Solving for ‘X’ : Understanding New Venture Units

Abstract: Innovation ‘labs’, ‘garages’ and ‘X’ units are proliferating in corporations across geographic and industry boundaries. However, semi-autonomous units poised to organize entrepreneurship within established corporations are not a novel phenomenon: such new venture units (NVUs) first appeared in the 1970s. Since then, they experienced multiple cycles of ebbing and flowing popularity and evolved considerably. Different generations of NVUs are products of their time and characterized by residual novelty. Prior research explores past generations of NVUs and typically takes the corporate venturing perspective as a starting point. This perspective presupposes a particular objective for these units: to add new business to and generate new revenue streams for their parent corporation. Less understood are contemporary NVUs, as well as whether and to what extent NVUs may, in fact, contribute to corporate entrepreneurship in other and novel ways. This thesis sets out to revisit and understand contemporary NVUs taking an organizational perspective, which examines the social stock of knowledge about current NVUs articulated in multimodal discourse. Drawing on novel theoretical and methodological ways of seeing, it explores what these units are and do, as well as what objectives they pursue. The findings suggest the following. First, NVUs do not, in fact, appear to be effective vehicles for creating and developing new ventures that survive within the parent corporation. Second, contemporary NVUs function as vehicles for corporate ideation that are tasked more explicitly than previous generations with exploratory activities, such as search, experimentation, and variation. Third, NVUs’ distinct culture, processes, and modus operandi are ends in and of themselves: contemporary NVUs serve as test sites for novel ways of working and nurture entrepreneurial innovation processes throughout the organization. Finally, the findings suggest that these units are a means to legitimate large, established corporations in business environments that are increasingly dynamic and face disruption by entrepreneurial startups. The thesis contributes to a more nuanced understanding of NVUs as part of a larger organizational system in which they create value through more than new business and revenue streams. In highlighting the broader and more strategic role of contemporary NVUs, it also helps explain the recurrent interest in these units that is counterintuitive from the corporate venturing perspective. NVUs attract interest today not despite their shortcomings as vehicles for corporate venturing, but because they can accommodate a new entrepreneurial way of working, which enables and signals the transformation of the organization, and, in so doing, they catalyze a broader process of becoming an entrepreneurial and innovative corporation.