Friday, September 14, 2018

Lessons Learned: Hugh Molotsi

Innovation within large corporations has more in common with startups than you’d think, but also comes with its own set of challenges. In The Intrapraneur’s Journey, Hugh Molotsi and Jeff Zias share their experiences at Intuit and lay out the guidelines for fostering innovation projects and also an innovative culture within enterprise companies. Here, Hugh Molotsi takes us from skunkworks to large-scale success.



I’ve been very blessed to have had a 22-year career at Intuit where I held various product roles from software developer on QuickBooks for DOS to offering leader on QuickBooks Connected Services. When I left Intuit in 2015, I was VP of Innovation and led Intuit Labs, Intuit’s internal incubator.

One of the highlights of my time at Intuit was being part of a skunkworks team in 1999 that developed Intuit’s first payment service, the QuickBooks Merchant Account Service. After months of advocating for the idea of allowing QuickBooks users to process credit card payments from their customers inside the product, we were finally given the green light to proceed but only had 12 weeks to make it happen.

We were severely under-resourced (initially the team was just a Product Manager, Scott Baird and me) and had to overcome significant organizational pushback from people who thought the whole idea was terrible and that what we were doing was dangerous. Somehow, with hard work and the help of a few key colleagues, we were able to deliver a functioning service to customers on time. Through the great work of many other Intuit employees, Intuit Payments would eventually become a roughly $1B business for Intuit and a key enabling feature for over half of Intuit’s small business revenue. I was generously rewarded the Intuit Founders Award in 2011 for helping get it started.

On reflection, I’ve half-jokingly said that the only reason our skunkworks service saw the light of day was because our group wasn’t well managed at the time. Perhaps if the big-wigs had realized the significance of what we were developing, they would have demanded more detailed plans or assigned the project to a much more senior leader. Flying just enough below the radar and plain luck seemed to be as important to our success as anything else.

Many years later, a group of Intuit employees were asked to develop a program that would give employees autonomous time as a way of increasing employee engagement. For personal inspiration, I thought back to my time on the Merchant Account Service. Imagine if we could create an environment were breakthrough innovations didn’t require luck or flying below the radar? What if the company was supportive of skunkworks projects, ensuring that small passionate teams of employees didn’t have to expend so much energy fighting against organizational pushback?

With this in mind, we started Intuit’s Unstructured Time program in 2005, where employees could spend 10% working on their own projects. The genesis of Unstructured Time was how I met my co-author Jeff Zias, who proved to be an instrumental thought leader and the key driver to getting employees excited about the new program. Jeff and I would go on to spend a decade working together helping cultivate Intuit’s innovation programs.

Unstructured Time has been an unqualified success for Intuit, yielding new offerings like mobile tax and small business applications, the move from desktop software to online “cloud” products, and numerous product improvements and internal process improvements.

Along the way, we had the privilege of spending time with innovation leaders at companies like Google, Atlassian, and LinkedIn who generously shared what has worked for them and what mistakes to avoid.

Jeff and I have shared all of these lessons in our new book The Intrapreneur’s Journey. We’ve seen the rewards of developing a culture of innovation where employees are empowered to work on their own ideas. The road to creating such a culture is riddled with challenges and pitfalls, and our book will help you avoid these pitfalls while creating an environment that empowers your employees. And empowered, energized employees innovate greatly improved experiences for your customers, ultimately driving growth.

The Intrapraneur’s Journey is available to order for a limited time (only until September 22, 2018) on Kickstarter.

You can also follow the authors on Twitter: @hughmolotsi and @jeffzias





Thursday, September 6, 2018

Lessons Learned: Ann Mei Chang

We say we want to make the world a better place, so why does it seem like we’re working so hard just to stay in place? With Lean Impact, Ann Mei Chang takes us on her journey of trying to bring innovation and social good together.






ANN MEI CHANG:

I thought that my decades working at some of the most innovative Silicon Valley companies would prepare me to tackle the big problems that really matter. Now I realize all the ways the tech industry has it easy.

16 years ago, I met Eric Ries when we were both working at an up-and-coming startup that held the promise to change the way we communicate and socialize. We poured our hearts, souls, and virtually every waking hour into what we thought was the perfect vision that would captivate the world. Then we launched, and our presumptions were plunged into cold reality. Sure, we had some passionate users. But, not surprisingly for a revolutionary product, we got as much wrong as we got right. Soon, I was unemployed, lying on a beach licking my wounds and wondering what happened.

While Eric went on co-found another company and write The Lean Startup, I went on to Google. There, we didn’t assume we knew all the answers. Rather, we believed in data. Whether it was a new product, new feature, or even a simple tweak to an algorithm or color choice, we ran experiments to see how users reacted. We lived and breathed the user experience under real world conditions with real world customers. Google didn’t always have the best ideas, but what it had was the ability to learn, iterate, and improve faster than its competitors. Seven years ago, when I left to dedicate the rest of my career to social good, I thought I could take these lessons with me and use them to make a difference.

Alas, it wasn’t so simple.

As I immersed myself in my new mission, I found myself continually propelled back into the poor practices of my failed startup. In this case, it wasn’t hubris but rather a web of  perverse incentives that in combination induce organizations to draw up incredibly detailed plans in advance, then implement them faithfully without necessarily knowing what’s working. Only rarely are they able to gather feedback and data, let alone incorporate improvements. The biggest challenge was the nature of funding, which tends to emphasize predictability and discourage iteration. On top of that, it’s far harder to measure social impact than e-commerce transactions or experiment responsibly when people’s lives hang in the balance.

Mission-driven organizations face immense hurdles in keeping up with, let alone getting ahead of the ever-accelerating pace of change in the world. But, given the pressing problems facing people and the planet, I wasn’t about to give up. My search led me to the Global Development Lab at USAID. In the heart of one of the largest and most established organizations working to end global poverty, the Lab nurtures groundbreaking social entrepreneurs and designs new ways of funding that can better support learning, risk-taking, and experimentation. In my years there, I encountered more and more trailblazers both at nimble startups and in pockets at larger institutions who were breaking the mold. Still, these were by and large early adopters.

As my appointment at USAID came to an end, I began to pursue a number of opportunities to lead nonprofits in the global development sphere. When I got my first offer, I knew I had a tough choice – would I do more good by working within a broken system to make what difference I could or by trying to change the way the system worked altogether? I decided to plunge head first into the latter. Given the perverse incentives, deeply ingrained culture, and difficulty of adopting widely used innovation techniques in the world of social good, I simply couldn’t convince myself that I’d be able to make a meaningful dent on the problems I cared about without first addressing some of the barriers to social innovation. Thus, Lean Impact was born.

To learn from those who had pioneered new models for designing solutions, accelerating learning, and financing social good, I asked the smartest people I knew to tell me about the best organizations they had heard of across the US and around the world. In the course of my research, I was lucky to interview over 200 of them.

They include Summit Public Schools, a nonprofit that was unwilling to wait potentially years to see full academic results and found ways to dramatically speed up its feedback loop so it could more quickly iterate and improve its transformative approach to personalized learning. Another great story came from One Acre Fund, a social enterprise that learned from a failed big bet and introduced staged experiments to test and improve new ideas with its smallholder farmers before investing in a large rollout. Still others, like Civilla, have worked hand-in-hand with government to drive change – in its case taking a human-centered approach to make access to social services in Michigan far simpler.

Companies like M-Kopa Solar, Off Grid Electric, and d.light are not only innovating on their home solar systems for low-income families, but also the business models that allow them to become profitable and expand. And, cutting edge funders like the Global Innovation Fund are deploying the increasingly flexible and blended financing that is needed to allow and encourage rapid learning.

It turns out that social good is no longer the exclusive purview of nonprofits and foundations. Increasingly, I’ve found that the most promising solutions are coming from hybrid organizations and funders – whether they be social enterprises, B corps, venture philanthropy, impact investing, or some combination. As individuals choose where to work, buy, and invest based on their values, businesses are taking notice. And, to achieve sustainable impact at scale, government and policy often must play a crucial role. I wrote Lean Impact for anyone pursuing a social mission, so that we can all work together in concert to drive much needed change.

