Applying lean startup theory in large enterprises

1. Summary

The lean startup is a hot paradigm for innovation. It promises more customer-targeted product development at a lower cost with a good fail-fast, fail-cheap setting to prevent projects from burning up resources unnecessarily. Or does it?

Companies can apply lean startup methods to their innovation and product-development process if they’re careful to avoid some of its pitfalls. In this paper we look at the upside and the dangers of lean.

Most larger companies have strict ROI or other financial metrics and stage-gate processes that dictate how product development should take place. Lean innovation plays comfortably into such a structure. It is the association with open innovation and business model innovation that makes lean more complex and encourages innovation.

Companies also have product-release cycles that can be severely disrupted by multiple lean projects with complex iteration cycles. And they are traditionally insight-driven rather than hands-on with customers in the product-development process. That means lean can be introduced into Skunk Works and other edge innovation processes but is much more difficult to get working in the mainstream of the organization.

Large companies need four main process innovations to exploit lean fully:

1. They need to introduce or expand customer iteration and adapt product-launch cycles and go-to-market strategy accordingly while creating investment capacity for customer-relationship development with early adopters.
2. They need to learn how to do brand and product positioning in real time, becoming masters of the art of pull — i.e., using social media to attract exciting communities around their projects.
3. They need to develop decision-making strategies that take advantage of lean innovation techniques like iteration and feedback loops.
4.  They need to adapt the accounting and forecasting capacity of the company to take account of continuous iteration.

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