Ep. 278 - Jim Euchner, Author of Lean Startup in Large Organizations on Building Lean Startup Methodologies to Stay Competitive

On this week's episode of Inside Outside Innovation, we sit down with Jim Euchner, author of the new book Lean Startup in Large Organizations. Jim and I talk about the underlying fears companies have when trying to change and implement innovation initiatives. And what they can do to initiate and build Lean Startup methodologies to embrace change and stay competitive. Let's get started.

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Interview Transcript with Jim Euchner, Author of Lean Startup in Large Organizations

Brian Ardinger: Welcome to another episode of Inside Outside Innovation. I'm your host, Brian Ardinger. And as always, we have another amazing guest. Today, we have Jim Euchner. He's an honorary professor at Aston Business School in the UK. Editor in chief of Research Technology Management Journal. Former VP of Global Innovation at Goodyear. And he is author of a new book called Lean Startup in Large Organizations. Welcome to the show, Jim. 

Jim Euchner: Thank you. Thanks for having me. 

Brian Ardinger: Well, I'm excited to dig in. You've been involved in Lean Startup for a long time, specifically around this idea of corporate innovation, which I think when you hear Lean Startup, at least in the early days, you didn't think about it from a corporate perspective.

I found, like when I talk to establish enterprises and you bring up the word or the term lean startup, a lot of times it has baggage around it. They dismiss it or think about it as you know that startup term. How do you define or talk about Lean Startup? 

Jim Euchner: I think about Lean Startup, in its basics the same way that the founders of it did. You know, Eric Ries and Steve Blank and so forth. I think it's a way of taking a high-risk venture from a very high-risk place to a place where it's something that you can bet on. It's a way of iterating your way toward a great customer value proposition and a good business model. 

The challenge in large corporations is that each of the practices of Lean Startups in its own way, sort of sparks an antibody inside the corporation. So Lean Learning Loops. They are a wonderful way of learning. Business experiments is another term for it. But if you have a lot of experiments and pivots, it can seem very chaotic to people inside the corporate setting. 

So, you have to do what I would call an impedance match between the corporate setting and the Lean Startup practices. The central Lean Startup practices are still very valid. But the way they're managed, there are some complimentary practices that make them effective inside large organizations. 

Brian Ardinger: You bring up a great point. It really doesn't matter if you're building something brand new in an uncertain environment as a startup or within a corporate environment. The same principles can be used to navigate that unknown or that uncertainty. 

In your book you talk a lot about, I guess, the common fears that leaders and organizations have when it comes to change or Lean Startup and that. Can you talk through and outline some of the key fears that you talk about in the book? 

Jim Euchner: Yeah, sure. So, the first one is this sort of fear of chaos. That the innovation program will just be out of control. And one way that's effective in doing that is to create what I would call an Innovation Stage Gate. So the practices of Lean Startup are still practiced, but they're inside a discovery phase, a business model development phase, and an incubation phase. 

That gives people inside corporations the chance to learn, to comment, to review at very critical stages. So, review the customer value proposition and the customer value. Review the business model. And very importantly, the effects that the business model will have on the core business. And then before scaling, understand how it works in the real market. 

The first fear is the fear of chaos. The second fear is a fear that the innovation team will disrupt the operations of the core. Everybody they're working with has a day job. Right. And you're asking them to take exceptions, to move quickly, to do stuff that you know, that really on the financial side, doesn't matter a lot in the near term. But it still has an urgency. And it may be outside the bounds of their usual experience. So, it's risky. Helping people manage that is important as well. 

Brian Ardinger: This fear of distraction. I hear it all the time. We don't have time to innovate. You know, we don't have time to try these new things and that. What are some of the ways that you can get people to overcome that mindset? 

Jim Euchner: It's a combination of things. And I really think that each company has to look at their own culture in order to decide. One thing that people do is, and it's the first thing to do, is just try to get corporate air cover. Someone says it's okay to do it. And that gives a permission. And then if they don't do it, it gives us permission also to escalate.

The problem with that is escalation wears thin very quickly. And you make more enemies than you can afford to make. One of the things that I found most effective in my experience is to bring the functions along as you go, but to have no expectations of them in the early stage, other than that, they'll just provide the support you need to get something done.

So, if I'm talking to procurement, I don't want them to do a full RFP. I don't want them to take a risk with their own career on something, but I need their help in putting together a contract that will meet our requirements. And if I have to sign off on that or I have to provide them some resources in order to cover the cost that that will have to them, then I'll do that.

The very important one is legal liability. Legal liability is very important to protect the core corporation. But when you're doing experiments, they can seem awfully risky. In that instance, you may need to raise the issues, explore the issues, understand the implications, and then co-sign off. They may still say, I don't like that liability risk, you say, okay. But we'll take it in this one instance. And I'll take that on myself. 

The core thing is just to not keep people in the dark because you're afraid they'll jump in. And to give them at the stage of incubation, really a chance to rash through all those issues. So, if you're a non-standard IT organization, what are you going to do about the final product? And you can thrash that out in incubation, not during the early experiments. And the same kind of thing happens across the company in sales and procurement and everything. 

Brian Ardinger: Yeah. I find that if you have this almost side project mentality, it's like, oh, we're doing a side project to test or iterate or try something. And then by the time it gets to the point where you need to escalate it, a lot of times you have additional evidence or insights that you can then get that buy in from the higher ups. 

Jim Euchner:...