Guest post by Lisa Regan, writer for The Lean Startup Conference.
How can established companies benefit from implementing Lean Startup? To answer that question, we hosted a webcast conversation earlier this week with Eric
Ries, Brant Cooper, and Patrick Vlaskovits. We’d like to share a few highlights and invite you to join the
ongoing conversation by posing questions for Eric, Patrick, and Brant in the
comments to this post. They’ll jump in to answer in the coming days. (Of
course, you can also continue the conversation by attending The Lean Startup Conference. Our latest batch of discounted tickets is about to sell out, so
register today.)
A lot of people think the “startup” part of “Lean Startup”
means the ideas apply only in young companies. But, in fact, they can be
crucial in large, established companies that need to find growth in new
products and new markets. As Eric puts it in the webcast, “I’ve met now the
CEOs of some of the biggest companies in the world, and I still spend time with
the CEOs of high-growth Silicon Valley companies from the garage on up, and what all those
people have in common is that they are seeking out sources of sustainable
growth…. What we care about in the innovation community is growth that is
driven by customers and creating value for them. And we just so happen to think that the best
way to create sustainable growth in our highly disruptive world is through
continuous innovation…. And that challenge I have seen to be identical no
matter the size of the company.”
Patrick and Brant understand these problems intimately. They
are the co-authors of The Lean
Entrepreneur, and the co-founders of the Moves the Needle Group, which
advises the innovation practices of Fortune 100 companies. Their webcast conversation
with Eric began with a discussion of the ways that large companies come around
to realizing they need to implement Lean Startup. Among other themes they
covered: the conditions under which established companies implement Lean
Startup; the hindrances and incentives they face; what individual employees can
do to implement the methodology; and how to protect a company’s core business
from the potential impact of experimentation. Though we’re posting a few
highlights below, we encourage you to watch the video in its entirety, as Eric,
Patrick and Brant dig into technical details and case studies that will be
helpful for people engaged with this topic.
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The webcast conversation examined corporate versus
startup structure, and the limitations on innovation that corporations create
for themselves. Problems arise when companies isolate areas of the business in
what Eric refers to as “functional silos”—independently operating teams (design,
engineering, marketing, legal, etc.) that discretely address specific areas of
the production chain. Each silo may be innovative in itself, but at some point
it considers its work complete and hands off to the next silo, with which it
has had little to no collaboration and for whose tradeoffs it has not accounted.
What can Lean Startup do about this?
Eric: I’ve now worked with a number of companies
where once they adopt Lean Startup, it gives them a common vocabulary for all
the different teams to use the same vocabulary, the same business-oriented,
results set of concepts to wrap all these techniques in…. We knock the silos
down and get everybody on a single, cross-functional team to say to everybody,
look, you are a startup, you are not a set of different functions, so you,
team…go experiment and learn how to make this happen. When teams are organized
that way they’re so much more productive, so much more energized, the creativity
you unlock is incredible.
Brant: We’re still taught in MBA school is these
silos, right? And if people can just imagine, if the way we motivate people,
the way we do performance reviews, and incentivize people within silos—those
measures cannot be drawn in a direct line to corporate objectives. You cannot
draw a direct line to reducing waste or improving revenues or cutting costs…whereas
the cross-functional teams, you can tie it to a performance metric that has a
direct result in the corporate objectives.
Patrick, with a bit of
highly practical advice: One of the things Brant and I counsel large
organizations, particularly ones that have already embraced Agile, is to extend
the Agile metaphor into the funnel, for example, and show the benefit of Lean
Startup for the sales and marketing teams, and then show the benefits of Lean
Startup to the HR folks…. With sales and marketing experiments, often you pick
low-hanging fruit in the millions of dollars very, very quickly. We’ve seen
this time and time and time again, and that’s how you get other parts of the
organization and other functional roles excited about starting LS methods.
--
A variety of audience questions came in effectively asking
how an established company, with an existing product, customer, and brand
image, can make use of a minimum viable product (MVP) for experimentation
purposes without damaging the larger company’s standing.
