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When Building a New Venture, Friction Isn’t Just Inevitable—It’s Invaluable

Source | .ideo.com | By|Katherine Londergan, Carl Fudge

For large corporations, the process of creating new venures can be tricky. Big companies are organized for efficiency rather than entrepreneurship: They look for ways to systematically reduce friction and cost as they optimize their core business. And they are rewarded for it. But this approach isn’t compatible with the conditions that allow new ventures to succeed—and that friction can kill budding corporate ventures on the vine.

Or, it can help them thrive.

Friction illuminates what could be. It can show you the difference between how you’ve been operating, and how you need to be. We’ve been creating new ventures with clients for years, and studying others that have successfully maintained their traditional business model while launching something entirely new. One thread that ties them together: the decision to embrace friction and use it as fuel for organizational adaptation. It’s the difference between hoping a new venture can grow in your current model, and making sure that it does.

So how, exactly, do you make that happen? We’ve found the key to dealing with frictions is to anticipate them, name them, and develop smart responses. Here are a few of the frictions we’ve encountered, and solutions for dealing with them.

Put aside ingrained mindsets

Many new ventures have radically different business models than the core business. That means company leaders have to clear their minds of decades of experience with their core offering to evaluate and support something entirely new, or risk tanking a new venture before it begins. When American Family Insurance (AFI) realized that its customers were having trouble saving enough money for an emergency fund, they created a service to help families bridge the gap between their paychecks and their financial security threshold. The platform enables businesses to tap into an on-demand workforce, and allows workers to access extra short-term employment when it’s convenient for them. Though the concept was outside AFI’s core offering, and a totally different model, the venture allowed the company to pursue a new opportunity while meeting its mission of helping people.

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