This is not a recipe book. There is no formula for immunity to disruption. Invincibility is an illusion. However, one factor stands out to explain why some succeed at corporate venture building. Our experience working with midsize and large legacy firms have shown us that innovation is as much about leadership as it is about method, strategy, organization, and culture. Leaders that ignite and sustain a spirit of exploration are more likely to succeed than those that rely on past strengths or success formulas to carry them through. At the center of every story of all corporate innovations are Corporate Explorers whose intense curiosity makes them dare to go where others do not. These are leaders capable of closing the gap between knowing what needs to be done to grow new businesses and doing so.

The story of Krisztian Kurtisz at UNIQA Insurance illustrates the way a Corporate Explorer operates in action. Kurtisz had an explorer's insight about something that could change in his company and in his industry overall. He took a purpose-driven approach to building a business around his insight, which helped him be successful at winning investor support from senior managers to pursue the idea. Even so, he risked being perceived as a wild explorer, advocating ideas best left to startups. He needed to manage uncertainty and help UNIQA make decisions about the future of the venture based on evidence.

Explorer's Insight

After two decades in the insurance industry, Krisztian Kurtisz had had enough. He had grown up in insurance and, as his career progressed, he became disillusioned. The industry, he felt, had lost sight of its original mission. Insurance originated as a community effort for covering members’ losses in bad times. The first modern insurance company grew out of the Great Fire of London in 1666, when a group of homeowners got together to protect their newly rebuilt brick homes. Over time, the industry became more focused on selling policies, administering them, and preventing losses, than on helping communities. Customer premium payments paid the salaries of an army of managers who were more aligned to limiting the risks to the insurer than to serving the needs of customers. Customers had become a cost to manage, not a community to serve. Kurtisz wanted to reconnect the insurance industry with its roots. He wanted to find a way for a modern insurance business to embed the values of the risk-sharing community. He wanted to disrupt the industry.

Kurtisz had a passion. He knew the rules of the traditional insurance industry well: detailed policies, annual premiums, large customer service teams managing customer renewals and claims, and a process designed to limit risk to the insurer. He drew inspiration directly from digital natives, specifically Spotify, the music streaming service. His research showed that customers found insurance products complicated and expensive. The experience of submitting claims was time consuming and frustrating. Many preferred to go uninsured for risks like travel and household possessions. Kurtisz reasoned that this was a customer problem worth solving. If he could create a product that reversed these negative impressions, then he could expand the market for insurance and convert people who do not buy insurance into people who would – a potentially lucrative opportunity.

He asked himself: What would Spotify do if it offered insurance? Out of this question, the idea for a new service, Cherrisk, was born. Cherrisk is a user-friendly, low-cost line of insurance products that is available, like Spotify, based on a monthly subscription. Whereas traditional insurers have a large infrastructure dedicated to managing fraudulent insurance claims, Cherrisk assumes its customers are acting in good faith. It is not that Cherrisk turns a blind eye to theft; it simply assumes that customers are honest and, in a reversal of industry norm, uses advanced digital technology to spot fraudulent claims retrospectively. However, this alone would not realize Kurtisz's ambition to reinvent insurance. Kurtisz wanted Cherrisk to reinvest profits into the community just as the original risk-sharing communities intended in 1666. For this he created Cherries, digital points that customers earn from activities like adopting a new exercise regime or not using a mobile phone while driving. Customers then convert Cherries into either a discount on insurance premiums or donations to community groups or charities of their choosing.

Purpose Driven

Kurtisz was CEO of Hungary for UNIQA, a large insurance company in Central and Eastern Europe. Kurtisz's inspiration for starting Cherrisk is part commercial opportunity – he saw something that UNIQA could do to serve an emerging market demographic – and part personal mission. He had a purpose to reinvent the core connection that the insurance industry has to society. This is not unusual among our Corporate Explorers. In Chapter 4, we describe how Sara Carvalho at Bosch used an insight from a hiking trip in Peru as her inspiration to start a venture to provide hot water in developing countries. This is a characteristic common to Corporate Explorers and venture-backed entrepreneurs. In her book The Creator's Code, Amy Wilkinson describes how great entrepreneurs like Elon Musk at Tesla and Space X or Howard Shultz at Starbucks have an ability to “find a gap.”¹ They see something in the world that does not work right and that inspires them toward constructing a solution. In Musk's case, Space X developed because he wanted to see if he could grow plants on Mars and was astonished to find that NASA had no planned missions to Mars! In Sara Carvalho's case, it was her personal experience in Peru.

