Applying The Lean Startup in a Corporate Environment
Updated: May 24, 2020
Entrepreneurs and SMEs have gone wild for the “Lean Startup” concept, popularised by Eric Ries. But despite claims, it “can be applied to… companies regardless of size” the response from corporates has been muted. Perhaps this is because little guidance exists on how they can apply it. This article remedies this by setting out practical advice on for effective application in a corporate environment.
The methodology was born from the observation that in conditions of extreme uncertainty accurately predicting what customers really want is hellishly difficult, therefore there’s little value in creating and executing a master plan. Instead, companies should build a ‘minimum viable product”, ‘learn’ what works and continuously ‘pivot’. Multiple iterations are essential because “failure is a prerequisite to learning”.
Many corporate executives will nod their heads at the above but struggle to see how to implement such an entrepreneurial approach. But it can be done and is being done with the right approach:
Set-up & Structure
Start by giving staff an overview of the methodology and use a historical example (to de-politicise it) of a major company initiative that failed under the traditional approach. Reassure staff that the ‘Lean’ approach will only be used for projects with extreme uncertainty; routine employment unnecessarily slows down projects and causes huge disruption in areas like planning and governance. Then set up a small cross-functional team of “Lean Practitioners” supplemented with at least two external entrepreneurial contractors to instil the right culture. (Contractors are better because you can rotate them based on project needs to keep the thinking fresh).
The biggest barrier to corporate adoption of ‘Lean’ is the risk of reputational damage from launching unpolished offerings. Whist this can partially be addressed by targeting early adopters it’s better to use sub or new brands. Otherwise, opponents of new ideas will perpetually, and somewhat justifiable, raise objections, which will at least slow progress. Mobile operator O2 has successfully adopted this approach in the UK and Ireland with its ‘Gif Gaf‘ & ‘48‘ brands. Both have undertaken experiments unthinkable for O2 such as risqué advertising and peer-to-peer customer service.
Leadership & Oversight
“An experiment forced to deliver the same outcomes as existing… business… quickly reverts to small incremental changes that… ultimately fail to discover anything radically new and valuable” (Karl Heiselman, CEO Wolf Olins). Therefore only set ultimate revenue and contribution run rates that need to be achieved as opposed to ramping up and other metrics such as customer numbers, and give them at least six months to do so.
Otherwise, you’ll end up being too prescriptive and the team won’t be able to
fail, learn and pivot sufficiently. Also remember the Riesism, “Planning & forecasting are only useful in stable markets… [with] lengthy trading history”. Therefore keep these to a minimum and if corporate planners demand figures simply give them arbitrary numbers.
Delivering The Project
The biggest challenge for the ‘lean’ team will be maintaining momentum and not getting bogged in the usual bureaucratic morass. Overcoming this requires guerrilla tactics such as: temporarily bypassing of large CRM systems in favour of smaller solutions (or even manual processing), using smaller, cheaper and more agile agencies and freelancers.
Whilst ‘Lean’ is dismissive of pre-testing with consumers there can be value in doing so, especially with modern methods such as Vox Pox which are quick, cheap and highly insightful. (They're also useful for reassuring project sponsors about its direction. Finally, if you do achieve early commercial success scale it ASAP, remember “Lean is a methodology, not a blueprint” so flex it to fit your business.