It’s not enough to simply “get” the startup mentality. Executives who want to use lean startup principles to compete in today’s fast-paced economy must do the hard work needed to transform their companies.
Every company seems to be a startup these days — or at least they try to act more like one.
More than 80 percent of executives surveyed in the latest GE Global Innovation Barometer shows recognized the startup ethos as increasingly the norm for creating an innovation culture for companies — regardless of size. But it’s not enough to tear down the office walls and preach lean and agile principles.
“People put up posters and tell everyone to `think like Facebook,’” says Eric Ries, entrepreneur and author of The Lean Startup. “But unless we have a deep integration into the core systems of the company, those efforts really don’t deliver.”
Since publishing his startup primer in five years ago, Ries has seen a lot of executives try to adopt the lean startup approach but struggle to truly transform their companies. His new book, The Leader's Guide, aims to address those frustrations by helping executives set up the type of system, team structure and ways of working to foster continuous innovation.
He’s not stopping there — he has asked his Kickstarter backers to apply the lessons of the The Leader's Guide and use their experiences to inform his next book, The Startup Way.
“Anything that is going to be valuable in the future is going to be an iterative and experimental process — I can’t be exempt from those forces,” says Ries in the interview, in which he also discusses the importance of talent, skills and asking the right questions:
You’ve talked about how it’s not enough to just “get” the lean startup approach. How will The Leader's Guide help ensure it’s actually successful?
The truth is, we are long on manifestos and rousing calls for innovation — and a little bit short on the details of how to get there. On the plus side, people have gotten the memo about innovation and thinking like a startup. The bad news is that it’s already become like a cliché — almost to the point of becoming laughable.
You’ve had these fad-oriented, not very substantive attempts. I understand why — there’s tremendous demand, and someone’s going to fill that demand with something. So people put up posters and tell everyone to “think like Facebook.” But unless we have a deep integration into the core systems of the company, those efforts really don’t deliver. So I think people have become quite cynical about the idea of what does it mean to think like a startup.
So what’s your message to companies that do want to think like a startup?
Companies that want to take this seriously must be prepared to do the work, to answer the right questions: If you want people to think innovatively, how does that how affect how employees reviewed, compensated and promoted? How does it affect budgeting and accounting?
People who give simplistic answer to those types of questions are in real trouble, because companies that we may consider “obsolete” are actually really well designed and have a very vigorous immune system. They are operated by smart people who have a natural tendency to defend what they know against the unknown. That’s a very healthy, normal response — because for every good idea, most managers are inundated with a hundred bad ones.
So if you want to do an organ transplant and make major changes in the way the host organism is designed, you really have to know what you’re doing. You have to have your surgical procedure and antiseptic ready to go.
How important is recruiting the right talent to help instill a lean startup corporate culture?
The first thing I would say to executives is: look within. Once your company gets to a certain size, you probably already have amazing entrepreneurs working for you. A lot of people who have front-line customer interactions day in and day out become radicalized — they become entrepreneurs, because they can’t help but see that customers have a significant problem that isn’t being addressed.
So the most important thing about building an entrepreneurial management system is finding those talented people within the organization. And instead of sending them into battle with both hands tied behind their back, free them up to do the things they probably would have loved to be doing all this time, but found the current system inhibited them from doing so.
Are graduates getting the skills they need to compete in the workplace of the future?
I don’t think so. I see signs of hope, but that’s because dramatic change is absolutely needed. To me, this is about a rigorous and scientific approach to business. When things get really uncertain and confusion is the order of the day, what we need is people who can think really rigorously and evaluate scientifically what’s working and what’s not.
People talk about lean startup as an experimental approach to business — the word “experimental” is loaded. To run a true experiment, that means having a hypothesis, using data to evaluate the success and — most importantly —having the perseverance to take that experiment and roll it into the next and the next until you get it right.
Some high schools and universities have started to teach entrepreneurial thinking and versions of lean startup to students — and students love it. It’s in some ways a more natural way of thinking about business, since they kind of have a native sense of the rocky seas they’re going to be embarking on.
You used crowdfunding to fund your latest book, and you plan to crowdsource the next one, The Startup Way, using feedback from The Leader's Guide to inform the case studies. What’s the benefit of that approach?
It really has to be that way – the world is too complicated for anyone to have a monopoly on wisdom or good ideas. I very much feel that, in my own work, I really wanted to walk the walk. The old way of writing a book — that you would just sit in your room and think great thoughts for several years —just seemed like unlikely to produce the kind of outcomes that I wanted.
As an author, I have a responsibility — just like the designer of a product —
to make sure not only that you can sell something, but that once you unwrap it and integrate it into your life, that it works. What I’ve asked people to do with The Leader's Guide is take these ideas home, use them in your company and report back what happened — so we can start to recalibrate. Anything that is going to be valuable in the future is going to be an iterative and experimental process — I can’t be exempt from those forces.
(Top image: Eric Ries at Lean Startup London, Courtesy of Betsy Weber)
Eric Ries is an entrepreneur and author of the New York Times bestseller, “The Lean Startup.”