Venture Client Model: Reaching New Heights on the Gartner Hype Cycle
The Venture Client Model made it to the Gartner Hype Cycle. Learn what this means, and how this model is transforming corporate venturing.
Hurray! We are thrilled to announce that the Venture Client Model has made it onto the 2024 Gartner Hype Cycle for new Innovation Practices, and it is currently positioned at stage 2: the Peak of Inflated Expectations.
Understanding the Gartner Hype Cycle
The Gartner Hype Cycle is a graphical representation that illustrates the maturity, adoption, and application of specific technologies as well as new business practices. It helps businesses and academics understand which emerging innovations are relevant and how they evolve over time through five key phases:
- Innovation Trigger: Initial breakthrough, early interest, and some high-profile success stories.
- Peak of Inflated Expectations: High excitement and hype, leading to potentially unrealistic expectations and media overexposure.
- Trough of Disillusionment: Realization of limitations, leading to waning interest and skepticism.
- Slope of Enlightenment: Practical applications emerge, and best practices develop as the technology matures.
- Plateau of Productivity: Widespread adoption and understanding of the technology’s benefits.
It’s important to note that not all technologies and business practices successfully pass through every stage. Some may get stuck in the Trough of Disillusionment or even disappear after the Peak of Inflated Expectations due to various factors such as market conditions, or inherent limitations of the innovation itself. For those innovations that do make it to the Plateau of Productivity, the path through the Hype Cycle stages helps to illustrate their journey towards maturity and widespread adoption. This journey demonstrates how expectations and perceptions evolve over time as real-world experiences and practical applications emerge.
The Significance of Stage 2: Peak of Inflated Expectations
For any new technology or innovation practice to be featured on the Gartner Hype Cycle is an achievement in itself. Being positioned at stage 2, the Peak of Inflated Expectations, signifies that the Venture Client Model has garnered significant attention and interest within the industry. This recognition suggests that the Venture Client Model is an impactful and transformative practice.
However, while reaching stage 2 is a notable milestone, it also marks the beginning of a critical journey. The challenge now lies in navigating through the subsequent stages and ultimately reaching the Plateau of Productivity, where the Venture Client Model can demonstrate consistent, tangible benefits and widespread adoption.
In essence:
- Visibility and Recognition: Being featured on the Hype Cycle means the Venture Client Model is recognized as potentially impactful and innovative. This visibility will likely attract more corporate adopters and spark more academic research of the Venture Client Model.
- Validation: Reaching the Peak of Inflated Expectations suggests that the Venture Client Model has demonstrated promise and generated excitement within corporations.
- Challenges Ahead: While reaching stage 2 is a positive milestone, it also marks the beginning of a critical period. The transition from hype to practical application is challenging, and many technologies struggle during the Trough of Disillusionment.
- Long-term Focus: The ultimate proof that the Venture Client Model is institutionalized as a valuable business practice is reaching the Plateau of Productivity, demonstrating its widespread adoption and consistent value generation.
In summary, being in stage 2 of the Hype Cycle is indeed a significant accomplishment. However, the journey to stage 5 involves overcoming substantial challenges and proving the long-term value of your technology.
The History of the Venture Client Model
It all started at BMW in 2014 when I was working there as an Innovation Manager. I sought a way for BMW to better obtain strategic benefits from startups and the entire startup ecosystem. The existing models, such as corporate venture capital (CVC) and accelerators, did not meet my requirements. I needed a model that was scalable (to benefit from as many startups as needed, not limited to less than 10 per year as in CVC) and one that would give BMW access to the very best startups. The CVC model did not guarantee this, as the best startups often do not want any (or another competing corporate) on their cap table. Additionally, I found traditional corporate venturing models too costly and risky, requiring millions to be invested for a non-controlling minority stake without knowing if a given startup technology would work or be accepted by corporate users.
I realized that the ultimate goal of corporate venturing is not to invest but to obtain strategic benefits from the usage and adoption of startup technology. Investment, I believed, is not a necessary condition to obtain such a benefit. So, I proposed skipping the investment stage and instead positioning BMW as a client, i.e., a user of startup technology. This idea led me to coin the term “Venture Client” to describe an early client and user of startup technology, in alignment with the term “Venture Investor” that describes the investor in a startup company. Although BMW and many other corporations had been Venture Clients of startups (buying and using startups’ technologies), there was no specific model (including processes, resources and value systems) for excelling in this. Just as Venture Capital is a distinct model for providing capital to startups, I developed a Venture Client-specific model to enable BMW to benefit strategically at scale, across the entire value chain, measurably, and with low cost and risk from the best startups worldwide. This marked the birth of the Venture Client Model as a novel innovation practice.
One key element of my Venture Client Model was to create a dedicated and branded organizational unit with the sole mission of harnessing strategic benefits from startups through Venture Clienting — through the usage and adoption of leading startup technology for relevant problems that startups were better at solving than BMW. This gave birth to the BMW Startup Garage in February 2015, the very first corporate Venture Client Unit.
Find more information about the history of the Venture Client Model in my book: Buy, don’t invest: The Venture Client Model: A Paradigm Shift in Corporate Venturing and the Venture Client knowledge base at 27pilots.com.
