Combining spin-out and spin-in activities

Abstract: After a long period of restructuring and outsourcing, companies are
increasingly looking for new growth opportunities. Growth with existing products
or by expansion in new markets is limited [1]. Therefore, companies are
searching for ways to expand their activities in new businesses. A frequently
used tool of multinational enterprises is corporate venturing [2, 3]. Within corporate
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 [4]. Research has been able to show that venturing activities
both internal and external can create value [5, 6].
In this paper we explore a special case of venturing which we call the ‘spinalong
approach’. It can be seen as a combination of internal and external venturing.
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 parental
will exit the company by selling its equity share [7]. Through literature review
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.

Keywords: Corporate venturing, spin-along, venture leader, spin-out, spin-in,
Deutsche Telekom Laboratories, Cisco Systems.