The business spin off is a form of business creation consisting of a company being born from another that has already been in operation for a long time. Initially, the new company functions as a subsidiary of the parent company until it achieves the necessary means, organization and size to function autonomously and independently.
Many companies founder trying to launch new products or services and even fail in their digital transformation process. It is there where the Spin-offs become key in the survival of the company into the future.
The advantages of Spin-off creation are shown below:
The new company enjoys greater speed and lightness to move faster
A Spin-off allows to increase the degree of diversification of the company
Allows to retain the talent of valuable employees who are attracted by new projects
The company can enter new markets in innovative and more efficient ways
Higher level of experimentation and risk tolerance for new products and services
Some successful examples of Spin-offs
Waymo is a Startup that was born within Alphabet, Google's parent company. This is a clear example of a Spin-Off that has become one of the heavyweights in the entrepreneurial ecosystem in Silicon Valley and in the autonomous vehicle industry.
Both Spin-Offs and incorporated companies have market challenges that must be overcome in order to maintain and achieve success. There is always a certain risk of failure that can be mitigated by incorporating a talented team in the management and administration of the Spin-Off.