What it comes down to is, how do we create a system so that the pursuit of social impact and scale becomes as relentless as the pursuit of profits in the corporate world?

-----

Lean Impact: How to Innovate for Radically Greater Social Good (Wiley, Oct 30) is available for pre-order at Amazon | Barnes & Noble | Indiebound | Books-A-Million | 800ceoread.
 

Visit the author’s site. Follow her on Twitter.

Wednesday, September 5, 2018

Lean Startup Conference 2018 is Coming to Las Vegas

After eight years in San Francisco, the Lean Startup Company's annual flagship conference is moving to downtown Las Vegas. From November 14 - 16, at the Zappos Campus, Lean Startup Conference 2018 will feature all-new workshops, speakers, and networking events covering all the latest Lean Startup insights and innovations. I'm excited to tell you more about it.

When Zappos approached Lean Startup Co. a little while back about hosting our conference in Downtown Las Vegas, we saw it as an opportunity to further expand our mission beyond Silicon Valley. South Bend, Indiana went from Rust Belt to Tech Belt with EdTech in the Bend. Detroit has Technology in Motion (TIM). Austin has SXSW. Revolutionary work can be done anywhere, and that's part of what this move is about. In addition to iconic hotels, casinos and restaurants, DTLV, just north of the strip, also has the Downtown Project: a thriving scene of tech startups, arts, culture, and education. Conference attendees will be staying at the Downtown Grand Hotel, one block from the conference venue, and right in the middle of DTLV--immersed in the city’s entrepreneurial culture day and night.

We’ve also made some changes to how the conference is structured. Instead of organizing workshops by company size as we have in the past, we've created more focused topic tracks that will highlight entrepreneurs in every industry. These workshops and keynote presentations will put you in the same rooms as innovators from across the world, representing businesses of all sizes, from many fields.

And because learning from peers is also such a critical part of Lean Startup, this year's conference will place a special focus on bringing together the Lean Startup Community, allowing enterprise executives, nonprofit leaders, NGO’s and of course startups at all stages to meet like-minded colleagues, share stories, and form lasting relationships.

With Zappos’ support, we've created a higher-end, more intimate conference centered around hands-on learning by doing and making meaningful connections with fellow Lean Startup practitioners. As a result, tickets are more limited than in the past and we expect them to sell out quickly.

I'm really looking forward to the changes, as well as the chance to learn myself. I hope to see you there.

Lean Startup Conference 2018
November 14 – 16, 2018
Zappos Campus, Downtown Las Vegas

Click Here to Register

Friday, June 15, 2018

A Non-Profit Lean Startup: The Story of Adopt-a-Pet

David Meyer founded Adopt-a-Pet.com (formerly 1-800-Save-A-Pet.com) in 2000 as a way of ending pet overpopulation. Today it’s North America's largest non-profit pet adoption website, with millions of visitors to the site each month and partnerships with more than 17,000 animal shelters, pet rescue groups, humane societies and shelters.

When the non-profit was nearly acquired by a for-profit company several years ago, the time came to take a step back and re-evaluate what they were doing. “We decided that if we were not going to sell, we were going to really up our game,” says Abbie Moore, chief product officer. The result was a reframing of how they understood their mission. Instead of running a non-profit that happened to be a web site, they reconceived Adopt-a-Pet as a technology company that happened to be a non-profit.

Like many new organizations that experience huge growth, Adopt-a-Pet needed to figure out how to manage it effectively. The company had no real process in place for developing its product, even as the product was doing well. “We were a mess,” says Moore. “We still found a lot of success, but really in spite of our knowledge (or lack thereof) and not because of it.” In the areas where the organization was successful, there was no real understanding as to why.

Around this time Moore was introduced to lean principles through The Lean Startup and urged CEO David Meyer to consider them as well. “We were excited about that methodology,” recalls Meyer. Within a short time, Moore instituted a biweekly, mandatory “Lean Startup” meeting, where the entire organization was required to meet for an hour-long discussion of specific principles. “I would ask everyone to bring examples of how the principles would affect their department or the work they were doing,” says Moore. Everyone from engineers and designers to customer service and support staff was included.

There was some skepticism at first, but Moore kept asking more (and different) questions of her colleagues, a practice she continues. “I still constantly challenge everyone to list out and prioritize their assumptions, and to use MVPs to validate those assumptions,” she says. "One of our drumbeats is, ‘How can we make a year happen in a month?’ If it’s true that we’re going to be better at anything in a year, what can we do to compress that time so we don’t have to wait a year?”

One way the organization began testing its new ways of working was through a peer-to- peer adoption project launched in 2016. The project enabled pet adoption between individuals rather than through traditional animal shelters. It started with an MVP landing page, with Moore acting as the person behind the interaction, personally screening adoption applications and reviewing them with pet owners. By going to meetings with potential owners and adopters, she learned more about what the company needed to offer and what might be missing.

For Meyer, the most important piece of understanding how Adopt-a-Pet could and should reinvent itself involved the value the company was providing to its customer. “It was the realization that users can and should guide us; we don't have to guess at what they want. The whole concept of getting an MVP in front of people as quickly as possible in any form is about being brave and knowing that people will forgive us if it’s not perfect. They want us to succeed.”

For Moore, the two most important changes are the ability to launch a product quickly and to learn from iterations. A few years ago Adopt-a-Pet had metrics that included visitors to the site and how many emails were being sent to users. It was fairly basic information that didn’t offer the organization much insight into how the site was being used. Now the site is about engagements and activity and can measure the ways in which visitors are putting the site to use. Moore also assembled a growth and optimization team that launches test after test to learn how people use Adopt-a-Pet.com and the ways in which improvements can be made. And as the site has evolved, so has the technology that allows potential pet owners to connect with Adopt-a-Pet, more than half of whom now access the site through a mobile device.

“I think a lot of nonprofits are run by super passionate people who have ideas about how to change the world for the segment they serve,” says Moore. “And I think a lot of them do what we did, which was a come up with a program that seems like a good idea, toil away to launch it, and then say, ‘That's done,’ and move onto the next thing. Nonprofits should really start from the beginning and recognize that their ideas about their constituencies and programs are just assumptions that need to be examined, then start from a place of learning, and prioritize that learning above everything else.” That’s where new growth (and in this case, new pets) comes from.


Monday, May 14, 2018

The Energy for Transformation

My most recent book, The Startup Way, is all about the methods and tools big corporations, government, and non-profits can use to innovate: think of it as Lean Startup at scale. One of the things people asked me over and over when I was talking to companies about how to start doing this kind of work, which can feel so daunting, was what it takes to kick off a transformation of this size. What motivates a company to take on such a huge amount of work?

I’ve seen three distinct driving forces behind this kind of change:

1. CRISIS: Sometimes, a crisis forces change. One of the stories I tell in The Startup Way comes from the Federal Government. The very public meltdown of HealthCare.gov, the government’s website designed to implement the Affordable Care Act, was a crisis of the highest order. A huge policy achievement almost went up in smoke because the process of creating the site was so poorly managed it didn’t work on the day it was unveiled. Ultimately, the crisis was the catalyst for real change at numerous agencies across the federal government, beginning with an epic lesson in what can happen if you rely on the traditional “safe” management methods the government used to build the original site.

2. STRATEGY: Other times, a new organizational strategy clearly necessitates a new way of working. At companies like Intuit, change was driven from the very top by a recognition that new strategic imperatives required a dramatic overhaul. This can work only when the most senior leaders in the company have bought into the new approach and are determined to see it through. It is also not the kind of decision that can be made lightly, which is why it becomes critical, after the first stages, to demonstrate how the new methods function and to lay the groundwork for full mobilization across the entire organization.

