When should you spawn an IT innovation?
IT innovators should consider their parent company’s resources before deciding whether they want to innovate in house or set up their own firm, according to research from Dr. Ulrich Hege of HEC Paris business school.
Dr. Hege, who has done extensive research in the Silicon Valley start-ups and their innovation process, says that before deciding, there are four things innovators should consider;
1. Does the parent company have the power to support your innovation?
If the company has the financial, marketing and commercial strength to support the innovation, the advantages of developing the idea in-house should be considered.
2. Does the parent company embrace your vision?
If the vision required for the innovation’s success is more important than the existing support functions and strength of the parent company, then it is in the innovator’s interest to create a new structure.
3. Does your product fit with the parent company’s culture?
It may be difficult for an existing business to understand and integrate a new product at all organisational levels. If in the manufacturing or sales process, the organisation is not suited to the product or service, it is important to consider developing it elsewhere.
4. Do you have the skills and capabilities to set up your own company?
The prospect of setting up independently may be appealing but a large number of people lack the business and commercial skills to make their ideas successful. If this is the case innovators should consider working with what they have internally.
Dr Hege says: ” Our research model shows that each innovation is a pathway to future innovations. This major implication puts pressure on tech CEOs when deciding whether to develop an innovation or let their employees leave and set up their own business. Most CEOs are afraid that by letting talent leave the company, a new competitor will emerge – this is hardly the case. Equally, some innovators are reticent to setting up an independent hub for their innovation due to lack of resources. The main thing to consider is that when an innovation is adopted by an inadequate company, everyone loses!”