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Growing A Corporate Startup – Early Lessons Learned

By Michael Cohen

For the past 6 months, I’ve been on an amazing journey as the General Manager of Zero Gravity Labs. ZGL is the innovation arm of LoyaltyOne (best known for the Air Miles Reward Program) and, as of February, we’ve spun out from ‘the mothership’, launched our own brand and settled into a startup-like (i.e. a brick and beam collaborative space) office. We have had our share of wins and losses over the first six months and have learned some valuable lessons (we’re still learning daily) about how to best navigate the corporate startup world that I’d love to share with you:

1) Be clear about the governance model and decision-making authority up front

This can be a bit harder if you are not in the room when the idea is being discussed by your executive team, but if you want to be able to run your corporate startup like an actual startup, it is vital that you know what level of authority and autonomy you have.

Do you own the budget? What about the burn rate? Who has the authority to hire and fire? Who can initiate a project and who can kill it?

These are all the questions that you would work out with your co-founders when starting a new company, and in that scenario, you may work it out over time but, when launching a venture within a corporate entity, it is vital to have this clarity up front so that you can achieve other key objectives (like #2 below).

In our structure, we agreed on a governance model with our executive sponsors where my business partner and I know clearly which decisions are ours alone, which ones we need input on, and those where we can provide a recommendation, but where we are not the decision maker.

We have some really amazing executive sponsorship and have been given a good deal of autonomy by the CEO and CTO of our parent company, so we’ve not run into many situations where we needed to review our governance structure, but the fact that we took that ambiguity out at the beginning is a big reason why we have not run into this over and over.

2) Be an owner, not a renter

I’m not the owner of Zero Gravity Labs (we are wholly owned by LoyaltyOne), but that’s not the way I feel and it is not the way I operate. I wake up each day with the passion and excitement of someone starting their own business. I lie awake thinking about the same things as many startup founders and I wake up at 4 AM to write down ideas.

Continuing on point #1, the fact that we have a governance model that allows me to act like an owner has created a scenario where my executive team and Board of Directors at LoyaltyOne do not have to worry about whether or not I will put the needs of the business over my own. As I truly feel like the owner of the business and the fact that they support that feeling, I treat the business like it’s my baby; I love and nurture it and will go to the wall to protect and grow it.

I consider myself a founder just like any other. We have different challenges, but when I look at the way the founders I know care for and nurture their businesses – the way they pour themselves into everything about that business – I know there is only one path to success: be an owner, not a renter.

3) Seek mentors both inside and outside of your business

Big companies have formal mentorship programs and I’ve found lots of success in being a mentor and a mentee in these programs, but they are internally focused and, in my experience, some of the best mentoring relationships I have are from people who know very little about my actual industry, or vertical.

I have found that the best balance for me is to have the right internal touch points, mentors and partners, so that I can put the LoyaltyOne perspective on things, but for what I am trying to achieve now (in building a corporate startup) I absolutely have to have mentors who live in the startup world and be able to give me that perspective, too.

4) Figure out when to ask for permission and when to ask for forgiveness

Being a part of a big company comes with its own benefits and pitfalls. I learned early on that while it might take a day or two longer than I hoped, it has generally been better for me to bring my internal stakeholders along and let them know why we at ZGL want to do something that is different than company policy, rather than just plowing ahead. I let them know what we are hoping to achieve and why we feel the current ‘corporate’ system/software/policy etc. does not suit our needs.

By solutioning together, or simply sharing that desired solution with them, I’ve respected that my colleagues have both a job to do and expertise that I may not. By bringing them my objectives and asking if we can collaborate to achieve those objectives, I’m empowering both of us to solution together. Sometimes I bring a solution to the table they did not know about and sometimes they do the same for me, but in the end, we meet the objectives I set out and we do so together.

Take advantage of the fact that you have an internal HR and PR team (amongst others) on day one and help those people help you, because if you do, you can make your small team seem much bigger; at times without much additional cost.

That is not to say that I don’t sometimes just put my foot on the gas and propel us forward on something and then ask for forgiveness later, but that is not my default approach.

Just like any startup, Zero Gravity Labs is all-encompassing and has its challenges, but the lessons we’ve learned already in the first six months are sure to help set us up for success as we continue to go forward.