Integrative Venture Engineering:
The world’s first discipline for market creating ventures
IVE was born out of an applied research program centered at Cornell University, and has been developed over the past two decades in partnership with entrepreneurs, investors and corporate innovation teams.
The goal? To solve the unique
challenge of creating new markets profitably: generating enough profits, fast enough to deliver a competitive return on investment.
Profitability as an engineering requirement
Integrative Venture Engineering (IVE) builds on systems engineering principles, processes, and tools. It treats “net present value”—a measure of profitability used by CFOs that accounts for the time-value of money and the opportunity cost of capital—as a core engineering requirement.
IVE enables three key performances levers to deliver positive net present value:
- Improve the probability of reaching sustained profits
- Decrease time spent getting to profits
- Reduce cash out
The diagram below provides an overview of venture building with IVE:
IVE increases the probability of building an NPV-positive venture by:
- Screening the opportunity landscape for the broad use case best able to pay back all required investment capital with a competitive return.
- Architecting ventures using a logic model to shift the cost curve downwards and eliminate the underlying value barrier
- Continually assessing the venture’s “market creation margin”—a metric that captures a venture’s ability to absorb higher-than expected costs and lower-than expected demand.
- Applying at-scale modeling and simulation to stress test the core business architecture, eliminate dead-end directions before time and money is spent building and testing them, and identifying critical path components to build/test first
- Building and testing starting at the component level (e.g. sales messaging) to validate they work as required, before moving on to more costly system integrations (e.g. sales function).
Productizing commercial requirements
Driving down the cost curve and solving the value barrier—#2 above—is the most important action for increasing the probability the business can generate profits, as it allows the product to be sold at a lower price, thereby increasing value generated for the customer, which then increases demand.
IVE engineers a shift in the cost curve by “productizing” 10 foundational commercial requirements universal to all new-market ventures. “Productizing” means the product form itself is shaped to solve each requirement. By harnessing the product to solve these “jobs,” the burden on the business model is lowered, thereby eliminating lots of costly activities and resources (see below)
Systems engineering applied to venture building
IVE also uses systems engineering’s v-model as a process management framework.
The v-model framework visually reflects the sequencing of the outputs across the design and build/test phases. The venture is designed top down along the left-hand side of the v-model starting with the Core Business Architecture and ending with the Key Operations and Management. It is built/tested bottom up starting with components and ending with a minimum representative pilot test.
The output of the V-Model is a ready-to-launch-and-scale venture with maximum robustness—one that can take a “punch in the mouth” and still be profitable.
Additional IVE facts
Click and read below for additional details about Integrative Venture Engineering:
IVE is requirements driven
The process is continually guided by a Business Architecture Logic Model (BALM) that outlines 10 universal “functional requirements” unique to market creating ventures–i.e. what the venture must solve to be commercially viable–and the performance requirements within which the solution must work to be profitable at scale.
Ventures are designed top-down
To create maximum synergy in the design and ensure business “parts” are optimized to support the overall business system, the venture’s core business architecture is designed first. It is then broken down into its constituent parts and designed in greater detail using the requirements set by the business architecture.
Solutions to requirements are productized
To radically drive down the core cost structure of the core business architecture while simultaneously driving up value to customer, the product form factor itself is shaped to solve all ten functional requirements.
Modelling, simulation and stress-testing are used throughout
Three visual modeling techniques–i.e., Customer Transformation Journey, At-scale Operational Model, and At-scale Resourcing Model–are used throughout to create a complete picture of how the venture works. The models are translated into an at-scale financial simulation that calculates the venture’s “market creation margin”–a measure of the venture’s margin of safety–and probes for key operational and strategic risks requiring validation before designing further.
Ventures are built & validated bottom-up
To eliminate noise and minimize the high cost of pivoting an entire business model, individual business parts (e.g., product features, sales pitches) are prototyped and tested by themselves against the requirements set by the core business architecture and the financial simulation. Parts are then connected up and the key business operations (e.g., customer acquisition) are each tested separately. It culminates with a test of a minimum representative pilot.
IVE was tested and refined in partnership with some of the world’s biggest companies
Social Innovation Facility
Incubated 50+ internal ventures through multiple cohorts. Ventures received $15m+ in investment and generated $100m+ revenue
BMW Innovation Lab
Program ran for 3 years, with 4 ventures progressing internally, targeting growth areas the core business could not currently service
Tomorrow’s Markets Incubator
19 ventures incubated. 3 proceeded to pilot, receiving £4m in investment. Generated material revenues for their country units