Understanding Barriers to Internal Startups in Large Organizations: Evidence from a Globally Distributed Company

TL;DR

This paper investigates the organizational barriers faced by internal startups in large global companies, highlighting issues like bureaucracy, decision-making delays, and infrastructure gaps that hinder software product innovation.

Contribution

It provides empirical insights from five case studies on internal startups, identifying key barriers and emphasizing the importance of continuity over speed for innovation success.

Findings

Late developer involvement hampers innovation

Unclear decision-making authority impedes progress

Lack of digital infrastructure limits experimentation

Abstract

Large global companies need to speed up their innovation activities to increase competitive advantage. However, such companies' organizational structures impede their ability to capture trends they are well aware of due to bureaucracy, slow decision-making, distributed departments, and distributed processes. One way to strengthen the innovation capability is through fostering internal startups. We report findings from an embedded multiple-case study of five internal startups in a globally distributed company to identify barriers for software product innovation: late involvement of software developers, executive sponsor is missing or not clarified, yearly budgeting and planning, unclear decision-making authority, lack of digital infrastructure for experimentation and access to data from external actors. Drawing on the framework of continuous software engineering proposed by Fitzgerald and Stol, we discuss the role of BizDev in software product innovation. We suggest that lack of continuity, rather than the lack of speed, is an ultimate challenge for internal startups in large global companies.