In many firms, strategic initiatives lead to frustration rather than performance improvements and strategic renewal. One frequently overlooked key to driving value through strategic initiatives lies in shifting the focus from launching disconnected individual strategic initiatives to managing an integrated portfolio of initiatives. This article identifies five key management practices that allow firms to address obstacles to effective initiative management and to enhance value creation through the deliberate management of initiative portfolios.

It's a dynamic that plays out in industry after industry: One company makes a big acquisition, and rivals feel pressured to respond with deals of their own. But the authors' research in the tech industry suggests that alternative strategies often make more sense. They advise managers to consider three less direct responses and provide guidance on determining the best strategy.

The high failure rate among new business ventures is usually chalked up to the fundamental uncertainty of the process. In actuality, say McGrath and Keil, flawed ways of assessing and managing ventures may account for the disappointing amount of value they generate. Instead of taking the go/no-go approach, whereby a project either advances toward launch or is killed, decision makers should consider a range of alternatives: recycling the venture by aiming it at a new target market; spinning it off to other owners or a joint venture; spinning it into an established business unit; or salvaging useful elements such as technologies, capabilities, knowledge, and patents. Firms that excel in value extraction--the "value captors" whose practices and mind-set this article explores--have created formal processes to systematically mine successes, failures, and everything in between. They know that a venture should be treated like a scientific experiment, in which learning plays a critical role. They are ready to seize new opportunities if a venture falters on its original course. They foster networks to promote cooperation and collaboration between established business leaders and venture teams and involve people from throughout the company in the venture review process. They don't allow financial criteria to dominate the reviews, and they recognize that the best people to launch a business may not be the ones who developed the idea. If your innovation pipeline is dry, your promising projects are being strangled for lack of a speedy payback, or someone else has made a fabulous business out of a slightly altered idea that you abandoned, consider the value captor's path.

This is an MIT Sloan Management Review article. Launching new ventures outside a corporation's core business is risky and failure prone, yet, it is often perceived as vital to innovation and organic growth. Can investing in new ventures add value to a company despite the risks? To explore that question, the authors conducted an in-depth study of corporate venturing at Nokia Corp. between 1998 and 2002. The research yielded a number of lessons about corporate venturing. For example, Nokia discovered that looking at the success or failure of an individual project as a business was the wrong way to evaluate the effectiveness of the venturing program. Whether they succeeded as businesses, Nokia's corporate ventures often added important capabilities to the core business, such as familiarity with a new customer segment for the company. In fact, seemingly unrelated investments sometimes led to technologies that later benefited the company's core business. The authors conclude that, to extract value from corporate ventures, companies must use different management practices than in their established businesses, structure new ventures so that they don't face pressure to deliver immediate results, and emphasize learning. Although 70% of Nokia's corporate venturing investments during the period studied were either discontinued or completely divested, the capabilities and technologies developed nonetheless played an important role in helping the company's core businesses respond to change.