HP Innovation Journal Issue 09: Spring 2018 | Page 59
Market Watch
Strategic investments give HP an eye to the future
One of the primary goals for many corporate venture capital
units is to help their company capture future opportunities
early. Technology change is happening exponentially around
us, and no single company can compete in the world today
using just internally developed technology. The successful
companies of today and tomorrow, by necessity, will need to
embrace open innovation and partner closely with the start-up
and venture communities to leverage the full breadth and
depth of technology innovation that is taking place around us.
Investing in start-ups provides companies not only with
foresight about the markets of tomorrow but optionality to
enter those markets by partnering with or acquiring startups
to bootstrap and accelerate market entry. Investing in start-
ups has many benefits to companies like HP, both strategic
and financial. It’s never a choice between the two, as a good
investment will have strong strategic value and returns.
Successful investing means aligning a complex array of
variables. It starts with understanding the financial viabil-
ity of the investment and likelihood the start-up can achieve
a successful exit (via acquisition) or IPO, and at a valuation
that makes the investment worthwhile. Next, you need to look
at the strategic impact to the company and if the investment
aligns with the vision and strategic objectives of the company.
Finally, you need to negotiate terms that make sense for both
you and the start-up, ensuring your company is strategically
positioned as an investor and advisor, providing the guidance
and financial backing the start-up needs to succeed long-term.
So how does a company move through this process
efficiently, always keeping strategic and financial objectives
in mind?
Aligning Investments with Future Growth Opportunities
The technology areas not currently a focus for a company are
often referred to as “corporate whitespace,” and investing
in corporate whitespace gives a company the foresight and
optionality needed to identify and capture new growth areas
for the future.
Every company has a different way of evaluating the
world for areas of future opportunity. At HP we spend a lot
of time looking at and understanding the megatrends that
are shaping the world around us, and that we believe will
have a sustained, transformative impact on the world in the
years ahead. Over the last three years, we have identified four
major megatrends, 35 sub-trends and 15 disruptive technol-
ogies that we believe will shape our human experiences with
technology over the next several decades. See “When Trends
Converge: 2018 HP Megatrends Report” for the latest on HP’s
Megatrends research. These megatrends and disruptive tech-
nologies, therefore, provide the framework and context we
use for identifying potential areas of “corporate whitespace”
relevant to HP.
In addition to Megatrends, HP has a formal strategic plan-
ning process to identify new growth areas for the company,
and we also use the results of this process to identify addi-
tional areas of interest.
Finally, there are technology areas that are closer adjacen-
cies to HP business units, but that are not yet a current focus
for those businesses. Again, while many of these technologies
are contemplated as part of the Megatrends work, there are
some that may be more business-specific, and so we include
them as well in our investment analysis.
With all of these potential “corporate whitespace” areas
identified, we then use a rigorous process to narrow down
options and make recommendations on an annual basis.
• Identify potential areas of interest aligned with Mega-
trends, HP’s strategic planning process, and new emerging
technology areas that complement HP’s business units.
• Filter by fit to HP’s long-term vision and mission.
• Further filter by market potential and market timing. We
want to invest in markets with significant potential. We
also want to avoid investing in areas that are still “research
stage” and, conversely, we want to avoid investing in mar-
kets where the opportunity has already been captured.
• Consolidate investment themes into a set of broad invest-
ment areas that correspond to known market definitions
and segmentation. This will allow us to properly size, land-
scape and further segment those markets for HP-specific
investment areas.
• Landscape and further segment to identify specific target
areas for investment.
This level of evaluation and analysis allows us to identify spe-
cific market segments that we believe can offer HP the greatest
strategic advantage, and that best represent HP’s right to play
and ability to succeed.
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