NOTE TO CORPORATE INNOVATORS — YOUR NAKED BUTT IS SWINGIN’ IN THE BREEZE

This article is written for the people who are tasked with implementing an innovation or LEAN program in their long established organization. As the title suggests, this may well involve a degree of risk that isn’t possible to mitigate. If you work for a company that exists to maximize the efficiency of every process that contributes to higher margins, then embarking on a LEAN innovation program means there’s no hiding the outcome. For many senior executives, promoting the need for an innovation program can be enormously challenging. The company is doing well, sales are growing steadily, bonus targets are being met, shareholders are happy — why take risks with investments in the unknown outcomes of innovation? In the 21st century this is precisely the right time to bring focus and resources to an innovation initiative and here are the 9 biggest organizational behavior issues that must change to support the LEAN model.

1. Customer feedback is filtered by the call center

Sales and customer service departments are tasked in dealing with client problems using off-the-shelf solutions in the most efficient way. A transactional, KPI-driven view of service. Coming up with an experiment for an uncertain solution that might work doesn’t fit their job description and will have a negative impact on their performance review. Product development and engineers, on their turn, expect these departments to deliver them client insights to design more relevant products and services. This model is the inverse of LEAN which mandates solution designers to work directly with a sample customer group.

2. Innovation in established companies fights with the corporate KPIs

This statement is perhaps a little unkind. Managers have their own KPI’s and growth objectives. If Manager X decides to invest in an innovation program to create new disruptive revenue streams for his Business unit; the ideas will be created around those objectives. Now imagine one of the accelerator teams realizing that they should pivot away from the original scope to keep a viable idea relevant for the company as a whole. Few managers will allow the team to pivot in a way that another business unit takes all the revenues and credit.

3. Typical corporate governance is designed to inhibit speed

Firstly, strict processes and guidelines make best practices repeatable, which is perfect for incremental business improvements and running an everyday business. Secondly, it keeps new disruptive initiatives from reaching those that have the power to implement the latter. Imagine having 7 management layers between an employee with a brilliant idea and the director that needs to allocate the budget to make it happen. Each manager will shape the idea to different KPI’s and personal preferences. All the interesting and differentiating factors, that make the idea brilliant, will be gone by the time an implementation decision can be made.

4. Sunk Costs Can Feel Like a Total Failure

Killing projects is a brave thing to do for both sponsoring managers and the project teams. Why? Firstly, it transforms all investments in the project into costs. Secondly, all people involved will have to accept that they failed and let go of the project. Lastly, it’s a challenge to know when a team tried everything possible to make a project work.

5. ROI (or payback cycle) is the standard KPI to measure investments

Everyone knows that uncertain projects need more time to reach their payback time. Most projects (90%) don’t even reach break-even. If they do, though, chances are that the ROI will be multiples of your ‘low hanging fruits’.

6. No budget available unless linked to clear deliverables

This investment strategy has been great for heavy IT implementations, but it doesn’t work for projects without a clear outcome yet. The push for control and short term return (often driven by shareholders) makes it impossible for uncertain projects to change direction when needed. This increases the chance of failure and premature project closure.

7. “We have a reputation to protect”

Don’t get me wrong here. It takes decades to build a good company reputation and it should be protected! What I want to tackle is how risk managers and corporate communication departments flag any type of experiment with clients involved. The main issue is the difference in both mindset and contextual understanding of lean startup type experiments. The risk manager and intrapreneur will have to meet in the middle.

8. Holding ‘GENIUS’ ideas internally to protect a first mover advantage

A very common theme that appears in innovation sessions: “We will educate the market, like Apple did in 2007 when they launched the first smartphone”. Well, nice to be challenged as an innovation facilitator, but let’s face the facts: in the early 90’s, IBM launched the Simon Personal Communicator. Next to calling, the device was able to send and receive faxes and emails. IBM didn’t succeed, but it sounds like a smartphone to me. Most successful products launched by big companies are a smarter, faster, less costly copy of what others are doing.

9. “Coming up with innovative solutions is always an important part of my job”

and “Innovation is only for new projects” are quotes you likely often hear when part of an innovation workshop with non-innovation professionals. Well, dear companies, if you really want to be innovative, you better start experimenting in existing projects. Start small and create a culture of trying new ways that question the status quo. Failures can and should be celebrated because you ran LEAN and you learned a great deal with a small budget in a short timeframe.

Summary

To summarize, implementing lean startup in a long established corporate is a challenging and exciting initiative to unroll. Large organizations, driven by shareholder returns are designed to maximize efficiency and managers naturally limit risk and focus on achieving their KPIs. On top of that, the Lean Startup book is one of those books that look nice on your shelf without reading it. This results in many people using innovation buzzwords (see below) without practicing what they preach. So only one way to go: define which of the 9 challenges apply to your organization, consciously focus on changing those behaviors and start testing new ways to unleash lean startup thinking.

Buzzwords that should be banned from your project scope document

Greg Twemlow, May 2017 — read more at http://www.gregtwemlow.co/

sharing what I’ve learned from 35 years as a citizen-of-the-world, parent, corporate executive, entrepreneur and since 2018, CEO of a registered charity