How Did the Venture Client Model Make it from a BMW Internal Approach to the Gartner Hype Cycle of Novel Innovation Practices?
I see three main reasons that led the Venture Client Model to be recognized by Gartner on the Hype Cycle as a relevant novel innovation practice for any company.
1 Effectiveness
The Venture Client Model works substantially better than alternative corporate venturing models. BMW boosted the number of startups it engaged with by a factor of 10, while also significantly reducing the cost and time needed to access these startups. I am observing the same positive results at multiple corporations that correctly adopt the Venture Client Model.
2 Widespread Adoption
Since BMW adopted the first Venture Client Model, many corporations across over ten industries worldwide have followed suit. Since starting 27pilots, we have helped over 50 corporations, including Airbus, Bosch, BSH, Holcim, MTU, Siemens Energy, and Otto, establish strong Venture Client capabilities. With the Venture Client Model, even SMEs and family-owned corporations can benefit from the best startups. Remarkably, no Venture Client Unit created by 27pilots has ever been closed.
3 Academic Recognition
Besides promoting the adoption of the Venture Client Model by companies, I have been actively supporting and advancing academic work related to Venture Clienting since 2015. In November 2015, I introduced the model to Prof. Andreas König (Universität Passau), who immediately recognized it as a game-changer in corporate venturing. Following this, institutions like IMD (Prof. Albrecht Enders) and INSEAD (Prof. Jörg Niessing) began researching, writing case studies and teaching the Venture Client Model.
Prof. Andreas König stated in my book:
The first time I heard Gregor Gimmy present the Venture Client Model in 2015, I instantly felt it was a game-changer. This wasn’t just another corporate venturing strategy — it was a radical rethinking of how companies can strategically benefit from startups. Since its inception, the model has not only been a catalyst for change in the business world but has also ignited a wave of academic research and classroom discussions. ‘Buy, Don’t Invest’ articulates this disruptive approach in a style that’s as direct as it is insightful. The book includes many rich real-world examples and anecdotes from established industry icons like BMW as well as Silicon Valley titans like Apple and Google. It is the central, state-of-the-art resource for anyone interested in understanding and teaching the Venture Client Model and its application in modern agile companies. Whether you’re an academic or a business leader, if you’re looking for a groundbreaking, novel perspective on corporate venturing, this book deserves a special place on your bookshelf.
I am proud that today, many more leading universities worldwide are teaching and researching the Venture Client Model, such as: ETH Zurich (Prof. Stephan Wagner), WHU (Prof. Nadine Kammerlander), HHL (Prof. Dominik Kanbach) and IESE (Prof. Julia Prats).
See this HBR article and INSEAD Case, the two first relevant academic publications about the Venture Client Model.
4 Emergence of Venture Client Solutions Market
In 2018, I left BMW and founded 27pilots, the first company fully dedicated to helping corporations build and operate excellent Venture Client Units through venture-client-model-specific consulting, technology, and data. Since then, many leading professional services and technology companies have started offering Venture Client Solutions. The pioneer in this area was Deloitte, which acquired 27pilots in 2023 and has since established a global Venture Client Solutions offering, spanning from Germany to Japan.
Recommendations for the Future
To ensure that the Venture Client Model does not succumb to the Trough of Disillusionment (stage 3), we must continue to produce high-quality academic research and provide superior consulting, technology, and data services. This will enable corporations to achieve true Venture Client excellence, generating substantial strategic impact from cutting-edge startup innovations. It is crucial that academics, and especially consultancies and tech providers, do not merely rebrand outdated and often ineffective venturing models as Venture Client practices. They must genuinely adopt the transformative process, resources and value systems that make the Venture Client Model so powerful.
We must all collaborate to further improve and refine the Venture Client Model. It is essential for Venture Client service and tech providers to avoid a price war that could degrade the quality of our deliverables and thus the strategic impact and relevance of corporate Venture Client Units. Such a race to the bottom would not only stall our ability to innovate this novel model but also risk undermining its core value proposition. Instead, we should focus on fostering a culture of continuous improvement, leveraging high-quality research, and embracing innovative methodologies. By maintaining the integrity and effectiveness of the Venture Client Model, we can ensure it remains a powerful tool for driving strategic benefits from startups.
In conclusion, the inclusion of the Venture Client Model on the Gartner Hype Cycle is a testament to the hard work of visionary BMW and 27pilots Venture Client teams, and all pioneers working in Venture Client Units at corporations and universities across the globe. As we — the community of Venture Client practitioners and academics — continue this journey, we are committed to demonstrating the model’s value, overcoming challenges, and driving innovation in corporate venturing practices. Stay tuned for more updates as we strive to reach new heights and achieve widespread success.
More information
Gartner: Hype Cycle for Innovation Practices, 2024
Book about the Venture Client Model: Buy, don’t invest: The Venture Client Model: A Paradigm Shift in Corporate Venturing and the Venture Client knowledge base at 27pilots.com.
Harvard Business Review about the emergence of the Venture Client Model at BMW: What BMW’s Corporate VC Offers That Regular Investors Can’t
INSEAD Case about the about the first corporate Venture Client Unit: How Corporates Co-innovate with Startups: The BMW Startup Garage
Venture Client Model knowledge base featuring relevant publications, videos, webinars, research reports and a Venture Client glossary.
