Why an Internal Startup Could Be Companies’ New Recipe for Success

F-Secure Life

AirBNB. Uber. These are but two examples of disruptive startups that are popping up to challenge big organizations’ legacy mindsets and business models. Digitalization has completely shaken the world, and companies have two options: adapt to stay in the game, or be left behind in a cloud of dust.

But it’s hard to turn a big ship around. That’s why F-Secure’s Harri Kiljander, Janne Jarvinen and Marko Komssi believe that a great way for companies to accelerate innovation is to bring the startup model in-house. They’ve collaborated with peers from other organizations in a new ebook, The Cookbook for Successful Internal Startups. The book is a practical guide to establishing and running an internal startup.

An internal startup, they say, is a great route to cheaper innovation execution and faster time to market. And the three have experience to draw on: F-Secure has developed its VPN product, Freedome, its password manager, Key, and its smart home security device, Sense, all as internal startups. The book pulls together F-Secure’s learnings as well as the learnings of other companies who use the model.

I caught up with Harri, Janne and Marko to talk about the internal startup scene.

The Cookbook for Successful Internal Startups

What is your definition of a startup?

Harri: A startup is an organization that is established to build a new product or a new service under a significant uncertainty. Trying to do something new that doesn’t exist yet, and constrained by a lack of established processes or budgets or resources.

Janne: To me, a startup is the means to build something new and disruptive, and build it as fast as possible, with the intention of scaling as quickly as possible. You’re not trying to make something that just a few people can do for a living, but you’re trying to build up a big business quickly from something new.

Marko: A startup is an entity that is searching for a scalable, profitable business model. It differs from a company in that a company has already found its business model.

Why do you want to encourage big companies to form internal startups?

Harri: Big companies are really good at doing old things. An internal startup is great way to introduce new ways of working and to try developing and launching new and better products and services.

Janne: All companies want to explore new areas, but in the established organization it’s difficult to start something new. With an internal startup, you don’t worry about the existing organizational structures. From a company perspective, because the startup is not embedded into the larger organization, it’s easier to handle and it’s easier to see whether it’s producing results. It also gives employees the chance to be involved in something new.

How has the internal startup model been beneficial for F-Secure products Freedome and Key?

Harri: One of the key elements has been the rapid development and feedback cycle – the classic cycle of build, measure, learn. Build something, release it, gather feedback from users and markets, and then adjust your product, pricing, channels, etc. The more rapid you can make this cycle, the higher the likelihood of being able to generate success.

Janne: We built Freedome and Key much faster as internal startups than we would have done in the traditional way. The global launch took place just nine months after the idea, and that’s extremely fast.

Marko: Freedome was incubated in strategic unit, not the business unit. It had more freedom as it was able to work independently, without being under any existing business pressure.

What is the biggest advantage an internal startup has over an independent startup?

Harri: The ability to access the big company resources, including free labor and expertise. In a big company there are a lot of experienced people who yes, may be stuck with old ways of working, but they still have lots of experience and know about doing business.

Marko: Access to the company lawyers, marketing competence, PR, company name brand, social media channels with established followings, etc. A startup has to pay for everything or get the competence somehow, whereas a big company has it in house.

And vice versa, what is the biggest advantage an independent startup has over an internal startup?

Janne: It’s not constrained by a company’s mindset and objectives, so it has more freedom. However, once an independent startup gets financing, the people writing the checks will start to want some control anyway, so in that sense it’s not so different from an internal startup.

Marko: The feeling of ownership. The independent startup team really feels that they own the idea. With an internal startup you somehow still feel that you are a company employee first. So ownership is weaker in an internal startup and that has an impact.

What do you hope people take away from the startup cookbook?

Harri: I hope people get a spark of courage to establish this kind of exercise in their own established organization. If they’re not sure how to go about it, they are welcome to contact the writers of the book and we might be able to help them. Even big organizations can do things fast if they follow the recipes or principles we outline in the book.

Janne: I hope people in large organizations see that they can explore new areas using this model. Our goal is to really help people learn from other companies’ experiences so that they don’t have to learn everything on their own.

Read The Cookbook for Successful Internal Startups

The Cookbook for Successful Internal Startups was created by the industrial organizations and research partners of Digile’s Need 4 Speed program. F-Secure is the driver company of N4S and Janne Järvinen leads the N4S consortium.

Harri Kiljander is Director of Privacy Protection, Janne Jarvinen is Director of External R&D Collaboration, and Marko Komssi is Senior Manager, External R&D Collaboration at F-Secure.

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