Lean Startup Summit Berlin 2019
On 11-12 Feb 2019 took place Lean Startup Summit in Berlin. This is the conference revolving around Lean Startup with a clear focus on how to enable innovation in the corporate world by adopting an entrepreneur mindset, principles and practices.
If you are into innovation, lean product management or business consultancy this is a great place to make good connections and get interesting ideas for your business.
Like previous editions most of the talks and workshops were about how to drive innovation in the corporate world, what is innovation about, how to measure innovation and how to scale up while being lean. And this is what I’m going to be talking about in the following lines.
1 – Lean Startup
Lean Startup is crossing the chasm towards corporate world. It is already a de-facto approach for starting up a business. However the corporate world is not yet adopting this entrepreneurship mindset.
Unlike in the Agile world, I like Lean Startup movement because they speak the language of business. However, they are facing the same problems as Lean suffered in the 1980s and Agile in the 2000s when trying to bring their approach to the corporate world at scale.
Lean Startup is a method to develop a scalable and repeatable business model. Which is basically what innovation is about. However, Lean Startup doesn’t tell you how to grow your organization in a Lean way. And, here is where we can learn a lot from successful Lean adoptions.
2 – Innovation
Obviously, Lean Startup is about innovation. When I think of innovation for the corporate world, I prefer not to use this buzzword and really think about what it really means. Which is basically about detecting and developing new sources of growth for your business.
If you think about it in this way it opens up a whole lot of options for growing your business or bringing you back to the pole position of your market.
This is not about tools or methods such as Design Thinking or Lean Startup or Agile, it is about clearly defining a growth strategy for your business and making sure that everything that happens is linked to that strategy.
To do that you need to follow the principles and practices of Lean Startup within the corporate world. And you will need to overcome many organizational and mindset barriers at many different levels.
Humans like linearity and causality, that’s why we like these pictures where we have first Design Thinking, then Lean Startup and then Agile. This is complete nonsense.
Innovation is not a linear process and it doesn’t start from an idea generation workshop. Innovation must be part of your strategy, then you must organize around a business model and combine Design Thinking, Lean Startup and Agile as required to continuously derisk your business model. Perhaps you need a Design Thinking workshop to find new ways in which you can make your business model generating recurring revenues or you need to implement and MVP to validate an assumption much before you have even finished clearly understanding what problem your target customers are facing and if you are able to solve it.
You can have a great product but if your business model is not right you won’t achieve much. You can have great ideas, but if the strategy of your company and the organization don’t enable ideas to be tested, validated and incrementally funded you won’t get much done.
Innovation is not about technology, product or great ideas, it is about developing a scalable and sustainable business model.
Great innovations of all times always come from rethinking an existing business model and changing some key variables. Think about Model T from Ford, Nespresso or Apple’s iPhone. From a product perspective they were nothing new, what they did was innovating on the business model.
Sometimes, however, innovations are tightly linked to a new technology, but it won’t get it through unless it has a sustainable and scalable business model underpinning this new technology.
3 – Corporate Innovation
Every time I go to conferences or read articles about people struggling to drive innovation or agility in their businesses I really wonder what the hell do they teach in business schools. Really. We have been talking about the same thing since Lean in 70s and 80s. Exactly the same things. And still today, we are discussing how to bring agility and innovation in big companies.
If you have to explain your CEO that the company has to innovate, that the company must have a clear, compelling and simple strategy that everybody can understand and enact. If you have to explain your c-suite they have to balance a portfolio of products including core products, adjacent products and transformational products, if you have to explain that you cannot measure innovation the same way you measure core products, if you have to explain your c-suite that functional division is dysfunctional, you should really find another place to work for, because this company is soon going to become irrelevant.
If you want to be the next Kodak, Nokia, Blockbuster or Blackberry of your industry just keep doing the same old thing.
4 – Innovation Metrics
Clearly, one of the main impediments to driving innovation in established businesses is how product success is being measured. You cannot measure innovation success by the same criteria you measure your core business products success.
Until achieving Product-Market Fit you can only measure learning and how closer you are to achieving your goal of developing a sustainable and scalable business model. Nothing else. You cannot measure progress by measuring ROI or ROA.
Innovation Accounting is the key thing here.
5 – Scaling Up
As companies achieve product-market fit and start scaling up the organization and the business they consistently adopt the incorrect approach. There are vey few companies who really grow lean, however many take some course correct and after several iterations and reorganizations they get it right.
One thing Lean Startup doesn’t teach is how to scale a business. However, if we go to the roots of this movement, we have the answer. In order to grow, you need to grow Lean, which means growing value generation faster than you grow non-value added work, and you can only achieve that by organizing around value streams as you grow.
As you can see in this picture I took from the panel discussion about scaling up. As this company started growing they organized around hierarchy and silos, then they did something weird, afterwards they moved to a matrix organization, then they did something weird again and finally it looks like they got it right and organized around value streams (what they call cross-functional product teams).
I prefer the term value stream from Lean, because it allows more than one team if you are quite big. You won’t always be able to do everything you need with a team of 7 people working autonomously, reality is more complex than that. However, if you keep the principle of organizing around value, you will get it right.