Product Innovation through Internal Startup in Large Software Companies: a Case Study

TL;DR

This paper examines how large software companies can leverage internal startups for product innovation, using a case study to develop a Lean startup-enabled development model tailored for large firms.

Contribution

It introduces a new development model combining Lean startup principles with internal corporate venturing for large software companies.

Findings

Internal startups face significant challenges despite potential benefits.

A case study reveals key factors influencing internal startup success.

The framework was extended into a tailored product development model.

Abstract

Product innovation is a risky activity, but when successful, it enables large software companies accrue high profits and leapfrog the competition. Internal startups have been promoted as one way to foster product innovation in large companies, which allows them to innovate as startups do. However, internal startups in large companies are challenging endeavours despite of the promised benefits. How large software companies can leverage internal startups in software product innovation is not fully understood due to the scarcity of the relevant studies. Based on a conceptual framework that combines the elements from the Lean startup approach and an internal corporate venturing model, we conducted a case study of a large software company to examine how a new product was developed through the internal startup effort and struggled to achieve the desired outcomes set by the management. As a result, the conceptual framework was further developed into a Lean startup-enabled new product development model for large software companies.