I love that the #leanstartup conversation has started including discussion around application to corporate environments and even government. I spent many years at Microsoft and recognize the wisdom that could be applied there. I have also been a leader in a “startup” within a pretty old-school corporate environment that had too much rigidity around processes etc inherently – a culture inherently counter to the kind of environment most startups thrive in. The experience really helped emphasize the need for a creating a culture that balances corporate accountability with agility. Finance and senior management need a separate language or rules that govern startups wrt accountabilities and allow them to exist in a space separate to the regular “rythm of the business” processes. Asking the GM of a startup to document a 3yr plan for the annual review cycle … #FAIL!

I was watching the session with Eric Ries and Scott Cook of Intuit (video below) and there were some great takeaways…

Principle criteria…

The principle criteria should be the same in a large company as in a lean startup … how many weeks after you have an idea can you have something in a customer’s hands? The unit of measurement for any idea is customer validation.

How to make it work…

Create islands of freedom: teams of 4-5 who are given as much autonomous freedom as possible. My thinking is this team should consist of a database developer/architect, Web developer, UX designer, biz dev and product manager. There are a couple of roles in there that could be compressed or skipped depending on the nature of the initiative.
Don’t force a review cycle: rather allow the team to report when they have something to share. Maybe sit in on discussions at the end of an agile/validation cycle to get a sense of challenges & opportunities. Or set up more informal and organic sharing sessions, maybe done at short notice to avoid excessive slide prep overhead.
Create a culture where failure=pivot, not death: Make sure that senior management is aligned around the importance of failure as a learning process that is necessary in a startup environment. And make sure that the concept of pivoting is well understood. I have suffered at the hands of a management team that had too much personal reputation at stake around commitments to pro forma P&L to allow for changes in direction. Sometimes a pivot can require a complete reset to the model originally proposed to justify funding the venture. Rigidity born out of a misplaced need for self preservation in your management chain can prevent necessary pivots toward market resonance. Establish the rules of engagement early on, balancing risk tolerance with the need for pivots by agreeing on criteria that guide frequency and overall number of pivots.

Measuring success…

If a group is identified as being a startup, then make sure that they released from the shackles that have been put on more established business units. Carve off every ounce of process “fat” that you can possibly afford to do without. In fact, take a hard look at how you can reorient internal process and infrastructure to help fast track the resources needed by people in startup groups. Make sure that HR, recruiting, IT and Operations all understand the need to help reduce the amount of time and process to be endured by the people who are trying to drive short-cycle customer validation. Make sure that finance and senior management know that startups are not going to be part of fiscal or quarterly planning processes unless absolutely necessary.

So … am I proposing that there shouldn’t be any accountabilities at all? Of course not! Here are some suggestions…

IDEA Phase Deliverables:
Hypothesis model
Definition of Minimum Viable Product
BUILD Phase Deliverables:
Low-Fi through Hi-Fi product against MVP definition
Customer Development objectives and plan
MEASURE Phase Deliverables:
Data … with clear delineation between quantitative and qualitative.
Emphasize the need for in-person validation in the customer environment as a significant % of the effort. And make sure senior managers are active participants in this, observing and hearing from customers first hand.
LEARN Phase Deliverables:
Most important of all is the love metric. This isn’t about how many users you have, but rather depth of use for the users you have. This means measuring things like frequency of use, propensity to recommend or share etc.
Try to establish early on a hypothesis around which of the following profiles your product fits into and corresponding drivers you should be paying attention to.

• Viral product = viral coefficient
• Sticky product = frequency & retention
• Paid product = CAC