3. HYPERGROWTH: Success can be its own form of crisis. When a startup achieves product/market fit, it can be forced to grow extremely rapidly. As legendary Silicon Valley investor Marc Andreessen, also founder of Netscape and general partner of the VC firm Andreessen Horowitz, put it (in one of the startup movement’s most famous pieces of writing):

“In a great market—a market with lots of real potential customers—the market pulls product out of the startup...And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”

Tuesday, May 1, 2018

An Interview with Steve Liguori, Serial Innovator



I first met Steve Liguori when we were both working at GE, where he was heading up a lot of their innovation efforts. But he’s been a change agent for much longer than that. We spoke recently about his path as a serial innovator, his beginnings in marketing, and what he’s been doing lately with his experience in teaching big companies how to transform themselves from the inside out. I’m a partner in his latest venture, the Corporate Entrepreneur Community (CEC), the newest addition to his long history of reinvention work that spans industries ranging from football to banking. I hope you’ll enjoy the conversation as much as I did.




Your first big innovation was also a huge cultural moment. What was it, and how did it come about?

When I was at PepsiCo, I started the Super Bowl halftime show with Michael Jackson. This was in 1993, and I was the chief marketing officer at Frito-Lay North America. The first Super Bowl halftime show was sponsored by Lay's Potato Chips, which we were re-launching. We were trying to do something dramatically new and innovative from a marketing standpoint, and being owned by Pepsi, which had done Michael Jackson, and was legendary for commercials and crazy marketing, we thought, "Why can't we do something crazy and innovative?" So we came up with the idea of disrupting the Super Bowl by doing, basically, what's now the Super Bowl halftime show--something crazy during halftime that we could own as a marketing vehicle. Before that--you can go back and look at old tape--half-time was the same thing from high school football to college football to NFL football. The marching band came out and did a marching thing and then at home everyone turned off the TV or went and got snacks because the announcers came on and talked football. We knew someone who knew Michael Jackson's agent and that's how it came together. I just always had that gene to make change. We called it “business not as usual.”


Where did that gene take you next?

I got lured away to run a small, private cookie company, and from there I went to Citibank. Going from potato chips and cookies to work at Citibank may seem kind of strange, but I got recruited there because they were looking to reinvent the consumer bank. I was president first of Citibank New York, then Citibank Federal Savings Bank, which is all the U.S. branches. I introduced brokerage services into the branches, which was a huge business innovation because for the first time you could go buy stocks and bonds in the bank branch. The other innovation I headed up there was basically putting Citibank online. I personally bought the citibank.com URL and introduced the first internet-based online banking.


Were people calling this kind of reinvention innovation at the time?

This was during the internet explosion, so I’d say it was called the digital revolution 1.0. In 2001, I moved from Citibank to become the CMO of Morgan Stanley’s brokerage business, where I was tasked with modernizing and reviving the brokerage business there. Everyone needed to get everything online right away and didn't know what the heck to do. I was there to help put Morgan Stanley online, but also to integrate the very broker-centric aspect of the business. Doing both was a really complicated endeavor and I helped reinvent it.  We didn't call it innovation, but it was, because it was about how to transform a purely human-based business into a combination of human and online and get the best of both. Because I’d made a name for myself as an innovative marketer in consumer financing, I was then recruited by GE, which still had a consumer finance brand at the time called GE Money.


Can you talk about how you went from finance marketing to the kinds of innovation projects GE started taking on eventually, which was when we first got acquainted? Clearly there’s a through-line of a willingness to take risks, right?


GE Money ended up being significantly scaled back during the recession in 2008, and as that was happening I met with Beth Comstock, who was the CMO at that time. She said to me, "We've got all these industrial divisions at GE: GE Medical, GE Aviation, GE Energy. Do you think that the basic principles of marketing are the same there as in the consumer world?" And I said, “Is that supposed to be a trick question?” Marketing is marketing, whatever you’re talking about. Two weeks later, I was named the executive director of global marketing for GE at the corporate level, working for Beth Comstock. My charge was to modernize all the marketing departments across the GE divisions. But it wasn’t long before GE realized they had to get moving on digitalization at the business level--that everything that was going on at the consumer level was becoming really important for business as well. They knew they needed to get into industrial software and data. My role migrated over to that, and I was put on a task force to figure out how GE could begin to digitize itself and the industrial internet.

What that means is that If you're running a utility company, an airline, or let's say, even a railroad, the data that comes off of your equipment is invaluable to running your operation more efficiently. In fact, there's a term now, it's called, "OT," as in operations technology. So as opposed to just having data on how well your accounting's doing, an airline wants to know what its fuel efficiency is. A hospital wants to know what percentage of up time it has on its CAT scan machines. A power company wants to know whether they should be burning natural gas or taking power off of the solar grid because it's sunny in Southern California. We started all these change projects--sensors in airliner engines, or in CAT scan machines, so we could tell management how valuable that data is for them to help run the business better. It innovation of the product lines in businesses, and I was put in charge of coming up with new ways to do things around digitizing GE and modernizing the company. It was another example of me being a serial change agent.


This was around the time when we met, because all that change was getting stuck and I came along to try to help move it forward.

Yes. The teams would be all fired up. They'd start their journey. We'd get back to them in, say 60 days or so, and they'd say, "We didn't make any progress." And we'd say, "What do you mean you didn't do any work?" And they'd say, "We didn't say we didn't do any work. We said we made no progress." Why did they make no progress? It was because of people saying, "That's not the way we do business." The change agents were getting eaten by the business-as-usual.

So we decided we needed to go and attack head on how to do innovation from a cultural perspective, which turned out to be the Lean Startup methodology. With you, we eventually created a whole new cultural methodology at GE to get this new way of working kicked off. That was FastWorks, which you wrote about in The Startup Way.


How did that experience carry over into new projects?

I was getting asked very frequently to go present GE’s story about how they were figuring out how to do innovation completely differently. People were realizing they needed to change but didn’t know how to get started doing it in a big company. So I became sort of a pied piper both within GE and external to GE. At some point the light bulb went off and I thought there was a really broad need for this kind of information. I decided I wanted to teach big companies how to implement their own reinvention, by using Lean Startup as the core for updating their culture and leadership. So I launched Liguori Innovation to do that.

About a year and a half into the new venture, I had another realization--which you’d also had--which was that people in every industry were calling me all the time with the same questions. It didn’t matter if it was a tech company, a finance company, or a manufacturing company. They were all struggling with figuring out how to make change in a large company. There are very few people doing it, just a core, small contingent of folks trying it. So I thought maybe the best way to help people figure out how to do it is to get those who are learning about it together with each other. The idea was to create a community of practitioners and let peers jump in and actually help each other as another part of the ecosystem they need to succeed at it.  That’s what the Corporate Entrepreneur Community (CEC) is for. It’s a very intimate setting where people can ask very specific questions of their counterparts at other companies that are similar to them in size and structure, but not in purpose, so there’s no competition. Things like, “What do you do when an executive comes in and says, 'Well, this seems great, but I'm still not buying into the process.” Or “We’re having a really hard time getting entrepreneurial people to stay in the company--how are you doing it?” It’s hard to have that conversation with anyone who hasn’t really lived inside a company of this size. There are several meetings a year, but it’s also a little bit of a matchmaker situation because people can call up and ask specifically to talk with someone we know has dealt with whatever their issue is.


Is the motivation behind your current work the same as it was when you started out at Frito-Lay or has it evolved in ways?

I really believe this is a huge need in society. These large companies have brought tremendous value to society from transportation, to electricity, to healthcare, to clean water.. And whether I love or hate Facebook, I don't think it's going to cure cancer, and I don't think it's going to get clean water to the billions of people that don't have clean water. These large, multi-national companies have global reach, and scale, but they are absolutely risking becoming dinosaurs because they're victims of the bureaucracy that they have created. That bureaucracy is necessary--they need regulations and controls on what they’re doing that affects people so much. But while you're making your quarterly numbers and doing all the things regulatory you need to do to pay the bills and stay out of jail, how do you at the same time completely reinvent yourself from the inside out? The specialty of what I do is to help answer the question: "How do you break all the rules safely?" That's an intentional oxymoron, and that's what these companies need to do.

