Spin or Stay? A Strategic Framework for Deciding What to Launch
Every large organization has them — those grey-zone projects stuck somewhere between promising and problematic. Maybe it’s a prototype born out of R&D. A clever platform built by the IT team. A sustainability tool developed for internal use that, just maybe, could be commercialized.
The question arises with unnerving regularity: Should we scale this internally or spin it out into its own venture?
For strategy teams and innovation leaders, this decision is among the most consequential — and most misunderstood — in modern corporate growth. Get it right, and you create a nimble, capital-efficient business with startup upside and corporate credibility. Get it wrong, and you’ll burn time, morale, and capital on initiatives that never quite fit the mothership.
The difference between a spinout that becomes a category leader and a project that dies in budget reviews often comes down to when and why a company decides to let it go.
Why This Decision Is So Hard
At first glance, the spin-or-stay question looks like a simple matter of strategy. But it’s not. It’s political, emotional, and existential. It forces leaders to confront uncomfortable truths:
- Is this idea strong enough to stand on its own?
- Will we really give it the freedom it needs to succeed?
- Are we willing to lose control — to unlock more value?
Too often, corporations default to keeping initiatives internal. The reasoning sounds responsible: “We already built it.” “Let’s scale it ourselves.” “It’s too risky to let outsiders lead.” But in reality, what begins as a cautious choice often ends in stagnation.
Keeping a venture in-house when it needs startup speed and independence is like trying to fly a plane down a corporate hallway. It doesn't matter how advanced the aircraft is — it’s the wrong environment to take off.
The Illusion of Fit
One of the most persistent traps is confusing adjacency with strategic fit. Just because a new product uses similar technology or serves adjacent customers doesn’t mean it belongs inside the core business.
Take Louisa AI, born at Goldman Sachs as an internal collaboration platform. While useful inside the firm, its real market was outside — among banks, VCs, and professional services firms hungry for intelligent relationship mapping. Had Goldman tried to keep Louisa in-house, it likely would’ve remained a clever internal tool. By spinning it out, they allowed it to become a product with external funding, broader ambitions, and an independent trajectory.
Similarly, SQUAKE might have remained a back-end ESG calculator for Lufthansa. But it didn’t. The team saw that sustainability data was a pressing need across the travel and logistics sector. That market size — and Lufthansa’s willingness to retain only a minority stake — enabled SQUAKE to attract funding and grow far beyond its parent.
What these examples reveal is simple: ventures that only fit inside the parent’s logic rarely scale beyond it.
Ask the Right Questions, Not the Comfortable Ones
To avoid strategic inertia, leaders need a clear — and occasionally brutal — decision framework. Not a checklist of yes-or-no boxes, but a structured way to ask: Where is this venture most likely to thrive?
Here are the real questions that matter:
-
Is the target market broader than our existing customer base?
If the venture must sell to competitors, suppliers, or entirely new segments, keeping it in-house will suffocate its potential. -
Can we fund this at the speed and scale the market demands?
If the answer is no — or if internal governance won’t tolerate losses during growth — it needs external capital, and that means a spinout. -
Does the team need startup-style autonomy to move?
If the venture can’t survive the weekly steering committee model, it needs a different operating environment. A separate entity can offer that. -
Would this venture still make sense if it had zero internal users?
If you can’t confidently say yes, you're probably looking at an internal tool — not a venture.
The most painful but useful question of all:
If this exact idea were pitched to us by an external startup, would we invest in it?
If yes, why not treat it that way?
It’s Not All or Nothing
It’s worth noting that spinning out doesn’t mean severing ties. The best spinouts retain smart linkages to their parent companies: preferred licensing terms, shared talent, early access to pilot customers. What they don’t retain is daily interference.
Some companies use hybrid models: ventures start internally, graduate to spinouts when ready, and continue to serve the parent as a key customer. Others retain the option to reacquire — a form of "innovation rental" that mitigates risk but keeps the upside on the table.
The real point is this: you don’t have to choose between total control and total separation. You just have to choose to give the venture what it needs to succeed.
The Cost of Keeping It
When companies choose to keep everything inside, they often underestimate the cost. Not just in capital, but in lost opportunity.
The internal team becomes demotivated, unable to move fast. Market windows close. Competitors — real startups with no internal politics — move faster. Eventually, what could have been a bold business becomes another “innovation initiative” no one wants to talk about.
Intel didn’t make that mistake with Articul8 AI. Despite having deep tech and internal leadership, they spun it out with a new board, a CEO empowered to raise capital, and the freedom to sell across industries. It wasn’t about losing control — it was about gaining velocity.
Final Thought
The future of your company may already exist — not in the core, but in the shadows of side projects and second-tier initiatives.
But to give those ideas a real shot at success, you have to decide — clearly and early — where they belong.
So ask yourself:
