Channel Your Inner Startup: An Enterprise Leadership Approach
One of the common concerns we hear from clients is that more nimble and laser-focused competitors are nipping at their heels or could emerge from a blind spot and impact their market. This concern only seems to increase with scale. This post describes an example of how we helped a large organization discover how much faster it could experiment, innovate and deliver a product.
The burden of success
Leaders of larger organizations are up against competitors that aren’t encumbered by an existing product portfolio, internal politics, complex processes or legacy technologies. Their challenge is leveraging their organization’s scale and minimizing its bureaucratic burden to safely achieve breakthrough performance improvements.
This was the case at one of our clients, with annual revenues above the billion-dollar mark built up over a decade of growth and market success. Until only a few years earlier they had been able to increase the rate of new product launches to at least one product every month. After tremendous growth in business and personnel, that rate started to plummet inexplicably to an eventual low of two new products per year.
The Chief Information Officer invited us to assess and help improve the alarming situation. His teams had already tried making changes in every critical area, such as portfolio priorities, team configuration, and key roles in both engineering and product management. The problem persisted no matter what they tried.
We interviewed leaders involved in every step of product development, which all had a similar narrative. This suggested that the issues might be more systemic, requiring changes in how people fundamentally worked, thought and behaved across the organization.
Enter the leadership
The CIO brought us in front of the executive team to present our understanding of the problem and pitch our approach. We proposed to emulate the performance of a nimble startup while leveraging the unique capabilities and resources of this company. We asked the executive team to prime the organization for the change needed for this endeavor, in the form of three specific leadership prerequisites: Boundaries, Participation and Safety.
Leaders made room for change by offering a space to experiment that was unencumbered by existing bureaucracy, politics, processes or arbitrary deadlines. Boundaries clarify and separate the areas where we would make fearless changes from those that were off-limits. Were there some product areas that we shouldn’t disturb or could we take our pick? Should the team focus only on Software Engineering and Design or was it ok to involve Marketing, the Call Center or even actual customers?
Defining boundaries also meant that any existing projects or commitments “inside the lines” would be removed from the roadmap, providing full freedom for an autonomous team to define their own product experiments.
We asked leaders to be full and visible participants in any new behavior and language that the team would introduce. This was meant to demonstrate their desire for a new approach and their flexibility with existing language and behavior. For example, we asked them to:
Replace questions like “when will that be done?” with “how can I help remove any delays?”
- Help the team make sense of any new market information they discovered along the way.
- Provide big-picture context when needed without defining the team’s activities.
During the initial interviews we noticed the frequent declarations of certainty. This left little or no room for uncertainty to be expressed or addressed. We asked for a safe environment where everyone involved could express uncertainty within the boundaries defined.
It was necessary but not sufficient for the leadership team to offer safety explicitly. They also created a safe environment by openly expressing uncertainty and abolishing the economy that previously rewarded and traded in declarations of certainty. For example, they stopped tracking milestones and dates and started to inquire about the experiments the team was designing and asked for the unfiltered results of any tests that were carried out.
In effect, these prerequisites were how executives helped clear the necessary space that would allow everyone to consider new ideas and new ways of working.
Value stream exploration
Once this safe space was established, we proposed conducting a Value Stream Exploration (VSE). A value stream is the set of all activities that are required end-to-end to generate value for a customer. The organization had a strong manufacturing backbone, so most people had experience with Value Stream Mapping, which is the analysis of value and waste in an end-to-end process. VSE is more about doing than analyzing. It is a way to demonstrate how fast the organization can deliver a product.
A Value Stream Exploration begins by empowering a seed team to make full use of the organizations’ capabilities, and optimize for outcomes in market. Their work is highly visible — the rest of the organization is asked to support and prioritize this team’s requests above all but the most critical of tasks. In a sense, everyone is brought into the task of figuring out how we can all deliver faster to market.
In our example, the VSE team of just four people got started shortly before Christmas and their first market launch, a simple product, came only six weeks later. To contrast, the average project was taking 13 months to run, with nothing to show until the end.
Their main epiphany was that the fast turnaround required the involvement of another 30 people in the organization across many departments. Under normal circumstances, these 34 people would have different individual and departmental priorities. In this exploration, they knew it was safe to put those priorities briefly on hold in order to prove how fast the system could work end-to-end with their help.
All cross-functional contributors were able to join and leave the exploration without any of the orchestration and negotiation normally involved in their projects. They realized their existing process overhead made products take much longer to launch. Also, each department was optimizing for their own separate definition of success. For example, manufacturing was pursuing an optimization they called “first time right.” This was great for reducing their own costs, but it increased the costs on the product and marketing teams and made the end-to-end process all but grind to a halt. In practice it was a product-avoidance optimization at a time when the organization needed more products!
The VSE team had already demonstrated a huge leap in performance and we identified two candidate goals to tackle next. The first was to repeat the exercise with a bigger product to chase bigger revenue potential, at the risk of needing to take more than six weeks. The second option was to deliver another small product in six weeks with as few of the 34 people as possible. The VSE team chose the first option.
Making room for change and new ideas in the enterprise is a deliberate act. The leadership prerequisites create the minimum conditions necessary for a team to create and implement new ways of working, behaving and thinking. In this environment, the team can explore how to use the unique advantages of the organization and minimize bureaucracy and waste.
The VSE team entered the selected problem space intent on an outcome: activating revenue streams. Their choice and prioritization of products was informed but not constrained by the existing roadmap. They maximized the work not done by ruthlessly prioritizing and executing only the essential tasks to learn from their market.
The strategic value of leveraging the organization’s scale and minimizing its bureaucratic burden in this way, is a longer list. The exploration makes it possible for an organization to:
- Adopt a new leadership mindset – one that is confident about change and innovation.
- Define a new operating playbook for product development – owned and operated by the team.
- Accelerate end-to-end product delivery.
- Innovate in a problem space.
- Identify and handle its own constraints.
- Create and test new processes that can be optimized for speed to market.
- Achieve breakthrough performance improvements.
At a tactical level, the main value of the exploration after only six weeks was concrete learning applied to transforming business performance. With that learning also came unexpected incremental revenues that the team thought would only materialize in later product launches.
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Lab Zero is a San Francisco based product team who has helped both startups and Fortune 100 companies build flexible, modern, and secure solutions.