Independent Project Franchising: Why Big Software Companies Should Spin Out Innovation Instead of Killing It
August 26, 2026 – 8:07 am
Credit: Robert Brownstein
Summary
Large software companies often develop valuable internal tools but let them decline when priorities shift. Robert Brownstein suggests "independent project franchising": allowing engineers to spin out successful internal projects as autonomous ventures with the parent company as a first customer and licensing partner. This approach addresses the growing concern among CEOs about slowing transformation and innovation, especially against lean AI-native competitors.
The Issue
- Decay of Internal Tools: Large software companies build tools, prove their value, then neglect them once leadership shifts focus.
- CEO Concerns: According to PwC’s 2026 Global CEO Survey, 42% of CEOs fear they are not transforming fast enough, while 29% question their innovation capability.
- Lack of Durable Structures: The industry lacks structures to support promising work through changing priorities.
- Initiative Thrash: Teams build projects, lose momentum, and leave behind unfinished code and knowledge gaps when new directives arrive.
The Cost
The cost of neglecting internal tools extends beyond the initial development budget:
- Lost Knowledge: Engineers who leave take institutional knowledge with them, forcing subsequent teams to reconstruct decisions or work around neglected architecture.
- Ongoing Maintenance: Projects that are seemingly completed can become recurring liabilities due to security concerns and feature requests left unaddressed.
The Changing Software Landscape
Deloitte’s 2026 Global Software Industry Outlook highlights:
- Faster software creation at lower costs.
- Lean AI-native challengers pressuring established companies.
- Traditional ownership models becoming less viable due to rapid production cycles.
A Proposed Solution: Independent Project Franchising
Brownstein proposes a middle ground between keeping projects in-house and letting them die:
- Spin Out Successful Projects: Allow engineers closest to valuable noncore capabilities to form independent ventures with the parent company as an anchor customer and licensing partner.
- Freedom and Sustainability: The new venture gains freedom to serve other customers, build its own team, and ensure long-term sustainability.
- Retain Interest: The parent company can retain a license or minority economic interest, providing transition funding as needed.