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When the non-profit was nearly acquired by a for-profit company several years ago, the time came to take a step back and re-evaluate what they were doing. “We decided that if we were not going to sell, we were going to really up our game,” says Abbie Moore, chief product officer. The result was a reframing of how they understood their mission. Instead of running a non-profit that happened to be a web site, they reconceived Adopt-a-Pet as a technology company that happened to be a non-profit.
Like many new organizations that experience huge growth, Adopt-a-Pet needed to figure out how to manage it effectively. The company had no real process in place for developing its product, even as the product was doing well. “We were a mess,” says Moore. “We still found a lot of success, but really in spite of our knowledge (or lack thereof) and not because of it.” In the areas where the organization was successful, there was no real understanding as to why.
Around this time Moore was introduced to lean principles through The Lean Startup and urged CEO David Meyer to consider them as well. “We were excited about that methodology,” recalls Meyer. Within a short time, Moore instituted a biweekly, mandatory “Lean Startup” meeting, where the entire organization was required to meet for an hour-long discussion of specific principles. “I would ask everyone to bring examples of how the principles would affect their department or the work they were doing,” says Moore. Everyone from engineers and designers to customer service and support staff was included.
There was some skepticism at first, but Moore kept asking more (and different) questions of her colleagues, a practice she continues. “I still constantly challenge everyone to list out and prioritize their assumptions, and to use MVPs to validate those assumptions,” she says. "One of our drumbeats is, ‘How can we make a year happen in a month?’ If it’s true that we’re going to be better at anything in a year, what can we do to compress that time so we don’t have to wait a year?”
One way the organization began testing its new ways of working was through a peer-to- peer adoption project launched in 2016. The project enabled pet adoption between individuals rather than through traditional animal shelters. It started with an MVP landing page, with Moore acting as the person behind the interaction, personally screening adoption applications and reviewing them with pet owners. By going to meetings with potential owners and adopters, she learned more about what the company needed to offer and what might be missing.
For Meyer, the most important piece of understanding how Adopt-a-Pet could and should reinvent itself involved the value the company was providing to its customer. “It was the realization that users can and should guide us; we don't have to guess at what they want. The whole concept of getting an MVP in front of people as quickly as possible in any form is about being brave and knowing that people will forgive us if it’s not perfect. They want us to succeed.”
For Moore, the two most important changes are the ability to launch a product quickly and to learn from iterations. A few years ago Adopt-a-Pet had metrics that included visitors to the site and how many emails were being sent to users. It was fairly basic information that didn’t offer the organization much insight into how the site was being used. Now the site is about engagements and activity and can measure the ways in which visitors are putting the site to use. Moore also assembled a growth and optimization team that launches test after test to learn how people use Adopt-a-Pet.com and the ways in which improvements can be made. And as the site has evolved, so has the technology that allows potential pet owners to connect with Adopt-a-Pet, more than half of whom now access the site through a mobile device.
“I think a lot of nonprofits are run by super passionate people who have ideas about how to change the world for the segment they serve,” says Moore. “And I think a lot of them do what we did, which was a come up with a program that seems like a good idea, toil away to launch it, and then say, ‘That's done,’ and move onto the next thing. Nonprofits should really start from the beginning and recognize that their ideas about their constituencies and programs are just assumptions that need to be examined, then start from a place of learning, and prioritize that learning above everything else.” That’s where new growth (and in this case, new pets) comes from.
I’ve seen three distinct driving forces behind this kind of change:
1. CRISIS: Sometimes, a crisis forces change. One of the stories I tell in The Startup Way comes from the Federal Government. The very public meltdown of HealthCare.gov, the government’s website designed to implement the Affordable Care Act, was a crisis of the highest order. A huge policy achievement almost went up in smoke because the process of creating the site was so poorly managed it didn’t work on the day it was unveiled. Ultimately, the crisis was the catalyst for real change at numerous agencies across the federal government, beginning with an epic lesson in what can happen if you rely on the traditional “safe” management methods the government used to build the original site.
2. STRATEGY: Other times, a new organizational strategy clearly necessitates a new way of working. At companies like Intuit, change was driven from the very top by a recognition that new strategic imperatives required a dramatic overhaul. This can work only when the most senior leaders in the company have bought into the new approach and are determined to see it through. It is also not the kind of decision that can be made lightly, which is why it becomes critical, after the first stages, to demonstrate how the new methods function and to lay the groundwork for full mobilization across the entire organization.
3. HYPERGROWTH: Success can be its own form of crisis. When a startup achieves product/market fit, it can be forced to grow extremely rapidly. As legendary Silicon Valley investor Marc Andreessen, also founder of Netscape and general partner of the VC firm Andreessen Horowitz, put it (in one of the startup movement’s most famous pieces of writing):
“In a great market—a market with lots of real potential customers—the market pulls product out of the startup...And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”
I first met Steve Liguori when we were both working at GE, where he was heading up a lot of their innovation efforts. But he’s been a change agent for much longer than that. We spoke recently about his path as a serial innovator, his beginnings in marketing, and what he’s been doing lately with his experience in teaching big companies how to transform themselves from the inside out. I’m a partner in his latest venture, the Corporate Entrepreneur Community (CEC), the newest addition to his long history of reinvention work that spans industries ranging from football to banking. I hope you’ll enjoy the conversation as much as I did.
Your first big innovation was also a huge cultural moment. What was it, and how did it come about?
When I was at PepsiCo, I started the Super Bowl halftime show with Michael Jackson. This was in 1993, and I was the chief marketing officer at Frito-Lay North America. The first Super Bowl halftime show was sponsored by Lay's Potato Chips, which we were re-launching. We were trying to do something dramatically new and innovative from a marketing standpoint, and being owned by Pepsi, which had done Michael Jackson, and was legendary for commercials and crazy marketing, we thought, "Why can't we do something crazy and innovative?" So we came up with the idea of disrupting the Super Bowl by doing, basically, what's now the Super Bowl halftime show--something crazy during halftime that we could own as a marketing vehicle. Before that--you can go back and look at old tape--half-time was the same thing from high school football to college football to NFL football. The marching band came out and did a marching thing and then at home everyone turned off the TV or went and got snacks because the announcers came on and talked football. We knew someone who knew Michael Jackson's agent and that's how it came together. I just always had that gene to make change. We called it “business not as usual.”
Where did that gene take you next?
I got lured away to run a small, private cookie company, and from there I went to Citibank. Going from potato chips and cookies to work at Citibank may seem kind of strange, but I got recruited there because they were looking to reinvent the consumer bank. I was president first of Citibank New York, then Citibank Federal Savings Bank, which is all the U.S. branches. I introduced brokerage services into the branches, which was a huge business innovation because for the first time you could go buy stocks and bonds in the bank branch. The other innovation I headed up there was basically putting Citibank online. I personally bought the citibank.com URL and introduced the first internet-based online banking.
Were people calling this kind of reinvention innovation at the time?
This was during the internet explosion, so I’d say it was called the digital revolution 1.0. In 2001, I moved from Citibank to become the CMO of Morgan Stanley’s brokerage business, where I was tasked with modernizing and reviving the brokerage business there. Everyone needed to get everything online right away and didn't know what the heck to do. I was there to help put Morgan Stanley online, but also to integrate the very broker-centric aspect of the business. Doing both was a really complicated endeavor and I helped reinvent it. We didn't call it innovation, but it was, because it was about how to transform a purely human-based business into a combination of human and online and get the best of both. Because I’d made a name for myself as an innovative marketer in consumer financing, I was then recruited by GE, which still had a consumer finance brand at the time called GE Money.
Can you talk about how you went from finance marketing to the kinds of innovation projects GE started taking on eventually, which was when we first got acquainted? Clearly there’s a through-line of a willingness to take risks, right?
GE Money ended up being significantly scaled back during the recession in 2008, and as that was happening I met with Beth Comstock, who was the CMO at that time. She said to me, "We've got all these industrial divisions at GE: GE Medical, GE Aviation, GE Energy. Do you think that the basic principles of marketing are the same there as in the consumer world?" And I said, “Is that supposed to be a trick question?” Marketing is marketing, whatever you’re talking about. Two weeks later, I was named the executive director of global marketing for GE at the corporate level, working for Beth Comstock. My charge was to modernize all the marketing departments across the GE divisions. But it wasn’t long before GE realized they had to get moving on digitalization at the business level--that everything that was going on at the consumer level was becoming really important for business as well. They knew they needed to get into industrial software and data. My role migrated over to that, and I was put on a task force to figure out how GE could begin to digitize itself and the industrial internet.
What that means is that If you're running a utility company, an airline, or let's say, even a railroad, the data that comes off of your equipment is invaluable to running your operation more efficiently. In fact, there's a term now, it's called, "OT," as in operations technology. So as opposed to just having data on how well your accounting's doing, an airline wants to know what its fuel efficiency is. A hospital wants to know what percentage of up time it has on its CAT scan machines. A power company wants to know whether they should be burning natural gas or taking power off of the solar grid because it's sunny in Southern California. We started all these change projects--sensors in airliner engines, or in CAT scan machines, so we could tell management how valuable that data is for them to help run the business better. It innovation of the product lines in businesses, and I was put in charge of coming up with new ways to do things around digitizing GE and modernizing the company. It was another example of me being a serial change agent.
