Why is it that so many companies—particularly large, established companies—consistently struggle to innovate? It’s not for lack of trying. And it’s not for lack of understanding the value of breakthrough innovation and its frequent predecessor, lean methodology.
We work with a lot of very large organizations, and I can tell you from experience that they know exactly how important this type of innovation can be to their bottom line.
But at the same time, they struggle to weave it into their culture.
From within an established company, it can seem almost impossible to push boundaries or take on risk. Despite plentiful resources, big businesses can be some of the slowest movers when it comes to bringing revolutionary—rather than evolutionary—products to market.
Because of this, large organizations often innovate via M&A strategies. But that approach comes with its fair share of baggage as well. We’ve seen big companies acquire entire organizations for 1 product, then struggle to deal with all the other products, people, accounting systems, etc. that came with the deal.
If only that large company could have filled the hole in their portfolio on their own.
This is a big part of the reason that over the past 5 years or so, we’ve heard a lot of talk about the lean startup model. This methodology
- Favors experimentation over detailed up-front planning
- Prioritizes customer feedback
- Upholds iterative design as a preferable alternative to big up-front investment in design and development
But where has it left us? I’m still talking with clients about pivots and MVPs on a weekly basis, but what lessons have we learned about this methodology? And how can we apply them to do this even better, particularly from within established organizations?
We at M3 Design are in a unique position in this conversation: We’re agile enough ourselves to have become quick experts in lean-startup methods. But at the same time, we’re not ignorant to the struggles of implementing these methodologies within large organizations that have to answer to Wall Street, because we work with such companies every day.
Now, this isn’t about experimenting for the sake of experimenting. We too are in favor of producing results—and of pulling the plug when an idea no longer has legs. But we’ve learned that certain aspects of the lean startup approach, when executed properly, are quite valuable.
So I’ve pulled together a quick refresher on the basics of lean methodology, all designed primarily for those working in larger companies. And I’ve collected 5 updated lessons we’ve learned in the trenches—lessons I think you can implement starting now.
The Not-so-Lean Status Quo
Let’s set the stage and get into role:
You work for a large organization. You’re tasked with pursuing breakthroughs in product development. But day-by-day, you find yourself increasingly frustrated with the roadblocks and hurdles you stumble into as you attempt to innovate in this environment.
If this is you, you’re not alone.
It’s easy to get frustrated in these situations, but the more you recognize the problem for what it is, the more effectively you’ll be able to tackle it. So let’s look at why this is happening.
Many traditional companies are actually designed to exploit existing business models with consistency and predictability. So all their methods and best practices are designed to do just this.
It’s no surprise, then, that when they take these very same methods and apply them to the discovery of new business models, products, and services, what was once tried-and-true quickly falls flat.
For business leaders who have been experimenting with different approaches to innovation for some time, this is old news. It’s not that large companies’ attempts at revolutionary innovation fail every time; of course, there are myriad success stories out there. But taken with the whole, they’re more the exception than the rule.
So the fact remains: most established companies consistently struggle when attempting something truly new. Sure, they are great at incremental changes: making something smaller, lighter, faster. But at some point, these product offerings suffer from the law of diminishing return. What will you do next? What else do your customers need…that you can be first to provide?
Meanwhile, the pace of change keeps increasing—faster every day, in fact. And with it, the pressure on business leaders continues to mount: find a way to innovate quickly and consistently, or become yesterday’s news.
The Beacon: Startups & their Lean Methodology.
For some years now, many large corporations have been keeping a close eye on the startup community, often attempting to adopt some of their nimble and innovative ways.
Steve Blank, a thought-leader in the world of entrepreneurship, defines a startup as “a temporary organization in search of a scalable and repeatable business model.”
In other words, startups aren’t just good at discovering new business models. It’s their entire reason for being.
So when the hurdles and snares of your large organization make the road to innovation ominous, the startup community can be a great beacon to steer by. Your path won’t be exactly like theirs—not by any stretch of the imagination. But you and your team can draw great inspiration from their methods.
