For both startups and large established corporations, there are tangible benefits to empowering employees to act like entrepreneurs, like cultivating a culture of learning, iteration and innovation among corporate employees. During Lean Startup Co.’s inaugural enterprise summit in New York City earlier this year, we brought people together to share best practices. One of them was a woman my business partner, Eric Ries, introduced me to years ago. Her name is Viv Goldstein and she is the Global Director of Innovation Acceleration at General Electric. On this day, she shared how GE uses innovation-based methods with their employees and leadership teams to maintain a commitment to long-term company success.
Our company, Lean Startup Co., teaches large complex organizations and startups around the world how to tackle strategic, cultural and managerial challenges by applying scientific rigor to product and business development. If you’re thinking of transforming your company through an entrepreneurial culture, here are five ways company leaders can empower employees to act like entrepreneurs, based on my experience as co-founder of Lean Startup Co.
Cause the Business Disruption
Startups challenge existing business structures with new ideas, technologies and operations that customers want. While established companies often focus most of their energy on keeping up with production demands and activities, entrepreneurs spend their time evaluating the market to see what new product or service meets an unmet demand. For instance, Netflix and Redbox each disrupted the video rental industry by providing consumers with easy access to their favorite movies, with fewer late fees. By the time Blockbuster and Hollywood Video stepped back from their daily operations to see what happened, it was too late to save their businesses.
Intrapreneurs (internal entrepreneurs) must have a safe place to run experiments (Ries calls this an “Island of Freedom”), and at the outset be held accountable by learning metrics instead of just profit. Give your team authority to do what they think is right for the customer, and be part of a fully dedicated functional group. Trust them with a small amount of funding.
Put the Customer Front and Center
Instead of focusing on what your team can do well, focus on the problem the customer is trying to solve for. This doesn’t mean asking the customer what they need: instead, start by understanding the customer’s business model and the problem and opportunity. Lean Startup teams practice techniques like identifying “leap of faith” assumptions, and testing using minimum viable products. Innovation teams will put prototypes in front of customers that aren’t always pretty. But getting this tough feedback from customers is one of the greatest parts of the method, and results in cultural change. Companies can no longer rely on traditional market research and focus groups if they want to validate a new solution. Customers can tell you all the opinions they want, but you need to focus on their behavior.
Invest Resources the Right Way
In order for teams to work with a startup mindset that allows for productive failure (which can be a very scary thing), it’s important to create an environment for the leadership team to know what’s going on so that they can be part of the conversation that infuses entrepreneurship into the culture of the company.
GE has had success with Growth Boards, a group of people that accepts or rejects projects. By putting product teams through a very different funding cycle, GE was able to motivate the entire company to get excited about a new way of working.
Seek Leaders Who Test and Learn
In order to create a culture of learning and iteration, it’s important to find leaders who are open to this new way of working. In a world changing at unprecedented rates to keep up with an evolving market, leaders need to be trained to ask the question. “Do you have the humility not to know the answer?” Instead of seeking leaders who have deep domain experience and are used to managing large teams, look for leaders who can manage horizontally. It’s better to have a small team with a higher ability to influence and the courage to say, “I don’t know, but let’s go figure it out.”
Change With the Times
With startups nipping at the heels of large corporations, GE has decided that, instead of fighting the change, they should change with it. With some help from Lean Startup methods, they’ve been able to change the way they work, think and act every day. They started with 20 projects that Eric helped incubate. People from finance to engineering loved it. And finally, they rolled out this different way of thinking. How? By training executives, creating a new governance structure, making leadership part of the conversation, and rewriting company beliefs. They created a physical workbook, established an intense training process and culture change training that clearly laid out the values involved in this new way of working. The result? They changed people’s mindsets and behaviors.
Goldstein shared that the rate change today is the slowest it’s ever going to be for the rest of your life. The Lean Startup journey has taken GE three years and while it’s been long and painful, there has been an unbelievable outcome. They now run hundreds of thousands of projects per year while no longer needing to rely on external expertise because they’ve built internal expertise.