How to Make Lean Work in Large Corporations — Implementing a System Mindset
In a previous article, I did a deep dive into how Lean succeeds in great start-ups and how this success does not always translate in large corporations. Often, these corporations fail because they’re matching Apples to Peaches.
The Lean methodology is driven by internet-age thinking models. It is fluid, fast, and largely free of the rigid, multi-level oversight that underlies the core business processes of large corporations. Successful startups that have applied the methodology admittedly benefit from an agility driven by their small size. But that’s not their only advantage. These organizations are also able to learn quickly and rapidly adjust course as they discover new evidence.
They encourage a learning environment that is driven by a system mindset, which lets them improve between iterations. They are fluid, constantly learning, and producing better products, processes, and ideas. This is an unpredictable environment.
Large corporations cannot very well employ this model throughout their business since it is uncertain — the very thing shareholders and the stock market do not like. Even when they try to leverage on incubators and sprints to generate high-potential ideas, many of these end up dying off, especially when they come into contact with the governance and funding structures of core business processes, or aren’t able to justify the promised ROI.
So, how can large organizations reap the benefits of Lean Startup while learning and iterating rapidly?
The answer is to adopt a system mindset at a portfolio level. Think of new ideas as startups that may or may not deliver on their promise. Just as 90% of startups fail and may not become profitable until 5–7 years, innovation efforts will not always bear fruit immediately.
But just as early-stage VCs understand how to manage startups to profitability and balance their portfolio accordingly as they mature, you should embrace the uncertainty of “loonshots” and fund the continuous learning efforts they demand. And not just in a “let’s throw some money at this and see what comes out” manner, nor with discrete initiatives towards the hottest buzzword technology of the moment either.