Which brings us to the set of practices known as the lean startup model. A blend of the philosophies behind lean manufacturing and agile software development, lean methodology has officially moved into the mainstream of business thought leadership.
Over just the past few years, the lean startup approach has been so widely embraced that it’s now becoming an important part of many business schools’ curriculum.
But that doesn’t mean that large organizations are integrating it effectively—or consistently leveraging this approach to counterbalance their famously slow, cautious, and/or clunky innovation and product-development processes.
A Lean Foundation
The goal of a lean methodology is twofold:
- Decrease risk
- Boost efficiency
Sounds like a win-win.
Used in this context, the term “lean” was coined in the 1990s and dates back to a management philosophy primarily developed by Toyota in the mid 20th century. Its focus: eliminating waste—waste being anything that does not directly contribute to creating value for customers through execution.
Some examples of waste include
- Overproduction: building products and features that customers don’t want
- Inventory: raw materials, work-in-progress (WIP), or finished goods not currently used to deliver value to customers
Traditionally, a company with a proven business model would attempt to do this while executing on their existing model.
But when applied to startups, it’s a different story. Since a startup has no proven business model to execute on (in fact, as we’ve learned, it exists to discover a new business model), its goal is not to execute, but rather to learn.
So in a lean startup, anything that doesn’t contribute to useful learning about customers is a form of waste and must be eliminated.
Therein lies our foundational lesson: keep learning; keep improving; repeat.
Unlike the old, linear “waterfall” approach to product development, the lean startup model centers on constant and rapid iteration or continuous deployment.
Here’s a quick overview of the build-measure-learn cycle that’s central to this popular process:
- Develop a hypothesis about the customer problem and solution
- Build the lightest possible version of the solution (the minimum viable product or MVP)
- Test the MVP with real customers, measuring the results
- Repeat ad infinitum
…and continue repeating it throughout the life of the product.
With each iteration, you’ll refine the product and improve its market fit, always validating progress based on learning from customers.
Now listen up, all you big companies, because we’re arriving at a philosophical posture that flies in the face of most traditional management practices (you know, the kind designed for “business optimization”):
Even if customers thoroughly reject the problem/solution hypothesis, the team’s work is considered a great success if they uncover a validated learning that they can fold into the next iteration.
While that might be a big change in thinking for your company, you can still begin adopting this approach with your team today. Think of the following 5 lessons as your cheat sheet.
Lesson 1: Be Purposeful on Purpose
In The Art of the Start, Guy Kawasaki writes that “making meaning is the most powerful motivator there is.”
He’s right. At the end of the day, a sense of purpose is far more motivating than money or title. So take time up front to set the vision.
This vision doesn’t need to be complicated (in fact, it shouldn’t be). It doesn’t even need to be profound. But it does need to be clear and stated—something we often overlook or presume away.
When you clarify the purpose of your project, you align your team around a clearer, more powerful sense of meaning—one that will help you all overcome hurdles and drive toward success as you move forward together.
Lesson 2: Staff Up like a Startup
Now that you know what you’re aiming for, you can make better choices about who you want on board.
Start with a small, cross-functional team. And avoid staffing up until that team has validated the business model. Since we’re learning from startups here, it’s important to note that premature scaling is one of the primary reasons for their failure.
Sure, as part of a large organization, your company is more protected against this type of failure. But don’t let that give you a false sense of security. Treat your project like a startup of its own, and scale accordingly—i.e., scale smart.
An important note here: keep in mind that there is a “right time” time to pull the plug and abort the mission. You don’t want that to happen too early on, but if you’re headed down the wrong road, you certainly want to figure it out within a reasonable amount of time and prior to scale.
We often joke that people (or organizations) either have more money than sense, or more sense than money. Try to put yourself in the mentality of the latter.
Finally, when selecting your lean-mean team of champions, think balance: 1 part business smarts to 1 part technology expertise is a winning combination among successful startups, and your team will benefit from similar attribute ratios.
Lesson 3: Protect Your Team
As an outside product-development partner, we at M3 are inherently more protected from the “dangers” of attempting lean-minded innovation from within a traditional business environment. But your internal team is right in the thick of this battle.
