Combining spin-out and spin-in activities – the spin-along approach

Abstract

After a long period of restructuring and outsourcing, companies are increasingly looking for new growth opportunities. Growth with existing prod-ucts or by expansion in new markets is limited. Therefore, companies are searching for ways to expand their activities in new businesses. A frequently used tool of multinational enterprises is corporate venturing. Within cor-porate venturing a further differentiation can be made in internal venturing and external venturing. Internal venturing promotes business ideas generated within the organization whereas external venturing promotes business ideas developed outside the company. Research has been able to show that venturing activi-ties both internal and external can create value. In this paper we explore a special case of venturing which we call the ‘spin-along approach’. It can be seen as a combination of internal and external ven-turing. In the spin-along approach, a company encourages its employees to take their business idea external and to found a company. Successful companies might later be bought back and integrated into the parent company or the paren-tal will exit the company by selling its equity share. Through literature re-view we have identified different motivations, best practices, and barriers to the successful implementation of a spin-along approach. Furthermore, two case studies will be discussed and compared. We conclude that the approach can successfully complement internal innovation management.Corporate venturing; spin-along; venture leader; spin-out; spin-in; Deutsche Telekom Laboratories; Cisco Systems