This was around the time when we met, because all that change was getting stuck and I came along to try to help move it forward.
Yes. The teams would be all fired up. They'd start their journey. We'd get back to them in, say 60 days or so, and they'd say, "We didn't make any progress." And we'd say, "What do you mean you didn't do any work?" And they'd say, "We didn't say we didn't do any work. We said we made no progress." Why did they make no progress? It was because of people saying, "That's not the way we do business." The change agents were getting eaten by the business-as-usual.
So we decided we needed to go and attack head on how to do innovation from a cultural perspective, which turned out to be the Lean Startup methodology. With you, we eventually created a whole new cultural methodology at GE to get this new way of working kicked off. That was FastWorks, which you wrote about in The Startup Way.
How did that experience carry over into new projects?
I was getting asked very frequently to go present GE’s story about how they were figuring out how to do innovation completely differently. People were realizing they needed to change but didn’t know how to get started doing it in a big company. So I became sort of a pied piper both within GE and external to GE. At some point the light bulb went off and I thought there was a really broad need for this kind of information. I decided I wanted to teach big companies how to implement their own reinvention, by using Lean Startup as the core for updating their culture and leadership. So I launched Liguori Innovation to do that.
About a year and a half into the new venture, I had another realization--which you’d also had--which was that people in every industry were calling me all the time with the same questions. It didn’t matter if it was a tech company, a finance company, or a manufacturing company. They were all struggling with figuring out how to make change in a large company. There are very few people doing it, just a core, small contingent of folks trying it. So I thought maybe the best way to help people figure out how to do it is to get those who are learning about it together with each other. The idea was to create a community of practitioners and let peers jump in and actually help each other as another part of the ecosystem they need to succeed at it. That’s what the Corporate Entrepreneur Community (CEC) is for. It’s a very intimate setting where people can ask very specific questions of their counterparts at other companies that are similar to them in size and structure, but not in purpose, so there’s no competition. Things like, “What do you do when an executive comes in and says, 'Well, this seems great, but I'm still not buying into the process.” Or “We’re having a really hard time getting entrepreneurial people to stay in the company--how are you doing it?” It’s hard to have that conversation with anyone who hasn’t really lived inside a company of this size. There are several meetings a year, but it’s also a little bit of a matchmaker situation because people can call up and ask specifically to talk with someone we know has dealt with whatever their issue is.
Is the motivation behind your current work the same as it was when you started out at Frito-Lay or has it evolved in ways?
I really believe this is a huge need in society. These large companies have brought tremendous value to society from transportation, to electricity, to healthcare, to clean water.. And whether I love or hate Facebook, I don't think it's going to cure cancer, and I don't think it's going to get clean water to the billions of people that don't have clean water. These large, multi-national companies have global reach, and scale, but they are absolutely risking becoming dinosaurs because they're victims of the bureaucracy that they have created. That bureaucracy is necessary--they need regulations and controls on what they’re doing that affects people so much. But while you're making your quarterly numbers and doing all the things regulatory you need to do to pay the bills and stay out of jail, how do you at the same time completely reinvent yourself from the inside out? The specialty of what I do is to help answer the question: "How do you break all the rules safely?" That's an intentional oxymoron, and that's what these companies need to do.
To write their equally fascinating and practical new book, New Power: How Power Works in the 21st Century—and How You Can Make it Work for You, Henry Timms, the President of the 92nd Street Y, a major cultural and community institution in New York, and Jeremy Heimans, the CEO of Purpose, a company that builds social movements all over the world, joined forces to come up with a guide to navigating the world of crowds and chaos and connections we all live in.
They spent three years talking to practitioners, academics and researchers on the cutting edge of what they call new power, which flows from what they think of as the essential skill of the 21st century: the ability to harness the energy of the connected crowd. Their research and conversations took place all around the world and included everyone from the heads of intelligence agencies in Washington to frontline health workers in the Netherlands. They write about the battle and balance between old power to new power, and show how they’re fueling the defining transformation of our times. But like all fast-moving trends, sometimes it’s hard to see it clearly when we’re right in the middle of it, which makes New Power just that much more important. It’s a guide to spreading ideas, launching movements, raising money and much more.
It was my pleasure to talk with Henry about what he and Heimans have learned about how power structures are changing, how people can get started making the shift from old to new power, how the principles of new power are related to the principles of lean startup, and the responsibilities that come with all the amazing energy being channeled.
It’s also my pleasure to offer three copies of New Power to readers, thanks to Henry and Jeremy’s generosity. Tweet your thoughts on our conversation with the hashtag #newpower and I’ll choose three winners at random on April 12th.
Let’s start with the basics. What’s the difference between old power and new power, and how did you and Jeremy get interested in defining them?
Jeremy and I came at the world from very different places. He’s an activist and movement-builder and launched movements like Avaaz and Get Up! and I run a 143-year old institution. But we were both trying to get our heads around what was really changing in the world. And so often, the conversations about how the world was changing were reduced to quite a shallow discussion about technology--it was all something to do with Twitter, or changing tools. But it wasn't really a conversation about power.
We both in our work started to ask, "What's the right taxonomy to think about all of these changes in the world?" and we galvanized around old power and new power. The old power world is the one we know well, which is very command and control, top-driven, managerial and based on downloading information onto the world. What's emerging is the new power world, which is much more about things that are made by participation, about upload, and about distribution models.
New power--that ability to harness the energy of the connected crowd--has really become the essential skill of the 21st century. If you look at all the people who are coming up on top right now, for good and for bad, what they have in common is the capacity to capture that energy. So whether we look at Trump and Obama and the unexpected victories that they both had politically, or we look at platforms like Uber or Facebook, or we look at movements like #metoo or March For Our Lives, these very different examples all share one thing: the people who are leading them have worked out how to harness this power of the crowd.
Was there a moment in your own life and work when you first saw the effects of new power?
The 92nd Street Y is in New York, where one of the events we all pay attention to is UN Week. UN Week is typically the most old power week of the year. The only people who get anywhere near the action are people who have a UN Grounds Pass or who can afford to go to the Clinton Global Initiative. You had the most exciting people in the world here talking about the biggest issues of the day, and it essentially excluded most people. You couldn't get anywhere near it. Really, what UN Week brought New York was gridlock.
So about eight years ago, we at the 92nd Street Y – along with Mashable, UNDP and the UN Foundation – created the Social Good Summit which I think of as something that looks at the world through a new power lens. We said, "Instead of this being top-down-leader-driven week, how do you get people engaging in these issues in much more connected ways?" We opened up to thousands of bloggers and social entrepreneurs and others to come be part of it at the Y here. Then we encouraged people to meet up and create their own events around the world. We had meetings that first year in twenty-five countries where people collectively organized their own events similar to the Social Good Summit. Now we’ve counted 100 satellite events around the world. I’m speaking this summer at the Social Good Brazil event – which is larger than ours in New York City.
Can you tell me a bit more about your own experiences transforming an old power institution into a new power role model?
The 92nd Street Y is all about strengthening community. In the old power world, the way we did that is people would come through our door and we'd offer them experiences. For years we've created programs and people would pick up the catalog and consume our programs. But all the new tools available now allow us to do that work in a very different way.
#GivingTuesday is a perfect example of that. We took one of the key values of the Y, which is around community and philanthropy and said, "After Black Friday and Cyber Monday, how could you create a day that was really about philanthropy? How would you create something that could really scale around the world?" And that was #GivingTuesday. The design of Giving Tuesday was very new power in a couple of ways. First, we never branded it. We never called it the 92nd Street Y’s Giving Tuesday, and the goal was never that it would be all about us. It was built so that other people would grab it and make it their own. Second, we designed it so people would improve it.
As a result, Giving Tuesday has morphed into all sorts of different hashtags and different campaigns around the world. I remember very early on when Baltimore turned Giving Tuesday into BMore Gives More--Baltimore Gives More. They decided they were going to make it all about how generous Baltimore is. Then the organization Dress for Success, which takes donations of clothing for women getting back into the workforce, turned Giving Tuesday into Giving Shoes Day, which was about women giving professional-appropriate shoes to those going back to the office. University of Michigan turned Giving Tuesday into Giving Blueday, and they used it to raise $5.5 million last year.
In the old power model, we'd say, "Cease and desist.” You've changed our brand, you've altered the frame. But in the new power world these are all signs that your idea is spreading in the right way. At the 92nd Street Y when we’re thinking about the future, we aren’t just thinking about new technology, but new models for building stronger communities.
How did you decide to expand your original Harvard Business Review piece on new power into a book and what the research process was like?
When we did the HBR piece, we started hearing from people around the world who had taken it and worked out ways of using it for their own needs. One of the best examples is a group of health workers and nurses in the National Health Service in the UK who built on the ideas in the HBR piece and made a curriculum for their own work.
We kept hearing, time and again, from so many different sectors that the old power/new power frame was speaking to them and to the challenges and options that they faced. Even spies, who are perhaps the ultimate old power sector, started to engage with the idea, realizing now that they're going to have to work out how to deal with a much broader and engaged and connected landscape if they want to succeed. So even intelligence agencies are experimenting around open innovation and open sourcing and all these things and they recognize that they can mobilize the crowd around the outcomes they want in the world.