Friday, April 6, 2018

New Power: An Interview with Henry Timms


To write their equally fascinating and practical new book, New Power: How Power Works in the 21st Century—and How You Can Make it Work for You, Henry Timms, the President of the 92nd Street Y, a major cultural and community institution in New York, and Jeremy Heimans, the CEO of Purpose, a company that builds social movements all over the world, joined forces to come up with a guide to navigating the world of crowds and chaos and connections we all live in.

They spent three years talking to practitioners, academics and researchers on the cutting edge of what they call new power, which flows from what they think of as the essential skill of the 21st century: the ability to harness the energy of the connected crowd. Their research and conversations took place all around the world and included everyone from the heads of intelligence agencies in Washington to frontline health workers in the Netherlands. They write about the battle and balance between old power to new power, and show how they’re fueling the defining transformation of our times. But like all fast-moving trends, sometimes it’s hard to see it clearly when we’re right in the middle of it, which makes New Power just that much more important. It’s a guide to spreading ideas, launching movements, raising money and much more.  

It was my pleasure to talk with Henry about what he and Heimans have learned about how power structures are changing, how people can get started making the shift from old to new power, how the principles of new power are related to the principles of lean startup, and the responsibilities that come with all the amazing energy being channeled.

It’s also my pleasure to offer three copies of New Power to readers, thanks to Henry and Jeremy’s generosity. Tweet your thoughts on our conversation with the hashtag #newpower and I’ll choose three winners at random on April 12th.



Let’s start with the basics. What’s the difference between old power and new power, and how did you and Jeremy get interested in defining them?

Jeremy and I came at the world from very different places. He’s an activist and movement-builder and launched movements like Avaaz and Get Up! and I run a 143-year old institution. But we were both trying to get our heads around what was really changing in the world. And so often, the conversations about how the world was changing were reduced to quite a shallow discussion about technology--it was all something to do with Twitter, or changing tools. But it wasn't really a conversation about power.

We both in our work started to ask, "What's the right taxonomy to think about all of these changes in the world?" and we galvanized around old power and new power. The old power world is the one we know well, which is very command and control, top-driven, managerial and based on downloading information onto the world. What's emerging is the new power world, which is much more about things that are made by participation, about upload, and about distribution models.

New power--that ability to harness the energy of the connected crowd--has really become the essential skill of the 21st century. If you look at all the people who are coming up on top right now, for good and for bad, what they have in common is the capacity to capture that energy. So whether we look at Trump and Obama and the unexpected victories that they both had politically, or we look at platforms like Uber or Facebook, or we look at movements like #metoo or March For Our Lives, these very different examples all share one thing: the people who are leading them have worked out how to harness this power of the crowd.


Was there a moment in your own life and work when you first saw the effects of new power?

The 92nd Street Y is in New York, where one of the events we all pay attention to is UN Week. UN Week is typically the most old power week of the year. The only people who get anywhere near the action are people who have a UN Grounds Pass or who can afford to go to the Clinton Global Initiative. You had the most exciting people in the world here talking about the biggest issues of the day, and it essentially excluded most people. You couldn't get anywhere near it. Really, what UN Week brought New York was gridlock.

So about eight years ago, we at the 92nd Street Y – along with Mashable, UNDP and the UN Foundation – created the Social Good Summit which I think of as something that looks at the world through a new power lens. We said, "Instead of this being top-down-leader-driven week, how do you get people engaging in these issues in much more connected ways?" We opened up to thousands of bloggers and social entrepreneurs and others to come be part of it at the Y here. Then we encouraged people to meet up and create their own events around the world. We had meetings that first year in twenty-five countries where people collectively organized their own events similar to the Social Good Summit. Now we’ve counted 100 satellite events around the world. I’m speaking this summer at the Social Good Brazil event – which is larger than ours in New York City. 


Can you tell me a bit more about your own experiences transforming an old power institution into a new power role model?

The 92nd Street Y is all about strengthening community. In the old power world, the way we did that is people would come through our door and we'd offer them experiences. For years we've created programs and people would pick up the catalog and consume our programs. But all the new tools available now allow us to do that work in a very different way.

#GivingTuesday is a perfect example of that. We took one of the key values of the Y, which is around community and philanthropy and said, "After Black Friday and Cyber Monday, how could you create a day that was really about philanthropy? How would you create something that could really scale around the world?" And that was #GivingTuesday. The design of Giving Tuesday was very new power in a couple of ways. First, we never branded it. We never called it the 92nd Street Y’s Giving Tuesday, and the goal was never that it would be all about us. It was built so that other people would grab it and make it their own. Second, we designed it so people would improve it.

As a result, Giving Tuesday has morphed into all sorts of different hashtags and different campaigns around the world. I remember very early on when Baltimore turned Giving Tuesday into BMore Gives More--Baltimore Gives More. They decided they were going to make it all about how generous Baltimore is. Then the organization Dress for Success, which takes donations of clothing for women getting back into the workforce, turned Giving Tuesday into Giving Shoes Day, which was about women giving professional-appropriate shoes to those going back to the office. University of Michigan turned Giving Tuesday into Giving Blueday, and they used it to raise $5.5 million last year.

In the old power model, we'd say, "Cease and desist.” You've changed our brand, you've altered the frame. But in the new power world these are all signs that your idea is spreading in the right way. At the 92nd Street Y when we’re thinking about the future, we aren’t just thinking about new technology, but new models for building stronger communities.


How did you decide to expand your original Harvard Business Review piece on new power into a book and what the research process was like?

When we did the HBR piece, we started hearing from people around the world who had taken it and worked out ways of using it for their own needs. One of the best examples is a group of health workers and nurses in the National Health Service in the UK who built on the ideas in the HBR piece and made a curriculum for their own work.

We kept hearing, time and again, from so many different sectors that the old power/new power frame was speaking to them and to the challenges and options that they faced. Even spies, who are perhaps the ultimate old power sector, started to engage with the idea, realizing now that they're going to have to work out how to deal with a much broader and engaged and connected landscape if they want to succeed. So even intelligence agencies are experimenting around open innovation and open sourcing and all these things and they recognize that they can mobilize the crowd around the outcomes they want in the world.

The reason we wrote the book was to really lay out this set of skills that help people become more powerful. The book offers a new playbook for a hyperconnected world. It asks and answers questions like: "How do you think about spreading ideas?" "How do you think about transforming an institution?" and "How do you think about raising money?" For that last one, of course, there’s a very new set of dynamics around things like crowdfunding, which everyone now needs to understand. The book is very much a practical guide for how people can think about their own power and how they can think about being more effective in the world.


There are also some cautionary tales. I think it’s fair to say we’ve seen some of the dark side of new power lately, too.

Yes, and that’s why the stakes are so high. If you agree that the essential skill of the 21st century is the ability to harness the connected crowd, you have to also agree that a lot of the people who are doing that well are not on the side of the angels. You look at the capacity of anti-vaccers to out-message health professionals. You look at the power of climate deniers to communicate better than climate scientists. You look at internet crazies who are doing better than academics who have all these truths and all these facts. There's this real surge of new power that is not ending up in the right hands. So while the first bit of the book is a practical guide how people can really get their head around this new set of tools, the second bit is a call to action--which is to say, we really need those on the side of the angels to get good at new power quickly. The voices of reason need to catch up.

I think we're also seeing the beginnings of a new kind of political consciousness emerging against platforms, who have gobbled up a lot of new power and extracted it for their own ends. There seems to be a very big market opportunity for someone who could create platforms that actually create meaningful and fairer connections with the people who create the value.


Who, in the course of your research, have you seen doing that most effectively?