This personal sense of purpose is critical to sustaining the Corporate Explorer. In Chapter 5, we will learn how Balaji Bondili created a new business inside the consulting and accounting firm Deloitte. Bondili is on a personal mission. His new unit, Deloitte Pixel, uses the “wisdom of crowds” to solve complex management problems. Bondili's first experience of the power of crowds came when he was a part of a self-organized community that came together to provide relief for victims of the 2004 Indian Ocean tsunami. This taught him that communities of people could self-organize and do work that traditional organization structures might struggle to perform. He then started work on seeing how he could apply similar principles of crowds to management consulting. The consultant lifestyle is notoriously antisocial, with long periods on the road living in hotels. Newly married with a young family, he was eager to find a new way to do consulting. This made Deloitte Pixel more than a job. It was a personal purpose. The venture was an expression of himself. It was much more than another corporate job.

Corporate Explorers are founders just as much as entrepreneurs, even though their personal financial stakes may be less than those of their entrepreneurial counterparts. There will be moments when the future of the venture is in question. Many of the successful corporate ventures have had their projects canceled, only later to be reprieved. The energy and commitment that comes from a founder's sense of purpose sustains Corporate Explorers through these crises, just as it does an Elon Musk–style entrepreneur.

Some Corporate Explorers are not founders of their new ventures. They are asked to lead new ventures conceived of by others, perhaps an innovation lab or corporate strategy team. These leaders have the advantage of more objectivity and detachment, perhaps more ability to take a fact-driven approach to evaluating the prospects of the new business. At IBM, Carol Kovac was the second leader of the Life Sciences emerging business unit that we described in Chapter 1. Although Carol was a scientist by background, along with many of the leaders she hired, it had not been her vision that started the unit. She focused intensely on the mission and vision for the venture, engaging organizational consultants from IBM's internal team to lead multiple workshops with her team. She reshaped the vision to make it a personal quest to create a computing environment to transform medicine and set a target, which many regarded as crazy, of building a one-billion-dollar business within three years. That she achieved this goal owed much to the fierce commitment and sense of identity she created within the team. Purpose is the fuel on which Corporate Explorers thrive. It is critical to success, whether it comes naturally from deep personal experience or from an intense, deliberate effort to create one.

The purpose should also answer the question all Corporate Explorers face: Why are we doing this, rather than leaving it to a startup? There needs to be a clear reason that a corporation can achieve scale more successfully than an independent entrepreneur can. This could be because there are assets to leverage – access to customers or a key capability, such as technology or brand reputation – or because of a threat that the firm will face unless it moves quickly to establish the new venture. Kurtisz's answer was that UNIQA could do this because it had the business assets, and that it must do this if it was to be ready to leap into a digital age.

Kurtisz was passionate about his purpose of reinventing insurance. It had inspired him to create a concept for a potentially transformative new business with Cherrisk. The challenge for Kurtisz was how to change the system from within. UNIQA serves 10 million customers with the traditional insurance model in Austria, Hungary, Poland, the Czech Republic, Slovakia, and many smaller countries. It has a strong vested interest in how the market operates today. His managers in corporate headquarters in Vienna had no immediate reason to act. For UNIQA, a profitable, successful corporation, with satisfied shareholders, it was reasonable to ask: Why upend a market that is working for us? Many asked Kurtisz, why pursue the opportunity as an UNIQA manager? Would it not be easier as a CEO of a venture-backed startup? Corporations are famous for failing to capitalize on opportunities. Kurtisz knew many corporate innovation managers and venture leaders struggle to have impact. Friends urged Kurtisz not to take on the impossible mission of leading innovation from within a corporation. They argued that insurance startups like Lemonade.com were already emerging and urged Kurtisz not to go head-to-head with these new players. Why should UNIQA launch a new and independent venture based on his vision of a return to the core values of insurance?

This analysis is persuasive and there is no question that startups are a key engine of innovation. However, venture backed startups also have a high failure rate. Although it is difficult to get precise numbers, the rule-of-thumb for venture investment in Silicon Valley is that 10% of new startups might be successful, another 10–20% may be marginally successful and return their investment, and 70% will fail.² Many fail because customers reject the idea. Those with good ideas still struggle to build everything from the ground up. They often lack assets like a customer base, technical expertise, and production capabilities. Platforms, like Salesforce.com App Exchange, or the Apple App store, have created a path to scale more rapidly by giving app-based startups access to customers, capabilities, and capacities that were previously hard to build. However, it has not significantly changed the startup failure rate.³ A corporate venture has a head start with solving these problems. They already have many assets they need to scale, if, that is, they can work out how to use them.

