The Case for Building Corporate Ventures Using Deep Tech
Emerging technologies such as artificial intelligence, blockchain, and quantum computing have the potential to transform industries and disrupt existing business models. For corporations looking to stay ahead of the curve, building corporate ventures using deep tech can be a game-changer.
In their Harvard Business Review article, “The Case for Building Corporate Ventures Using Deep Tech,” Chithra Srinivasan, Robin Weston, and Hanno Stegmann argue that deep tech is the key to long-term growth and innovation. Deep tech refers to technologies that are based on cutting-edge scientific research and development, with the potential to create significant economic value.
The authors note that traditional corporate innovation methods such as R&D, acquisitions, and partnerships may not be sufficient in today’s fast-paced technological landscape. In contrast, building corporate ventures using deep tech not only enables corporations to stay ahead of the curve but also provides immediate access to cutting-edge technology and talent.
The article highlights the benefits of corporate ventures using deep tech, Some of the highlighted areas of the article are,
1. Commoditized tech vs Deep tech:
Commoditized tech refers to widely available technologies that have already reached mainstream adoption. These technologies are easily accessible and are no longer considered a competitive advantage. Examples include email, social media, and mobile devices.
Deep tech, on the other hand, refers to technologies that are new, disruptive, and have a high potential for future growth. These technologies require extensive research and development and are often protected by patents. Examples include artificial intelligence, blockchain, and quantum computing.
Although deep tech builds come with greater technical risk, they offer the potential to gain a true competitive edge. However, prosperous deep tech-powered companies will still require reliable commoditized technology for the non-unique aspects of their product offerings.
2. Deep tech is particularly challenging but still relevant for corporate
Incorporating deep tech into a corporate strategy requires significant investment and expertise. However, the potential benefits are vast — deep tech can provide a competitive advantage, increase efficiency, and drive innovation. Deep tech startups are also attractive acquisition targets for larger corporations.
One of the advantages of deep tech is its ability to help corporates stay ahead of the competition. By investing in deep tech, corporates can gain access to new technologies and capabilities that can help them to improve their products and services, reduce costs, and expand into new markets.
For example, deep tech has been used by companies such as Google and Amazon to develop new artificial intelligence (AI) and machine learning (ML) technologies that have given them a significant competitive advantage.
Along with the potential benefits of deep tech, it is important to note that it is a challenging area to invest in. The high risk and long development cycles associated with deep tech can make it difficult for corporates to recoup their investment. Additionally, deep tech companies often require significant amounts of funding and support, which can be difficult for corporates to provide.
However, deep tech can be a valuable asset for corporate ventures. By carefully selecting the right deep tech opportunities and providing the necessary support, corporates can gain a significant competitive advantage and create disruptive innovations that can change the way their industry operates.
3. Realizing Value from Deep Tech
Deep tech has the potential to transform industries and solve major problems. However, it is a long-term investment with high risk. Corporations that want to realize the value of deep tech need to have a long-term vision and be willing to take risks. BCG Digital Ventures has experience working with corporates and startups to turn deep tech potential into win-win opportunities. They have identified three key pillars of a successful deep tech investment strategy: Focus on the right opportunities, build strong partnerships, and Be patient.
The authors emphasize more on the following areas in order to realize value from deep tech,
a. Choosing the right technology enablers: The key to successful deep tech ventures is using the right technology enablers. This involves selecting the appropriate technologies to support the development and implementation of deep tech. For example, cybersecurity technology is necessary for blockchain implementations, and machine learning is essential for artificial intelligence applications.
b. Choosing the right opportunity area: Choosing the right opportunity area is critical for success. This involves identifying specific business challenges that could be addressed by deep tech solutions. The opportunity area needs to align with the company’s strategic goals and should have a clearly defined return on investment.
c. Adopting a lean mindset: Deep tech ventures require a different mindset compared to more traditional business ventures. It is important to emphasize agility and speed over perfection. Adopting a lean mindset and using rapid prototyping techniques allows for quick testing and iteration, reducing the risk of failure and keeping costs low.
4. Devising the right deep tech strategy in partnership
Corporate ventures using deep tech require significant investment and expertise. Successful implementation may involve partnering with startups, academic institutions, or government agencies. These partnerships can provide access to cutting-edge research and development, as well as the talent required for implementation.
In conclusion, despite the challenges of implementing deep tech into a corporate strategy, the potential benefits are vast. Combining the right technology enablers with a focus on opportunity areas and the adoption of a lean mindset can increase the chances of success. Moreover, partnering with experts in the field can provide valuable resources and accelerate the implementation process. As technology continues to evolve and disrupt, deep tech will play an increasingly critical role in driving innovation and growth for businesses.
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