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Title: Venture Catalyst : The Five Strategies for Explosive Corporate Growth by Donald L. Laurie ISBN: 0738204072 Publisher: Perseus Publishing Pub. Date: 18 September, 2001 Format: Hardcover Volumes: 1 List Price(USD): $27.50

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Average Customer Rating: 4

Rating: 4
Summary: Venture Strategies to Accelerate Revenue and Profit Growth
Comment: From 1955 through 1998, only a handful of the largest U.S. companies were able to enjoy compounded double digit growth. These few include 3M, American International Group, Dayton Hudson, Hewlett Packard, PepsiCo, Procter & Gamble, UPS, and Wal-Mart. For most of those years, inflation was low so double-digit revenue growth meant major expansion in unit volume.

The problem of finding revenue growth has been most severe for the Fortune 50. They have been lucky to match inflation.

Management consultant and early stage investor Donald Laurie argues that a variety of venture-based strategies can perk up the growth rates of even the largest companies. You can invent the next great business (as Thermo Electron and Corning did in the 1990s), invest in the next great business (as Intel Capital and GE Equity did in the latter part of the 1990s), venture the next great business (as Nortel and Advent International), partner in the next great business (as Sperry Marine did with XL Vision), or acquire and integrate the next great business (as Cisco Systems did to build their lead in network architecture). In describing these choices, Mr. Laurie describes a business model as "the way a venture or venture strategy makes money."

The most persuasive example in the book is that of Johnson & Johnson, which has successfully used all of these methods for many years.

Each of the styles of establishing the next great business comes with questions to focus on to help you become effective in these areas. There's a lot of learning and expense involved, so don't look for quick fixes from this direction. I was particularly impressed by the description of how Corning invented its fiber optic business versus how Thermo Electron built its many new technologies. Each used a quite different approach. So, it's clear that there are many viable routes to pursuing these directions. You do, however, have to be sure that you pick one that fits what you can accomplish.

Running ventures and operating existing, profitable businesses are two entirely different activities in time frames, objectives, and focus. Venture Catalyst does a nice job of making that point. In fact, this aspect of the book is a good adjunct to The Innovator's Dilemma.

I must quibble with one aspect of the book. Venture Catalyst makes it all sound reasonably easy to do. My impression is that hardly any large companies have done well with their venture stage investments over the long run. Also, there are dozens of companies who find that their partnerships have severe problems for the few who master doing this well. Often, even those who do it well have a hard time explaining how they make them work. As the Innovator's Dilemma points out, inventing the next great business very rarely occurs from among the industry leaders. On the other hand, a number of people have been successful with acquiring and integrating promising technology-based businesses. But more large companies falter than succeed with this strategy. Clearly, you should carefully choose one area where you should have an above-average rate of success to focus on first. Then, start with small bets while you make your mistakes.

I would have liked to have seen much more information about Johnson & Johnson to help explain their models for venturing. For example, how much of their success is related to the timing of profits and investment in new pharmaceutical products? With the big gushers that come aboard in the first 2-5 years of a new pharmaceutical, it may be that venture funding is easier to afford and be patient with than in companies with more volatility. Ventures often pay off in that industry faster than new pharmaceutical research and development. How can someone go from being used to a quick win to the slow pace of venturing?

I was also surprised to see that the book did not say very much about UPS which has been very active in successfully shifting its business focus in the last ten years to accelerate its revenue growth. That example would have meant even more to me than the one of Johnson & Johnson.

After you finish reading the thinking about the questions raised in this book, consider where most of your growth will come from in the future. If all of your business went away in the five years, how would you double your current revenues and your highest level of profits? Then ask, what's the track record of people like me taking that route? Do you like the odds? If not, you had better find a surer route to future prosperity.

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