When it comes to innovation, there is much that we can learn from the lean approaches taken by startups. There is the rapid iteration, hypothesis testing and measurement, that builds a dynamic, responsive organization. There is the focus on releasing products and services as part of an iteration cycle. And there is the relentless focus on customers that I have long been an advocate for – what I refer to customer oriented thinking.
But in a world where change is accelerating, and where the needs of our customers, the competing demands of our stakeholders, shareholders and competitors cry out for decisions, action and differentiation, we need to find ways to react faster. To produce faster. And to create strategy on the fly. It’s no longer about customer oriented thinking but customer oriented doing. We need to find ways to apply the “thinking and doing” approach of startups to leadership.
McKinsey have long argued that we need to find ways to integrate short, medium and long term strategy into our leadership capabilities. But I believe this shift in leadership is less about process and more to do with the qualities of leadership, approaches to teams and the strategic use of data to help inform decisions. For it is the rapid making of decisions – and the ability to respond to changing conditions – that’s when lean leadership comes into its own.
Where the lean startup approach focuses on ideas, coding and data, lean leadership sets the conditions for maximum acceleration. This means that the leader looks to the organization, the teams and the capabilities required to deliver and execute strategy. For the lean leader, it’s about creating the cultural, economic and structural incentives to drive new practices.
With this in mind, the principles of lean leadership borrow from the Lean Startup and include:
- Intrapreneurs first: For years we have seen the “internal entrepreneur” operate below the radar of our businesses. They are the people in your teams who know how to get things done within the system. They lead your skunkworks projects. They produce unexpected returns. But they rarely reap the rewards or attention that is often deserved. The first task of the lean leader to identify, nurture and coach intrapreneurs.
- Minimum viable management: Once you know where your intrapreneurs reside within the organization, you need to get middle management out of the way. After all, it is in the interests of management to stall innovation and change – not because they don’t see value in innovation, but because their job is to manage risk. If you want to support innovation, you need to move management accordingly. Rather than running innovation projects through existing management functions, create a layer of “minimum viable management” – just enough to help your teams learn and grow, not enough management to kill the best of your teams’ innovation.
- Data driven learning: Enterprises are awash with data – and this is an enormous potential advantage. Understanding how your new innovations can be more rapidly brought to market, or to a market segment, means using the data at your disposal. Lean leaders understand that data not only helps them make better and faster decisions, but also helps the whole organization learn faster. And in learning faster, better decisions can be made.
- Innovation incentives: It is not everyone’s job to be innovative. But for those who do have KPIs attached to innovation, there needs to be incentives to match. The lean leader understands that new incentive structures need to be established to support and encourage intrapreneurs. Ensure that there is a balance of risk and reward and that the incentives are also aligned with the whole organization’s strategic innovation goals.
- Pivot or persevere: One of the tenets of the lean startup is to understand whether your innovation needs to shift gear, close down or change course. Lean leaders must assume responsibility of not just one innovation project but many. This means developing a portfolio view of your innovation projects and helping your intrapreneurs, innovation steering and investment committees to understand whether a project should pivot or persevere.
Nina Nets it Out: Innovation operates from the bottom up and from the top down. The lean leader ensures that commercial innovation meets somewhere in the middle.