Lean Startup in Organizations

Why do Attempts at Innovation Fail so Often in the Corporate Setting?

How do corporations – which have so many assets to support new ventures – fail to compete more effectively with startups?

The first step is for large companies to replicate the tools for learning that work so well for successful startups. The Lean Startup method has helped thousands of startups to move quickly and reliably to validate, refine and accelerate the growth of their businesses.

But Lean Startup approaches alone are not sufficient for success within a large, established corporation. The methods of Lean Startup can trigger antibodies in the company. Each of the antibody reactions has its roots in a legitimate concern, but each is also to some extent irrational – based more on fear than reason. If the risks are properly managed, the fears can be overcome, however, and Lean Startup can be as successful in the corporate context as it is in startups.

The practices described in this book are “Yes . . . AND” practices: they are complements to the core principles of the Lean Startup method itself. They have been tested – and have led to success – in real-world corporate settings. Although no two corporate cultures are exactly the same, many of the challenges are surprisingly common. These practices offer a starting point for the journey.

SIX FACTORS THAT DRIVE INTERNAL RESISTANCE

Chaos

Lean Learning Loops, a key, knowledge-gathering element in Lean Startup,
can lead to fears of an unmanaged innovation process
An Innovation Stage-Gate model can help contain the chaos

Loss of Control

Creation of Minimum Viable Products, another Lean step,
can disrupt the operations of core internal functions
Graduated Engagement can create a productive relationship with the performance engine

Loss of Identity

Creating a Value Hypothesis for the new venture
can lead to opportunities that the company cannot exploit (orphans)
Asset-Based Opportunity spaces focus the innovation team

Cannibalization

New ventures may succeed by damaging the core
The Business Model Pyramid can help to find solutions
that work in the market and add value to the core business

Misallocation of Resources

Investing in a new venture can drain needed resources from the core
The Separate-but-Connected model can protect the NewCo from the mother ship

Making a Blunder

Investing in new spaces introduces new risks
Ambidextrous Leadership develops people who can protect the core while fostering efforts to innovate

WHAT PEOPLE ARE SAYING

“New ventures in corporations are not just startups that happen to be housed inside a company. Lean Startup methods work for corporations, too, but additional tools are required. Jim shows us one path forward in this book.”

Steve Blank
Adjunct Professor, Stanford University
Co-founder of the Lean Startup movement

Jim has been involved in leading-edge innovation research with me at MIT for years, and he has also led successful innovation inside corporations for decades. His focus has always been on making leading-edge innovation practices work really well in the messy, real-world context of Corporate America. This book lays out practices that work.

Eric von Hippel
T. Wilson Professor of Innovation, MIT Sloan School of Management

“As we emerge from the unchartered waters of a post-pandemic world, A CEO’s greatest driver will categorically be innovation. LSU presents the practical model to harness chaos into competitive advantage. After personally interviewing over 1,000 top CEOs I believe, Lean Startup in Large Organizations could arguably be the most important book an enterprise CEO reads in 2022″

Robert Reiss
CEO, The CEO Forum Group

ABOUT THE AUTHOR

Jim A Euchner

Jim Euchner is Honorary Professor at Aston Business School (UK) and Editor in Chief of Research-Technology Management, a peer-reviewed journal for practitioners of innovation, technology and research management. He was previously Vice President of Global Innovation at Goodyear Tire & Rubber Company, where he led the development of new businesses and helped launch five businesses on three continents. Prior to his work at Goodyear, Jim held positions as Vice President of Growth Strategy and Innovation at Pitney Bowes, Inc. and Vice President, Network Systems Advanced Technology at Bell Atlantic (now Verizon).

Jim has worked in the field of intelligent systems for over 25 years. In his consulting practice, he helps companies to implement businesses enabled by emerging technologies, including AI, the Internet of Things (IoT), automation, and predictive analytics. He helps companies to move quickly and in a disciplined way from concept to cash. Areas of focus include the use of lean startup approaches in large organizations, business model innovation, and the challenges manufacturers confront in moving to services-led business models.

Jim is a member of the Scientific Advisory Council for the Nissan Autonomous Vehicle program and industry co-chair of the Aston Advanced Services Partnership. He is also a co-founder of the MIT Innovation Laboratory, a consortium to nurture innovation in organizations. Jim has published and spoken extensively on innovation and technology management. His google scholar page can be found at http://tinyurl.com/google-scholar-JimEuchner

Jim received his Bachelor of Science degree from Cornell University in mechanical and aerospace engineering and his Master of Science degree from Princeton University, where he was a Guggenheim Fellow. He also holds an MBA from Southern Methodist University. He has received several awards for his work in AI, including two selections as Innovative Applications of AI, the Carnegie Mellon University/AMS Award for Managing Information Systems, and the Franz Edelman Award (finalist).