The Missing Function is Entrepreneurship!

on The Startup Way by Eric Ries

I was listening to the Enterprise Information Live broadcast with Marilyn Gorman and Eric Ries yesterday, Thursday October 12th 2017. Most of it was about Eric Ries’s new book The Startup Way. No, it was not about promoting the book; the conversation rather focused on the contents of the books.

Mind you, I have not yet read the books as it only comes out Tuesday October 17th 2017.But what I got from the broadcast is the following: in his new books, Eric deviates from the original Lean Startup method. He is pivoting in the sense that he mentions that is not ONE lean startup way. The reason for this is as that wherever he went whether it be conferences or coaching sessions, people were asking all these questions about how to adopt the method in their company.

Now as Eric has a lot of experience in companies of all size and Marilyn as well for that matter, they definitely speak true when saying theory doesn’t always meet practice. And therefore for each company the adaptation of the Lean Startup Way is different pending on the culture, the values, the type of organization etc.

However, they also noted that there are three common denominators with regards to the process. This counts for companies of all sizes, whether they are startups or corporates or anything in the middle.

These three stages in the Lean Startup process are:

1. Critical mass

In this phase you look for proof of concept where you learn and validate, and see what processes work or need to be adapted.

For startups the founders are seen as being the entrepreneurs. However when scaling up your job description suddenly changes now you are the one who is supporting the other entrepreneurs in your company. The Startup Way is about how to help and transform companies to support entrepreneurship in their organization. The startup triangle helps in this process of transformation: accountability, process, culture, and people.

As Eric mentions:“Accountability is the foundation for everything when companies go through transformation. Where does the culture or organization come from? These foundational elements drive the service level characteristics of the organization. None of the Lean methods (Kazan/Kanban, MVP/BML pivots etc.) will work when accountability systems work against the cross functional and collaboration nature of these methods. If you don’t reward people who build smart MVPs or punish people for failing early, therefore not appreciating the learnings taken from this, people are not going to get smarter or pivot. They just keep doing things the same way they are used too: working according to the playbook or in silos.”

So it is not about driving behavioral change. You want to change the wrapper that created the behavior.

Therefore transformation itself should be treated as a startup. The people who leading this need to be seen as entrepreneurs. But transformation needs one driver, one advocate to make sure it happens. That driver is called the missing function also known as Entrepreneurship.

2. Scaling up

Commonly, middle management has the habit of erasing anything that threatens the status quo of the company. Therefore they chip away items from the lean startup team’s plan. Make the experiment good. So you can prove that the lean startup method is working. That does NOT mean making your MVP or experiment perfect! Usually lean startup teams use “Make experiments good” as an excuse to go back to the old ways of doing things when experiments fail.

Doing the same old thing is NOT Lean Startup. Successful transformation means really doing things differently; start small, experiment and then look for leading indicators for future success to grow and widen the movement to more and larger projects.

3. Dive Deep

Be willing to experiment, Be willing to fail, Be willing to win.

From all of these experiences you learn. And that helps to really build the leverage to transform the deep processes within a company. That means changing the values of a company. That actually requires coordination over functions and departments, but also functional manager’s buy-in is needed.

Therefore use the earlier phases to build up the political power to be able to transform. This will breakthrough people’s unwillingness to transform and helps you get through the difficult conversations.

So what’s the risk?

Managers who are hindering the transformation need to be told: you inherited the business from your predecessor and you will transfer it to your successors. What do you want your legacy to be? Do you want to be seen as the last generation of managers of this company or as its transformational supporter?

The risk to all of this is that it looks so easy. Well we all know that is definitely not the case and I speak from more than six years of experience introducing innovation is a more than traditional company. So how do we keep it real? We need to level with each other. There is no magic here.

As Eric says: “It is more painful to go out of business than to transform.”