How To Run Your Enterprise Like a Lean Startup

How To Run Your Enterprise Like a Lean Startup Interviews with: ENTERPRISE HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP AUTHORS HourlyNerd Cynt...
Author: Arleen Webb
0 downloads 0 Views 2MB Size
How To Run Your Enterprise Like a Lean Startup Interviews with:

ENTERPRISE

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

AUTHORS

HourlyNerd Cynthia Hollen INTERVIEWS

Dr. Shawn Davis, Principal Engineer of Device Strategy, Amgen Elise Kissling, Director of Creator Space™, BASF Dyan Finkhousen, Director of Open Innovation & Advanced Manufacturing, General Electric Alex Chriss, Vice President and General Manager, Intuit CONTACT

HourlyNerd 280 Summer St Boston, MA 02210 (617) 446-3734 [email protected]

2

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

A Word From The CEO Every large company was once a startup. But as these companies grow, they often lose the entrepreneurial spirit that made them what they were. As a large enterprise, they can become process-driven, slow moving, and risk-averse, leaving them vulnerable to younger, faster moving competition. But this does not have to be the case. We believe that the characteristics of a startup, e.g. flexibility, innovation, lean processes, etc., can and should scale along with the business. Here at HourlyNerd, we’ve had the honor of working with thousands of companies, including many Fortune 1000s, to help them bring flexibility and innovation into their businesses. Rob Biederman CEO, HourlyNerd

With these learnings in hand, and leveraging interviews with companies like GE, Intuit, Amgen, and BASF, we have written a white paper to outline the best practices that we’ve seen for how even the largest of enterprises can run like lean startups. Regards, Rob

About HourlyNerd: Leaders at companies of all sizes have long sought a solution for meeting critical ad-hoc needs for experienced business expertise. HourlyNerd offers the leading technology platform connecting elite business talent to enterprises to tackle projects flexibly, quickly and efficiently. HourlyNerd has built a global market for on-demand expertise and developed best-inclass software tools for engaging and managing this market. HourlyNerd’s innovative human capital solution connects business leaders with nearly 20,000 boutique consulting firms, custom teams, and independent experts for project-based work. Today, HourlyNerd serves thousands of clients, including Fortune 1000 companies like GE, Staples, and Microsoft, as well as countless others on a confidential basis. Learn more at enterprise.hourlynerd.com

3

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Contents A Word From The CEO . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4

Why Enterprises Should Emulate Lean Startups . . . 6 Case: Amgen’s Device Strategy Group - Changing Culture from Inside . . . .

Focused. Flexible. Fast.

8

. . . . . . . . . . . . . . . . . . . . 11

Focused . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Case: BASF’s Creator SpaceTM - Innovation Through Co-Creation . . . . . 12

Flexible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Case: Intuit’s Continuous Product Evolution - Savor Surprises . . . . . . . 14

Fast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Case: Intuit Part 2, Creating Space for Intrapreneurs to Disrupt . . . . . . 15

Innovative Projects . . . . . . . . . . . . . . . . . . . . . . . 18 Case: GE Tapping Into the Global Brain . . . . . . . . . . . . . . . . . . 19

Conclusion .

4

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Why Enterprises Should Emulate Lean Startups

5

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Why Enterprises Should Emulate Lean Startups “Across the board, enterprises are recognizing that they need to change or they will get beaten by leaner, faster competitors.”

What does every single large company have in common? It was once a startup. Where along the way does the entrepreneurial, risk-tolerant spirit give way to the inertia and risk-aversion often observed at established companies? And why does it matter? Over the last 20 years, enterprises have learned to look differently at smaller, younger companies. The once undisputed “benefits” of scope, scale, and history are now often dismissed, or worse, disrupted, by newer entrants. These agile upstarts are unencumbered by balancing conglomerates of products, maintaining economies of scale, and managing carefully crafted hierarchies. Successful lean startups famously outperform their older, heavier competition in everything from customer adoption to speed-to-market. From Netflix versus Blockbuster to Amazon versus Barnes & Noble to Uber versus yellow cabs, examples of innovative business models toppling the corporate giants have become both commonplace and revolutionary in our lives.

Across the board, enterprises are recognizing that they need to change or get beaten by leaner, faster competitors. As a result, many are introducing some form of lean management, “intrepreneurial” incubating, or other creative approaches in order to insert a startup mentality into their enterprise.

