RECIPES FOR INTERNAL
STARTUPS

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Internal startups bring cheaper innovation execution and faster time to market, which eventually transforms the company into a growth company. The new book published by the N4S-program serves useful recipes.

Over the past several years, companies have had to change to meet the threat of accelerating competition coming from startups and other global industry players. Digitalization has come to stay, and many companies are evaluating what to do in order to stay in the game. According to consultant Jukka Märijärvi who worked in the N4S program, Internal startups are a way of thinking forward and a solid model for renewal. The Cookbook for Succesful Internal Startups provides guidance on how to build such startups and what the common pitfalls are. The book is a combination of different writers and different corporate experiences.

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“Things have been difficult for businesses in Finland and many other countries - many businesses have had to start saving, cutting costs and laying people off. It is easy to get stuck in this cutting mode when you should be looking forward to the future. The purpose of the book is to show that it is better to join the game and change the market than to stay passive - it gives a concrete model of a startup that leads to success.”, says Märijärvi.

Freedom and Assets of the Big Corporation Combined

Internal startups should have freedom from the rest of the organization but still be integrated into the corporation. Freedom is needed for quick execution and market trials, as well as for refocusing based on the feedback. However, corporations have many assets and competencies, which will come handy during the process. For example, legal and pre-production services are just a call away.

Jukka Märijärvi points out that internal startups are most likely the best instrument if a corporation wants to try out new things and if the new things clearly fit into the corporate vision and strategy.

“Finding a well-matched startup from outside may be difficult, if not impossible. With internal startups, the company stays in the driver’s seat, and additionally modifies the existing culture to be less siloed, rigid, and inflexible.”

According to Märijärvi the book is a summary of the theory of the subject, but also of the experiences of the businesses within Digile’s rersearch programmes.

“Its structure is good in the sense that both theory and experiences have been combined and put in a form that allows readers to implement the methodology of internal startups themselves.”

“With internal startups, the company stays in the driver’s seat, and additionally modifies the existing culture to be less siloed, rigid, and inflexible.”

Internal startups are most likely the best instrument if a corporation wants to try out new things

Industry Cases Presented

The Cookbook containts intereresting cases from different Finnish companies.

F-Secure is an Internet and cyber security company established in 1988 in Finland. One of the new opportunity areas identified by the company’s growth strategy in 2012 was “people protection”, and a family location-sharing service concept was developed by a small cross-disciplinary team of technologists, designers, and business developers as a special project in addition to their normal duties.

Tieto is the largest IT services company in the Nordics, providing fulllifecycle IT services. Tieto’s most recent innovation program, SPARK! — launched in February 2015 — has proven to be a successful way to inspire and promote innovation in a corporate context. The program was built on four important principles: team first, Lean Startup approach, timeboxing, and experimentation.

Supercell is one of the most profitable companies in Finland. In 2014 Supercell’s turnover was 1.545 billion Euros while the net result was 421 million. However, the start of the success was not easy and required several companies, and learning from mistakes.

OP Financial Group set up a research and development unit in the northern city of Oulu, formerly a major site for Nokia-related development and consumer electronics. The bank set its sights on launching a 100% Finnish mobile wallet, which would revolutionize the way application users would see their personal finances.

Qentinel Quality Intelligence (QI). Qentinel’s background is in software quality assurance. Qentinel is a professional services company providing knowledge-intensive quality consulting, project management, quality management, test automation, and testing. Qentinel started to think of shifting its business to a different kind of offering. The corresponding vision guided it towards a sophisticated understanding of quality through the concept of value. All the information should be available and each stakeholder should be provided with the information they need.

Neste Oil in Finland has made substantial efforts to create an innovation tool and process through which ideas are systematically collected and analyzed. The challenge with establishing an internal startup culture in a corporation is that change is needed at every level of the organization and in all functions.

The Contents and the Recipes of the Cookbook

The Cookbook containts intereresting cases from different Finnish companies.

Chapter 2 details challenges that big corporations have. It is recommended reading for those who come from the startup domain and have little experience in big companies. Chapter 3 is for people who don’t know the basics of startups, i.e., people with a background in big companies.

Chapter 4 is the theory section on internal startups and provides guidance on how to build such startups and what the common pitfalls are. Chapter 5 is written from an internal startup leader with a team perspective and is based on a real example. Chapter 6 describes alternatives to internal startups and other related discussions.

Chapter 7 is for the recipes. The chapter presents best practises and insights gained from N4S-program. What are the real benefits? What is the importance of brandig? What can be leaned from mistakes? What is the lifecycle of an internal startup? What are the benefits of launcing the product to the restricted audience? How to avoid bureacracy and get top management involved? It is explained how to improve and observe the product by shadowing. Finally when the internal startup proves to be ready for the market it is time to decide the exiting.

Download the Cookbook recipes here:

http://www.n4s.fi/publication/cookbook-successful-internal-startups/

Need for Speed (N4S) will create the foundation for the Finnish software intensive businesses in the new digital economy. N4S adopts a real-time experimental business model, and provides capability for instant value delivery based upon deep customer insight. The program is executed by the forefront Finnish software companies. The consortium consists of 11 large industrial organisations, 15 SMEs and 10 research institutes and universities. The four-year program of DIGILE (2014-2017) is partly funded by Tekes. Tekes is the most important publicly funded expert organisation for financing research, development and innovation in Finland.

DIGILE aims is to increase the pace of development of Finnish ICT and digital business, which in turn will ensure growth of the business of the whole sector, and therein the creation of new jobs. Nowadays, digital business is an essential part of all kinds of business as well as public services—not just ICT. As one of Finland’s Strategic Centres for Science, Technology and Innovation (SHOKs)—DIGILE’s role is not only to bring together and systematise research and development, but also to ensure that the results of research are understood, applied and adopted as part of companies’ business practices faster than ever before.