UNIQA is a multibillion-dollar firm with a huge customer base and deep expertise in designing insurance products. Kurtisz saw that these assets could be key to his success. He reasoned that, as a Corporate Explorer creating a new business from within a corporation, he could move faster than he would alone. He could use UNIQA office space to give Cherrisk its own floor in Budapest. Importantly, there were existing UNIQA customer insurance data to analyze to help understand market needs. These same customers could also be asked to trial new products for rapid feedback during the development process. UNIQA's actuaries were there to design the insurance products themselves. Although Cherrisk was reinventing the insurance business model, that did not mean he needed to replicate the expertise of designing and pricing risk products. Perhaps most importantly, he did not need the burden of a legal and regulatory team. Insurance is a heavily regulated industry. Using UNIQA's existing registrations with government authorities would mean skipping the time consuming and expensive process of getting a separate license. Launching Cherrisk within UNIQA would give him a stronger, faster start. He could achieve his vision and improve his odds of success. What he needed was an investor.

Investor Support

Sitting in Vienna, UNIQA's management had every reason to be ambivalent about Cherrisk. UNIQA's core market in Austria had not adopted digital financial services at anything near the rate of other countries. In contrast with the UK, where nearly 50% of the market had adopted digital channels, only 3% of the Austrian market had done the same. UNIQA saw so-called Insurtech startups attempting to create new digital insurance business models and, though market demand was stronger in the faster-growing Eastern European economies, UNIQA faced no immediate threat. Kurtisz was well regarded as the leader of UNIQA's Hungarian business. He had recently led a turnaround that had returned it to growth. However, it was still a relatively small unit, and was a few steps down in the corporate hierarchy. Budapest was not where most managers in the Vienna headquarters expected to turn for innovative ideas. As is often the case, the path through the corporate hierarchy was not simple. Kurtisz could not simply call the UNIQA CEO, Andreas Brandstetter, and ask for a few extra million euros to pursue his passion. He had to build a case and win the sponsorship of other stakeholders before he would have his opportunity to engage Brandstetter. Would they back a maverick step in a minor market? Would they be convinced that a Corporate Explorer could beat Insurtech startups?

As an entrepreneur, instead of enrolling senior executives one-on-one, Kurtisz would have been out pitching to venture capital firms, seeking to persuade them of the brilliance of the idea, and his capacity to execute it. In some ways that is easier. VC firms are used to appraising new ideas. They have developed sophisticated approaches to assessing risk and deciding which bets are worthwhile, even ones that break business orthodoxies. However, they also look at a management team's ability to execute. New ideas are just as likely to fail because prospective investors lack confidence in the team as they would because they do not believe in the business proposal. That can make searching for funding without a track record a thankless task. Investors may be attracted to an idea like Cherrisk, but if you have no track record of launching a new venture, you could be met with skepticism.

The challenge for the Corporate Explorer is often reversed. A manager like Kurtisz is a known quantity. He has earned respect. However, senior executives in mature businesses rarely have experience evaluating nascent business opportunities with high uncertainty. Success for the Corporate Explorer depends as much on teaching the executives about how to manage uncertainty as it does on deciding that there is an idea worth investing in. They cannot act on the idea without an approach to managing uncertainty. Some organizations have built corporate innovation programs or innovation labs to provide specialist skills. Kurtisz, however, was on his own. This was an idea generated by Kurtisz and his team. If he was going to win support, he needed to make the case himself.

Winning sponsors in this situation is key to the long-term survival of the new venture. Many Corporate Explorers fall into the trap of overadvocating the promise of the new business. They speak in absolutes about what the opportunity will be or the imminence of the threat if senior managers fail to act. This type of behavior should be expected. Moving up the corporate ladder, managers learn that being confident and certain is more highly valued than saying you are open to learning what you do not know. Unfortunately, being certain about how a new venture will develop in an uncertain market is likely to expose weakness in the underlying case. You are dealing with unknown unknowns, you do not know what you do not know, and many of your initial business model hypotheses will be wrong. The alternative is to test an incomplete idea with executives and welcome them as advisers. Enrolling senior stakeholders like this helps to break down the barriers that may otherwise be erected as a response to a potentially threatening idea. You are inviting them to learn with you, rather than claiming to have the answer.