Separating Lean from Startup Simply being a startup does not ensure success. In fact, 80 to 90% of startups fail, and very few become shining stars.1 Therefore, the goal is not to mimic startups. Instead, enterprises should take lessons from successful startups and the elements that led them to win, while continuing to leverage the big corporate advantages that got these enterprises to where they are today.

6

1

Revsin, Yan. “The Major Reasons Startups Fail - And How You Can Avoid Them”, Forbes.com March 5, 2015.

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

How can Big Be Lean? Several key factors keep enterprises from naturally being lean. In interviews with startup veterans, “intrapreneurial” managers, and corporate executives seeking leaner outcomes, the most common corporate obstacles are culture and process. Cultural obstacles include the common behaviors, ingrained beliefs, and shared history that drive a firm-wide mentality about how things get done. Process obstacles are the documented, legal, and operational procedures that create stability and reduce risks, but also block change and innovation. Lean managers and employees, on the other hand, think differently and are measured differently. They speak differently. And they make decisions very differently. The mindset difference is fundamental: even the language that executives use to describe their teams, challenges, and achievements clearly illustrate the barriers enterprises face in becoming lean. In BCG’s 2015 Global Innovation Study, 1,500 enterprise executives tasked with improving innovation and product development noted their biggest obstacles to success included slow processes, difficulty finding and selecting ideas, improper incentives, and leadership and culture issues.2 These obstacles are common amongst large enterprises that struggle to be lean. Recognizing obstacles to efficiency and innovation is critical. But for an enterprise to adopt lean practices, it first must understand what startup qualities to copy, what to ignore, and what to adapt to fit. Amgen is one global company tackling these obstacles head on with deliberate and bold steps. The world’s largest independent biotech company is proving that it can successfully leverage the scope and scale of a multi-billion dollar enterprise with the agile mindset of a lean team.

2

Global Innovation Study. Rep. N.p.: Boston Consulting Group, 2015. Print.

7

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Case: Amgen’s Device Strategy Group – Changing Culture and Process from Inside “The team is leveraging agile startup lessons to shift its focus to the customer and company, which is driving better results for the enterprise.” “There is a sunk cost fallacy in large companies,” says Davis, explaining that companies continue to invest more time and money into projects, simply because they have already invested a lot of time and money into that project. Lean companies, on the other hand, look at the resources needed for every effort underway, and objectively decide if each project is the best use of company resources in the long run. With a focus on the big picture investment, timeline, and outcome factors, Amgen can determine the best overall portfolio, and the best use of resources.

Amgen is a $115 billion, 35 year-old, publically traded biotech company that sells some of the world’s most successful drugs and therapeutic biologicals.

Lean companies make tradeoffs each day in an effort to maximize total company value. If large enterprises can bring that kind of clarity and discipline to their own decision making processes, they can realize the same benefits.

And it wants to be lean. Three years ago, Amgen created the Advanced Device Technology team with a mandate to leverage lean principles in order to understand its portfolio and drug delivery needs, and to match those needs to technologies best suited to drive value for Amgen as a whole.

A Lean Bias Frame – Changing Your Approach to Risk

Amgen’s Dr. Shawn Davis, Principal Engineer of Device Strategy, calls the skills and thought processes this eightperson team is injecting a “startup bias.” With this new approach to product innovation and device strategy, the team is focused on what is good for the customer and for the company overall, not just what is good for each product.

One of the greatest challenges the Amgen team faces in driving innovative thinking is changing risk biases. “In a big company, if you take a risk that makes the company a billion dollars, you get a pat on the back and a promotion. If you take a sound risk that costs the company a billion dollars, you expect to be fired,” says Davis. In theory, he explains, the company benefits by taking balanced risks to improve the overall portfolio of results, but individuals generally don’t feel safe taking risks that could threaten their job security.

Ruthless Priorities According to Davis, a startup veteran, many large biotech companies fund investments on a product-byproduct basis, which distorts the focus on the core goals of the broader company. “When each team is focused on the time cycles and investments required for their own product, they can’t see the trade-offs of company resources against other opportunities, so they are not maximizing the whole company’s value.”3

There are two ways to tackle this hurdle, and Amgen is pursuing both. The first is to hire people with a greater risk-taking profile, as they have with this new team. The second is to make risk-taking more celebrated and rewarded. The Advanced Device Technology team serves as a role model within Amgen, as a way to create a safer, more encouraging workplace where budding entrepreneurs and risk-takers feel welcome. Davis admits that changing a company’s risk biases is extremely hard, and that it is critical for management to back up the shift with follow-though and support for this to happen.

