The Lean Startup
Entrepreneurial spirit isn’t reserved for start ups. Large established companies will get to a point where their current line of business hits a ceiling and they need to expand their portfolio. This is a time when they need to invest in internal innovation. This effort comes with a completely different set of challenges than running an established business or starting a new company.
The biggest challenge comes from the customers and reputation the company already has. A failed product or even a failed experiment can ruin the companies entire reputation. Loosing the primary market share is not an acceptable price to pay for innovation.
To protect the parent company, the innovative sector must be sand boxed. This sectioning off allows the experimentation to focus on a narrow customer segment, or release the product under a completely separate brand. Once the learning cycles have been complete and the value of the new offering is proven out, the sandbox can be disbanded and integrated back into the parent.
Putting the innovation team into a sandbox also has benefits for the team. It gives them a secure budget by removing the political pressures of the internal departments. It allows the team to have full control over their experimentation without being slowed down by requests for approval. It gives the team a personal stake in the success of the new venture. These contribute to creating a highly motivated and inspired team that can open new avenues of business for an established company.