The reason we wrote the book was to really lay out this set of skills that help people become more powerful. The book offers a new playbook for a hyperconnected world. It asks and answers questions like: "How do you think about spreading ideas?" "How do you think about transforming an institution?" and "How do you think about raising money?" For that last one, of course, there’s a very new set of dynamics around things like crowdfunding, which everyone now needs to understand. The book is very much a practical guide for how people can think about their own power and how they can think about being more effective in the world.
There are also some cautionary tales. I think it’s fair to say we’ve seen some of the dark side of new power lately, too.
Yes, and that’s why the stakes are so high. If you agree that the essential skill of the 21st century is the ability to harness the connected crowd, you have to also agree that a lot of the people who are doing that well are not on the side of the angels. You look at the capacity of anti-vaccers to out-message health professionals. You look at the power of climate deniers to communicate better than climate scientists. You look at internet crazies who are doing better than academics who have all these truths and all these facts. There's this real surge of new power that is not ending up in the right hands. So while the first bit of the book is a practical guide how people can really get their head around this new set of tools, the second bit is a call to action--which is to say, we really need those on the side of the angels to get good at new power quickly. The voices of reason need to catch up.
I think we're also seeing the beginnings of a new kind of political consciousness emerging against platforms, who have gobbled up a lot of new power and extracted it for their own ends. There seems to be a very big market opportunity for someone who could create platforms that actually create meaningful and fairer connections with the people who create the value.
Who, in the course of your research, have you seen doing that most effectively?
So many of the people who are good at new power think about their work in an experimental, entrepreneurial way – with some real overlap with the Lean Startup method. Rapid experimentation isn’t something that’s just entrepreneurial, it's actually what the best mobilizers do. You talk to any long-time campaigner or activist; they'll tell you that's how they think about their own work-- just constantly experimenting until you see something that hits. I think that's probably the ultimate lesson of new power. It isn't something you do once a year. It's a practice that people need to learn and get good at.
In fact, you can think about the Lean Startup movement itself as an amazingly effective exercise in new power. Leaders all around the world have grabbed the central frame, made it stronger and stepped up to organize, create and collaborate. They aren’t waiting for permission. They all now connect with one-another in dynamic and productive ways, but without a top-down old power mentality. Ultimately, Lean Startup is a community.
How do those two aspects--the practical and the cultural--play out in the business world?
We think a lot about how many of the most powerful businesses we see now have new power models but revert to old power values. Uber's a great example; it has this amazing new power model with terrific execution. But they really resorted to old power values: secretive, very leader-driven, and very transactional in lots of ways and it, obviously, ended up costing Travis Kalanick his job.
Contrast that with a company like Lyft which is trying, with some success, to actually create a business that has both a new power model and new power values. New power values are much more about empowering the crowd, about more transparency and collaboration, and engaging with the wider world. For two companies who essentially offer the same service, there is a real return available around culture and values. When Uber and Lyft were in a recent price war, at the same time that Uber was seeing its drivers organize pickets against it around the country, Lyft, essentially, responded by organizing picnics. They're really trying to build enthusiasm and community amongst their drivers. It will be interesting to see where they go with this.
Facebook offers another example of a new power model with old power values. And the price of that is becoming clear. It's very much about centralizing value, it's very much about Facebook deciding what's good for the world and not the users. It's very opaque in terms of how it's governed and how the algorithms work. For businesses, we think the opportunity is for organizations to build a culture that is based on more than the efficiency of their algorithms, and fosters the human connection they have with people in their network.
What’s your opening advice for someone who’s in an old power organization and wants to start making change?
I think the biggest shift is not about technology, but actually about professional identity. It's about whether you are, in a committed and strategic way, really prepared to think about how you can engage more people more meaningfully in your work. For generations, the only real ask we had of our communities is "do what you're supposed to do" or "buy my product." That was kind of how the world worked. What's so interesting now is those businesses who are doing well are those who are offering more interesting routes to participation – far beyond “just consume”. Airbnb is a great example of that. They have worked out how to get their crowd to be their hosts, they've worked out how to get their crowd to fight their regulatory battles for them, they've worked out how to get their crowd to essentially be their advertising machine. Our argument is that for every business, every organization, every political activity, mobilization is now the key activity if you want to get ahead. The book offers the playbook for the new power world.
Ann Mei Chang is the Executive Director of Lean Impact, the social good division of the Lean Startup Company. This fall, her book based her own experiences using lean approaches to innovate in the social sector, including during her time at USAID, as well as stories from nonprofits, social enterprises, companies, government agencies, foundations, and philanthropists all over the world, will be published. Lean Impact: How to Innovate for Radically Greater Social Good is going to be an amazing resource for so many people from innovators to funders and everyone in between. Ann Mei recently talked with me about the book, some of the structural problems that impede social innovation, how lean approaches are leading to better solutions, and how she came to Lean Impact. It was incredibly energizing!
Let’s talk about what the idea of lean impact is and how you came to it. It’s such an inspiring story of taking skills from one sector to another for social good.
I spent most of my career in Silicon Valley in the tech industry, about 23 years. Then about seven years ago, I decided to make a pivot to spend the second half of my career in the public or social sector, particularly focused on global poverty. I ended up doing a fellowship at the State Department, then I worked at a non-profit called Mercy Corps. After that, I served at USAID as the Chief Innovation Officer and the Executive Director for the U.S. Global Development Lab. It was really a dream job. Our charter was to identify breakthrough innovations that could really bend the curve of progress and also transform the way we the practice of global development itself. We worked on issues around global health, around economic development, around democracy and governance, around agriculture and access to energy--across the board and around the world. I became really inspired at the possibilities of taking some of the best practices for innovation that I learned throughout my career in Silicon Valley and applying them to solving some of the worlds' toughest problems.
What are some of the biggest issues with the way projects happen in the social sector that prevents those problems from being attacked in an effective way?
The traditional approach to global development, and much of the social sector, is to run fairly large size programs that are usually designed in detail upfront, then executed accordingly - something I call an enforced waterfall model. It’s very risk-averse. A foundation or government agency puts out an RFP, and non-profits or contractors then submit a detailed proposal. Then once an award is given, the grantee is expected to spend the next three to five years dutifully implementing on the program as designed.
There's very little room for experimentation, for risk taking, for iteration. You have to stick to the letter of the proposal. That's not a great way to innovate. At the Global Development Lab we were pioneering some different ways to tackle problems, to structure our funding so that we could give out smaller grants for people to experiment, give them a lot more flexibility to do so, and then give them increased grants based on their successes. This happened both through development innovation ventures--we called these DIV--which was an open innovation window where we took ideas from anywhere and across sectors, and also through our grand challenges, which we called directed innovation. Those would focus on specific problems where we felt like the solutions we had were insufficient and we were seeking to tap into the worlds' greatest minds to come up with better solutions that could move the needle.
You’ve now spent the last year writing a book about all of this, also called <em>Lean Impact</em>. Can you talk a little about why you wanted to do it in that format and about the process?
When I left USAID, I wanted to continue to take the things I’d done there forward, and a book seemed like the right way to do it. I think a book is a really helpful reference point that anyone can access, whereas only a limited number of people can make it to any individual conference or presentation. We’re also doing events and conferences, either in conjunction with the lean startup community or potentially some independent ones as well, along with workshops and consulting services, all with a nonprofit mindset of looking at how we can help the social sector as a whole become more innovative.
A book is a way to capture all the ideas in one place that can serve as a foundation. The intent of the book is to lay out how we can adapt the same approaches that we've seen lean startup bring to accelerating innovation in business to solving some of the world’s greatest problems. Yet, innovation is far more challenging in the social sector, and doesn’t always easily translate. Lean Impact addresses these unique barriers head on, and shares compelling examples from different organizations who have overcome them. I talked to over 200 organizations in the course of my research for the book, and it’s been really inspiring to hear their stories of how they managed to innovate in the work that they do.
Were there any universal challenges among all the stories?
Absolutely. One of the biggest ones is funding. Startup companies are typically funded by venture capitalist or angel funding that is fairly flexible; you can experiment, you can take risks, and it’s expected, in a sense, when you're a startup company.
For organizations in the social sector, the funding that you get from government agencies, from philanthropists, and from foundations is often fairly restricted and fairly risk averse, as I was saying. It's a real challenge and this is the most common concern that I heard from the people I've spoken with. They wanted to innovate, they wanted to experiment, they wanted to take risks. But the way that they were funded, they felt like their hands were tied behind their back and they didn't have a lot of room to do it. That's one of the things that the book really focuses on: how to make the room, how to be able to do this type of work within the constraints that organizations often have.
Are there some solutions you’ve seen work even for organizations that are in the early stages of adopting lean methods?
I do think there are a lot of things organizations can do, even in the current landscape. It does involve taking some risk. One tactic is that some of the best organizations I spoke with have actually turned down grants that are too restrictive or poorly aligned. It's something that people are often hesitant to do, because they are trying to keep the doors open and they're trying to grow. It's very tempting to take money when it's offered to you. But some of the most successful organizations I know of were picky. They made the difficult choice to turn down money that was offered to them because it didn't allow them to move forward on the things that they thought would be most effective. They took a gamble that they could find other money that would be more flexible and many have. Sometimes it's just making that tough choice and really being patient to find the right kind of funding.