According to Davis, Amgen’s Advanced Device Technology team is inserting the “ruthless priorities” of a startup into its efforts, with a focus on critical items for the company overall and a tighter runway to profitably deliver more effective products to customers.

8

3

“Run Like a Lean Startup Amgen.” Telephone interview with HourlyNerd. 11 Dec. 2015.

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP Outside of their own mandate, Davis’s team is also working with groups across Amgen to encourage them to ask questions differently. They’re working specifically with mid-level managers and product teams throughout the organization to reframe questions to focus on accomplishing goals, rather than avoiding risk. When evaluating a new filled injectable device opportunity, for instance, they focus on asking questions like “How can we do this?” and “What if we try this?”, rather than the more typical enterprise bias that starts with “Why shouldn’t we do this?” While it is too early to show measurable results, Davis can already point to products that have been initiated, funding that has been cut back, and innovations that have resulted from looking at company challenges through a lean bias decision frame.

They deliberately chose to bring an “insurgency” of startup veterans and project team members into the organization to shift the culture from the inside, as evidenced by the new Advanced Device Technology team. In addition to great scientific and technical skills, “the social skills to carry the message that risk-taking is acceptable and that excuses get in the way of innovation, throughout the company,” has been a key hiring criterion for this “lean bias” team. Though only three years old, the Advanced Device Technology team is leveraging lean thinking to make decisions that are directly impacting the company’s core products and markets. The team is leveraging agile startup lessons to shift its focus to the customer and company, which is driving better results for the enterprise.

Importing Lean Thinking In an industry-wide push to realize greater innovation, most biotech companies have created “Innovation Centers” or outsourced the role to partners. This runs the risk of essentially exporting innovation and lean thinking to areas outside the core company. According to Davis, Amgen is acutely aware of this risk and is actively focused on fostering innovation throughout the organization.

9

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Focused. Flexible. Fast.

10

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Focused. Flexible. Fast. “The following three examples are from well-respected large enterprises that are embracing lessons from lean startups and finding compelling ways to adapt them into their own corporate culture.” The key behaviors that enterprises must learn: be focused on core targets, flexible enough to learn and innovate, and fast enough to capture markets.





“Through co-creation, the

company connects people and ideas around the globe with the

is that “no one, inside or outside your company, tells you what you really need to know.”4 Customer feedback gets massaged to look good, and managers soften bad news and emphasize good news. It is simply harder for decision makers at enterprises to hear the real feedback that can lead to the next breakthrough. Learning from customers is a key focus area for chemicals giant BASF. To get close to as many customers as possible, the 113,000 employee company did something really remarkable. And they did it in a way that only a global enterprise could.

aim of jointly developing new solutions to global challenges.”



Every story of lean startup success highlights the moment when one of these key traits led to the breakthrough that created a phenomenon. The following three examples are from well-respected large enterprises that are embracing lessons from lean startups and finding compelling ways to adapt them into their own corporate culture.

Focused A lean startup’s success often comes from being close enough to the customer to listen. At a small company, executives are naturally closer to the end user. It is not uncommon, for example, to have the CEO be the lead on a customer call. The startup’s survival hangs on the reactions of each and every customer, so they share, celebrate, fret and discuss customer feedback in detail across every function of the company. Customer feedback is equally important at a large enterprise, but harder to come by. Scott Cook, co-founder of Intuit, explains that the biggest problem enterprise CEOs have

4

“Startup Grind - S Cook.” Interview by Rich Foreman. 2015.

11

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Case: BASF’s Creator Space™ – Innovation Through Co-Creation “Open innovation is the process by which companies bring outside ideas and thinking into its own innovation process by inviting collaboration, crowdsourcing or teams to form joint innovations.”

BASF devised a yearlong “open innovation” program to better understand what consumers, value chain players, governments, and other end users of its products are frustrated about.

