Elliot Susel - Applying The Startup Way
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In this session, Lean Startup Company Senior Faculty member Elliot Susel will walk us through his experience coaching teams that want to apply the principles in Eric Ries’ newest book, The Startup Way. Although many of the principles are easy to understand, their application is another story entirely. Elliot will reflect on the challenges he’s experienced by organizations of various sizes and missions as they embark on the journey to get better outcomes with The Startup Way.
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Elliot Susel - Applying The Startup Way
- 1. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 1 Elliot Susel Senior Faculty, Lean Startup Co. Lessons Learned Applying The Startup Way
- 2. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 2
- 3. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 3 The marketplace of UNCERTAINTY
- 4. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 4 ”In One Tweet, Kylie Jenner Wiped out 1.3 Billion of Snap’s Market Value”- Justina Vasquez, Article in Bloomberg Technology
- 5. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 5 Change the paradigm: ‘Traditional’ Companies The Nature of Work Internal competition Command and control Seniority = authority Lifelong jobs The Nature of Workers Company culture rules Loyalty = longevity Success = position Ambition to climb The Nature of the Enterprise Plentiful talent Long sales cycles
- 6. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 6 The Nature of Work Employs entrepreneurial management tools for dealing with extreme uncertainty The Nature of Workers Every employee has the opportunity to be an entrepreneur The Nature of the Enterprise Is disciplined in the rigorous execution of their core business; respects its employees and their ideas at a fundamental level Change the paradigm: ‘Modern’ Companies
- 7. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 7 PEOPLE CULTURE PROCESS ACCOUNTABILITY The Foundation
- 8. This photo, “Jackfruit” is copyright (c) 2014 Michael Coghlan and made available under a CC BY-SA 2.0 license. https://creativecommons.org/licenses/by-sa/2.0/
- 9. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 9 PEOPLE CULTURE PROCESS ACCOUNTABILITY The Foundation
- 10. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 10 What’s Different?
- 11. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 11 Continuous Innovation Startup as an Atomic Unit of WorkThe Missing Function The Second Founding Continuous Transformation The Startup Way
- 12. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 12 INNOVATION Continuous
- 13. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 13 ATOMIC UNIT Startup as an OF WORK
- 14. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 14 ”VCs can make a multi-million dollar decision in less than 48 hours. If you can’t too, you’re falling behind.” - Teague Hopkins, CEO THG
- 15. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 15 FUNCTION The Missing
- 16. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 16 FOUNDING The Second
- 17. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 17 TRANSFORMATION Continuous
- 18. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 18 The three phases of TRANSFORMING A COMPANY
- 19. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 19 Phase One: CRITICAL MASS
- 20. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 20 Phase TWO: SCALING UP
- 21. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 21 Phase THREE: DEEP SYSTEMS
- 22. Lessons Learned Applying The Startup Way | © 2017 Lean Startup Co., LLC. All rights reserved. 22 Lessons Learned Applying The Startup Way Want to learn more? Contact: education@leanstartup.co
Editor's Notes
- Truly my pleasure to speak to you this morning about Eric Ries’ most recent book. - When I was asked if I would present material from Eric’s book, I knew I wanted to do two things – cover material, share stories. To do that, I’ve received permission to use Eric’s slides from LSW 2017, layered in a few of my own. - Before I begin, tell you about myself: Taxi Magic, got good at shipping tech. Second half of career on product - Led product & growth at startup, R&D group
- I originally thought this book was going to be about Lean Startup at Scale… which it sort of is, but it’s really about the management systems within our company. The underlying premise is that although the landscape in which we operate has changed, the way that we run organizations has not.
- One of the core premises that drives the entire movement is our acknowledging that we’re in a marketplace of uncertainty. The pace of change is faster than ever, and it’s harder than ever to predict what will happen next. It’s funny I was recently sharing Eric’s definition of a Startup at a workshop, and an analytics manager came up to me after and said that the world is now entirely predictable, there is no uncertainty that can’t be solved with data.