The other problem I would say is that because of how the social sector is structured, we often have a mindset that everything needs to be done fairly big. We create these proposals, we run these big programs. Innovation in general and particularly with lean approaches, should start small. Experimentation isn't something that takes a lot of money. That’s more of a mindset shift: even if we don't have a lot of flexibility, we should take what flexibility we have and for example, just get out of the building. Go talk to your customers. Spending a day doing that can glean enormous insights, even if you're not able to completely transform the way you work. Injecting what you can by running a few small experiments or talking to customers can make a big difference.
What would you say to people who might say that starting small is a little pointless when facing such huge problems?
There's this great graph that the World Bank put out in a report a few years back that really shows the progress that we've made on some traditional poverty alleviation intervention, such as clean water, access to electricity, access to education, and so forth. What we've seen is very slow but steady progress. But if you overlay that with the trajectory of adoption of mobile phones, for example, you see a completely different curve where there's an acceleration of adoption that rapidly eclipses all of those traditional problems. Mobile phones were this new innovation that people wanted, that solved real problems for them, and that had a business model that enabled rapid scaling.
I think it's absolutely possible to bend the curve of progress when it comes to global poverty. What it means is rather than brute forcing our way there--by taking the tried and true things we've been doing for decades and needing another dollar to reach another person--we need to step back and look at how can we find more effective interventions that get us greater bang for buck. We need solutions that people really want and embrace and we need to look at different ways we might go about solving some of these problems and finding one that has the capacity to reach much greater scale and impact in what we are doing today. That’s exactly what small experiments are for.
Who can make that happen? Is it up to funders? Or the people getting the grant money?
I'd love to see funders take a different stance in terms of how they give out grants and the kind of flexibility they offer, to really shift the way they fund to better support innovation in the industry. But I think grantees can help with that shift. One of the things that I've been a big advocate for is building in an innovation window when you apply for a grant. It may very well be the case that your funders out there are going to fund a certain way, so you need to write a proposal to access that funding. But you can include in that proposal, say, a 5% innovation window, where you say I'm going to use 5% of those funds to experiment in order to try to figure out how I can make the other 95% far more cost effective or impactful or scalable. It's a very good use of money. When you show that experimentation does really yield results, then hopefully the funder might consider even larger windows in the future. It's not necessarily what funders are thinking, but by taking some of that risk, I think the reward can be really outsized in terms of what they can deliver in the long run.
It’s pretty clear these issues really need to be addressed from a lot of different angles at once. Can you talk about how lean impact fits into that?
In the social sector, it takes a whole ecosystem to get projects done. In business, the individual business can do a lot on their own: You create a great product, you can go out and there's infrastructure to market that product, to take payments for the product, to be able to distribute the product and so forth. In the social sector, one non-profit, one social enterprise often can't solve the problem completely on their own. They need to work with donors, other partners, government policy, distributors, missing infrastructure. Just getting payments or getting distribution for products can be a big challenge. It ends up being a much more complicated problem that involves bringing together multiple players, multiple stakeholders that can really tackle the problem from different angles. So this concept of lean impact is for all of those stakeholders as well as the philanthropists, foundations, or government agencies distributing foreign aid. It can also be for individuals who are looking at how they can most effectively volunteer their time or make donations of their money to be able to create social change in the areas that they care about.
What stage would you say social sector innovation is in, overall? And what’s needed, besides just spreading the word and the methods, to help it grow?
Innovation has become probably the most overused buzzword in the English language. In the social sector, there has been a lot of interest because people are seeing the kinds of results that innovation is having in business, and they see an opportunity to make better, faster progress on intractable social issues. However, in many cases, I think there has been a misunderstanding of innovation--which has resulted in lots of new ideas being generated for social good, but very few of those ideas are reaching significant impact at significant scale.
One of my favorite quotes is from Thomas Edison, who said that genius is 1% inspiration, and 99% perspiration. That inspiration is the invention, the new idea, which we absolutely need to get started. Lean impact is about that 99%, which is the blood, sweat and tears that goes into the constant testing, iteration, experimentation and feedback loops that take a germ of a great idea, and turn it into a solution that really can reach massive impact at scale. Ultimately the reason to become more innovative is to become more effective, and make a bigger difference more quickly for more people.
To learn more about Lean Impact, go to</em> <a href="http://leanimpact.org/">leanimpact.org</a><br />
While doing research for his extraordinary new book, Great at Work, Morten Hansen studied more than 5,000 managers and employees in corporate America to identify the key practices that explain why some perform better than others. What he and his research team discovered is that seven key practices explain a whopping 66% of the difference in performance among people in the sample.
I was really curious to learn more about his research and findings, but also how these practices apply to working in startups. Both kinds of organizations are experiencing high degrees of uncertainty, and I’ve found they can be more similar than people expect (though there are clear differences when it comes to scale and building new things vs transforming existing structures or processes). We talked about what being “great at work” means in both contexts.
Q: Startups are inherently unstable. Can you explain how the principles that make people successful in more traditional, less volatile work environments can also work for startups? Are there common factors?
A: Startups are clearly different from established companies, yet there are also similarities. Many established companies today are experiencing unprecedented levels of instability in their business models, brought on by technological disruption and, yes, those startups chasing their markets. We found that the best performing people in established companies are constantly innovating in their work. They look for ways to redesign their jobs to add more value, and they keep on learning new things. That means that they experiment and pivot from time to time, just like startups. For example, there’s a high school principal in my book who was leading a severely under-performing school in Detroit where 80% of students were on food stamps. He started experimenting with new ways of teaching which led his school to be the first in the entire United States to flip the classroom for the entire school—homework at school, lectures at home via video clips. Essentially, he applied the “startup way” inside a school. He had a very tight budget, not unlike a startup, and started out by using A/B testing his hypothesis around flipping with a minimal viable approach (using some basic videos and teaching plans) to see how it would work in two social studies courses. The rest is chronicled in the book, but we find these kinds of innovators and learners throughout the corporate world. We just need to give them tools, frameworks, and right encouragement.
Q: In your research, you found that top performers at big companies had two critical skills: they knew how to set a short list of priorities and also how to protect them by being really good at saying no to anything that didn’t align with those priorities—including their bosses. What happens when people at both large organizations, and startups, don’t follow your principle: “Do less, then obsess”?
A: In my experience, startup teams do obsess—they go all in on their startup and fully commit to their work. Their problem maybe the opposite which is too much hyper focus. I recently spoke with a founder of an online education marketplace. He had a laser-like focus on his key for-profit segment, but then some high-profile people approached him to extend this to a non-profit area. Flattered by their attention, he re-allocated resources to that new effort, only to encounter problems in the core area. After a while, he realized that he had prematurely branched out and had to re-focus the effort. It’s a real concern given startups have very, very limited resources. Doing less—and sticking to that narrow scope—is key, yet the temptations to prematurely expand to new customer groups, new features, new products and services, and new geographies is very strong. It requires real discipline to master this principle in a startup environment when little is known and resources are scarce.
In larger, established companies my data show the situation is the opposite and often worse. A lot of people working in innovation encounter the problems of both lack of focus and lack of obsession. Many people in our data reported work environments where people “do more, then stress”. They take on many priorities—for example, working on 3 product development projects simultaneously—and then work hard to accomplish all of them, which means they cannot go all in and obsess over a few things.
“Do more” types fall into two traps: they spread themselves too thin, which leads to them to miss deadlines and deliver lower-quality work. They also fall into the complexity traps: they spend time coordinating and juggling multiple activities. Things get dropped, and error rates go up. Many cope by working long hours and stressing to just keep all these activities afloat. It can work to some extent, but it doesn’t produce excellent work. It certainly isn’t being great at work.
Q: We tend to think of people who succeed at their jobs or in launching a startup as people who are passionate about what they do. Is passion a prerequisite to being a top performer?
A: I initially thought that people who do very well did so because they “followed their passion.” That idea has become cliched, it’s repeated so often. The problem is this: What it really implies is that passion should dictate what you choose to do, regardless of other considerations (the assumption being that it will all work out in the end). Ignoring your passion, doesn’t sound like such good advice, either, as it may just lead to a life of drudgery.
We discovered a solution to this conundrum. Top performers found a third way: they matched their passion with purpose. Passion is do what you love; purpose is do what contributes. Passion asks, what can the world give me (a hedonistic view). Purpose asks, what can you give to the world (an other-orientation). I call this “P-squared”: People who infused their work with both passion and purpose performed much better in our data set than people who had just passion, or just purpose, or neither. They placed in the 80th percentile in the performance ranking on average, while people with only passion (but no purpose) placed in the 20th percentile, and people with purpose (but not passion) placed in the 64th percentile (note that purpose more than passion correlated with high performance).
Having passion and purpose in one’s job is important because when you inspire yourself first, it’s easier to inspire others. In today’s workplaces, whether in large companies or startups, you need to get others excited about your initiatives and projects—you can’t just rely on the old style “command and control.” We found that the top performers were really good at inspiring others, surprisingly not through charisma but through other easily adopted techniques to evoke emotions in others (both positive and negative). For example, by “showing and not telling.” One purchasing supervisor we spoke to was charged with the thankless tasks of converting paper to electronic forms in the company, and no one was excited to support him. Then he learned that the CEO would be visiting his office building for a meeting, and he arranged to use the adjacent conference room. He grabbed the CEO in a break and guided him into his room, where he had displayed a mountain of paper on a giant conference table. “Holy cow, what is this?”, the CEO asked excitedly (and not in a good way!) to which he responded, “this is all the paper forms we use in this company.” His project got the support it needed.