Some enterprises try to act lean, and some try to buy or outsource lean. In contrast, BASF is using big to be lean. Their BASF Creator Space™ approach is a brilliant use of big company resources leveraged to mine and nurture new ideas, and it is letting BASF break through all of the traditional barriers that stop enterprises from hearing what is going on around them. To celebrate 150 years of making chemicals for every imaginable use around the world, BASF did something truly innovative. This $82 billion giant launched the BASF Creator Space™, a program in which employees from across regions, divisions and research platforms worked with customers, scientists, thought leaders, institutions, students and communities to understand why some of the world’s biggest problems around food, energy and urbanization aren’t being solved. And then they listened. Innovation from the outside in, on a global scale, using the best thinkers in the world, is something only a large enterprise can do. And it is the epitome of employing “lean innovation” inside an enterprise to identify, test, and develop big solutions to big problems. According to Elise Kissling, Director of Creator Space™, BASF is re-thinking what it means to be innovative, and looking at not only chemical innovations, but at market driven innovations to address societal needs and pain points.5 As the world’s leading chemical company, BASF is far up the value chain from the end consumer, as it supplies chemicals and materials to the manufacturers who, in turn, make the products that consumers buy. Therefore, in order to get closer to the end users of its products and systems,

12

“We have thousands of top researchers inside BASF, and we are great at innovation inside the company and with leading universities and institutes,” says Kissling, “but with our new strategy we wanted to move in the direction of open innovation and co-creation in order to innovate in ways that are more relevant to our target groups. And to be faster!” Described by Kissling, ‘open innovation’ is the process by which a company brings outside ideas and thinking into its own innovation process by inviting collaboration, crowdsourcing or teaming with partners to form joint innovations. “Co-creation is a method you use to get there, especially in face-to-face interactions,” explains Kissling. So the company looked to lean startups for inspiration. They developed a vast and global “open innovation” project to meet, listen to, learn from, and collaborate with partners and end users. “We knew that co-creation and open innovation were very popular in the B2C space,” says Kissling, “so we thought it would be great to adapt those methods and approaches for our B2B environment.” And BASF reinvented “startup open innovation” to meet the needs of the global enterprise, using all of its innovation credibility, local market expertise, corporate event management teams and substantial resources, to conduct a CEO-mandated, yearlong “experiment” into new learning methods. It was critical, according to Kissling, that CEO Kurt Bock frame the project as one of experimentation and learning so that the entire team felt the freedom to takes risks and be receptive to new ideas. Even some co-creation skeptics were won over after having the opportunity to be part of successful collaboration, in person. BASF’s Creator Space™ was broken down into around 50 co-creation activities run by people from across the

5

“Run Like a Lean Startup BASF.” Telephone interview with HourlyNerd. 1 Feb. 2016.

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP company’s divisions and functions. Local thought leaders and value chain partners tackled local challenges in six regional tours. Taking their cut from best practices inside and outside of the company, the Creator Space™ team tailored eight co-creation methods to BASF’s B2B environment and piloted these methods in 2015.

The project team had weekly meetings directly with sales people and customers to see what was working and what was not, and the prototype was modified based on the feedback. Both the final offering as well as the target customer segments changed dramatically during the lean startup phase.

From that work, more than 60 non-routine project proposals are now being evaluated by BASF, and many others are already being implemented by the business units.

“This is a new approach for BASF,” says Kissling. In addition to sourcing innovative ideas from outside the company in order to stay close to the customer, BASF is “using Lean Innovation methods that startups use to do prototyping and piloting so teams can learn on fly before we go into full scale roll-out. The feedback on the ground is that we haven’t invested that much because we piloted with a few customers and we now have a much better product than we would have if we had used the process we normally do.”

At the New York regional tour, for instance, dozens of outside contributors (designers, urban planners, developers, construction industry customers, etc.) focused on the flooding caused by Hurricane Sandy and came up with three completely different approaches for how to protect future cities from rising sea levels. These approaches now form a foundation for product and business model innovation at BASF from flood barriers to redesigned city blocks. At the agriculture division, a new business model idea that bundles products and services with risk management components was developed. To see if the new offering was viable, rather than taking several years to polish it and create all new marketing material, a few innovative sales people piloted the offering with 15 customers to test it before rolling it out more broadly.

By looking to lean startups, BASF is attempting to accelerate growth with new products, businesses and partnership models. Getting there requires a top-down and a bottoms-up focus on real customers, real problems and real pain points. In one year, BASF has made major strides in learning how it wants to approach its next 150 years of innovation. But being focused on the consumer is not always enough. In an ever changing world, being flexible and able to react to new learnings is often the factor that determines success.