So many of the people who are good at new power think about their work in an experimental, entrepreneurial way – with some real overlap with the Lean Startup method. Rapid experimentation isn’t something that’s just entrepreneurial, it's actually what the best mobilizers do. You talk to any long-time campaigner or activist; they'll tell you that's how they think about their own work-- just constantly experimenting until you see something that hits. I think that's probably the ultimate lesson of new power.  It isn't something you do once a year. It's a practice that people need to learn and get good at.

In fact, you can think about the Lean Startup movement itself as an amazingly effective exercise in new power. Leaders all around the world have grabbed the central frame, made it stronger and stepped up to organize, create and collaborate. They aren’t waiting for permission. They all now connect with one-another in dynamic and productive ways, but without a top-down old power mentality. Ultimately, Lean Startup is a community. 


How do those two aspects--the practical and the cultural--play out in the business world?

We think a lot about how many of the most powerful businesses we see now have new power models but revert to old power values. Uber's a great example; it has this amazing new power model with terrific execution. But they really resorted to old power values: secretive, very leader-driven, and very transactional in lots of ways and it, obviously, ended up costing Travis Kalanick his job.

Contrast that with a company like Lyft which is trying, with some success, to actually create a business that has both a new power model and new power values. New power values are much more about empowering the crowd, about more transparency and collaboration, and engaging with the wider world. For two companies who essentially offer the same service, there is a real return available around culture and values. When Uber and Lyft were in a recent price war, at the same time that Uber was seeing its drivers organize pickets against it around the country, Lyft, essentially, responded by organizing picnics. They're really trying to build enthusiasm and community amongst their drivers. It will be interesting to see where they go with this.

Facebook offers another example of a new power model with old power values. And the price of that is becoming clear. It's very much about centralizing value, it's very much about Facebook deciding what's good for the world and not the users. It's very opaque in terms of how it's governed and how the algorithms work. For businesses, we think the opportunity is for organizations to build a culture that is based on more than the efficiency of their algorithms, and fosters the human connection they have with people in their network.


What’s your opening advice for someone who’s in an old power organization and wants to start making change?
 

I think the biggest shift is not about technology, but actually about professional identity. It's about whether you are, in a committed and strategic way, really prepared to think about how you can engage more people more meaningfully in your work. For generations, the only real ask we had of our communities is "do what you're supposed to do" or "buy my product." That was kind of how the world worked. What's so interesting now is those businesses who are doing well are those who are offering more interesting routes to participation – far beyond “just consume”. Airbnb is a great example of that. They have worked out how to get their crowd to be their hosts, they've worked out how to get their crowd to fight their regulatory battles for them, they've worked out how to get their crowd to essentially be their advertising machine. Our argument is that for every business, every organization, every political activity, mobilization is now the key activity if you want to get ahead. The book offers the playbook for the new power world.

Friday, March 16, 2018

Lean Impact : Innovating for Social Good







Ann Mei Chang is the Executive Director of Lean Impact, the social good division of the Lean Startup Company. This fall, her book based her own experiences using lean approaches to innovate in the social sector, including during her time at USAID, as well as stories from nonprofits, social enterprises, companies, government agencies, foundations, and philanthropists all over the world, will be published. Lean Impact: How to Innovate for Radically Greater Social Good is going to be an amazing resource for so many people from innovators to funders and everyone in between. Ann Mei recently talked with me about the book, some of the structural problems that impede social innovation, how lean approaches are leading to better solutions, and how she came to Lean Impact. It was incredibly energizing!




Let’s talk about what the idea of lean impact is and how you came to it. It’s such an inspiring story of taking skills from one sector to another for social good.


I spent most of my career in Silicon Valley in the tech industry, about 23 years. Then about seven years ago, I decided to make a pivot to spend the second half of my career in the public or social sector, particularly focused on global poverty. I ended up doing a fellowship at the State Department, then I worked at a non-profit called Mercy Corps. After that, I served at USAID as the Chief Innovation Officer and the Executive Director for the U.S. Global Development Lab. It was really a dream job. Our charter was to identify breakthrough innovations that could really bend the curve of progress and also transform the way we the practice of global development itself. We worked on issues around global health, around economic development, around democracy and governance, around agriculture and access to energy--across the board and around the world. I became really inspired at the possibilities of taking some of the best practices for innovation that I learned throughout my career in Silicon Valley and applying them to solving some of the worlds' toughest problems.



What are some of the biggest issues with the way projects happen in the social sector that prevents those problems from being attacked in an effective way?


The traditional approach to global development, and much of the social sector, is to run fairly large size programs that are usually designed in detail upfront, then executed accordingly - something I call an enforced waterfall model. It’s very risk-averse. A foundation or government agency puts out an RFP, and non-profits or contractors then submit a detailed proposal. Then once an award is given, the grantee is expected to spend the next three to five years dutifully implementing on the program as designed.


There's very little room for experimentation, for risk taking, for iteration. You have to stick to the letter of the proposal. That's not a great way to innovate. At the Global Development Lab we were pioneering some different ways to tackle problems, to structure our funding so that we could give out smaller grants for people to experiment, give them a lot more flexibility to do so, and then give them increased grants based on their successes. This happened both through development innovation ventures--we called these DIV--which was an open innovation window where we took ideas from anywhere and across sectors, and also through our grand challenges, which we called directed innovation. Those would focus on specific problems where we felt like the solutions we had were insufficient and we were seeking to tap into the worlds' greatest minds to come up with better solutions that could move the needle.



You’ve now spent the last year writing a book about all of this, also called Lean Impact. Can you talk a little about why you wanted to do it in that format and about the process?


When I left USAID, I wanted to continue to take the things I’d done there forward, and a book seemed like the right way to do it. I think a book is a really helpful reference point that anyone can access, whereas only a limited number of people can make it to any individual conference or presentation. We’re also doing events and conferences, either in conjunction with the lean startup community or potentially some independent ones as well, along with workshops and consulting services, all with a nonprofit mindset of looking at how we can help the social sector as a whole become more innovative.

A book is a way to capture all the ideas in one place that can serve as a foundation. The intent of the book is to lay out how we can adapt the same approaches that we've seen lean startup bring to accelerating innovation in business to solving some of the world’s greatest problems.  Yet, innovation is far more challenging in the social sector, and doesn’t always easily translate. Lean Impact addresses these unique barriers head on, and shares compelling examples from different organizations who have overcome them. I talked to over 200 organizations in the course of my research for the book, and it’s been really inspiring to hear their stories of how they managed to innovate in the work that they do.



Were there any universal challenges among all the stories?


Absolutely. One of the biggest ones is funding. Startup companies are typically funded by venture capitalist or angel funding that is fairly flexible; you can experiment, you can take risks, and it’s expected, in a sense, when you're a startup company.


For organizations in the social sector, the funding that you get from government agencies, from philanthropists, and from foundations is often fairly restricted and fairly risk averse, as I was saying. It's a real challenge and this is the most common concern that I heard from the people I've spoken with. They wanted to innovate, they wanted to experiment, they wanted to take risks. But the way that they were funded, they felt like their hands were tied behind their back and they didn't have a lot of room to do it. That's one of the things that the book really focuses on: how to make the room, how to be able to do this type of work within the constraints that organizations often have.



Are there some solutions you’ve seen work even for organizations that are in the early stages of adopting lean methods?


I do think there are a lot of things organizations can do, even in the current landscape. It does involve taking some risk. One tactic is that some of the best organizations I spoke with have actually turned down grants that are too restrictive or poorly aligned. It's something that people are often hesitant to do, because they are trying to keep the doors open and they're trying to grow. It's very tempting to take money when it's offered to you. But some of the most successful organizations I know of were picky. They made the difficult choice to turn down money that was offered to them because it didn't allow them to move forward on the things that they thought would be most effective. They took a gamble that they could find other money that would be more flexible and many have. Sometimes it's just making that tough choice and really being patient to find the right kind of funding.