When Kurtisz finally pitched his vision to Brandstetter, he had already informally built support for the idea with key stakeholders, like his direct boss Wolfgang Kindl. This left him free to present his case in dramatic terms. He presented an image of a large and densely populated office building and contrasted that with an image of the two people he proposed to employ in the Cherrisk call center. This image, comparing the cost of administration in a traditional insurance firm with that of performing the same task in the digital era, relayed a simple message: our model is broken, and we need to reinvent insurance before others do it for us. His CEO called his proposal a “nuclear bomb,” and it earned Kurtisz the funding to develop an initial prototype.

Manage Uncertainty

Humans have a complex relationship with all types of exploring, corporate or otherwise. We admire entrepreneurs and the explorers of the natural world for the grand quests they pursue. They overcome great obstacles for uncertain rewards, with little concern for personal security. We romanticize their exploits and are thrilled by the discoveries that follow a great expedition. However, we are uncertain about the value of such heroics. We may even doubt the sanity of those who take such risks. Characters like the great Antarctic explorer Ernest Shackleton seem driven by an insatiable desire for new challenges, but with little concern for personal safety. He returned repeatedly to the globe's least hospitable continent, performing extraordinary feats of heroism, yet died penniless, on South Georgia Island, still short of his goal.

In 1983, a 26-year-old English woman, Tracy Edwards, had the temerity to captain an all-female crew to participate in the Whitbread Round the World Yacht Race. She was mocked. How could a woman, whose only experience of the 33,000-mile race was as a cook, now captain an all-woman team of novices? She challenged not only our boundaries for safety, but also, at the time, society's expectations of women. Edwards triumphed, finishing second in her class. Even the Apollo lunar landings, now feted as a great moment in human history, were initially opposed. Throughout the 1960s, opinion polls recorded consistent public disapproval in the United States of the cost of its space program. Even scientists were critical of the plan to put a man on the moon. A poll of 113 scientists published by Science magazine found only three that gave unequivocal backing to NASA's approach.⁴

A Corporate Explorer's adventures are less dramatic than those of Shackleton, Edwards, and the Apollo astronauts. They are simply creating new businesses inside an existing corporation. There are no death-defying feats of bravery. At face value, it is a relatively risk-free endeavor. However, the outcomes of corporate exploration can be just as uncertain as a voyage to the Antarctic. The market opportunity is often unclear and usually unproven. What you are going to sell, like Kurtisz's insurance product, may not even exist. It is just an idea sketched by the manager, a CEO, or, worse still, a management consultant. They may not face the menace of a storm raging across Cape Horn, but the staunch opposition of managers from the legacy or Core business can have similarly ruinous consequences. As Kurtisz prepared to build his case for investing in Cherrisk, he knew that he risked being rejected as an idealist with wild ideas. He had to do more than just be right, he had to build support for his strategy.

Fortunately, Kurtisz was pushing on an open door. Brandstetter and Kindl were actively concerned about the changing insurance market and the impact of digital business models. The Cherrisk concept crystalized a potential future vision for the company. Brandstetter and Kindl had a larger strategic ambition for UNIQA, and this new venture was a means for learning about how to make it a reality. This gave them the first key element in a system for managing uncertainty. Brandstetter and Kindl had a motivation to learn what it would take to make Cherrisk successful. They backed Kurtisz partly on the strength of the opportunity for Cherrisk, but mostly because it gave them an entry point into a new world of insurance. Brandstetter wanted to pursue an ambidextrous strategy: one for his traditional core business, and another for this emerging exploratory one. Successful Corporate Explorers create this connection between the concept for the venture that they lead and the strategic ambitions of the senior team. Kurtisz needed to make Cherrisk a step down a path to learning about UNIQA's future, not a wild explorer idea.

Investor support for Cherrisk was conditional on Kurtisz demonstrating that he could build the new service and that customers wanted to buy it. He would have to return in six months with evidence to win backing for taking the project to the next stage. Instead of being asked to budget for Cherrisk within his annual strategy and budget, Brandstetter and colleagues wanted to treat it as something special and different. This could be coded as micromanagement; however, Kurtisz saw it as evidence that they wanted to be actively engaged in helping him be successful. UNIQA has been designing and selling insurance products for more than 100 years. It has deep and long-earned customer loyalty. As executives, they were very comfortable making investments within this domain. Investing in an unproven venture was itself a new skill for the management to learn.

