This paper focuses on the question how companies can build new capabilities or competencies based on discontinuous technological innovations? In particular, we analyze how corporate ventures are set up to develop and commercialize these radical innovations can play a crucial role in the process of building new competencies (not only technological capabilities). New competencies are in turn the basis to create a range of new businesses. Building and deploying competencies are intrinsically related to new business development or other forms of corporate venturing and both co-evolve over time.
The paper furthermore analyses what it takes to promote new business development (NBD) or corporate venturing (CV) as a trigger of corporate renewal. We argue that new competencies can only be built through a sequence of CV-initiatives and that both competence building and NBD can only fully be understood in relation to corporate strategy making. On the one hand, existing competencies and corporate strategy (vision or strategic intent) serve to direct and select these NBD-efforts through which the firm can enter new but attractive businesses and build new competencies (required to operate successfully in these businesses). A corporate vision should stretch the company beyond its existing resources and knowledge base; it leads to a fruitful misfit between what the company is and what it intends to become. On the other hand, new competence building also drives and refines the cognition of corporate strategy. New competence building and NBD based on radical innovations also demands to think differently about the organizational context and the role of top and middle managers. Finally, building competencies is not only a dynamic but also an organizational learning process:
developing non-traditional businesses and new competencies is a function of a firm’s ability to organize itself into a knowledge-creating system. Management roles also play a crucial role in successfully implementing CV and new competence building.
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