WHAT IS LEAN STARTUP
WHAT IS LEAN STARTUP OR LEAN INNOVATION AND WHAT IS ITS PURPOSE?
Lean Startup™ is a term coined (and trademarked) by Eric Ries — or more generally Lean Innovation — that refers to a framework that describes how to eliminate waste in the discovery and creation of new value.
Lean Innovation is a set of prinicples which companies of all sizes adopt in order to eliminate waste, time, resources and creativity in the discovery of new value. These principles increase the speed and agility of organizations facing uncertainty in the market, opening new business opportunities through customer empathy, rapid experimentation and evidence-based decision-making.
Employees will begin to feel confident to take measured risks when they know failure is viewed as a good thing, in other words, just another step in the learning process. Iteratively deepening their understanding of customers, rapidly experimenting within establishing guidelines, focusing on actionable data, and learning how to share evidence, both data and insights, instill that confidence in employees.
HOW DOES LEAN INNOVATION FIT WITHIN MY EXISTING PRODUCT STRATEGY?
Organizations that have a history of successful innovation don’t deploy one method; they use a varied approach: R&D labs, internal incubators, M&A, and creating innovation cultures. Lean innovation affects each of these. The biggest difference between old school and new school methods is in how to invest resources, measure progress and scale success.
- The R&D labs of large enterprises and universities succeed in creating new technology, but a fairly poor record in bringing these innovations to market. Lean Innovation provides a framework for discovering profitable business models based on application of the innovation.
- Incubators (e.g. Horizon 3 ideas) often discover promising new ideas, but are measured based on ROI and thereby killed prematurely. Lean Innovation accounting provides a way to measure idea progress and focus on what moves the needle, thereby maximizing the potential for success.
- M&A will continue to be a cornerstone of enterprise innovation, but how do you know the acquisition target will be a good fit? That the culture will successfully be absorbed. Lean Innovation is a powerful way to test acquisitions as part of due diligence. Further, lean innovation helps reduce post-acquisition employee churn.
- Ultimately, it’s our belief established organizations will have to transform culture to work in a new way, based upon the massive economic and technological transformation happening across the globe. This is not done by simply teaching a select few new innovation principles, but rather by making innovation everyone’s job.
HOW SHOULD WE GET STARTED WITH LEAN STARTUP?
Challenges to “getting started” exist at all levels of the organization, from educating individual contributors, to enabling systems support, to leadership creating the right environment for innovation. But if you wait for all the stars to align before you get going, it will likely be too late. To get started, you have to simply start putting the lean startup principles into practice.
The best way to make immediate yet lasting change in your organization is to arrange a Lean Enterprise Accelerator Program Workshop.
We bring lean innovation to life, helping organizations make the leap from “theory” to “practice”. These workshops are fun, intense, inspirational, hands-on, “learn by doing” sessions. Moves the Needles starts with a Lean Startup overview, which explains origins of the principals, ”why lean, why now”, and relates challenges specific to enterprise application.
We quickly move into applying lean startup to real business issues through teaching and practicing customer empathy, rapid experimentation and data-informed decision making, and conclude by sharing best practices for bringing Lean Startup back to daily work.
MY INDUSTRY IS STABLE...
MY INDUSTRY IS STABLE; WHY DO I NEED TO WORRY ABOUT THIS?
The time from stable to scrap heap is at the shortest in history for Fortune 500 enterprises.
Competition is coming not just from your current customers, but from startups, established businesses not currently in your market, and businesses from anywhere in the world. Customer-focus, being data-smart and the ability to think and move quickly are becoming required characteristics for big companies to keep pace in today’s digitized, global economy.
WE NEED TO MOVE QUICKLY
I HAVE A HUGE R&D GROUP. I’M NOT WORRIED ABOUT INNOVATION; WE NEED TO BE ABLE TO MOVE MORE QUICKLY.
Congratulations for recognizing the ‘need for speed’!
