Looking at Eric Ries and The Startup Way

With a wry grin, Eric begins his talk by knocking on the idea of certification: “A certified entrepreneur is a certifiable idea.” This was the perfect opening to a cunningly smart talk that cuts straight through the morass of corporate politics.

The author of The Lean Start Up and The Startup Way began his talk by saying the most absurd thing one can say in the corporate world is “think like a Startup.” Funny statement given his book titles, but he has seen the folly of trying to get corporate executives to really act like a start up.

After writing his first book, some of the Start Ups practicing Lean Startup became successful.  The issue is that once they become successful they become bureaucratic.

Here’s the outline of THE STARTUP WAY in brief:

• Continuous innovation
• Startup as an atomic unit of work
• The Missing Function
• The Second Founding
• Continuous Transformation

Eric then told a story about a large corporation. They had come up with a disruptive innovation. Yet, they didn’t understand their competition, the users of the product, and had “knew” that technology superiority alone would allow them to dominate the market. Sounds familiar, huh?

He pushed. They got nervous. Could they do customer work or competitive work as well as the Lean Build-Measure-Learn methodology?

He then got them to reduce production from five years to two. He asked about different Use Cases and encouraged them to test specific segments. After much corporate intrigue, they decided to run a quick and inexpensive test to see if the product was actually desired.

The Startup Way has to be embedded as an atomic unit of work: you have to make sure an internal startup has a distinct organizational structure to support them (rather than a committee to manage “the technical, financial, and managerial support of a new creation.”

This model calls for metered funding according to successful milestones. This money is sacrosanct, not based on dynamic slings of corporate budgeting. This is to say, it is a different funding system for allocating resources than typical corporate budgeting.

Ries calls for a Second Founding, where the company is radically re-birthed.

“Entrepreneurship has no home in the corporate system. If your CEO says it is everyone’s job, it is no one’s job,” he adds.

Instead, each division has a portfolio with metered funding. The corporate system is great for risk mitigation but not revenue generation. The risk profile is different.

Continuous transformation is the ability “to rewrite the organization’s DNA in response to new and diverse challenges and doing to again and again.” Several large companies are trying to embed these changes on an ongoing basis.

This system means we think through the people, the culture, the process, and accountability. These are the parts of the Startup Way.

“The best model may be a Venture Fund—and it should be the only topic and theme.”

Focus on experimentation rather than just execution – “the whole point is that innovation needs experimentation to create new value.”

Image Credit: Pixabay

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Michael Graber is the managing partner of the Southern Growth Studio, an innovation and strategic growth firm based in Memphis, TN and the author of Going Electric. Visit www.southerngrowthstudio.com to learn more.