The other problem I would say is that because of how the social sector is structured, we often have a mindset that everything needs to be done fairly big. We create these proposals, we run these big programs. Innovation in general and particularly with lean approaches, should start small. Experimentation isn't something that takes a lot of money. That’s more of a mindset shift: even if we don't have a lot of flexibility, we should take what flexibility we have and for example, just get out of the building. Go talk to your customers. Spending a day doing that can glean enormous insights, even if you're not able to completely transform the way you work. Injecting what you can by running a few small experiments or talking to customers can make a big difference.



What would you say to people who might say that starting small is a little pointless when facing such huge problems?


There's this great graph that the World Bank put out in a report a few years back that really shows the progress that we've made on some traditional poverty alleviation intervention, such as clean water, access to electricity, access to education, and so forth. What we've seen is very slow but steady progress. But if you overlay that with the trajectory of adoption of mobile phones, for example, you see a completely different curve where there's an acceleration of adoption that rapidly eclipses all of those traditional problems. Mobile phones were this new innovation that people wanted, that solved real problems for them, and that had a business model that enabled rapid scaling.


I think it's absolutely possible to bend the curve of progress when it comes to global poverty. What it means is rather than brute forcing our way there--by taking the tried and true things we've been doing for decades and needing another dollar to reach another person--we need to step back and look at how can we find more effective interventions that get us greater bang for buck. We need solutions that people really want and embrace and we need to look at different ways we might go about solving some of these problems and finding one that has the capacity to reach much greater scale and impact in what we are doing today. That’s exactly what small experiments are for.



Who can make that happen? Is it up to funders? Or the people getting the grant money?


I'd love to see funders take a different stance in terms of how they give out grants and the kind of flexibility they offer, to really shift the way they fund to better support innovation in the industry. But I think grantees can help with that shift. One of the things that I've been a big advocate for is building in an innovation window when you apply for a grant. It may very well be the case that your funders out there are going to fund a certain way, so you need to write a proposal to access that funding. But you can include in that proposal, say, a 5% innovation window, where you say I'm going to use 5% of those funds to experiment in order to try to figure out how I can make the other 95% far more cost effective or impactful or scalable. It's a very good use of money. When you show that experimentation does really yield results, then hopefully the funder might consider even larger windows in the future. It's not necessarily what funders are thinking, but by taking some of that risk, I think the reward can be really outsized in terms of what they can deliver in the long run.



It’s pretty clear these issues really need to be addressed from a lot of different angles at once. Can you talk about how lean impact fits into that?


In the social sector, it takes a whole ecosystem to get projects done. In business, the individual business can do a lot on their own: You create a great product, you can go out and there's infrastructure to market that product, to take payments for the product, to be able to distribute the product and so forth. In the social sector, one non-profit, one social enterprise often can't solve the problem completely on their own. They need to work with donors, other partners, government policy, distributors, missing infrastructure. Just getting payments or getting distribution for products can be a big challenge. It ends up being a much more complicated problem that involves bringing together multiple players, multiple stakeholders that can really tackle the problem from different angles. So this concept of lean impact is for all of those stakeholders as well as the philanthropists, foundations, or government agencies distributing foreign aid. It can also be for individuals who are looking at how they can most effectively volunteer their time or make donations of their money to be able to create social change in the areas that they care about.



What stage would you say social sector innovation is in, overall? And what’s needed, besides just spreading the word and the methods, to help it grow?


Innovation has become probably the most overused buzzword in the English language. In the social sector, there has been a lot of interest because people are seeing the kinds of results that innovation is having in business, and they see an opportunity to make better, faster progress on intractable social issues. However, in many cases, I think there has been a misunderstanding of innovation--which has resulted in lots of new ideas being generated for social good, but very few of those ideas are reaching significant impact at significant scale.


One of my favorite quotes is from Thomas Edison, who said that genius is 1% inspiration, and 99% perspiration. That inspiration is the invention, the new idea, which we absolutely need to get started. Lean impact is about that 99%, which is the blood, sweat and tears that goes into the constant testing, iteration, experimentation and feedback loops that take a germ of a great idea, and turn it into a solution that really can reach massive impact at scale. Ultimately the reason to become more innovative is to become more effective, and make a bigger difference more quickly for more people.


To learn more about Lean Impact, go to leanimpact.org



Tuesday, January 30, 2018

What Top Performers at Startups and Large Organizations Have in Common…More Than You Would Think


While doing research for his extraordinary new book, Great at Work, Morten Hansen studied more than 5,000 managers and employees in corporate America to identify the key practices that explain why some perform better than others. What he and his research team discovered is that seven key practices explain a whopping 66% of the difference in performance among people in the sample. 

I was really curious to learn more about his research and findings, but also how these practices apply to working in startups. Both kinds of organizations are experiencing high degrees of uncertainty, and I’ve found they can be more similar than people expect (though there are clear differences when it comes to scale and building new things vs transforming existing structures or processes). We talked about what being “great at work” means in both contexts.

Q: Startups are inherently unstable. Can you explain how the principles that make people successful in more traditional, less volatile work environments can also work for startups? Are there common factors?

A: Startups are clearly different from established companies, yet there are also similarities. Many established companies today are experiencing unprecedented levels of instability in their business models, brought on by technological disruption and, yes, those startups chasing their markets. We found that the best performing people in established companies are constantly innovating in their work. They look for ways to redesign their jobs to add more value, and they keep on learning new things. That means that they experiment and pivot from time to time, just like startups. For example, there’s a high school principal in my book who was leading a severely under-performing school in Detroit where 80% of students were on food stamps. He started experimenting with new ways of teaching which led his school to be the first in the entire United States to flip the classroom for the entire school—homework at school, lectures at home via video clips. Essentially, he applied the “startup way” inside a school. He had a very tight budget, not unlike a startup, and started out by using A/B testing his hypothesis around flipping with a minimal viable approach (using some basic videos and teaching plans) to see how it would work in two social studies courses. The rest is chronicled in the book, but we find these kinds of innovators and learners throughout the corporate world. We just need to give them tools, frameworks, and right encouragement.

Q: In your research, you found that top performers at big companies had two critical skills: they knew how to set a short list of priorities and also how to protect them by being really good at saying no to anything that didn’t align with those priorities—including their bosses. What happens when people at both large organizations, and startups, don’t follow your principle: “Do less, then obsess”?

A: In my experience, startup teams do obsess—they go all in on their startup and fully commit to their work. Their problem maybe the opposite which is too much hyper focus. I recently spoke with a founder of an online education marketplace. He had a laser-like focus on his key for-profit segment, but then some high-profile people approached him to extend this to a non-profit area. Flattered by their attention, he re-allocated resources to that new effort, only to encounter problems in the core area. After a while, he realized that he had prematurely branched out and had to re-focus the effort. It’s a real concern given startups have very, very limited resources. Doing less—and sticking to that narrow scope—is key, yet the temptations to prematurely expand to new customer groups, new features, new products and services, and new geographies is very strong. It requires real discipline to master this principle in a startup environment when little is known and resources are scarce.

In larger, established companies my data show the situation is the opposite and often worse. A lot of people working in innovation encounter the problems of both lack of focus and lack of obsession. Many people in our data reported work environments where people “do more, then stress”. They take on many priorities—for example, working on 3 product development projects simultaneously—and then work hard to accomplish all of them, which means they cannot go all in and obsess over a few things.

“Do more” types fall into two traps: they spread themselves too thin, which leads to them to miss deadlines and deliver lower-quality work. They also fall into the complexity traps: they spend time coordinating and juggling multiple activities. Things get dropped, and error rates go up. Many cope by working long hours and stressing to just keep all these activities afloat. It can work to some extent, but it doesn’t produce excellent work. It certainly isn’t being great at work.

Q: We tend to think of people who succeed at their jobs or in launching a startup as people who are passionate about what they do. Is passion a prerequisite to being a top performer?