If you’re a founder or working in a startup or thinking about forming or joining one, think about this. Don’t just follow your passion in deciding which startup and which role. Try to formulate how you can take your unique strengths and find ways to contribute to the world. What’s your personal purpose statement? We found that a very strong purpose orientation has three components: what value do you create for others—customers, co-workers, company? Is that value meaningful to you personally? And does that value provide societal benefits beyond sales and profits? Then apply this to the startup itself: What value does the company create—and for whom—and is this formidable value creation? How many of the employees find that value proposition personally meaningful? What societal benefits does the company bring, beyond generating its sales and profits and selling stuff to customers (selling advertising or selling an app to a corporate customer does not necessarily provide societal benefits).
Q: So how can people working in both startups and corporate jobs determine if they’re creating that kind of value and those benefits for the people who they work with?
A: They need to pursue different, better metrics. We discovered in our research that people in established companies oftentimes pursue the wrong metrics. They emphasize volumes of activities or internal goals, over value-creating metrics. For example, one logistics manager in a high-tech industrial company tracked the extent to which their industrial products left the warehouse on time, achieving an impressive 99% on-time shipment rate. The problem was, the customers complained that only 65% of the shipments arrived when they needed them. The 99% metric was an internal goal, whereas the 65% metric measured customer value. You need to measure value-metrics and not internal “volume” metrics.
I suspect that many startups also don’t do this. A few months ago, I spoke to the CIO of a large company that is one of the largest paying customers of Slack software. She reported that they tracked very high usage of the software. When I asked whether they had seen higher productivity as a result of Slack or tracked that, she said they had no idea and that it wasn’t clear. Then I asked them to ask Slack whether they tracked such measures of their clients, and so they did and got a negative response. That’s no surprise. When I read about Slack in the news, I come across two typical metrics: the number of users and user engagement (hours of use per day). But those are volume metrics: the fact that a group of engineers in a client company uses Slack extensively during the day doesn’t mean that they are doing better work (that’s like saying that meetings using video-conference tools are good meetings). This is not to single out Slack, which is a terrific company, but to make a general point. Startups also need value-creating metrics: what value do we create for our customers, really? And how can we modify our work and offerings to increase value?
For that logistic person shipping goods, that meant re-organizing the schedule to get better delivery time for customers (value metric: % of shipments arriving when customers needed them). For Slack and many others like that, the real measure of value is the improved results by the customers like the one I interacted with (higher engineering productivity, speed of product development etc). Yes, those are harder to measure, but they are the real measure of value.
Q: Your concept of the “learning loop” draws on the build-measure-learn cycle that is one of the pillars of The Lean Startup and The Startup Way. What does it look like for people who set themselves apart from their colleagues?
A: One of the great virtues with The Lean Startup and The Startup Way methods is the focus on learning empirically, for example by doing A/B testing on MVPs, learning from those, and pivoting if necessary. We found in our research that the best performers apply a similar “learning loop.” They try out a new way of working (say leading a meeting), then get some measurements and feedback (say, feedback on meeting effectiveness), then modify their behaviors, and then repeat. It was also striking to discover how few people do this while working. Many people become competent at a professional skill, then they stop improving—good enough is good enough, it seems. This paucity means that startups and other companies pursuing the lean method in innovation have a huge advantage over others who are not learning at the same rate. Moreover, we discovered that the learning loop method really works not just for idea development but also for most “soft” professional skills, like running a meeting, prioritizing, doing a sales pitch, and so on. Everyone can apply this to managerial and professional skill development. For example, if you’re a sales person in a startup: do you apply such a learning loop to your sales pitch? Do you A/B test it and modify it constantly to become better? Those who did in our dataset improved faster and outperformed the rest. Continuous learning and growth are important in any work environment.
Morten Hansen’s new book GREAT AT WORK is on sale today and available at bookstores everywhere.
Editor’s Note: We wrapped up the 2017 Lean Startup Week in San Francisco just a few weeks ago, and we’re excited to share with you some of the best lessons learned in entrepreneurship and corporate innovation. Expect to read a new story each week straight from our keynote and breakout stages.
In an interview with GE’s Culture Transformation Leader Janice Semper during Lean Startup Week, Eric Ries remarked, “Listen, that's our specialty here. We try to talk to real practitioners about actual, real issues.” And the effort was reflected by the 140 speakers and mentors who took the stage and ran workshops over the course of the seven-day conference. We'll share the lessons we learned from these inspired leaders over the next few months, and give you a taste with these seven highlights from Lean Startup Week.
LESSON #1: Equip your business with a portfolio map and a 21st century org chart.
With industries from banking to transportation being transformed and, in some instances, undermined by new business models and technology, executives are smart to wonder, “Are we next?” To confidently answer no, co-founder of Strategyzer Alex Osterwalder told our attendees, “What you really want to do is work more like Amazon. … The reason Amazon [is invincible] is because they've put a system in place that allows them to continuously innovate.”
To do the same, Alex recommends building two things: a business portfolio map that recognizes invention as necessary and an updated organization chart. “You need a pipeline of tested and validated ideas,” Alex said. The pipeline starts by dividing your business into two distinct functions: innovation and execution. The innovation motto is “Fail fast.” The execution motto: “Failure is not an option.” The innovation function is dedicated to iterative search through experimentation. The execution function is dedicated to the day-to-day business.
To successfully support experimentation, Alex explained you must also create an org chart that mirrors the roles overseeing execution. For example, if a chief executive officer manages the daily operation, a chief entrepreneur heads up innovation efforts. “And the chief entrepreneur has a staff of chief portfolio manager, chief venture capitalist, and chief risk officer, right? Because these Lean Startup people, they do crazy stuff,” Alex joked. “So that gives us two different management structures for these two different portfolios.” Two particularly important roles include the chief venture capitalist, because the investment philosophy for invention is different than traditional finance, and the chief internal ambassador “who connects the two [functions] and builds bridges.”
LESSON #2: Forget innovation. Remember your customers, culture, and connections.
ING Group is an exemplar of supporting continual improvement, so it may be surprising that their Chief Innovation Officer Ignacio Julia Vilar told the Lean Startup crowd that “innovation” is “a little bit [of] a buzzword.” So, ING has redefined the I word. “And to be honest,” Ignacio shared, “the first thing that we said is what it's not about. And innovation is really not about gadgets.” Instead, ING has adopted a company-wide focus on three Cs: customers, culture, and connection. It’s “creating something really useful for the customer that is solving the need of the customer.” And to do this, ING has had to create the right culture and sometimes connect with outside fintech companies.
To support the three Cs, ING has also developed their own iterative practice named PACE. Describing the development of this methodology, Ignacio explained, “We just sat down together and said, ‘Well, let's look at what we're doing. … Let's see what works well, what doesn't work well for us, for our organization, for our culture.’ We tried to define the best for us, and then we started practicing.” The result is a combination of design thinking, Lean Startup, and Agile Scrum, and Ignacio’s innovation team includes 25 coaches who train employees in PACE best practices. To “embed this in the organization,” the company has created PACE Everyday, “a simplified version…to force our organization to always start with what is a problem that we are trying to solve and to test it and to test it in a real way.”
LESSON #3: Avoid these three hiring mistakes.
When it comes time to grow your team, Jeff Jordan and Eric pointed out three hiring mistakes to avoid.
First, do not hire someone just because they have the domain expertise. You want to be sure that they can work with the resources you can provide in terms of staff size and budgets. In other words, be sure they are ready to work at a startup. Jeff elaborated, “You want to tee [your hires] to the state of the company.” For example, don’t court public-ready CFOs when your financials aren’t even on QuickBooks yet.
Second, don’t simply hire your buddies. “You’re kind of looking for founders,” not friends, remarked Jeff. “If you know the true story of any [startup], the early employees are every bit as entrepreneurial, every bit as dedicated … as the true founder,” Eric seconded.
Lastly, question any hiring decision based on “culture fit” alone. While Jeff and Eric agreed that company culture can be powerful and effective, it can also result in a homogeneous company with unexplored opportunities and weaknesses. Eric recounted, “I was just in an interview where someone was saying, ‘I don’t want to hire this person. They’re qualified. I liked all their answers, but my Spidey-sense is tingling. I didn’t feel like they’re a fit around here.’ The human brain is really good at producing intuitive leaps, but we know from the research that those leaps can be biased by irrelevant characteristics. Whenever you hear, ‘They’re not a fit,’ you have to look really carefully.”
LESSON #4: Get creative with your MVPs.