13

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Flexible “The pivot” is one of the most touted talents of the successful startup. The ability to see that something is not working, or that a new opportunity has arisen, and then have the entire organization react, instantly, to capitalize on this new learning requires both dexterity and courage. Over and over, large enterprises find that their financial and cultural investments in the status quo make seeing a new problem or opportunity very difficult. Reacting is even harder. More than 30 years ago, Intuit was the lean startup that everyone envied, and they have not forgotten that their focus on customers and their ability to react to feedback quickly are the reasons that most of their top products were conceived. Now, as a large enterprise, they have had to learn new ways to grow, but they have not lost sight of how crucial it is to stay focused and flexible.

Case Study: Leveraging HourlyNerd to be Consumer Focused Collecting customer data is widely accepted as a best practice to validate hypotheses and guide go-tomarket strategies. However, the process is typically time consuming and expensive. In an effort to better understand the Canadian artisanal food consumer quickly and efficiently, without sacrificing quality, a Fortune 500 CPG company turned to HourlyNerd. Understanding the attitudes, values and beliefs of this market required someone who not only lived in Canada, but who was also a market research expert that had navigated this field before. HourlyNerd consultant,

Anshul A., tapped into his network and hired three additional researchers to conduct interviews and to administer surveys to respondents in Toronto, Vancouver, and Montréal. In just two weeks, Anshul presented his research, findings, and recommendations. His team’s work provided a third party assessment that validated the client’s hypothesis, shed light on consumption patterns by city, and assisted in their goto-market strategy, ultimately refining the company’s launch budget. In conclusion, staying ‘Focused’ and close to the consumer doesn’t need to be a drain on resources. Rather, by leveraging platforms like HourlyNerd, enterprises can conduct consumer research in an effective and cost efficient manner, helping them to stay lean.

Case: Intuit’s Continuous Product Evolution – Savor Surprises Scott Cook’s mantra, “Don’t listen to what customers say, listen to what they do,” created yet another major pivot point for the enterprise in 2009, after watching smart phone financial management demand erupt. Intuit famously started in 1983 with two guys in room in Palo Alto. Fast forward three decades and they are a $4.2 billion annual revenue, 7700 employee market leader in personal and small business financial software. And Intuit’s co-founder, Scott Cook, works hard every day to make sure that the company continues to heed the lessons they learned as a lean startup.

Savor Surprises An early breakthrough for Intuit came by focusing intently on surveys of Quicken users and then reacting quickly to capitalize on their learnings. Quicken was developed as a tool for personal finance, so Intuit was surprised to find that customer surveys regularly mentioned Quicken issues at work. In the 1980s, many people only had computers at work, so the team assumed workers were using Quicken on offices computers for personal tasks. They probed further. To their surprise, business managers, owners and assistants were repurposing Quicken into a business

14

finance tool. There were plenty of business accounting tools on the market at the time, so the team had never even considered that market opportunity. The breakthrough insight that revolutionized Intuit was that non-accountants at companies were suddenly able to take on bookkeeping and “accounting” roles because Quicken did not require an understanding of debits and credits and journal entries, like all other “accounting systems” on the market.

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP The entire team recognized this new market opportunity, shifted to embrace small businesses, and rapidly created a new product for them. QuickBooks was released the next year and outsold the market leader within two months. It quickly grew to an authoritative 94% market share for small business accounting. Intuit continued working closely with customers and tweaking its direction based on what it heard. Intuit’s tax programs followed a similar path of opportunity, arising from dissecting surprising behavior when they watched customers struggle with receipt data entry and realized that Intuit could make tax preparation easier. It pioneered OCR receipt entry, bought a tax software company, and transformed the personal tax space.

Experimentation Today, Cook’s chief role is to work closely with a pool of in-house startups, and to mentor and manage these small businesses. He insists that the startups, and Intuit itself, continue to focus on listening, experimenting, and pivoting to seize opportunities. His mantra, “Don’t listen to what customers say, listen to what they do”, created yet another major pivot point for the enterprise in 2009, after watching smart phone financial management demand erupt. Instead of asking customers what changes they needed, they went out and watched what new startups who were inventing their own mobile and social financial solutions were actually doing. Intuit quickly understood the new need driving customer defections to mobile financial solutions, and in 2009, Intuit bought Mint. Cook was so impressed with the Mint solution, and the Mint team, that he took the Mint management team and put it on top of the Quicken team. “We wanted to Mintify the whole company”, he said.

