My Take: Why Internal Startups Fail - Conflicting Missions

One trend that always sound good and always end badly is the Internal Startup within an established company.

What happens is there’s an internal champion for this movement because of external factors such as: smaller companies doing better than them, the company not as trendy anymore, lots of media coverage on a new wave of business. Internal factors such as executives restless or fearful of external factors.

Whatever the reason - the setup is the same: an established company carves out resources to act like a startup. There can be any mandate: create the future, explore crazy ideas, make the thing that will kill the company, etc.

This process begins well - everyone is on-board, lots of hiring, green-field projects, etc. The mood is like the company heyday again and is a lot of fun!

It’s great - I’ve been part of these and highly recommend getting in early on the process.

Eventually, all of the internal startups I learned about fail. I reflect back and there are different reasons why these projects start well and yet fail.

One reason: the mission of the internal startup conflicts with the established company mission.

This dichotomy is strong and affects all decisions of both the startup and the established company in two extreme ways:

• The startup holds to the new mission and creates something awesome, the established company rejects the result (because it’s just so off mission).

• The startup is so entangled with the old mission, they deliver nothing and the established company learns to never have an internal startup again.

Having conflicting missions between the internal startup and established company creates lose-lose situation for both the internal startup and established company.