Kurtisz's first task was to learn what customers valued most and design Cherrisk around that rather than use his own predetermined concept of success. That was a significant step for an experienced manager with a history as an insurance technical expert. Although driven by a passion for reinventing the insurance industry, Kurtisz did not assume he had all the answers. Often, deep technical specialists, such as scientists, engineers, and actuaries, get more satisfaction from pushing technical boundaries, than from learning what customers want or value. It is this technology push obsession that led to technology transfer failures in great technology laboratories like Xerox Parc (Palo Alto Research Center). Instead, Kurtisz committed himself to a series of iterative experiments to design Cherrisk. He and his team wanted to understand both what data they needed to assess a given risk and what it would take to convert a customer's interest into a sale. The insights he garnered from this initial customer discovery informed Cherrisk's beta version. Then, over the next nine months, they refined the product, making over 4,000 changes, completely redesigning it at one point, all with the goal of delighting customers.

As Cherrisk launched in 2018, it quickly became clear that it had tapped into strong demand in Hungary. They had 15,000 active users in their ecosystem within six months and 100,000 within two years. Now, with the concept proven, the next step was to expand into a larger market. In early 2020, Cherrisk launched in Germany. One of Kurtisz's proudest moments was when he hosted the top 100 leaders of UNIQA at a showcase event in Budapest in 2019. They had come to learn about the strategy for Cherrisk, how it was built, who they hired, and the work practices they adopted.

One of the most impressive features of the Cherrisk case is that Krisztian Kurtisz initiated it himself from outside the senior team of the enterprise. He was not given the responsibility to develop disruptive business models or asked to become the vice president of innovation. There was no senior team mandate to innovate or “shark tank” competition to pitch ideas. Krisztian had an analysis of what the opportunity could be. He built support with stakeholders, leveraging both his passion for the vision, and his strong social network. He did not present an overly optimistic revenue plan or create a secret project to incubate Cherrisk. He made a pitch, his management board listened, and together they set about learning whether they could be successful. It was not a top-down initiated change, it was a midsenior manager with a vision, enabled by his senior team. These lessons offer a preview of what it takes to be a successful Corporate Explorer. In the following chapters we will provide many examples, both successful and unsuccessful, and provide a framework for how Corporate Explorers can succeed and avoid the pitfalls that can kill a new venture.

Many who subscribe to the conventional wisdom that corporations cannot lead radical innovation put the blame squarely on the CEO: “If only they had the courage to take risks!” Krisztian Kurtisz shows how you can succeed by engaging the CEO, rather than waiting to be given the responsibility to innovate. He initiated the project, developed the first insights about the customer problem he wanted to solve, and then built support for exploring the concept he proposed. Kurtisz's actions, like those of the other Corporate Explorers we will feature, confound conventional wisdom about corporate innovation. He mobilized a sleepy old corporation into action.

However, as the saying goes, it takes two to tango. Kurtisz goes nowhere without a senior leadership team that is ready to engage. The decision to fund a new venture is often controversial within an organization. It means defunding another priority, one with a higher probability of short-term success. The tension this creates always lands with the senior team. This is the group that gets to make the big resource allocation decisions and decide to commit a percentage of revenues to creating long-term growth options. This decision is easier if they know why they want to commit resources to innovation. They need a strategic ambition to build a bridge between the senior team and the Corporate Explorer.

Chapter Summary

In this chapter we used the story of Krisztian Kurtisz at UNIQA Hungary to illustrate how Corporate Explorers can succeed.

Kurtisz was driven by a purpose that went beyond creating a new business opportunity. He used a personal insight about what was wrong with the insurance industry to fire his imagination and reinvent the model for the twenty-first century in a business he called Cherrisk.

Kurtisz could have chosen to seek venture funding for his idea and become an entrepreneur. Instead, he chose to build Cherrisk within UNIQA Hungary because he believed the company's assets could help him go faster. He built a coalition of support for Cherrisk and the idea that UNIQA had the assets to build a new venture.

The UNIQA Management Board saw a connection between Kurtisz's vision and their Strategic Ambition to make the company more customer-centric in its strategies and products. This enabled him to win Investor Support. However, Kurtisz had to teach the organization how to manage uncertainty. This involved learning how to evaluate data from experiments, as he applied the disciplines of ideation, incubation, and scale disciplines to build Cherrisk.