In a world where software is rolled out to customers daily, and dominant businesses are disrupted overnight, Intuit has remained not only focused and flexible, but also fast as solutions companies need to be in an app driven market.

Fast There are thousands of innovators with unprecedented access to cheap development tools and investment capital looking to capitalize on unmet needs. They can move from an idea to a delivered product in just months. Typical new product development time, from concept to delivery, in a large company, on the other hand, is often measured in years. As a result, successful lean startups are able to exploit the slower, steadier pace of the bigger players and beat them to market. But when big companies get creative, the strengths of the enterprise combined with the speed of a lean team can achieve enviable results.

Case: Intuit Part 2, Creating Space for Intrapreneurs to Disrupt “Intuit is breaking down walls to allow their employees to be flexible, to innovate to cut failing products, and to deliver profitable solutions that meet current market demands.”

In the past year, all of Intuit’s products, including QuickBooks, have undergone a major transformation to online and mobile interfaces and business models. Intuit is so passionate about the need to be flexible and innovative that it has created an entire toolkit of resources for its small business clients to help them understand customer behaviors, imagine new opportunities, and monetize new product visions. And Intuit walks the talk. For 30 years, every major new product has been the result of quickly adapting the company to meet new business opportunities.

The QuickBooks Self-Employed (QBSE) product, conceived and launched all in 2014, is the story of successfully combining the best of lean startups and deep corporate advantages.

15

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP In 2013, another “surprise” Intuit customer behavior appeared. This time in the simple mobile personal finance app, Mint. Thousands of users were marking a majority of their expenses as “OTHER”, instead of using the many personal tracking categories available. By asking “why”, Intuit learned that self-employed contractors were using Mint’s “OTHER” to track business expenses. They were creating a big digital shoe box of “other” receipts that still needed to be sorted and re-categorized for taxes, but, at least, were now captured.6 This fast growing self-employed market need was a big gap in the Intuit product portfolio, between the new Mint mobile personal app, and the entry-level version of QuickBooks. The Intuit team looked at two options. They could pull a great cross-functional team together to create a new product to launch in 2016, or they could create a real startup inside Intuit. They chose the startup mode, with a few luxuries that only a large enterprise could provide. But they were careful to strip away the weight, obstacles and handicaps that usually come with the enterprise. A key challenge was finding people who were comfortable with risk, uncertainty, and speed. In any large organization, there is a bias towards existing products and existing methods. But, rather than hire “startup people” from outside, Intuit created the space for entrepreneurs who already worked at Intuit to emerge. To find these entrepreneurial-minded people, they cast a wide net. “We started very broad and said, look anyone who wants to come do this, can come do this”, explains Alex Chriss, now VP & GM of the Self-Employed Solutions business unit of Intuit’s Small Business Division. They ended up with twenty teams of three to five engineers, product managers and marketers who were set to compete against each other in a six-week marathon. Every team had access to the same research, customers, corporate code bases and tools, and each presented ongoing ideas and learnings to an executive selection team. Five of the original twenty teams were then tapped to move forward to refine their QBSE product ideas, and,

16

after two more months, one team was assembled with the best ideas and team members from the whole innovation exploration. While the competition was originally intended to discover new product ideas, perhaps the greater takeaway was that the executive team leared a lot about the “lean” thinking capabilities of various individuals in the competition. Chriss explains, “There were some interesting ideas that came out of the competition, but it really highlighted the people that really wanted to do this and had the chops and the excitement.”

Small Company Drivers Once assembled, the bar for the new QBSE team was high. They had a short, three-month runway to get a viable product into the hands of customers. Chriss drove the team to deliver a minimum viable product that customers would value enough to pay for, not just use. Twelve weeks later, the first version of QBSE was in the hands of test users. Consumer feedback was rapid, thanks to the tools the team had carefully integrated. The QBSE team took all user calls, emails, and questions, just like any startup would. Feedback went directly to the entire team, from the leader to the programmers. With this intimate focus on listening to consumers, the flexibility to innovate new solutions, and the drive to deliver results quickly, the team was able to iterate rapidly. As a result, over several months, multiple software updates were released, sometimes twice a day. At one point, a key hurdle to customer conversion emerged – actually paying for the product. Just like what you would find in a startup - but is unheard of in a large company - engineers and team members bootstrapped a solution for their hundreds of customers. They manually updated customers’ data for them, so that the customer immediately saw the reports and functions they needed to convince them to buy the software. Instead of first building specifications, coding a solution, and releasing a new module, the team accomplished what needed to be done

6

“Run Like a Lean Startup Intuit.” Telephone interview with HourlyNerd. 4 Jan. 2016.

