Thesis: innovation starts on a small scale and grows to epic, world-changing proportions when supported by a larger patron. In this article, I will try to surprise you by pointing out successful projects that started out small within organisations or received substantial support from organisations in the form of 4 case studies followed by a list of some of the most interesting examples.
Co-authored by Olga Trąd, editorial team, netguru.co
Whether or not you’re a gamer, you must have heard of the Xbox. Do you use Slack and/or Trello at work? There’s something these brands have in common.
Their origin story. They all started as a side project within a larger company or partnered up with a large company and grew alongside it.
These days it seems like that’s the trend. Organisations have realised they are not built for fast innovation. Their complex structures, decision-making processes and risk-management schemes block them from introducing change quickly. We’ve recently written an article that explains this in depth. The best (quick & dirty) option for many, therefore, is to create internal startup projects and leave failing fast to them.
If you’re interested in transforming your whole organisation, read this article.
Another factor influencing the birth of many new startup-like projects within larger companies is the popularity of startup culture. Pretty much everybody tries to stay on top of what is happening in Silicon Valley. Google, Facebook and other giants aren’t shy about buying up promising startups or about innovating internally by encouraging the entrepreneurial approach and supporting small internal projects.
The characteristics I looked for in companies that would end up on my list might not be obvious at first glance. My focus was on large, corporate structures and business entities only. I also included companies that started small but grew thanks to the startup projects they supported.
Searching for deep relationships between startups and their corporate supporters wasn’t easy. A small company that simply received funding and little else from a large organisation would not meet my criteria, but a company that was bought by a corporation or became a part of a group would.
This is all to make sure that the article would be relevant to senior executives in large organisations looking for a new and better way to innovate.
Now then, onwards to the case studies and other examples.
Xbox – Trust the Experts on Your Team, Use the Tools You Already Have and Think About Your Audience
It isn’t a widely known fact, but Xbox started pretty small. The original console’s final design was introduced to the public in 2001 and Microsoft became the first major player on the console gaming market originating on US soil since the Atari Jaguar left the scene in 1996. Its history goes a few years back.
In 1998, Kevin Bachus, Seamus Blackley, Ted Hase and team leader Otto Berkes from Microsoft’s DirectX team, used parts from Dell’s laptops to build the prototype. The original name for the console was actually the “DirectX Box”. Their goal was to compete with Sony’s PlayStation 2. In a 1999 interview, Bill Gates said, “we want Xbox to be the platform of choice for the best and most creative game developers in the world”. This was most likely the first public mention of the new console.
While Microsoft backed Xbox from very early on, the console wouldn’t have been created if its four-man team hadn’t successfully pitched the idea to Bill Gates. It all started as an idea, a side project – a startup, which then received funding and, apparently, the full support of Microsoft. It’s success can be attributed to the Xbox team relying on existing tools within Microsoft – both hardware and software elements, such as high end PC components and DirectX. They also took advantage of the knowledge and expertise of senior Microsoft staff. And let’s not forget to mention their focus on making life easier for game developers.
The original Xbox was followed by Xbox 360 and Xbox One – all successful releases. Xbox 360 sold over 77 million copies, while Xbox One is at the 26 million mark as of January this year. The console remains a main competitor on the market, rivalling Sony’s PlayStation 4 and maintaining huge popularity worldwide.
Trello – Do What You Know and Create Products to Solve Your Own or Your Current Users’ Business Problems
According to Trello’s official about page, their story began in 2010 at Fog Creek Software, a company you might know as responsible for Stack Exchange and Stack Overflow. The company launched Creek Weeks, an initiative aimed at finding innovation within the organisation. A prototype called Trellis was successfully pitched in 2011 and the app launched at TechCrunch Disrupt that same year. It had 50,000 users within the first few days. Funnily enough, some of the names proposed for the app that were eventually rejected were Cardvark and Planatee.
The main reasons behind Trello’s success paint a similar picture to what happened with the Xbox. The team focused on something they knew and used internally – the Kanban board, a practice that was already widely used, only with yellow post-it notes. They also focused on their existing audience. It’s another example of leveraging existing company assets through an innovative startup-like approach.
After several years of operating within Fog Creek Software, Trello decided to spin off in 2014. Michael Pryor, Fog Creek Software’s co-founder, became the CEO of Trello, Inc. About 4.75 million were using Trello that year.
Trello was recently acquired by Atlassian and continues its journey with the support of a larger partner.
Niantic, Inc. – Be Patient, Maintain Your Technological Focus and Leverage Company Assets
Niantic wasn’t a well known company (though it did have cult status among its loyal, international player base) until July last year, when they launched Pokemon GO. But that is not the only game they’ve created and not the only reason why they are notable.
The company started out as Niantic Labs, an internal startup within Google. Their first product was Field Trip, an app checking the user’s location to show him or her “cool, hidden and unique things” in the area. Their first game, Ingress, used augmented reality and achieved worldwide success – though mostly among geeks and people from the IT industry, notably those unopposed to Google+. The player base, though diminished, is still active today, most likely thanks to regular in-game events organised in various cities around the world.
