External v. Internal Ventures
External ventures are excellent for the acquisition of innovations and technology that already exists. The reality of the corporate world is that there is not always time and space to innovate anything from scratch (Eckblad & Golovko, 2016). It is sometimes necessary to go outside the firm and buy or take what already exists. The main drawback here is that external ventures are often expensive and distracting. They can disrupt business so much that they interfere with core functions. External ventures can be risky, but at least one gets an existing innovation.
Internal ventures, on their part, are excellent for the growing firms which need to make a name for themselves. Internal ventures produce innovations that reflect the company and its mission. The products emanating from internal ventures are a true reflection of a firm’s culture, capacity, and approach (Eckblad & Golovko, 2016). They are also much easier to control than external ventures. That said, they can be distracting. They need resources and staff, both of which have to be reassigned from somewhere else. Internal ventures also deepen and widen the existing bureaucracy. One gets innovations with the firm’s DNA, but he or she has to have strategic and tactical control at all times.
A growing firm needs internal ventures to grow. As mentioned, it is better to have an internal process that gives the market products which reflect a company’s identity. Additionally, internal ventures are excellent morale boosters. It provides the workers the confidence to work on the firm’s vision, knowing that their innovations drive production. The process does need investment in both staff and funding, but it is usually worth it. Growing firms need internal ventures more than they need external ones.
References
Eckblad, J., & Golovko, E. (2016). Organizing for innovation. Journal of Evolutionary Studies in Business, 1(1), 15-37.