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP by brute force, the same day. The fully integrated solution was delivered in week. This rapid, intimate innovation would never have been possible following standard corporate product development cycles. The QBSE team had critical advantages of a lean startup that few corporate product development teams share: 1. Direct, constant, team-wide communication with customers. 2. A very short runway to deliver a revenue generating product. 3. Freedom to bootstrap solutions, measurement tools, and anything else the product needed to stay alive.

Big Company Ecosystem Advantage At the same time, the QBSE team had the critical advantages of a large enterprise with a strong customer and product ecosystem that few lean startups share: 1. A pool of 8,000 employees from which to pluck the best team.

Shortly after launch, the team realized that these same customers were going to take all of this organized data to a tax accountant in just four months. So, in September 2014, the QBSE team met with the Turbo Tax team to ask if they could work together to build a Turbo Tax integration product for QBSE that could be delivered by December of that year.

“Give the team enough space and enough autonomy to move as quickly as they can. But then, when the time is right, lean in with the resources and the advantages that the company has and allow the startup to truly accelerate.”



The QBSE team leveraged everything it learned about how to be focused, flexible and fast, and brought those learnings to an entirely new team at Intuit. The two teams released an integrated tax package in just four months.

2. Capital to pay salaries and rent during the runway (e.g. lossmaking) period. 3. A vast code base to leverage as needed.

With strong corporate support, clear mandates on customer benefit targets, and a single-minded drive to deliver, a $4 billion enterprise launched a totally new product to a new customer base in twelve months.

4. Existing integrations and relationships with almost every bank and credit card company. 5. A brand name and ready customer base from which to solicit new users. 6. An established product distribution channel. 7. A ready investor to take and grow the product as soon as it was proven.

Leveraging these enterprise benefits is critical, says Chriss. To effectively incubate a startup within an enterprise, it is important for the enterprise to “give the team enough space and enough autonomy to move as quickly as they can. But then, when that time is right, lean in with the resources and the advantatges that the company has and allow the startup to truly accelerate.” By September, the “bootstrapped” QBSE product, resulting from a productive marriage between startup and corporation, was a success. Customers were signing up, importing their data, and paying the $9.99 monthly fee.

From pharmaceuticals to software, sophisticated enterprises are learning that they need to leverage their size and muscle strategically, and to get lean where it counts. They are getting out of their own way and finding concentrated ways to really focus on what customers and new markets are telling them. They are breaking down walls to allow their employees to be flexible, to innovate to cut failing products, and to deliver profitable solutions that meet current market demands. And they are unleashing the power of teams, but stripping away the corporate distractions that cause tasks, projects and new business units to struggle under the typical demands of being a member of a large enterprise. Other enterprises are embracing the projects as a surgical approach to getting focused, flexible, and fast, all across the company, very quickly. At GE, employees are encouraged to leverage internal and external entrepreneurs, specialists, and fast pop-up teams to deliver on anything they need. This is the rise of the freelance economy, leveraged to maximum benefit, to keep the biggest of the big, fast, agile, and innovative.

17

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Innovative Projects

18

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP

Innovative Projects Many enterprises who aspire to run with the speed and agility of a startup are focusing more granularly, driving efficiency and innovation with new approaches at the project-level. Namely, enterprises like GE are tapping into “The Global Brain”, internal and external experts and entrepreneurs from around the world, to help them become more focused, flexible, and fast. Leveraging technology, an enterprise manager who wants additional or new innovative ideas, different perspectives, or outside resources can mobilize these ideas in a matter of hours. By leveraging external partners offering various levels of expertise and capacity—from technology through HourlyNerd (where enterprises can access on-demand business expertise for project-based work) to micro-tasking with Fiverr and Mechanical Turk (where armies of workers can be hired to do any anything from data entry to logo design)—a traditional team, armed with a small budget and objective, can solve challenges quickly and effectively. GE has been at the forefront of the this movement, and is learning that by leveraging this “Global Brain”, they are able to achieve solutions faster and with additional customer feedback.