In September 2015, Niantic announced they were working on a new game, Pokemon GO. Only a month later, they spun out of Google, possibly in response to Google’s announcement that it would be restructuring as Alphabet, Inc.
Niantic secured at least $35 million of investment for the development of Pokemon GO. It was the right move. A week after the game’s launch, it was the most downloaded app in the App Store. According to some reports, people were spending more time playing Pokemon GO than on using Facebook, Twitter, Snapchat, Tinder and Instagram. The game has been downloaded over 650 million times – and this number is likely to grow.
Here, success hinged on patience. The creators of Pokemon GO did not give up after early failures and were not satisfied with a small success. They also knew to continue investing in the technology they were familiar with. Aside from that, the compounded interests of several company assets played a role in the story. Google was invested in mobile technologies and Nintendo in the gaming industry – while the general public and the market were more than ready for AR innovation.
Yieldbird – Work Towards Real Success, Don’t Be Afraid to Pivot and Keep Your Team Small to Maintain Momentum
This global company manages ads and optimises ad inventories. They employ software engineers to be able to customise their services for their clients: media and advertising companies. And it all started with the birth of the original startup, AdTaily, in 2007.
The founders wanted to automate the process of selling ads on blogs and websites. Companies with products or services to advertise would be able to buy advertising space willingly, while owners of that space could make money with no hassle. The startup won a Seedcamp competition in London while still in prototype stage.
In 2009, AdTaily was bought by Agora, one of the largest media groups in Eastern Europe.
The initial business model for AdTaily did not bring as much success as expected. But the team, knowledge and experience in the media space allowed the startup to pivot and build Yieldbird on top of Agora’s main operations. Yieldbird became a much bigger, fast-growing product. In December 2016, it was announced that the whole AdTaily group would be rebranded as Yieldbird. It is now one of the fastest growing global business owned by Agora.
The key to Yieldbird’s success was keeping the startup minded AdTaily team outside of Agora’s corporate hierarchy. They were given freedom, both in terms of business and technical decisions (software development). They took advantage of both Agora’s know-how and the small team’s agility. Today, they boast over 10 billion ad impressions a month and over 350 publishers in more than 30 countries in Asia, Europe and Latin America.
GOG – Innovate with Your Existing Product and Have a Clear Goal to Give Your Team Focus
GOG.com is a digital distribution platform, mainly for video games. They caught gamers’ attention by offering DRM-free content. The name is an acronym for Good Old Games – which were the kinds of games GOG sold initially, targeting a particular niche on the gaming market. They’ve managed to become successful rivals to the largest digital distributor of games, Steam.
Interestingly, Steam has somewhat similar origins.
GOG was born within CD Projekt, a company that specialised in distribution of boxed games (procured from abroad) in Poland. They bought CDs and licenses, sold them and soon discovered that many games sell even 5 years after premiere. People loved the idea of revamped old games sold at low prices. As the company witnessed the market shifting to a digital model, they launched GOG as a small side project that grew naturally into a very successful business.
They sold .exe files without DRMs as the MVP of their startup project, which had its own team, structure and leaders. Within 5 years, this startup project grew bigger than its parent company. Today, it’s a separate company with a popular game client and an army of loyal fans.
GOG achieved success because they were focused on a particular goal from the very beginning. They had a separate team able to focus on a clear missions and pursue a chosen set of values. They manage to leverage their local success (selling boxed games in Poland) to the global market because they knew their customers, knew what made GOG unique, and had the opportunity and courage (separate team, small risk to the parent company) to take advantage of their strengths.
Another Interesting Case – SAP
IBM received the rights to Xerox’s Scientifix Data Systems (SDS)/SAPE in 1975 as part of a larger deal. Five of their (IBM’s) engineers – Dietmar Hopp, Klaus Tschira, Hans-Werner Hector, Hasso Plattner and Claus Wellenreuther – were working on a system based on just this technology. Obviously, their project was no longer necessary.
Instead of abandoning all of their work, they left IBM Tech and built their own company: SAP.
Their success is another proof that the best environment for fast innovation to happen is a small-scale business – a startup. Had IBM recognised the potential of the project they were abandoning, they likely would have allowed their 5 engineers to continue their work internally.
I do believe the thesis stands. In all the examples mentioned in this article, small, dedicated teams were able to achieve what a corporate structure couldn’t. Moreover, many among them had the support of larger organisations and used it to their advantage by leveraging the financial support, knowledge, brand value and expert employees they received.
The startup approach within large organisations is not a lost cause. It’s not a fever dream. What’s necessary for such projects to succeed, however, aren’t just small teams and the veneration of failure. These initiatives often require tried and true processes, tested on other startups, and experts with experience on the startup scene.
Don’t give up on innovation. Are you really need are the right people, and those are not too hard to find.
This post is part of our contributor series. It is written and published independently of TNW.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.