in a culture that favors quick wins over transformative ideas

What's most concerning is that this revolving door isn't just a business failure—it's actively damaging people's lives and careers. Each time they hire a new CEO, they disrupt someone's professional trajectory only to likely repeat the cycle shortly thereafter. This cavalier approach shows a disturbing lack of regard for the human cost associated with organisational dysfunction and reflects a deeper crisis in corporate management.

Rethinking Corporate Venturing

To address these systemic issues and drive meaningful innovation through corporate venturing, companies must radically rethink their approach. Drawing from experiences in high-growth, high-performance environments spanning elite sports and business roles, I propose a framework that combines the adaptability of nature's most successful 'apex' predators with the calculated risk-taking of extreme sports and business, all underpinned by a relentless pursuit of excellence.

This approach should be grounded in principles of smart growth that extend beyond traditional notions of expansion:

1. Diversified economic development beyond traditional sectors.

2. Emphasis on innovation and technology adoption.

3. Focus on sustainability and environmental stewardship.

4. Investment in human capital and skills development.

5. Adaptive governance structures.

6. Skin-in-the-game approach to ensure productive contributions/ accountability.

7. Equitable development to mitigate wealth concentration.

Implications for Policymakers, C-suite Leaders, and Investors

1. Implement a "Smart Growth Scorecard" for corporate venturing programmes that ties incentives to performance metrics like job creation, skills and leadership development, storytelling and 'storylistening', and environmental sustainability.

2. Adopt a "Venture Impact Framework" aligning goals with smart growth principles and tracking progress on key indicators.

3. Establish "Innovation Councils" that bring together diverse stakeholders to guide global venture strategy and ensure alignment with broader economic and societal needs.

4. Develop "Smart Growth Investment Criteria" that prioritise ventures demonstrating commitment to sustainable and equitable development.

5. Create "Blended Finance" models combining traditional venture capital with impact investing approaches to support ventures addressing critical societal challenges.

Until these fundamental issues are addressed, corporate venture building programmes will continue to be exercises in corporate theatre, generating more heat than light in the innovation ecosystem. The recurring job postings every six months are a testament to this ongoing struggle, as companies fail to retain talent and address their deep-rooted problems.

For potential applicants considering roles in such programmes, my advice would be to thoroughly investigate the company's structure and leadership teams, along with their approaches/ frameworks/ best practices to innovation before committing. The issues I've described suggest deep-rooted problems that may be challenging to overcome from within. The companies in question need to be held accountable for these practices. While I won't name them directly here, I strongly encourage potential applicants to thoroughly research company history on Glassdoor, learn about their approach to venture building (and scaling!!!) before considering any roles with them. The recurring job postings are not a sign of growth or opportunity, but rather a warning sign of a deeply flawed system that's failing both its ventures and its people.

By addressing these gaps and fostering an environment of true collaboration and innovation, corporations and governments can unlock the full potential of venture building, driving meaningful innovation and sustainable growth in an increasingly competitive global marketplace. This approach recognises that the future of work favours those who can combine deep domain expertise with strong people skills – the "snow leopards" of the corporate world. By nurturing these rare individuals and creating environments where they can thrive, organisations can build high-impact cultures that are truly nimble, innovative, and capable of sustained excellence in an increasingly complex global marketplace.

Acknowledgment of Insights on Corporate Venture Innovation

These reflections on corporate venture innovation highlight critical systemic failures that many organisations face today. The disconnect between corporate culture and the entrepreneurial spirit, combined with bureaucratic inefficiencies, creates an environment that stifles creativity and innovation, both of which are necessary for smart and sustained growth.

By embracing these insights and fostering an environment conducive to collaboration and innovation, corporations can unlock their potential to drive smart growth in today's fierce landscape. FlowLab's frameworks and approaches, grounded in smart growth principles and transformational leadership, offers a roadmap for revolutionising corporate venture programmes and creating a true innovation flywheel.

Please do reach out for a confidential discussion on where your organisation fits with regards to:

1. Implementing a "Smart Growth Scorecard" for corporate venturing programmes

2. Adopting a "Venture Impact Portfolio Framework" aligned with smart growth principles

3. Establishing cross-functional "Innovation Councils" to guide global venture strategy

4. Developing "Smart Growth Investment Criteria" for sustainable ventures (SDGs)

5. Creating "Blended Finance" models combining venture capital with impact investing

About the Author:

Andrew Soteriou is a seasoned entrepreneur, innovator, and thought leader with over 25 years of global leadership experience. As the Founder & CEO of FlowLabs, he specializes in smart growth strategies, revenue management, and digital transformation. Andrew has co-founded multiple successful ventures, including Fifth P, Europe's leading boutique strategy consultancy. His expertise spans retail, consumer goods, and technology sectors, having held executive roles at UpClear and served as a Strategic Advisor at PWC/Strategy&.

A regular speaker on startups and corporate venturing, Andrew shares insights on AI, smart cities, and innovative technologies. His work focuses on driving transformative growth and building high-impact cultures to create sustained advantage in an increasingly competitive global marketplace. Andrew is passionate about accelerating human and organisational transformation for smart growth, helping power profitable growth that benefits organisations while creating wider positive impact through action, experimentation, and continuous learning.