It’s been well documented by the likes of Steve Blank and Clayton Christensen that if you want explore disruptive innovation in a large company, you have to either redesign or create parallel processes, systems and values internally in order up to support behaviours critical to innovation - think moving fast and rapid experimentation. Failing that, taking innovation outside of the building by spinning out a company with its own processes, systems and values is par for the course.

But the kicker here is to not treat the spin off as an independent startup, otherwise you might be better off simply setting up a corporate venture capital arm to invest in startups.

A more powerful approach is to leverage your relative strengths to mutual benefit.

A large corporate will bring domain expertise, networks, distribution channels, customers and resources to the table.

The spin-off or startup will be unencumbered by reputational risk or the watchful eye of regulators which slows down corporates. It will also bring rapid experimentation, emerging tech and business models to the table. Bonus: it might prove a much more compelling workplace for emerging talent, aiding companies in their quest for talent acquisition.

Together, you’ve got a formula for success. So, where to from here?

The Business Model Canvas

No doubt you have heard of the business model canvas - a tool popularised by Alex Osterwalder and later appropriated by Ash Maurya who turned it into the lean canvas.

The business model canvas effectively breaks a business into building blocks such as distribution channels, customer segments, customer relationships, key partners, value propositions, resources, activities, costs and revenue models. It’s often used by startups in the early stages of building a business in place of a traditional business plan in order to get moving quickly and start testing assumptions. The canvas has also been gaining more prominence amongst corporate innovation teams.

However, it has applications beyond simply mapping out a starting point for a proposed business - it can help us identify how large corporates and their spinoff entities and even startups can best work together.

How to Identify Synergies

Step 1 - The spin-off or startup completes a business model canvas. Easy and familiar enough.

Step 2 - The large company or a business unit therein completes a business model canvas (or multiple canvases for different business units).

Step 3 - Map the spin-off or startup’s canvas over the corporate’s business model canvas and identify any overlaps (no dissimilar to a good old fashioned venn diagram, below).

That bit in the middle - that’s where a corporate can help a spin-off or a startup.

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