A: I initially thought that people who do very well did so because they “followed their passion.” That idea has become cliched, it’s repeated so often. The problem is this: What it really implies is that passion should dictate what you choose to do, regardless of other considerations (the assumption being that it will all work out in the end). Ignoring your passion, doesn’t sound like such good advice, either, as it may just lead to a life of drudgery.

We discovered a solution to this conundrum. Top performers found a third way: they matched their passion with purpose. Passion is do what you love; purpose is do what contributes. Passion asks, what can the world give me (a hedonistic view). Purpose asks, what can you give to the world (an other-orientation). I call this “P-squared”: People who infused their work with both passion and purpose performed much better in our data set than people who had just passion, or just purpose, or neither. They placed in the 80th percentile in the performance ranking on average, while people with only passion (but no purpose) placed in the 20th percentile, and people with purpose (but not passion) placed in the 64th percentile (note that purpose more than passion correlated with high performance).



Having passion and purpose in one’s job is important because when you inspire yourself first, it’s easier to inspire others. In today’s workplaces, whether in large companies or startups, you need to get others excited about your initiatives and projects—you can’t just rely on the old style “command and control.” We found that the top performers were really good at inspiring others, surprisingly not through charisma but through other easily adopted techniques to evoke emotions in others (both positive and negative). For example, by “showing and not telling.” One purchasing supervisor we spoke to was charged with the thankless tasks of converting paper to electronic forms in the company, and no one was excited to support him. Then he learned that the CEO would be visiting his office building for a meeting, and he arranged to use the adjacent conference room. He grabbed the CEO in a break and guided him into his room, where he had displayed a mountain of paper on a giant conference table. “Holy cow, what is this?”, the CEO asked excitedly (and not in a good way!) to which he responded, “this is all the paper forms we use in this company.” His project got the support it needed.

If you’re a founder or working in a startup or thinking about forming or joining one, think about this. Don’t just follow your passion in deciding which startup and which role. Try to formulate how you can take your unique strengths and find ways to contribute to the world. What’s your personal purpose statement? We found that a very strong purpose orientation has three components: what value do you create for others—customers, co-workers, company? Is that value meaningful to you personally? And does that value provide societal benefits beyond sales and profits? Then apply this to the startup itself: What value does the company create—and for whom—and is this formidable value creation? How many of the employees find that value proposition personally meaningful? What societal benefits does the company bring, beyond generating its sales and profits and selling stuff to customers (selling advertising or selling an app to a corporate customer does not necessarily provide societal benefits).

Q: So how can people working in both startups and corporate jobs determine if they’re creating that kind of value and those benefits for the people who they work with?

A: They need to pursue different, better metrics. We discovered in our research that people in established companies oftentimes pursue the wrong metrics. They emphasize volumes of activities or internal goals, over value-creating metrics. For example, one logistics manager in a high-tech industrial company tracked the extent to which their industrial products left the warehouse on time, achieving an impressive 99% on-time shipment rate. The problem was, the customers complained that only 65% of the shipments arrived when they needed them. The 99% metric was an internal goal, whereas the 65% metric measured customer value. You need to measure value-metrics and not internal “volume” metrics.

I suspect that many startups also don’t do this. A few months ago, I spoke to the CIO of a large company that is one of the largest paying customers of Slack software. She reported that they tracked very high usage of the software. When I asked whether they had seen higher productivity as a result of Slack or tracked that, she said they had no idea and that it wasn’t clear. Then I asked them to ask Slack whether they tracked such measures of their clients, and so they did and got a negative response. That’s no surprise. When I read about Slack in the news, I come across two typical metrics: the number of users and user engagement (hours of use per day). But those are volume metrics: the fact that a group of engineers in a client company uses Slack extensively during the day doesn’t mean that they are doing better work (that’s like saying that meetings using video-conference tools are good meetings). This is not to single out Slack, which is a terrific company, but to make a general point. Startups also need value-creating metrics: what value do we create for our customers, really? And how can we modify our work and offerings to increase value?

For that logistic person shipping goods, that meant re-organizing the schedule to get better delivery time for customers (value metric: % of shipments arriving when customers needed them). For Slack and many others like that, the real measure of value is the improved results by the customers like the one I interacted with (higher engineering productivity, speed of product development etc). Yes, those are harder to measure, but they are the real measure of value.

Q: Your concept of the “learning loop” draws on the build-measure-learn cycle that is one of the pillars of The Lean Startup and The Startup Way. What does it look like for people who set themselves apart from their colleagues?

A: One of the great virtues with The Lean Startup and The Startup Way methods is the focus on learning empirically, for example by doing A/B testing on MVPs, learning from those, and pivoting if necessary. We found in our research that the best performers apply a similar “learning loop.” They try out a new way of working (say leading a meeting), then get some measurements and feedback (say, feedback on meeting effectiveness), then modify their behaviors, and then repeat. It was also striking to discover how few people do this while working. Many people become competent at a professional skill, then they stop improving—good enough is good enough, it seems. This paucity means that startups and other companies pursuing the lean method in innovation have a huge advantage over others who are not learning at the same rate. Moreover, we discovered that the learning loop method really works not just for idea development but also for most “soft” professional skills, like running a meeting, prioritizing, doing a sales pitch, and so on. Everyone can apply this to managerial and professional skill development. For example, if you’re a sales person in a startup: do you apply such a learning loop to your sales pitch? Do you A/B test it and modify it constantly to become better? Those who did in our dataset improved faster and outperformed the rest. Continuous learning and growth are important in any work environment.

Morten Hansen’s new book GREAT AT WORK is on sale today and available at bookstores everywhere.

Thursday, December 14, 2017

7 Highlights from Lean Startup Week

Guest Post by Misti Yang, Writer for Lean Startup Co.

Editor’s Note: We wrapped up the 2017 Lean Startup Week in San Francisco just a few weeks ago, and we’re excited to share with you some of the best lessons learned in entrepreneurship and corporate innovation. Expect to read a new story each week straight from our keynote and breakout stages.

In an interview with GE’s Culture Transformation Leader Janice Semper during Lean Startup Week, Eric Ries remarked, “Listen, that's our specialty here. We try to talk to real practitioners about actual, real issues.” And the effort was reflected by the 140 speakers and mentors who took the stage and ran workshops over the course of the seven-day conference. We'll share the lessons we learned from these inspired leaders over the next few months, and give you a taste with these seven highlights from Lean Startup Week.

LESSON #1: Equip your business with a portfolio map and a 21st century org chart.


With industries from banking to transportation being transformed and, in some instances, undermined by new business models and technology, executives are smart to wonder, “Are we next?” To confidently answer no, co-founder of Strategyzer Alex Osterwalder told our attendees, “What you really want to do is work more like Amazon. … The reason Amazon [is invincible] is because they've put a system in place that allows them to continuously innovate.”

To do the same, Alex recommends building two things: a business portfolio map that recognizes invention as necessary and an updated organization chart. “You need a pipeline of tested and validated ideas,” Alex said. The pipeline starts by dividing your business into two distinct functions: innovation and execution. The innovation motto is “Fail fast.” The execution motto: “Failure is not an option.” The innovation function is dedicated to iterative search through experimentation. The execution function is dedicated to the day-to-day business.



To successfully support experimentation, Alex explained you must also create an org chart that mirrors the roles overseeing execution. For example, if a chief executive officer manages the daily operation, a chief entrepreneur heads up innovation efforts. “And the chief entrepreneur has a staff of chief portfolio manager, chief venture capitalist, and chief risk officer, right? Because these Lean Startup people, they do crazy stuff,” Alex joked. “So that gives us two different management structures for these two different portfolios.” Two particularly important roles include the chief venture capitalist, because the investment philosophy for invention is different than traditional finance, and the chief internal ambassador “who connects the two [functions] and builds bridges.”

LESSON #2: Forget innovation. Remember your customers, culture, and connections.