Case: GE Tapping Into the Global Brain “The team has established partnerships with various talent marketplaces and crowdsourcing platforms to connect them with GE teams to invent, analyze and implement new solutions.” talent marketplaces and crowdsourcing platforms to connect them with GE teams to invent, analyze and implement new solutions. “A given GE stakeholder may not have the right resource, or the time, to solve a problem they’re facing,” says Finkhousen, “or they may just want an outside perspective to view the problem from a different angle.”7

Digital Industrial giant GE believes in innovation and has celebrated a successful innovation legacy for 130 years. In the last decade that belief was expanded even further, as GE resolved to tap into “The Global Brain”—moving to open its R&D environment to connect and collaborate with entrepreneurs outside the company to create new intellectual property, value and inventions. Dyan Finkhousen heads the GE GENIUSLINKTM team, responsible for Open Innovation, Collaborative Innovation and Crowdsourcing, as part of GE Global Operations Commercial (GE’s Shared Services organization). Since 2013, the GENIUSLINKTM team has been enabling internal GE employees to quickly and effectively connect with internal and external expertise. The team has established partnerships with various

7

“Run Like a Lean Startup GE.” Telephone interview with HourlyNerd. 13 Jan. 2016.

“It is impossible for anyone in the organization to have all of the best ideas, so we’re leveraging open innovation, collaborative innovation and crowdsourcing to collaborate with experts and entrepreneurs everywhere who share our passion for solving some of the world’s most pressing issues.”

In the last year alone, the GENIUSLINK team has helped GE teams improve the speed, cost, and quality of hundreds of projects across the company. Within these projects, they improved product development speed and cost by up to 40-50% and improved the speed and cost of market insights by up to 40-80% across the projects they have sourced and managed. TM

19

HOW TO RUN YOUR ENTERPRISE LIKE A LEAN STARTUP With partners like Kaggle - a data science and machine learning specialist network, and HourlyNerd - a marketplace for business expertise, the people across every business unit at GE now have quick and seamless access to an expansive and impressive network of talent. “With Kaggle,” says Finkhousen, “we’re able to tap into industrial internet expertise that can exponentially improve the solution sets we can make available.” HourlyNerd “has curated a community of consulting and business experts that provide access to on-demand expertise to solve for a very diverse range of business priorities, including planning, strategy, process optimization and more.” In 2015, having completed several HourlyNerd projects, and understanding the potential for enterprisewide impact both at GE and at other companies, GE Ventures made an investment in HourlyNerd, further solidifying the partnership.

In fact, in the last year alone, the GENIUSLINKTM team has helped GE teams improve the speed, cost, and quality of hundreds of projects across the company. Within these projects, they improved product development speed and cost by up to 40-50% and improved the speed and cost of market insights by up to 40-80% across the projects they have sourced and managed. The program has been so successful that GE is now opening the service up to GE’s own clients. GE is taking advantage of rapidly evolving business models and technology to rethink how it can operate with better speed and innovate more effectively. This means changing the way they manage projects and product development internally--and also how they engage with the world to be focused, flexible and fast.

The GENIUSLINKTM program began several years ago with corporate sponsorship to experiment with the right way to bring outside resources in. Working with early adopter “clients” inside GE, the GENIUSLINKTM team has built a portfolio of case studies and a track record for success— leading to GE’s decision to make access to outside support available to everyone.

Conclusion Amgen, BASF, Intuit and GE are all companies that have recognized an opportunity to be more successful, more profitable, and more relevant by leveraging lessons from lean startups. Amgen brought in a team with a “lean bias” to re-orient the company’s focus to end results. BASF is using its breadth and network to foster new ideas and innovation from its extended community. Intuit is harnessing its startup roots to remind its team that “surprises” create opportunities, and then giving them the space to create. And GE is focused on leveraging “The Global Brain” to get projects done quickly and effectively. Each company took a very different approach, but all four are proving that the benefits inherent to a large enterprise, paired with the focused, flexible, and fast capabilities of a lean startup, can lead to dramatic results for the company as a whole.

20

ENTERPRISE enterprise.hourlynerd.com