Enterprise Lean Startup vs. Startup Lean Startup
Why is it so difficult for large enterprises to apply innovation techniques and practices? Those giant battleships should be able to squash any competitor in moments. Unfortunately, it is not that simple. These enterprises are successful because they execute incredibly well. They hire and reward employees for their ability to execute.
True innovation is about searching and learning, about converting guesses into facts. This search requires employees to possess a distinctly different skills and capabilities. They need to be open to the unknown, understand how to learn from failure quickly, and move extremely fast. Additionally, leaders and employees in the organization need to make decisions informed by customer data. Command and control simply does not work in this environment.
Many large organizations today are beginning to embrace the tenets of Lean Startup. In doing so they are learning that the ways in which you apply these techniques in a large organization are very different from the ways they are applied in a startup.
What is different about applying lean startup in the enterprise vs. a startup?
Legal / Branding – Existing enterprises incur significant risk by running experiments with their paying customers. There are existing legal policies in place, as well as the desire to keep from tarnishing the company brand. These facts require that leaders inside the organizations behave differently to be able to innovate effectively within these constraints.
To generate some initial data for these conversations, you will need to run some experiments without approval. Under the cover of night. You don’t need to gather much data, but just enough to influence your legal and branding teams. You’ll need to be able to show them that you can be faster and more effective if you were allowed to run small experiments with customers. The need to get approval from them EVERY time you run an experiment just won’t work.
What Intuit and other companies are doing is to create a set of experimentation guidelines. These guidelines basically give an upper boundary for the number of customers an innovation team an interact with. As long as the team stays within these guidelines the legal team will support their efforts. If the innovation team needs to go outside these boundaries then there is a streamlined approval process in place.
The end goal is to eventually help the legal & branding teams move from frequent “no” answers to frequent “yes” answers so the innovation teams can move ultra-fast.
Human Resources – Behaving like an intrapreneur requires skills that are different from those of a typical enterprise employee. We tend to hire employees for their existing knowledge, tools and processes. We hire them because they have significant domain knowledge that is valuable to the organization.
As you apply Lean Startup and the organization behaves more like a startup, you need to be able to search for a business model that will work. You need natural curiosity, lots of patience, passion and the ability to influence others (without the benefit of positional power).
The ways that you evaluate your employees will be different as well. They will need to be rewarded for taking risks, failing and continuing to move forward. As an organization you’ll also need to determine how you will reward successful new business launches. Will the intrapreneur get to move forward with their business idea or will they have to continue to work in their existing position?
The answers to these questions will be different for every organization. You’ll need to use your new customer empathy skills to determine how your intrapreneurs feel.
Leadership – Your employees are not the only people in the organization that will need to behave differently. This new way of working will significantly impact your leaders as well. Rather than making decisions about the product(s) and keeping the team moving, your leaders will wear the hat of a coach or mentor. They will help to set a product vision, clear the path for their team, ensure the team is running effective experiments and not overlooking key insights.
These new rules of engagement apply whether you are a functional team or a product team. Because they don’t need to focus on making mundane decisions anymore, the leader can now focus on growing the skills of their team members. The are freed up to focus on what is truly important.
Central Sales / Marketing – As your product teams embrace this new way of working, they will handle their own sales & marketing. Remember, they are trying to figure out what works and your existing sales & marketing teams are here to execute something that already works. This creates a clear tension between innovative teams and the teams that support them.
Understanding how to create effective partnerships and touch-points with these supporting teams will make or break your ability to get new products and services into the market quickly.
I’ve seen a few enterprises that have created “catch” teams in their sales & marketing organizations. These teams catch the incoming sales / marketing requests and determine whether the processes have been proven by the requesting team or not. If they have been proven then they can be treated one way, if they have not, then the catch team can help them understand how to search for a working model and even support the innovation team in doing so.
If your sales / marketing organizations keep getting new business ideas that don’t work, the lack of this mindset is likely to blame.
This is by no means an exhaustive list of differences you’ll encounter in the enterprise, but hopefully gets your wheels turning and saves you some time and heartache. Those of us that are implementing this across our enterprises are on the cutting edge and are literally writing history.
Keep the faith!