ING Group is an exemplar of supporting continual improvement, so it may be surprising that their Chief Innovation Officer Ignacio Julia Vilar told the Lean Startup crowd that “innovation” is “a little bit [of] a buzzword.” So, ING has redefined the I word. “And to be honest,” Ignacio shared, “the first thing that we said is what it's not about. And innovation is really not about gadgets.” Instead, ING has adopted a company-wide focus on three Cs: customers, culture, and connection. It’s “creating something really useful for the customer that is solving the need of the customer.” And to do this, ING has had to create the right culture and sometimes connect with outside fintech companies.

To support the three Cs, ING has also developed their own iterative practice named PACE. Describing the development of this methodology, Ignacio explained, “We just sat down together and said, ‘Well, let's look at what we're doing. … Let's see what works well, what doesn't work well for us, for our organization, for our culture.’ We tried to define the best for us, and then we started practicing.” The result is a combination of design thinking, Lean Startup, and Agile Scrum, and Ignacio’s innovation team includes 25 coaches who train employees in PACE best practices. To “embed this in the organization,” the company has created PACE Everyday, “a simplified version…to force our organization to always start with what is a problem that we are trying to solve and to test it and to test it in a real way.”

LESSON #3: Avoid these three hiring mistakes.


When it comes time to grow your team, Jeff Jordan and Eric pointed out three hiring mistakes to avoid.

First, do not hire someone just because they have the domain expertise. You want to be sure that they can work with the resources you can provide in terms of staff size and budgets. In other words, be sure they are ready to work at a startup. Jeff elaborated, “You want to tee [your hires] to the state of the company.” For example, don’t court public-ready CFOs when your financials aren’t even on QuickBooks yet.

Second, don’t simply hire your buddies. “You’re kind of looking for founders,” not friends, remarked Jeff. “If you know the true story of any [startup], the early employees are every bit as entrepreneurial, every bit as dedicated … as the true founder,” Eric seconded.

Lastly, question any hiring decision based on “culture fit” alone. While Jeff and Eric agreed that company culture can be powerful and effective, it can also result in a homogeneous company with unexplored opportunities and weaknesses. Eric recounted, “I was just in an interview where someone was saying, ‘I don’t want to hire this person. They’re qualified. I liked all their answers, but my Spidey-sense is tingling. I didn’t feel like they’re a fit around here.’ The human brain is really good at producing intuitive leaps, but we know from the research that those leaps can be biased by irrelevant characteristics. Whenever you hear, ‘They’re not a fit,’ you have to look really carefully.”

LESSON #4: Get creative with your MVPs.


In an interview with Eric reflecting on their work together at GE, Viv Goldstein and Janice Semper, co-founders of GE’s FastWorks, demonstrated that even a hundred billion dollar company can learn from creative, low-cost MVPs. When the CEO of GE’s Sustainable Healthcare Solutions business in India called Viv one day and said, “We've got a problem selling our neonatal incubator,” Viv explained: “We started by asking what is the customer problem we're trying to solve for? What is the impact that our customers need? And what are some of the challenges they're facing with the product right now? Not, ‘what's the technology?’ In GE, technology used to be our lead, and instead we reframed that and started with the customer.” The team discovered that medical professionals in rural clinics in India needed a more suitable and convenient way to place the babies in the incubator, and needed incubators that could hold multiple babies while still providing the right amount of heat and light to each baby and withstand the one type of disinfectant clinics could afford. The first MVP was “a shoebox and a doll.”
When confronted with a “safety valve hydraulic thing,” Eric remembered that “all the conversation in the room was about the technology of hydraulics.” But, “the ultimate MVP they had involved sending a team member to go sit on the rig … to find out what the actual safety problems were.” What did the rig-sitter find? The problem “had nothing to do with hydraulics and everything to do with 29 kinds of human error.”
And, in response to employees’ desire for more continuous feedback from their manager and peers, a GE team had built a simple MVP for enabling real time 360 feedback; but when they tested the tool, they found that absolutely nobody used it. “What we discovered is that it had absolutely nothing to do with the tool,” Janice shared. Instead, employees “were like, ‘Well, I don't know how to give my peer feedback. I've never done that before. I can't really give my manager feedback. How is he or she going to take that?’” The team learned that they didn’t need to build a better product. It “was much more [about] training around the behavior.”

LESSON #5: Build-measure-learn with an innovation thesis.


According to Tendayi Viki, 54 percent of companies struggle to bridge the gap between innovation strategy and business strategy. He suggested starting by adopting a build-measure-learn loop for your innovation strategy. Here is the step-by step process that he outlined in his presentation:

First, sit down with your team and develop a point of view on where the world is going. Ask “what are the trends that are impacting our business? And what are the things that are coming up in the future that we think we need to respond to? What products in our portfolio are declining that we need to fix?”

Then, decide how you will use innovation to respond to these challenges; this is your innovation thesis. Tendayi explained, “It's actually based on the venture capital notion of investment thesis. If you're a venture capitalist, the whole time you're getting pitched a lot of ideas by a thousand people. You can't invest in everything, so you have to make a decision about the kind of things you invest in and the kind of things you don't invest in.”

Once you have a thesis, every project you support becomes an experiment testing it, and you should review it on a quarterly or biannual basis and change it as needed. This approach also structures your budget decisions. “Not a single dollar moves from the company's bank account into some project except when it’s a specific expression of [your] strategic intentions. There's no let's-see-what-happens dollar. Every dollar moves as an expression of [your] strategic intentions.”

LESSON #6: Fall in love with your problems, not your solutions.


“I always thought, ‘How are we going to affect this organization whose heritage is world-class innovation?’ reflected David Kidder during his interview of Procter & Gamble CTO Kathy Fish. Reflecting on how Lean Startup methodologies have changed P&G, Kathy shared that “when you fall in love with the problem and not the solution it opens your mind up in a really different way. So we would typically fall in love with the solution, which would always be a product … As you fall in love with the problem, you start seeing business model opportunities; you start seeing marketing and education opportunities in addition to product opportunities, and it's just much, much richer.”

Focusing on the problem first has also proven cost-effective. Before working with Lean experimentation, the company was “spending a lot of money sometimes before we really should have,” Kathy said. “We've now shifted to a more metered funding approach . . . And we're finding on some of our biggest programs that we're learning faster; we're getting to the consumer a lot faster; and we're spending 25 to 50 percent less money along the journey. It's amazing.”

LESSON #7: Create peak moments.


While Kathy encouraged companies to embrace their problems, co-author of The Power of Moments Chip Heath asked the Lean Startup crowd to create peak moments, or moments that evoke an emotional response. To illustrate his point he told the story of the second highest rated hotel in Los Angeles on TripAdvisor, the Magic Castle. Number three is the Four Seasons. The Magic Castle’s secret is not their shoddy bathrooms, but their butler popsicle service, free candy at the front desk, and free laundry—peak moments.

In Chip’s “toolkit for creating a happy face” are four elements. The first one is elevation. “Elevated experiences are experiences that bring us up in sensory experience to something that rises above the day-to-day.” Chip’s examples included fireworks, sunsets, and cupcakes. The second element is insight. Chip shared the story of the executive who displayed the 424 kinds of gloves his company was buying to help his senior leadership team realize they had a procurement problem.

The third peak element is pride, and finally, there is connection. John Deere redesigned their employee orientation day to achieve both. The welcoming process starts with a personal text before your first day and includes a welcome email from the CEO letting you know that “on your desk is a model of the very first patented plow that John Deere manufactured" 175 years ago. “There is not better leverage than an employee orientation day at John Deere,” Chip said. He advised creating peak moments when you are bringing people onto a team, when you need alignment on direction, when you need people to get along, and when you need to show people how to act.

From startup hiring to enterprise alignment, Lean Startup Week offered learnings for a wide range of entrepreneurial thinkers, but as Eric noted in his opening remarks, one theme was clear: “We have to be thinking about how do we sustain our innovation into the next, and the next, and the next generation. In order to do that … we need to adopt the idea of the startup as an atomic unit of work.” We need to keep learning from the startup way.

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This was originally published on Lean Startup Co.'s blog.