In an interview with Eric reflecting on their work together at GE, Viv Goldstein and Janice Semper, co-founders of GE’s FastWorks, demonstrated that even a hundred billion dollar company can learn from creative, low-cost MVPs. When the CEO of GE’s Sustainable Healthcare Solutions business in India called Viv one day and said, “We've got a problem selling our neonatal incubator,” Viv explained: “We started by asking what is the customer problem we're trying to solve for? What is the impact that our customers need? And what are some of the challenges they're facing with the product right now? Not, ‘what's the technology?’ In GE, technology used to be our lead, and instead we reframed that and started with the customer.” The team discovered that medical professionals in rural clinics in India needed a more suitable and convenient way to place the babies in the incubator, and needed incubators that could hold multiple babies while still providing the right amount of heat and light to each baby and withstand the one type of disinfectant clinics could afford. The first MVP was “a shoebox and a doll.” When confronted with a “safety valve hydraulic thing,” Eric remembered that “all the conversation in the room was about the technology of hydraulics.” But, “the ultimate MVP they had involved sending a team member to go sit on the rig … to find out what the actual safety problems were.” What did the rig-sitter find? The problem “had nothing to do with hydraulics and everything to do with 29 kinds of human error.” And, in response to employees’ desire for more continuous feedback from their manager and peers, a GE team had built a simple MVP for enabling real time 360 feedback; but when they tested the tool, they found that absolutely nobody used it. “What we discovered is that it had absolutely nothing to do with the tool,” Janice shared. Instead, employees “were like, ‘Well, I don't know how to give my peer feedback. I've never done that before. I can't really give my manager feedback. How is he or she going to take that?’” The team learned that they didn’t need to build a better product. It “was much more [about] training around the behavior.”
LESSON #5: Build-measure-learn with an innovation thesis.
According to Tendayi Viki, 54 percent of companies struggle to bridge the gap between innovation strategy and business strategy. He suggested starting by adopting a build-measure-learn loop for your innovation strategy. Here is the step-by step process that he outlined in his presentation:
First, sit down with your team and develop a point of view on where the world is going. Ask “what are the trends that are impacting our business? And what are the things that are coming up in the future that we think we need to respond to? What products in our portfolio are declining that we need to fix?”
Then, decide how you will use innovation to respond to these challenges; this is your innovation thesis. Tendayi explained, “It's actually based on the venture capital notion of investment thesis. If you're a venture capitalist, the whole time you're getting pitched a lot of ideas by a thousand people. You can't invest in everything, so you have to make a decision about the kind of things you invest in and the kind of things you don't invest in.”
Once you have a thesis, every project you support becomes an experiment testing it, and you should review it on a quarterly or biannual basis and change it as needed. This approach also structures your budget decisions. “Not a single dollar moves from the company's bank account into some project except when it’s a specific expression of [your] strategic intentions. There's no let's-see-what-happens dollar. Every dollar moves as an expression of [your] strategic intentions.”
LESSON #6: Fall in love with your problems, not your solutions.
“I always thought, ‘How are we going to affect this organization whose heritage is world-class innovation?’ reflected David Kidder during his interview of Procter & Gamble CTO Kathy Fish. Reflecting on how Lean Startup methodologies have changed P&G, Kathy shared that “when you fall in love with the problem and not the solution it opens your mind up in a really different way. So we would typically fall in love with the solution, which would always be a product … As you fall in love with the problem, you start seeing business model opportunities; you start seeing marketing and education opportunities in addition to product opportunities, and it's just much, much richer.”
Focusing on the problem first has also proven cost-effective. Before working with Lean experimentation, the company was “spending a lot of money sometimes before we really should have,” Kathy said. “We've now shifted to a more metered funding approach . . . And we're finding on some of our biggest programs that we're learning faster; we're getting to the consumer a lot faster; and we're spending 25 to 50 percent less money along the journey. It's amazing.”
LESSON #7: Create peak moments.
While Kathy encouraged companies to embrace their problems, co-author of The Power of Moments Chip Heath asked the Lean Startup crowd to create peak moments, or moments that evoke an emotional response. To illustrate his point he told the story of the second highest rated hotel in Los Angeles on TripAdvisor, the Magic Castle. Number three is the Four Seasons. The Magic Castle’s secret is not their shoddy bathrooms, but their butler popsicle service, free candy at the front desk, and free laundry—peak moments.
In Chip’s “toolkit for creating a happy face” are four elements. The first one is elevation. “Elevated experiences are experiences that bring us up in sensory experience to something that rises above the day-to-day.” Chip’s examples included fireworks, sunsets, and cupcakes. The second element is insight. Chip shared the story of the executive who displayed the 424 kinds of gloves his company was buying to help his senior leadership team realize they had a procurement problem.
The third peak element is pride, and finally, there is connection. John Deere redesigned their employee orientation day to achieve both. The welcoming process starts with a personal text before your first day and includes a welcome email from the CEO letting you know that “on your desk is a model of the very first patented plow that John Deere manufactured" 175 years ago. “There is not better leverage than an employee orientation day at John Deere,” Chip said. He advised creating peak moments when you are bringing people onto a team, when you need alignment on direction, when you need people to get along, and when you need to show people how to act.
From startup hiring to enterprise alignment, Lean Startup Week offered learnings for a wide range of entrepreneurial thinkers, but as Eric noted in his opening remarks, one theme was clear: “We have to be thinking about how do we sustain our innovation into the next, and the next, and the next generation. In order to do that … we need to adopt the idea of the startup as an atomic unit of work.” We need to keep learning from the startup way.
This was originally published on Lean Startup Co.'s blog.
Since The Startup Way came out on October 17th, I’ve had a great time traveling with the book, speaking to audiences, and meeting amazing people creating change in all types of organizations. From New York, Philadelphia, and Boston to Los Angeles and San Francisco, entrepreneurs came out to share their enthusiasm -- you really are everywhere. Some great new reviews and interviews from smart, generous readers since my last post:
- Don’t let your hot startup grow into a sluggish, old-fashioned company (LinkedIn Weekend Essay)
- Digital Magic: How Eric Ries Brought The Startup Way to GE (GE Reports)
- The Startup Guru Who Wants Everyone to Think Like a Founder (Wired)
- How Creating An Entrepreneurship Function Can Help Sustain Corporate Innovation (Forbes)
- How to Turn Your Lumbering Dinosaur of a Business Into a Nimble Butterfly (Inc.)
- The missing function of entrepreneurship in most companies, creating a new accountability paradigm, and how to structure promotions and compensation in the new structure (Twenty Minute VC Podcast)
In addition to all the great press, I was honored to see the book make the Wall Street Journal bestseller list in its first week on shelves.
Next stop on the book tour: London. My UK publisher has put together a packed schedule and I can’t wait to talk about The Startup Way across the pond. You can learn more about each event and access tickets at the links below:
Nov 13 | Tech City Nations | 6:00pm | Cass Business School In conversation with Ingrid LundenNov 14 | TechHub | 5:00pm | TechHub London Live coaching hosted by Elizabeth Varley, Founder & CEO TechHubNov 14 | Campus | 7:30pm | Google Campus London In conversation with Sarah Drinkwater, Head of CampusNov 15 | Bookomi / How To Academy | 9:00am | Emmanuel Centre Digital read-along and book discussionNov 15 | Business of Software | 6:00pm | Emmanuel CentreNov 16 | London School of Economics | 6:30pm | Old Theatre In conversation with Dr. Lourdes Sosa
Back in the US, the first printing of the hardcover edition is selling fast, but if you buy one now you can still get all the bonus content we’ve created, accessible only with a unique code printed inside the first edition US print run.
Bonus content includes:
- A five-part video series introducing the key concepts and methods of The Startup Way
- A case study on hiring and onboarding at hypergrowth startup Gusto, not included in the book
- Bonus MVP examples courtesy of Intuit
- A downloadable visualization of The Startup Way
- A workbook to generate and analyze MVPs in your own organization
- A primer on innovation accounting and its key metrics and questions
- Access to The Leader’s Guide online community, a network of new and experienced lean practitioners
We’ll be adding more content over time as well, so be sure to pick up your hardcover copy while supplies last. Don’t forget to tweet a photo of your book to see it on thestartupway.com
Thank you, as always, for your support. I can’t wait to hear more about how you use the #StartupWay in your work.
A few thing as we move into Week 2 of my book tour:
I'm now in Los Angeles and San Francisco to promote The Startup Way. If this week is anything like the last, attendees are in for great events.
If you're in those cities, I hope you'll join me:
10/24 | Los Angeles, CA | 8:00pm | Ann and Jerry Moss Theater In conversation with Mark Suster, Managing Partner at Upfront Ventures
10/25 | Los Angeles, CA | 7:45am | Cross Campus Downtown LA In conversation with Krisztina Holly, Founder of MAKE IT IN LA10/25 | San Francisco, CA | 4:30pm | Bunker Labs Muster @ Slack HQ
In conversation with Todd Connor, Founder and CEO, Bunker Labs10/25 | San Francisco, CA | 6:30pm | Commonwealth Club of San Francisco
In conversation with Todd Park, former US CTO
Speaking of events! An important reminder: Lean Startup Week is in San Francisco October 30 - November 5
The Lean Startup Week team has been working around the clock to put together a program that will suit the needs of any entrepreneur in any organization, all themed around The Startup Way. Whether you're a student or the head of a division at a large company, we have a package to help you get the most out of the conference. You can see the full program agenda here and register for the package that suits your needs here. See you there!
Here’s a round up of early media for The Startup Way
Teaching GE to Think Like a Startup (Fortune)
Eric Ries: Why Companies Need To Create An Entrepreneurial Culture (Forbes)
In Eric Ries’ new book, he tells companies to turn every unit into a cash-strapped ‘startup’ (TechCrunch)
How companies can keep their 'start-up DNA': Eric Ries (CNBC Squawk Box)
Why big companies need to innovate like entrepreneurs (Wired UK)
EDITOR'S CHOICE: The Startup Way (800CEOread) (a terrific in depth review)
Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism? (WSJ) (nice piece about our efforts with The Long Term Stock Exchange)
One final reminder!
