Can large corporations be “Lean”?

by Anonymous

I have constantly found myself thinking through the new lean startup concepts throughout this class and wondering how they could be successfully applied to large organizations.

The definition of a startup and a large corporation are completely different in every critical way: access to capital, human resources, brand awareness etc. And yet, large corporations are constantly trying to find ways to “incubate”, develop, promote and support lean startup methodologies. Over the past few years, I have seen how two large companies have tried to create a “lean” environment within their companies. The common trade-offs are:
Uncertainty vs. Scaling: Startups ideally try to reduce the amount of uncertainty through minimum viable products (MVPs), while corporations require accountable business plans and projections that force premature scaling and disincentives pivoting. Effectively there are rarely corporate structures or environments that even permit anything beyond setting a vision in the Hypothesis Driven Entrepreneurship Process. 

Testing vs. Brand: Does testing hurt a brand? As companies grow, so does their customer base, as does the size of their funnel, and ultimately their brand presence. This tension can be seen in multiple ways:
  • Smoke tests are a wonderful inexpensive way to gauge customer demand for a new product, although large companies are hesitant to endorse false advertisement. 
  • Constrained functionality can tarnish a brand and corporations are often unwilling to engage customers with a half baked product. 
  • Frequent pivoting after a product idea has been launched at a large corporation often indicates weakness to the public and investors. In short, corporations feel they can’t afford to “fail”. 
Large companies have constantly failed at creating lean environments. As a result, they have resorted to purchasing companies for a huge premium after ideas or concepts have already proven a “product-market fit” and fail to continue encouraging lean methodology. That’s when you start seeing write-offs for early stage acquisitions that failed to grow, pivot or adapt after acquisition. Does that mean corporations can’t be lean? I would still like to believe there is hope. Corporations would need to constantly test unbranded products and cut off their reliance on branding to drive hype and validation. Most importantly, corporations must create an environment that allows and encourages failure.

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