Lean Internal Startups for Software Product Innovation in Large Companies: Enablers and Inhibitors

Context: Startups are disrupting traditional markets and replacing wellestablished actors with their innovative products.To compete in this age of disruption, large and established companies cannot rely on traditional ways of advancement, which focus on cost efficiency, lead time reduction and quality improvement. Corporate management is now looking for possibilities to innovate like startups. Along with it, the awareness and the use of the Lean startup approach have grown rapidly amongst the software startup community and large companies in recent years. Objective: The aim of this study is to investigate how Lean internal startup facilitates software product innovation in large companies. This study also identifies the enablers and inhibitors for Lean internal startups. This is the authors’ version of the manuscript accepted for publication in the Journal of Systems and Software. Copyright owner’s version can be accessed at https://doi. org/10.1016/j.jss.2017.09.034. c ©2018. This manuscript version is made available under the CC-BY-NC-ND 4.0 license. Please cite as: Edison. H, Smørsg̊ard, N. M., Wang, X. and Abrahamsson, P. (2018). Lean Internal Startups for Software Product Innovation in Large Companies: Enablers and Inhibitors. Journal of Systems and Software, 135:69–87. ∗Corresponding author Email addresses: [email protected] (Henry Edison), [email protected] (Nina M. Smørsg̊ard), [email protected] (Xiaofeng Wang), [email protected] (Pekka Abrahamsson) Preprint submitted to Journal of Systems and Software February 27, 2018 ar X iv :1 80 2. 09 39 3v 1 [ cs .C Y ] 2 3 Fe b 20 18 Method: A multiple case study approach is followed in the investigation. Two software product innovation projects from two different large companies are examined, using a conceptual framework that is based on the method-inaction framework and extended with the previously developed Lean-Internal Corporate Venture model. Seven face-to-face in-depth interviews of the employees with different roles and responsibilities are conducted. The collected data is analysed through a careful coding process. Within-case analysis and cross-case comparison are applied to draw the findings from the two cases. Results: A generic process flow summarises the common key processes of Lean internal startups in the context of large companies. The findings suggest that an internal startup can be initiated top-down by management, or bottom-up by employees, which faces different challenges. A list of enablers and inhibitors of applying Lean startup in large companies are identified, including top management support and cross-functional team as key enablers. Both cases face different inhibitors due to the different process of inception, objective of the team and type of the product. Conclusions: The contribution of this study for research is threefold. First, this study is one of the first attempt to investigate the use of Lean startup approach in the context of large companies empirically. Second, the study shows the potential of the method-in-action framework to investigate the Lean startup approach in non-startup context. The third contribution is a general process of Lean internal startup and the evidence of the enablers and inhibitors of implementing it, which are both theory-informed and empirically grounded. Future studies could extend our study by addressing the limitations of the research approach undertaken in this study.