These days uncertainty faces us on both ends of the innovation spectrum, from sustaining to breakthrough. It is the Lean process that allows teams to think on their feet, make evidence-based decisions, and create more value for new and existing customers. Lean Startup principles help organizations reduce uncertainty, increasing agility and competitiveness on the sustaining side, while building muscle that leads to breakthrough innovation, as well.
THE RIGHT MINDSET
THIS ISN’T A HOW-TO PROBLEM; IT’S A CHANGE-MINDSET PROBLEM. HOW DO I AFFECT CHANGE TO MAKE THIS PERMANENT?
You need to go at it through a combined top-down, bottom-up approach.
You cannot force a culture change, rather it must be organic and grow from within your company.
In order to do this, a company needs to change employees mindsets from skepticism to being open to new tactics.
Two key things are necessary: Empower Employees to make decisions, boldly experiment, and discover new value; and provide security, so that innovator’s know leaders will stand by them.
The shift of this mindset is a key focus on Move The Needle’s 3-day LEAP workshop and accelerator programs.
WE’RE NOT A STARTUP, WE CAN’T BEHAVE LIKE A STARTUP. GOT ANYTHING ELSE?
It’s true, you’re not a startup and advice that suggest you should turn your enterprise into a startup is bad advice. Full stop. Your organization became big and successful, because it executed better than the rest inside specific markets.
There are internal systems in place — legal, compliance, marketing, human resources — that serve to protect the core assets of the business.
But the world is changing fast.
See #3 above.
In order to move faster in existing markets and to open new markets, you need to change, too.
Those same internal systems also serve to help grow the business. Lean Startup practices help teams compete and innovate, but also show the internal functional organizations how to support innovation. So no, the business does not turn into a startup. But to survive, it must learn how take advantage of startup principles throughout the organization.
HOW TO MEASURE INNOVATION
HOW DO YOU MEASURE INNOVATION?
“Real” innovation is a long process.
Most successful startups we hear about are already 5-7 years in. Yet when we try and innovate in large enterprises, we’re immediately faced with the return on investment question: How much ROI will we get and when will we see it? These questions inevitably pull innovation back to incremental improvements to products in existing markets. Because that’s the only way we can accurately answer the ROI question!
To achieve “real” innovation we have to look elsewhere, at least at first. Yes, eventually we must answer the ROI question, but it’s best to put off that answer until we can prove the innovation will provide value in the marketplace.
Lean innovation shows us how to use startup-like metrics — user engagement, customer lifetime value, churn, etc — to prove value is being created, before we look at whether the idea has strategic value or enough potential to invest further.
This approach has many benefits, not the least of which is smaller upfront costs, and the greater potential for getting some amount of return via spin-out, selling or absorbing into the core business.
HOW DO I EMPOWER MY EMPLOYEES?
Acting with the mindset of a mentor will promote entrepreneurial behavior.
The role of a mentor is not criticize the idea of business model, rather teach others how to test and validate. Poking holes in new ideas is easy, but it doesn’t teach an employee the skills needed to learn whether an idea is good or not.
Mentors ask questions that lead to insight. They teach perseverance, promote bold activity and provide safety for that behavior.
Employees will begin to feel confident to take measured risks when they know failure is viewed as a good thing, in other words, just another step in the learning process.
Iteratively deepening their understanding of customers, rapidly experimenting within establishing guidelines, focusing on actionable data, and learning how to share evidence, both data and insights, instill that confidence in employees.
BEING A BOSS THAT PROMOTES INNOVATION
HOW CAN I BE A BOSS THAT PROMOTES INNOVATION?
Managers manage because much of their job is to execute pretty well-known processes in pretty well-known markets. Managing execution in the face of uncertainty, however, will likely result in failure. Managers need new skills to support innovation.
The key to being a boss that promotes innovation is to become a mentor, not just a manager. The core role of a manager is to control, direct and administer in the context of the ‘known’.
In contrast, mentors offer ideas, evaluate evidence and hold teams accountable to their learning; mentors educate, enable, and empower their employees.