Applying Lean Start-up Methodology to Accelerate Innovation in Organizations

Why does disruptive innovation seem to take so long? Why don’t the usual levers that we deploy speed up our innovation efforts like frequent check-ins or adding on more resources and tighter deadlines? Organizations resign themselves to the fact that innovation is a slow process and there’s no way to move faster to find out if an idea is a success. Our experience shows that there are ways to accelerate disruptive innovation, we can build a framework for improving the speed from paper to market and there are ways to accelerate the experimentation and get the right leaders in charge of projects. Organizations wish they had something like Elon Musk’s Hyperloop – to go from idea to impact in the blink of an eye. But the reality is, innovation looks a lot more like Jakarta traffic – slow, torturous and painful. In situations like this, there are a few tools organizations reach out to such as:

  • adding more resources on the team
  • injecting more funds (spend your way out of this problem)
  • start micro-managing
  • set tight deadlines

While these are very proven tools, they don’t work on innovation projects and the recipients of these tools are unhappy with them. Why is this?

In an advisory op-ed in, Steve Blank of the Lean Start-up fame famously said: “Today, after half a century of practice, we know unequivocally that the traditional MBA curriculum for running large companies like IBM, GM, and Boeing does not work in start-ups. In fact, it’s toxic.” Steve teaches at Stanford and is a serial entrepreneur, having participated in the launch of a number of new businesses. So why is the MBA toxic? “A start-up is not what you think it is” shares Ephlux CEO, Ali Nasim. “Most people consider it to be a small version of a big business when in fact, a start-up is a temporary organization that is searching for a scalable and repeatable business model. In order to maximize success and minimize risk, the search for the business model requires dramatically different tools, rules, road-maps and skill sets. Traditional MBA’s are taught to use the right tools for the wrong problem.”

There are a few steps to ensure is sped up towards the business idea or model that works and its a never ending process:

a. Switch to Field Strategies
Make sure you are working in the right place, a strong strategy can only be forged in the white hot heat of the market place, not in a conference room. This is to test and push the boundaries of preconceptions around the industry and viability. The unfortunate reality is that most strategies are forged in the conference room and we think (like MBA’s) that the truth reveals itself in the MS Suite of products. “To assess start-ups, I suggest a simple model to my clients” reveals ALJ Capital CIO, Altamash Javed, “a good way to figure out the customer centricity of an organization and the value of their strategy is to take all the time they spend in market and divide that with the amount of time they take to prepare their strategy in-front of senior management” or consumed in any kind of internal meetings. He believes that if the ratio is anything less than 3:1, they need to rethink where they forge strategy.

b. Tie Investment to Knowledge
For an idea to be successful, at the end of the day there must be three things must be true – there must be some kind of market need, you must have the resources to deliver and the returns should be worth it. Don’t take their word for it if customers say their is a demand, have them use/test the BETA, give feedback, purchase again & again and finally, advocate your product or service. Pilot your ability to deliver then scale that aspect. Start with a transaction based model and graduate to a business model gaining unit economics validation and a line of sight to profitability. Doing all this can ensure your idea is a sustainable business.

c. Pick Mentors of Relevance
With six NBA championships and believed to be one of the greatest players of all time, Michael Jordan has 2 Olympic gold medals and the highest lifetime scoring average. Yet he sucked at Baseball. Similarly, entrepreneurs often fall into the trap of tapping a board of veterans with experience in large organizations that never innovated, launched anything new or attempted as such. By only considering past experience and success in the past, you can fail in picking the right mentors or board. Your advisers need to be innovators that can think and assess for tomorrow, not yesterday. Get out of the habit of asking the Michael Jordan’s in your organization for help in critical growth efforts; they have demonstrated excellence in today’s business, not tomorrows. Some good questions to ask in the assessment stage are:

  • have you worked on a similar business model?
  • do you have an empathetic understanding of the target customer?
  • is your own money invested in the underlying technology?
  • how many times in your career have you expanded into an emerging market or launched a new venture – intra or entrepreneurial?

Often time innovators and managers striving to form a business or initiate a project go along with mentors and board members that do not meet majority or any of the above stated criteria out of obligation to having something to show for, or using the connections and potential funding or support. But its a long term loss, speaking from personal experience in choosing the wrong mentor. This is the era of innovators and it has never been easier to start a company. But this also the era where 75% of start-ups do not return a dollar to their investors. The most famous anomaly is Facebook – less than 10 years old, worth USD 100 billion and serving over a billion users worldwide. Sure, it has never been easier to start a company, but it has never been harder to build a business.

Leave a Reply

Your email address will not be published. Required fields are marked *