What “dangers,” you ask? This lean startup model probably stands in stark contrast to the way the rest of the company is functioning. So you’ll probably deal with questions from the outside. Doubters. Naysayers.
And even if you work in some magical wonderland where everyone outside of your team cheers you on with colors flying, you’re still going to face obstacles that will never confront those following the Path of the Proven Model.
Within the walls of M3, our team gets to contribute “off-the-wall” ideas during a brainstorm, without judgment. But within a corporate setting, presenting an idea that isn’t fully fleshed out can be career suicide. This is just the nature of the beast.
But I can’t tell you how many times I’ve seen someone’s “crazy” or even “silly” idea lead to a product breakthrough or game-changing innovation in the market. It is easier to shoot down an idea than it is to build on one.
But for some (if not many) on your team, when the going gets tough, the tough will want to return to the status quo.
Your best solution? Distance.
Get outside help when you can. And set up your own internal team in a different location, if possible. Preferably a different zip code.
Also, try to protect your team’s incubation period. Looking at our startup examples, we know that it tends to take 2 – 3 times longer for a startup team to validate the market than the founders originally expect.
Whoa. What will your higher-ups say if it takes your team 3 times as long as predicated to do the same?
But here’s the bigger problem: out-of-whack expectations can introduce unhealthy pressure to scale prematurely.
So set upper management’s expectations and plans accordingly, and prepare your team for what incubation can look like, keeping everyone focused on the mission of long-term business success.
Lesson 4: Get Out There
See step #3 in our brief breakdown of the lean startup approach: “test the minimum viable product with real customers.”
“Real customers” most likely do not live or work or shop or do anything in your workspace. So why are you spending all your time there?
You must test your hypotheses face-to-face with real customers. If you’re not already doing this, spoiler alert: you are going to be amazed at how much you learn—and how fast you learn it—when you finally get out there and make this part of your process.
Now, this can be really uncomfortable. But the entire lean startup model blows up if you don’t do it. So if your team is making excuses for holding off or not getting with customers, here’s the key: do it sooner.
The best time to get your MVP in front of users is early on, when ideas are still half-baked. Why?
- You’ll learn what you need to know sooner, which equates to more investment in the right things (and less in the wrong ones);
- Your team will have less ownership of the concept, because they have personally invested less in execution, so they will be more open-minded to change;
- Your customers’ feedback will be more open and effective—both because users feel more comfortable critiquing unrefined products, and because they can better imagine and suggest solutions when the product under review is more open-ended.
Also, be very intentional in how you staff. Some people have a natural knack for and enjoyment of doing user research and pulling information out of people. It is really enlightening when someone with an analytical mind also enjoys activities like this.
But others would rather slam their thumb in a car door than get out and talk to people.
The message here is to play to your people’s strengths and staff accordingly for best results.
Lesson 5: Pivot like a Ballroom Dancer
Successful lean startups are pivoting pros. When they realize that their assumptions about a business model or target market are wrong, they pivot, radically changing the business concept to move in a new, more promising direction.
This can be incredibly difficult for those in large organizations to emulate, because the culture rarely favors speed or change. But your small team of innovators can adopt its own, more startup-like personality.
You know about the lean startup model. You probably have for years. In many ways, you know what you need to do.
Now don’t give up on making it happen. Accept that you work for a large organization and that its culture is what it is for a reason (hey, there are lots of great things about your big company!). In fact, your connections, resources, and pure horsepower can bring revolutionary products and services to the market in an incredibly effective manner. This power just needs to be harnessed in the right way.
At the end of the day, I think all any of us want to do in our lives and careers is create something of value, and our work often gives us the opportunity to make products and services that really help people and leave the world better than we found it.
There are millions of ways to improve medical procedures, simplify daily tasks, or even bring delight through a clever game design. The fun part (for me, anyway) is figuring out how to bring the best of these things to market via sustainable business models.
Life is short. Let’s not waste it working on the wrong thing.