Each copy of the first printing of the hardcover edition of The Startup Way in the US and Canada contains a unique code that grants you access to bonus features at thestartupway.com/bonus. Register with the code in your copy to get access to a five-part video series, a visualization of The Startup Way, bonus MVP examples courtesy of Intuit, and more.
If you're outside the US or purchased via Kindle or Audible, sign up on the site without a bonus code and you'll receive some bonus materials as well.
As always, thank you for your support, and I look forward to hearing what you think as you delve into the book.
Today, my new book, The Startup Way, finally hits bookshelves! It's a huge day for any author, but I also hope it can be a huge day for the future and growth of the startup movement and for the future of our country.
I want people to use my book as a way to start conversations about the critical roles of innovation and sustainable growth everywhere from startups to large corporations to public policy. Together, these institutions can help transform the United States into a thriving entrepreneurial nation that supports and values all of its citizens. The success of the startup movement is about so much more than making cool new products; it's about adapting our country for an uncertain future that holds as many opportunities as it does challenges.
In order to start those discussions, though, people need to read the book. I've always found that the best book recommendations come from the very same source that has powered the startup movement so far: smart, creative, busy people. People like you. We have so many ways of getting information today, and I would really appreciate you using any channel you feel comfortable with to tell your friends and colleagues about The Startup Way. Here are a few suggestions for spreading the word:
1. Share the book socially. Conversations at cocktail parties or over the dinner table are welcome, as, of course, is social media. If you do post online, it would be great if you tag your enthusiasm with #StartupWay. I've included some ideas below and encourage you to create your own based on your experience with the book.
• Insights on how continuous innovation leads to continuous transformation in @ericries new book The #StartupWay. http://bit.ly/2y3lIeY
• The #LeanStartup has grown up to become The #StartupWay, w/innovation framework for orgs of every size. Out now! http://bit.ly/2y3lIeY
• Entrepreneurial mgmt is difference btwn modern & old fashioned co’s. @ericries new book #StartupWay shows why. http://bit.ly/2y3lIeY
2. Write a review on Amazon. The book got some amazing blurbs in advance of publication, but reader reviews also have a huge effect on the buying decision. If you enjoy the book it would mean a lot if you could take a few minutes to write a positive review. Thank you!
3. Pick up a copy. Or five! Every sale makes a difference, even more so if it's from a local retailer, and the first week's sales can make or break a book's trajectory. I encourage you to grab copies for you and your colleagues. We’ve created resources on the Startup Way website for people who buy the US hardcover edition -- there’s a code in each book -- that I hope will help facilitate group discussions.
I am deeply grateful for your support throughout this process. It was an honor to see the impact that The Lean Startup had on so many and to have the support of such terrific friends and readers. I’m hoping The Startup Way will continue that conversation and am so glad to have you along for the ride.
For eight years, our flagship conference has focused on sharing stories and lessons of putting Lean Startup’s entrepreneurial methodology into practice. We’ve hosted talks, workshops, and interactive sessions on the challenges and successes of modern management techniques from a wide variety of business leaders around the world. Lean Startup Week (Oct. 30 - Nov. 5 in San Francisco) allows you to experience seven days of interactive innovation training from our experts and true Lean Startup practitioners—in a city that’s known for being the hotbed of high-growth startups and iconic tech companies (not to mention a great place to eat, drink, sightsee, and shop while you’re talking shop).
This year, we’re really honing in on the feedback from our past conferences, as well as our smaller, more focused conferences in New York and London this year. What we heard was that you want more opportunities to have your specific challenges answered—so to that end, we’ve added new sessions where you can ask our experts your questions directly, including Roundtable Discussions and Live Office Hours with Eric for all attendees, along with our regularly popular sessions such as Speed Mentoring, Networking Dinners, and our Women’s Breakfast. We’re also working very closely with all of our speakers to ensure that the expert knowledge they impart is not only in line with Eric’s new book, The Startup Way, but focuses on actionable takeaways.
We want you to leave Lean Startup Week feeling like you understand your next steps when you’re back at your office trying to put all the pieces together. Because while it’s great to feel inspired after a conference, we can have a bigger impact when we leave you feeling empowered to make entrepreneurship a core function of your organization. And that kind of empowerment only comes when you have 90+ speakers and mentors offering you practical, actionable knowledge, learned from their time in the trenches.
Here are some of the specific things we want to help you tackle:
- Connecting with like-minded entrepreneurs and experts who share your challenges and concerns
- Turning an old school-minded organization on to modern entrepreneurial management techniques
- Starting and scaling an innovation practice in your organization
- Connecting Lean methodology to hiring, team-creation, organizing boards, leading engineering teams, and more
- Ensuring your organization remains committed to innovation practices as you grow
We’ll help you with these solutions by approaching them from a variety of formats:
- Learn by Doing (click here to see how)
- Learn by Example (click here to see how)
- Learn from Experts (click here to see how)
- Learn from Your Peers (click here to see how)
- A rare workshop with Eric Ries (co-led by Lean Startup Labs senior faculty member Marilyn Gorman) on enterprise transformation using the Lean Startup way on Oct. 31 (limited to the first 200 Gold Passholders.) Side Note: Eric and Marilyn will be doing a webcast as a preview to their workshop on Oct 11. Sign up for free here.
- Justin Rosenstein, co-founder of Asana, presents a new approach to thinking about your startup's culture from the ground up, mapping the idea of intentional culture design to the familiar tenets of product research, design, and management
- Tim O’Reilly, founder & CEO of O’Reilly Media, discusses how to avoid getting sucked into the vortex of me-too thinking by ensuring all the parts of your business work together, a theme from his new book, WTF? What’s the Future and Why It’s Up to Us
- Anil Dash, CEO of Fog Creek Software, on mindfully building modern companies in a more humane and ethical way
- Chip Heath, best-selling author & Stanford Graduate School of Business professor, on The Power of Moments in creating organizational change
- Zach Nies, VP of Education at Techstars & Marcus Gosling, VP of Product at Long-Term Stock Exchange, co-host Startup Office Hours, an interactive Q&A where you can ask the experts your questions on sustainably implementing Lean Startup and other like-minded methodologies into your growing business
- Vanessa Colella, Head Of Citi Ventures & Chief Innovation Officer, Citi, on how Citibank uses growth boards to provide seed funding to internal startups
- Alex Osterwalder, co-founder of Strategyzer, on protecting your organization from disruption
- Eric Ries & GE FastWorks Co-Founders Viv Goldstein & Janice Semper on GE’s Startup Way strategy
- Bionic CEO David Kidder and Procter & Gamble CTO Kathy Fish on P&G’s innovation pathway
- Making diversity & inclusion an actionable, trackable metric at your company with industry thought leaders, including eBay’s Helen Kim, CodePath’s Michael Ellison, Pivotal’s Michele Perras, and Intuit’s Cassie Divine
- Innovation, Impact & Design Thinking for social good with IDEO.org
Sounds great! So how to attend?
If you haven’t been to one of our Lean Startup Conferences, this is the year you won’t want to miss. So get ready to take selfies with the Bay Bridge, snag a burrito in the Mission district, and step foot into some of the hottest tech companies up and down Market St. We have passes for all budgets:
Gold Pass - For those who are serious about diving deep into the Lean Startup methodology and getting hands-on experience, join us for the full seven days of innovation training at Lean Startup Week (Oct. 30 - Nov. 5). This is perfect for teams looking for their best off-site yet! Register here.
Silver Pass - For those who are tight on time but want to get highlights of what we offer, get access to the two-day main conference on Nov. 2 & 3 and a seat at our Ignite Opening Night on Nov. 1.
Bootstrapper Pass - Offers the same benefits as the Silver Pass, but brings the cost of the conference down to $350 for people who otherwise wouldn’t be able to attend (think: fledgling solopreneurs, employees at very young startups, and small non-profits). Apply for a Bootstrapper Pass here.
Livestream - Because we’re all about community building, we invite you to host or join one of our free livestream meetups. Get details here. You get all the mainstage talks and the most popular breakouts, along with access to live Q&A and moderated chat.
Volunteer - If you’re a student, you can apply to volunteer here. Pitch in for a shift, and we’ll give you a Silver Pass.
We hope you’ll join us in San Francisco at the end of this month!
In just a few weeks, my new book, The Startup Way, will be available in print, digital, and audio formats.
One of the most gratifying parts of writing a book is heading off on tour with it and finding out how it’s engaging actual readers. Some of the most inspiring conversations I’ve had about my work have happened at book events, and I’m looking forward to more of them. I can't wait to get out on the road with The Startup Way and talk to you about the methods and principles of modern management.
