Who Says Elephants Aren’t Lean?

by Greg Ayres

I have been reflecting on lean startup management practices in the context of new business development in a big corporation.  Whether large or small, young or old, innovative companies must find product market fit and/or refine and extend their business models.  I believe that the lean startup method can be successful for any company with a well aligned organizational culture.

Without a doubt, big companies’ product development processes are better established than those of startups.  This leads to a sense that launching new products or businesses in a large enterprise is a far different task from doing so in a startup; and thus, the lean startup methodology cannot be employed successfully by large firms.  In fact, on the surface a large organization has a few key advantages over a young company implementing lean management techniques.  These include superior access to customers, flexible developer resources, an experienced team of internal testers, and more.  Under favorable conditions, a big company might employ lean management techniques to launch a product or enter a market quickly.

What are these conditions?  I think organizational culture, not size or age of the enterprise, is the most important factor leading to success of lean startup management techniques.  For instance, the firm’s culture must be customer focused and not unnecessarily risk averse, and it must have the proper market permissions or be able to build or acquire those quickly.
Customer focus requires a company to make investments based on the stated needs of its customers.  It achieves product-market fit through data-driven decision making.  It involves the customer early in the product development and business development process, and uses their feedback to guide changes to the design.  Without customer focus, lean management techniques are difficult to employ.

Furthermore, without an appetite for risk taking, a firm may be unable to approve certain lean management techniques, like testing in production.  The firm may want to avoid violating its customer relationship by releasing unfinished products.  However, big companies can leverage their internal resources and existing relationships to test in production-like environments that mitigate risks to the customer base.  A large pool of beta testers, internal testers, and lead users can all help a big company adjust product features quickly according to the lean methodology.

Finally, refining or extending a business model can be difficult or time consuming for established firms if they lack the proper market permission.  Having market permission means that customers see a strong link between the firm and the new type of product or service.  In many cases, businesses without existing products or brands have an easier time building market permission in new spaces than do established firms.  Nevertheless, large companies can leverage their resources to quickly earn or acquire market position.  They can acquire, partner, or launch a new brand without established connotations.  This requires a culture that accepts risk taking, as these firms must work to understand their audience, test hypotheses, and readjust the plan accordingly.  Lean management techniques can help.


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