Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies

Though anecdotal, I've seen a slight rise in activity with companies looking to incubate new businesses or start-up climates within a larger company. These are challenging situations to get off the ground. Based on a mixture of consulting to a number companies in these situations and being involved with at least one of these situations as a manager within the company, here are some thoughts on winning and losing moves:

  1. Structure: Having a start-up sponsor in name or position only (losing move) – Successful, external startups have managers that will fight to win, pave new ground, work out kinks, get the best resources, etc. If the sponsor is a senior executive that provides only oversight, does not push or provide guidance, and does not empower delegates, this could be a warning sign for an effort that will not bear fruit. If you have a start-up sponsor that provides political and boundary management only, then it might be a good idea (winning move) to get a powerful delegate that answers to the sponsor and can help to "fly cover" in the organization. Situations where cover may be needed include designing new marketing material, getting special access to the sales team, breaking new ground in the legal contracts area, and getting financial budgets approved outside of normal (overly conservative) control mechanisms.
  2. Strategy & Goals: Failing to clearly articulate the ultimately goal and problem statement of the startup early on (losing move) – I guess an addendum to this might be making the strategy too complicated. For example, when faced with the startup options of creating new revenue, helping cross-sell other services within the larger company, reducing customer churn, or all of the above, I would tend to advise leaning away from trying to knock down too many of these at once. All options can be on the radar and should be part of early brainstorming & strategy sessions, but viewing the startup as a standalone business may be the best option of getting traction first.
  3. Core Team Makeup: Failing to bring in new blood when new blood is needed (losing move) – At risk of disrespecting both large company employees and entrepreneur-types, these groups often don't understand one another. For example, entrepreneurs-types can lack respect for large company bureaucracy, but this is dangerous because buy-in and tapping into the resources (people, structure, assets) of a large company can be tremendous. On the other hand, large company employees can become accustomed to the culture, pace, and processes of existing businesses - these may be incompatible with aspects of a new venture. Bringing in new blood for a start-up within a larger company is often a winning move, and the resources need to be different & complementary.
  4. Extended Team Resources and Horse Trading: Failing to capitalize on resources of the larger entity (losing move) – If entrepreneurial types are brought into the new business, there needs to be complementary intrapreneurs (winning move) that understand the structure of the large company and can help get things like data from business units within other areas of the company, identify potential A-team resources already within the company that can help (e.g., marketing, business development, project management, finance), or tap into key channels and partners external to the company (e.g., lighthouse accounts).

There are many more winning and losing moves to create startups within larger firms. What are your experiences? Where do you see pain points?

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4 Replies to “Musings On Winning and Losing Moves Within Startup Situations Within Larger Companies”

  1. About 3 – looks like the trick, then, is for the people already within the team to figure out that new blood is needed in the first place. But how can they break loose enough from the typical ways of thinking they adopt in the office to recognize this need?
    Insightful post you have here.

  2. Jen,
    You pose a tough question. My experience is somewhat biased having mostly come in as an outsider (even in the case when I worked for one of the firms as an employee and not as a consultant – I was a new hire brought in specifically since I had a different background than the traditional of the firm). What I will say is that whether a company hires insiders or outsider, the company should take an entrepreneurial perspective to hiring. And one of those implications is that the company should seek a lot of data points and outside advise and perspectives – an experimental and inquisitive approach. Through seeking a lot of different perspectives, the company will probably be in a better position to determine whether “new blood” is really needed.
    What perspectives do you and others have?

  3. Love the part about bringing in new blood when it’s necessary. People like to play the hand their dealt sometimes, even when it makes more sense to fold and build a new hand.

  4. I agree, Steve. I think a company should be ready to see things from fresh perspectives, anyway, when they’re looking to create a start-up situation within. Also depending on the identity they want to push, it can be hard to define how much of the fresh ideas around should be incorporated into practices along with what practices have always been reliable. It will really have to come down to experimenting, doing, then getting feedback, and back to step one, in an entrepreneurial mindset, and that can apply to more than deciding if “new blood” is needed.

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