Lean Startup in large corporations and the shadow of the future

Eric Ries has argued for an entrepreneurial career path to be created within large corporations in order to better promote innovation in his book, The Lean Startup. In this post, I will examine how this idea plays together with the game theory concept of the shadow of the future, which refers to the way our knowledge of future interactions affects our current decisions.

The four kinds of work

Ries follows Geoffrey Moore’s ideas in Dealing with Darwin in his categorization of the product lifecycle into four kinds of work:

  • The first kind of work is research and development, the core matter of Lean Startup, the innovation to create products that customers really want. This type of work corresponds with Moore’s inventor innovation role.
  • The second kind of work is scaling the product to mainstream market; becoming part of the public face of the company and fine-tuning the product to appeal to more than just early adopters. This type of work corresponds with Moore’s deployer innovation role.
  • The third kind of work is creating operational excellence and upgrading the product to prevent the commoditization of the product. This type of work corresponds with Moore’s optimizer innovation role.
  • The fourth kind of work is managing the declining demand for the product through outsourcing and cost reduction.

Both Ries and Moore argue that it is common in companies for the same people to stay with the product throughout its lifecycle and that this practice prevents companies from achieving continuous innovation as people are forced to move into roles that do not come naturally to them: inventors and optimizers are two different breeds.

Ries’s solution is to create strong cross-functional teams around each type of work, and have the products handed over to the team of the next phase as they mature. This solution comes with a pair of important caveats:

  • Employees should be given the choice to move with the product or to stay with the kind of work.
  • Especially at the beginning of the scaling phase, the innovators will need to continue to provide leadership to the larger team to get the product off to a good start.

Morieux and extending the shadow of the future

In his book, Six Simple Rules: How to Manage Complexity without Getting Complicated, Yves Morieux examines ways to manage the increasing complexity of business. One of his core tenets is the importance of extending the shadow of the future: by creating improved feedback loops, a company can increase the importance of the future in decision-making and thus encourage better long-term decisions.

Morieux proceeds to give four examples of ways to extend the shadow of the future:

  • Tighten the feedback loops: Increase the frequency of reviews and activities. This is actually very well in line with the Build-Measure-Learn loop (the application of the PDSA cycle) of the Lean Startup, but there is no equivalent feedback loop between the lifecycle phases of the product.
  • Bring the end point forward: Set shorter-term goals to ensure that the same people will still be around when consequences of actions begin. Again, the Build-Measure-Learn loop achieves this. Assuming that we do not actually strive for short product life span, this does not seem applicable between the lifecycle phases of the product.
  • Tie futures together: For example, force people to train their own replacements before they can progress in their careers. A bit of this is present in the way innovators help at the beginning of the scaling phase.
  • Make people walk in the shoes they have made for others: For example, move design engineers to take care of warranty issues for the product they have designed. This point is the major difference between extending the shadow of the future and building a purely entrepreneurial career path within a corporation: if you are only the innovator, you will not experience the consequences.

It is interesting that whereas Lean Startup does a whole lot to extend the shadow of the future within its product development cycle, it is much more prone to create silos between product lifecycle phases instead of staying on the same path there as well. When it comes to product lifecycle, the people managing one phase of the lifecycle have no meaningful interaction with the rest of the product lifecycle, and this is a major risk for cooperation.

How multi-skilled is multi-skilled?

Cross-functional is almost a mantra in Lean. Break the functional silos, have people work together to understand the whole context, increase the breadth of skills that people possess in their field. When it comes to product lifecycle phases, Lean startup stays true to the cross-functional mantra of Lean. But is that enough?

One example Morieux gives in Six simple rules is a company that applied the rules by requiring that people work in more than one department before they are eligible for promotion into managerial roles. This kind of horizontal career development, even though maybe not mandatory, is at least common in Lean companies.

Product lifecycle is completely analogous to this: if the goal is to build an understanding of the whole in people, how is that possible unless they experience the various lifecycle phases of the product and the challenges in each first-hand? If a person can be an entrepreneur within a corporation, and only focus on the invention part of the lifecycle, how can he know what it takes for the product to be successful in the later phases as well? Furthermore, there are no entrepreneurs who can only focus on innovation and never build up their product. At least, no successful entrepreneurs.

Horizontal career paths as an answer

The guaranteed option to get off the train of any product when it moves to a new phase is a risk for long-term decision-making as because of it the problems of the next phase are nothing to worry about. However, the shadow of the future does not work only when you know that you will be tied to the future of the product, it also works in cases of uncertainty. If there are opportunities to switch over to something else, that is OK, as long as it is not definite when the opportunity becomes available.

Furthermore, the more experience on different roles, products, and lifecycle phases one has, the better equipped one is to meet any upcoming challenges.

Therefore, the solution does not lie in separating the teams that work on different lifecycle phases of the product, but in systematically encouraging horizontal transfers within the company, and yet not committing to a definite point in time when such transfers are available.

This practice promotes developing wide expertise as well as takes advantage of the shadow of the future as there is no clear point where one can jump ship and therefore the need to ensure the best possible future for the product remains strong.

Photo: The Future by Kristian Bjornard (CC)

Author: Ville Kilkku

I run my own consultancy business, so if you find the ideas on this blog intriguing, contact me at consulting@kilkku.com or call me at +358 50 588 5043 and we can discuss how I can help you solve your business problems. I am currently based in Tornio, Finland, but work globally. Google+