Lots to take out from this a16z podcast with Eric Ries (of the Lean Startup fame of-course) including the title of this post (which it seems comes from an old customer-service oriented strategy from McDonalds). Believe it or not the book is five years old now (and the fundamental ideas even older), setting out a more scientific approach to building products but in doing so creating principles that might be applied in a much broader context to doing anything new under conditions of extreme uncertainty.
It's worth listening to the whole thing, but some of the most interesting discussion was about this wider context for Lean outside of silicon valley startup world, and how it might be applied to creating change in much larger organisations (touching on many of the areas that I've written about a lot here). Some notes from me:
- We're moving from ownership to platform - from Karl Marx's old idea of owning the means of production to a world in which we can rent the means of production. So value comes not necessarily from complete control, but from taking a smaller piece of much larger pie
- An interesting point on the origins of accounting methods, which were originally developed to ensure managerial accountability but seem now to be much more about tracking money and relying on forecasts which almost never come true: ‘a forecast is accurate only to the extent that it is an extrapolation from a long and stable operating history’. In conditions of high uncertainty where we are doing a lot more new things, we need a better way of accounting
- A good analogy about moving from science to astrology as an idea comes out of a Lab or R & D where it has been more rigorously developed and into the business where it is shackled to forecasts, organisational silos and short-term targets, meaning it is unlikely to survive. Eric makes a great point here about a missing function of entrepreneurship in many companies. Someone who is responsible for taking ideas out of the lab and has the ability, incentives, time and space to commercialise them. Someone who can manage the process from concept to execution, and a disciplined, systematic way of testing new ideas. Often in companies the problem is not lack of ideas, but the lack of a process to test out those ideas. Saying it is everyone’s job means it is nobodys.
- It’s not inevitable that large companies cannot innovate in this way - 'the bureaucracy and slowness and osification that we take for granted as a result of scale is not an inevitable development but is a choice about the systems of management we use'. The people that can make it work and take on these ’suicide missions’ are the mavericks that defy the standardisation of work
- Eric's 'grand unified theory of entrepreneurship' is that in most companies there are four completely different jobs that are actually the same role - a product manager tasked with entering a new environment/market, someone in charge of a new internal system, someone in business development tasked with evaluating startups for purchase, or people who are responsible for partnering with startups. These are all entrepreneurial challenges and all deal with situations of high uncertainty. Identifying the metrics for accountability, how you share best practices, what a career path looks like and so on - that sounds a lot like a corporate function
- Many larger organisations pay lip-service to continuous innovation but have no-one really driving it or no process for it to happen. A Founder/CEO’s time on innovation projects doesn’t scale - if you’re a large company that needs to create something disruptive every couple of years you need to have hundreds of experiments running at any one time. So you need to have a way to train and reward the entrepreneurial people in your company
- Small teams can be a useful tool in the management toolbox since they allow you the resourcing flexibility to try things out and not have it turn into a big sprawling committee. It's important to keep the people focused, cross-functional and dedicated
- It is often about mindset, not tools. Most companies have everything they need but it is just about management. Eric mentioned the GE Fast Works programme as an example of how large companies might innovate using Lean principles
- Pivot is now an overused word, but is a description for something that still needs a name - Pivot is a 'change in strategy, without a change in vision'
- Most people are energised by new ideas, but get frustrated by the slow pace of change in large companies. An enormous amount of human potential is locked up inside these companies. It's a powerful catalyst to set this potential free.
Good stuff.