- This is a comedic mechanism for demonstrating that perhaps the world is getting more uncertain, but if I were really trying to make a quantitative argument for this I’d bring data points around average life of companies, speed for competitors to come to market, etc. Given that there’s more uncertainty than ever, and the world is likely only to get more uncertain, are the management systems within our companies prepared to adjust with the times?
- Traditionally, and I can say that I experienced this firsthand when I was doing consulting early in my career, companies want employees to be predictable, interchangeable widgets. They show up on time, deliver in a consistent and reliable manner, and do what they’re told. The perfect short order cook. I’m sure that lots of folks in the room are objecting, “ohh no I don’t do that”. Projects are on time, on budget, and managers meet or exceed their forecasts. And even if companies don’t say this is what they want, it’s what they reward and promote, so the effect is the same.
- Eric proposes that perhaps this system is antiquated for the times, and our view of our workers and how they interact with their work and each other has to change if we want to keep up. What would happen if we gave people the tools they need to work though uncertainty, the freedom to do so, and rewarded them as they demonstrably learned? What would that world look like? By show of hands, how many of you remember the 5 principles of the Lean Startup. And keep your hand in the air if you would be comfortable, right now, standing in front of this group and sharing those 5 principles. It’s not a coincidence that the first principle of lean startup is that Entrepreneurs are everywhere. Second principle.
- When Eric presented this material he pointed out that entrepreneurial management is not a replacement for traditional management, and in fact entrepreneurial management is built on the same 4 elements. Accountability – DOD, Team member managers still responsible for team members doing their full work Process – Taxi Magic, no way for good ideas to emerge Culture – Jackfruiting. Someone kept saying ‘low hanging fruit’, we said wrong thing , easy not valuable. Biggest fruit is a jackfruit. Big ugly, sweet on the inside. Every time someone said low hanging we said jackfruit to shift people from prioritizing what’s easy to what’s critical at this moment in time. Talked at a recruiting event, people came up and said, “I want to eat the jackfruit”. People – Govt Team, RFID, project. Accenture, Agile software dev. Proficiency vs. preference (anyone can learn it, not everyone wants to. It wasn’t that they couldn’t, it’s that they didn’t want to. Seen this in junior and senior leaders).
- When Eric presented this material he pointed out that entrepreneurial management is not a replacement for traditional management, and in fact entrepreneurial management is built on the same 4 elements. Accountability – Team member managers still responsible for team members doing their full work Process – Taxi Magic Culture – Phone outage transparency, Jackfruiting. Someone kept saying ‘low hanging fruit’, we said wrong thing , easy not valuable. Biggest fruit is a jackfruit. Big ugly, sweet on the inside. Every time someone said low hanging we said jackfruit to shift people from prioritizing what’s easy to what’s critical at this moment in time. Talked at a recruiting event, people came up and said, “I want to eat the jackfruit” People – Govt Team, RFID, project. Accenture, Agile software dev. Proficiency vs. preference (anyone can learn it, not everyone wants to. It wasn’t that they couldn’t, it’s that they didn’t want to. Seen this in junior and senior leaders). If we want to influence change, we have to start with the bottom of the pyramid and work our way up. Helps us focus a conversation around exactly what part of what we are trying to change. accountability: systems, rewards & incentives that drive employee behaviors process: the tools and tactics that employees habitually use to get work done culture: shared, often unstated beliefs about what employees believe to be possible in an organization people: the ultimate corporate resource. Without the right ones, no company can be successful
- What happens when you’re switching from traditional to modern. Eric: These modern–company tools may be familiar to you because they are the foundation of the Lean Startup approach. The Startup Way is a a leadership framework designed specifically for 21st century uncertainty, and helps leaders be as rigorous in the entrepreneurial part of their management portfolio as they are in the general management part. And just because innovation may be decentralized doesn’t mean it can’t be managed. It just requires different tools and safeguards than the ones we’re used to seeing in traditional management settings. In fact, the power of The Startup Way is that it combines the strengths of 2 different ways of working.