Here’s the current list of my planned stops. If your city is on the list, come by and say hello! More information and tickets available at the links below:
10/16 | Philadelphia, PA | 6:45pm | Prince Theater
In conversation with Adam Grant, author of Give and Take, Originals, and Option B
10/17 | New York, NY | 12:00pm | Grand Central Tech
10/18 | New York, NY | 7:00pm | The Strand
In conversation with Beth Comstock, Vice Chair of GE
10/19 | Cambridge, MA | 7:00pm | First Parish Church
In conversation with Tom Eisenmann, Harvard Business School professor
10/24 | Los Angeles, CA | 8:00pm | Ann and Jerry Moss Theater
10/25 | Los Angeles, CA | 7:45am | Cross Campus Downtown LA
10/25 | San Francisco, CA | 6:30pm | Commonwealth Club of San Francisco
In conversation with Todd Park, former US CTO
Meanwhile, I’m offering early access to a special 5-part video series on The Startup Way for those of you who pre-order. Enter your order confirmation information at bit.ly/thestartupway to see the videos. I had a great time exploring another medium for sharing my ideas and hope you find the series beneficial in advance of the release of the book. I can’t wait to hear what you think. Join me on Twitter using #StartupWay to share your reactions.
“If The Startup Way can transform the federal government—and it has—it can transform your company. For everyone who's thought 'there has to be a better way,' here's your proof and a playbook to make it happen.”
-- Jennifer Pahlka, Founder and Executive Director, Code for America
Finally, the 2017 Lean Startup Week is themed around The Startup Way. October 30 through November 5, we're gathering thousands of thought leaders in downtown San Francisco for a week of keynote talks, interactive workshops, speed mentoring, roundtable discussions, industry dinners, innovation bootcamps, and startup tours. You'll take in the book's concepts and learn from technology thought leaders like Tim O'Reilly and Anil Dash, seasoned enterprise leaders including Viv Goldstein and Janice Semper of GE, founders of high-growth startups like Justin Rosenstein of Asana, government innovators from the NSA and 18F, and non-profit practitioners deep in the trenches. Plus, every attendee will receive a copy of the book. I hope you'll join me there.
“Think big. Start small. Scale fast.” This is the mantra of Lean teams described by Eric Ries in his upcoming book, The Startup Way. Whether you’re struggling in an actual startup or trying to build an internal one at an established organization, a Lean team approach can maximize efficiency and results in uncertain times. But assembling a group that can execute on this vision comes with the routine challenges of team-building as well as questions unique to the methodology. Drawing on the advice of experts and recent research, here are seven insights on how to best build a Lean team.
Eric often refers to Amazon’s “two-pizza team,” which means starting small when it comes to new innovation groups, aiming for a number that you could easily feed with just two pizzas. A tighter team provides several advantages. First, small groups typically bond faster, leading to better communication within the team. Second, with fewer decision-makers, experiments can happen faster. There is also greater accountability because it’s easy to know who’s doing what.
Make your team cross-functional.
Just because the team size is diminutive doesn’t mean its skillset should be. A hallmark of Lean teams is cross-functionality. Members should bring a diversity of skills and/or represent different departments within the company. In enterprise organizations, teams are often comprised of employees from the same department, and once their work is “completed,” the results are passed along to another department. This siloed approach is inefficient, and the lack of varied perspectives often results in subpar solutions.
To build a cross-functional team, Eric suggests starting by asking what departments are needed to make meaningful progress that won’t get roadblocked along the way. In The Startup Way, Eric provides the example of an industrial project that might require a product designer, someone with manufacturing expertise, and a salesperson who understands customers’ wants and needs. An IT project, on the other hand, might include an engineer, a designer, and a marketer. As Eric says in the book, “There are endless permutations, depending on what needs to get done.”
Every team leader should also know whether you’re planning to do something that could require approval from legal. If so, be sure to include a representative from that department to prevent delays. Another tip from Eric: If you lack the budget or influence to get someone from a necessary department assigned to your team, ask for volunteers.
Don’t over-rely on your natural team players.
Relying on the same employees to contribute to teams can create collaboration overload, which in turn negatively impacts work satisfaction and productivity. A study published in Harvard Business Review found that typically 3 to 5 percent of employees contribute 20 to 35 percent of effective collaborations, but “those seen as the best sources of information and in highest demand as collaborators in their companies—have the lowest engagement and career satisfaction scores.” According to the researchers, simple solutions for avoiding collaboration overload is to cancel unnecessary meetings and to let individuals who are most often tapped for teams know it’s okay to say no and to suggest another capable person to take their place.
Train people to be team smart.
To ensure that every employee can excel in workgroups, invest in team training. “[Companies] focus a lot on professional development at the individual level. They have robust programs for people, but they won't necessarily be focused on teams,” says Janet Brunckhorst, principal product manager at Carbon Five. Employees and managers are rarely educated in how to be an effective contributor or how to make a better team. In short, many companies are team dumb, which is a problem because there’s evidence supporting the idea that a team’s collective intelligence is independent of the intelligence of its individual members.
Even if a company has the smartest employees, its teams can fail. In research published in the journal Science in 2010, psychologists from Carnegie Mellon, M.I.T. and Union College found that what they label the “c factor” (another term for collective intelligence) is correlated with “the average social sensitivity of group members, the equality in distribution of conversational turn-taking, and the proportion of females in the group.” The same research suggested that a team that failed at one thing was likely to fail at every task it attempted. A simple way to increase your team’s c factor is to bring in someone versed in guiding groups through the best practices of teamwork and Lean methodologies, whether that’s an internal leader or an external coach.
Create a pro-risk environment.
Finding innovative solutions and creating breakthrough products requires bold ideas and often big missteps, so individuals on Lean teams must learn to welcome risk and failure. Creating this mindset can be challenging in a traditional failure-is-not-an-option environment, and the dynamics of a team can exacerbate the desire to play it safe. (Nobody wants to look foolish in front of their colleagues.) However, with some psychological insights and pragmatic tools, teams can be coached to feel good about taking risks and failing.
“There are lots of things that carry through all teams. Mostly, that we are all human, and the psychological and behavioral patterns are the same,” says Carbon Five’s Janet Brunckhorst. While it may seem obvious, the insight is often overlooked. Companies often focus on expertise or personalities when selecting team members, but research suggests that any group of people can succeed if the right atmosphere is created.
Google’s Aristotle Project, an effort launched by the company in 2012 that surveyed 180 of their teams to better understand what made them work, found that the key to a highly-functioning team was psychological safety. In a 2016 New York Times article discussing the Aristotle Project, Abeer Dubey, a manager in Google’s People Analytics division, said, “The ‘who’ part of the equation didn’t seem to matter.’’ In other words, it wasn’t about the balance of skills or diversity of personalities. Instead, high performing teams shared two characteristics: 1. Members contributed to conversations equally, and 2. They were adept at interpreting how others were feeling based on nonverbal cues and addressing those feelings. Creating this type of environment does not come with a one-size-fits-all approach, but Google found that simply sharing the research findings inspired teams to work differently.
People also need to know that their decisions will not result in the loss of millions of dollars or litigation. This is an idea that Courtney Hemphill, partner at Carbon Five, calls reversible risk. It means that teams understand what can be undone. “Teams need to have a reverse button,” she says. “Productive teams are able to say, ‘Well, that didn’t work. Let’s fix it, learn from it, and not do it again.’ But then continue to make decisions and move quickly.” If a team can define its reversible risks, people are less likely to get bogged down in a blame game.
Understanding what your team needs means understanding their assumptions.
Everyone comes to a team with certain assumptions about how work gets done, how to communicate, and a million other things. To function as a cohesive unit, people need to understand what assumptions they are working with. “In a team, there may be someone interrupting and talking all the time, and your assumption might be that they’re a jerk,” says Christina Wodtke, principal of her firm, Wodtke Consulting, and professor at California College of the Arts and Stanford Continuing Education. “Everybody is walking around with an idea of how you are supposed to behave in business, and it is not the same idea, believe you me.”
For this reason Christina recommends that every team create a charter of norms: “Norms are just, ‘How do we agree we are going to work together? What are we going to do when we disagree? Are we going to make proposals? Are we going to just fight it out? How do we make a decision?’” To help develop a team charter, she suggests starting with the eight scales outlined in Erin Meyer’s book The Culture Map. The scales address expectations surrounding communicating, evaluating, persuading, leading, deciding, trusting, disagreeing, and scheduling.
Measure to learn and improve your team. Whether you’re starting a new team or trying to improve an existing team, “you can’t really take your first step without looking at the team and measuring,” Janet says. This could mean tabulating assumptions, as with The Culture Map scales, or assessing the current sentiment—in other words, how do people feel about the team spirit. “It could be something as simple as every time you have a team meeting, doing a team temperature gage—a one-to-five scale or thumbs up/thumbs down,” Janet says. From there, the important thing is acting on that information. For example, understanding why a team may be feeling closer to a one, and then working to remedy the problem. Fundamentally, it is applying the Lean Startup methodology of build-measure-learn to your team dynamics.
Although teams vary across companies, an effective Lean team should start small and be cross-functional. Creating clear ground rules, working to ensure everyone contributes, and checking in regularly to assess how individuals are feeling helps create a productive working environment, and from there, you can continually fine-tune based on feedback. Accept that you will have to iterate your team because effective teams are committed to continuous improvement. “It means never accepting your team as done,” says Christina.
To learn more about building Lean teams, join us at Lean Startup Week October 30th - November 5th in San Francisco. Christina Wodtke, Courtney Hemphill, and Janet Brunckhorst will be leading breakout sessions on crafting effective teams.
This post was originally published on Lean Startup Co.'s blog.