Venture Studios: A New Corporate Innovation Model

Many large companies struggle to achieve meaningful returns from traditional innovation investments. Dr. Michael Johnson, President of the New Jersey Innovation Institute, identifies common pitfalls. These include investing in external startups that lack strategic fit, entering markets too late, and failing to utilize internal expertise. Johnson proposes the venture studio model as a more effective alternative. This approach focuses on building new companies internally, designed to solve specific corporate challenges. By creating tailored ventures, organizations gain greater control and ensure alignment with their core business objectives. Benefits include early access as a primary customer, retaining substantial equity, and attracting skilled entrepreneurs to lead these new entities. Successful venture studios require operation as distinct legal entities, employment of external entrepreneurial talent, and a minimum of 18 months of guaranteed funding. Johnson argues this method allows corporations to develop solutions that directly address their unique needs, fostering more impactful innovation.