- One of the key goals with The Startup Way is to create an environment in which everyone can in fact operate as an entrepreneur.
- This first principle highlights that as an organization we should have a repeatable process for generating breakthroughs. No longer are we in a world in which a single innovation can carry us for 20-30 years. Data point: Time to adoption of communication technologies. Phone was X, Fax was X, Internet was Y, Snapchat was Z. To remain relevant for even the length of one career…
- In order to actually generate continuous innovation, companies need to have teams that can experiment to find them. These teams require a distinct organizational structure to support them. Story – Working at AOL, tasked with building an R&D group from scratch. However, we reported weekly (and often more frequently) on the status of things we were working on. What startup has to present to its board on a weekly basis? This was borderline absurd. This Is the domain of metered funding. If it makes more sense, pay a 3rd party.
- “No CFO, No CMO” Eric likes to use this example, and I can’t think of a more poignant explanation. Was teach a workshop and someone asked me this very question: I told the CEO I should lead innovation, he said everyone is responsible for innovation. You can’t make this stuff up. AOL – Difference between an R&D group, and an innovation function. Innovation function works on things like Fastworks at GE, or LeanStartIn at Intuit. “The proliferation of undoable jobs” Just because someone is responsible for all of those things doesn’t mean they can do them and assign them equal weight
- At some point an organizations scales Eric: The second founding: Making this kind of profound change to an organization's structure is like founding the company all over again, whether it's 5 or 100 years old.
- New organization capability, not the last time a new management practice will come along
- - Different within every organization The Startup Way is not be another manifesto, but instead a roadmap to tackle the real and difficult details of how to move your organization to a more effective, entrepreneurial, way of working. In essence, it was written to answer 3 critical questions: 1. What, exactly, are the systems and structures we need to implement? 2. How, exactly, do we convince managers and employees alike to try something different than what they’ve known their whole careers? (Remember, even in a hypergrowth startup, most employees were not present for the founding of the company.) 3. When, exactly, is a company ready to make this transformation happen? The answer to these questions are explained by the common patterns when it comes time to transformation: three distinct phases that seem to recur again and again
- Phase One covers the earliest days of transformation, when the Lean Startup approach often starts small, is ad hoc, and may be viewed as chaotic. The beginning of a Startup Way transformation is very local, very grassroots. It’s a period of coaching a handful of individual teams, experimenting with new approaches, and making progress, one project at a time, in service of proving a larger thesis, both to management (top- down) and to the teams doing the testing (bottom- up). It looks different depending on the organization, but is generally built on a few key steps. • Build a comprehensive set of cases, stories, and successes that demonstrate that you’re on the right track. At GE, we began with only 8 pilot teams out of a global workforce of 330k. In the federal government, there were a handful of projects in different agencies that served as the testing ground for what ultimately became a major digital transformation.
- The 2nd phase of transformation is the rapid scaling of the process proven to work in Phase 1. This is the moment when all the resisters and objectors make their voices heard and the transformation either develops its own political heft and becomes the new normal or it dies out. - Teams still operate with exceptions, more teams doing it.
- All of this eventually pays off when the transformation reaches Phase 3: when at last it becomes possible to tackle the deep systems of an enterprise. These are the structures and incentives that cause people to return again and again to the same old ineffective ways of working. What sets them apart, and how can future startups replicate their success? How can established organizations recapture that startup spirit? This is the work of Phase Three, in which organizations transform their internal processes. The goal: to create functions that are capable of continuous innovation. This moment is about changing the “deep systems” of the organization to support innovation for the long- term life of the company. Remember that in Phases 1-2, many exceptions had to be made in order to function and support innovation teams. But for an organization to truly change, the systems that made those exceptions necessary also need to evolve. Now they need to support rather than hinder this new way of work.
- Lens with which to view rest of presentations Every org different