Article at a glance:

The innovative organization: Why new ventures need more than a room of their own

The idea that new businesses prosper best when separated from their corporate parents has become commonplace. Tethered to the parent, a new business will struggle to get the flexibility it needs or the financial or managerial resources it deserves, or so the argument goes. Yet this argument needs to be reassessed. Separation may well be the model of choice when the new and old differ greatly—as with an Internet start-up launched by an industrial company. But strict separation can rob a new business of invaluable resources and the parent of the vitality that new businesses generate.

The take-away

Strive to find an organizational model that blends separation and cooperation. Any company seeking growth should give new businesses entrepreneurial space. Yet those businesses also need to be plugged in, from the outset, to the parent's resources, knowledge, and goals.