Brant: The core
business has to be protected from the startup. We separate out these startups.
They need to exist in a different place for the time being, so that the startup
is protected from the questions around return on investment, and the core business
is protected from the startup…. So you’re not launching a minimum viable
product to all of your core business customers--that’s a no-no. You have to
keep these separate. And then the Lean Startup acts like a new startup. You
have to go find your own customers to experiment with, you have your own brand,
so you have to think like a Lean Startup.
You’ve got your validated learning with the customer development you’ve
been doing with your own market segment. But you’re not going to your core
business.
Patrick: The
startup “can’t run to the core
business and have all its problems solved for it. Because then you get
something like the children of helicopter parents, that can’t fend for
themselves. And ultimately if it’s a real innovation, that has real value and
creates real value for customers, it has to fend for itself. It has to be a
stand-alone business case that makes sense.
Eric, on making
lemonade out of an MVP lemon: The great thing about an MVP is that if
customers don’t like it, but they care enough to complain, that’s actually
great news. Most of the time when you do an MVP, no one even notices. Zero
customers show up. You have “launch day” and then nothing happens, because your
value proposition is so wrong that no one cares. So that doesn’t harm the brand. If people complain but you kept the
scale of the product small--and MVP is about containing the scope of the
experimentation so that the cost of failure is low--then you can make it right
for those customers that complain. Like, you can send them a hand-engraved
letter press apology. Every single one. Personally delivered to their house. By
you. If that ever happens.
--
So how do you start a Lean Startup practice where you
actually work? Patrick, Eric, and Brant all talked, in response to audience
questions, about the importance of individual actors within corporations
deciding to, as Patrick put it, “be subversive.”
Brant: Changing
the culture is what’s needed and it’s hard and it takes time. And so I think if
you’re a person inside of an organization that is ready for this type of stuff,
the first thing you should do is go find like-minded people, and that’s actually
how you start the process…. I’m not saying go do something that’s going to get
you in trouble, but you can’t wait for some magic to happen, for some external
force that says ok, now this company is prepared for Lean Startup culture. You
actually have to go and make the change yourself.
Patrick: Actually, let me go as far as to say you should go get in trouble, you should actually be subversive. I’m
half-joking here, but I think we’ve all seen this, that where Lean Startup has
managed to take root and flower is where initially you had some aggressive
early-adopters act a little subversively. If you have a mortgage and a family,
I’m not telling you to risk your career on adopting Lean Startup, but if you’re
passionate about making change, you can’t wait for permission to do this stuff,
you’ve got to start doing it and you’ve got to start doing it intelligently,
and part of that is hacking the actual internal political system. That’s very
difficult, obviously, but it’s part of that journey.
Eric: Think of all the managers who worked at Kodak,
or Nokia, or Blackberry--pick your favorite company that has had a total collapse
in living memory. And say, “How would it feel to be the manager who was there,
who saw the disruption coming and did nothing about it?” First of all, is that
actually a good path to having a
longterm career? If you have to feed a family and make your mortgage, and your
company collapses while you’re there, is that really going to help you? I feel
like it’s almost irresponsible to put your head down and say, “Whatever, I work
for a great institution, and I’m going to let it crumble under my
stewardship….” The future leaders of companies I think are going to be the
people who today started learning with these techniques, because what we’re
talking about here is nothing less than a full-scale paradigm change in the
management culture and management philosophy of modern companies. So would you
rather be an early adopter of that, or have someone else take that lead?
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Interested in more in-depth discussion of Lean Startup in
the enterprise? We invite you to check out the entire video, including a
fascinating conversation about why revenue is not a good growth metric. For even more insight, register today to join us at The Lean Startup Conference in December.
If you bring eight or more of your employee, we’ll give you a substantial break
on the price. For more info on the benefits of team registration, see our
post on fostering innovation in established companies. For pricing details
just email our executive producer Melissa
Tinitigan and use the subject header “group discount.”
