The technology landscape is evolving rapidly in a global market where winner takes it all economics became the standard modus operandi. Corporations and established market players must continuously innovate in order to maintain market-share.
Corporations can choose from a number of options to launch new ideas, innovations, and internal research. Such initiatives can be internal or external. Internal initiatives rely on internal teams, skills, and insights to create a new product that is offered alongside the existing corporate portfolio. External initiatives generally take place in the form of new ventures. New ventures can be created via spin-outs, joint-ventures, and most often acquisitions.
Internal initiatives may rely on external delivery partners such as digital agencies and digital studios, however the whole process is driven by internal teams. Internal teams define the scope, requirements, and budget of the internal product being developed. The failure rate of technology projects that follow this approach can reach 50 to 80% depending on the statistics. In addition to internal inefficiencies and high failure rates, corporations quite often change focus half way through digital projects, leaving a trail of half finished projects along the way.
External initiatives provide more flexibility, as the parent corporation delegates the responsibility to external organisations that can add value beyond the corporation's core specialties. Joint Ventures and acquisitions provide lower risks on a product perspective, however other risks such as cultural fit or technical debt are exacerbated. The most attractive way for corporations to branch out internal innovation, ideas, and research are spin outs.
Spin outs provide most of the benefits of being part of a corporation, without the limitations that come with internal products. Spin outs can have a completely different culture, values, technology, and no concerns with brand perception. The latter being the most relevant, as spin-outs can launch embarrassing products, that can evolve in a truly agile manner, unlike corporations that have their image on the line.
Venture Builders like Outroll are ideal delivery partners for the creation of corporate spin-outs. Venture Builders leverage internal expertise building complex technologies, designing Minimum Viable Products (MVPs) that can find product-market-fit, and reducing the risks with launching and managing a new venture in the early stages.
Most venture builders receive a percentage equity on the ventures built, increasing the incentives to produce ventures that can grow exceptionally well. That increases the incentive to provide scalable technologies, business models, and processes, that will not provide bottlenecks when the spin-out becomes successful.
As more traditional industries adopt new technologies and get disrupted, corporations will benefit a great deal from partnering with venture builders to create spin-outs. Spin-outs have the potential to bring new technologies to market groundbreaking speeds.