December 30, 2016
Empowering employees to act like entrepreneurs is hard. While there are tangible benefits such as cultivating a culture of learning, iteration and innovation among corporate employees, getting it to happen is no easy task.
At Lean Startup, we teach 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 into an entrepreneurial culture, here are five ways company leaders can empower employees to act like entrepreneurs.
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 and, at the outset, be held accountable for 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. You can even trust them with a small amount of funding.
Put the Customer Front and Center
Instead of focusing on what your team does well, focus on solving a problem for the customer. This doesn’t mean asking the customer what they need. Instead, start by understanding the customer’s business model and the problem and opportunity.
The 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, it’s important to create an environment for the leadership team to understand their process so they can be part of the conversation and infuse entrepreneurship into the culture of the company.
General Electric (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. Look for leaders who have deep domain experience and are used to managing large teams, and 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, General Electric 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 and began to train executives, create a new governance structure, make leadership part of the conversation, and rewrote 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. GE now run hundreds of thousands of projects per year while no longer needing to rely on external expertise because they’ve built internal expertise among their employees.
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