Lean Scaleup: The 12 Modules For Corporate Business Building Excellence

That’s what your typical business leader might say. We as innovators might argue that it’s the other way around- innovation does not scale because the mothership is not prepared for letting innovation scale up.

So, how to arrange a win/win/win? The mothership wins, the innovation unit wins, and most importantly, our customers and the world at large wins?

The Number One Challenge: Converting Innovative Ideas to a Viable Business

Success remains elusive so far, mostly because it’s hard to convert innovative ideas into viable businesses. There are two value creation systems under a corporate roof: the "red shirt system" for day-to-day business operations and the "blue shirt system" for long-term, unknown future revenue streams.

The efficiency-driven approach of the “red shirt system” maintains stability and consistency, ensuring that processes run smoothly and efficiently. Meanwhile, the “blue shirt system” thrives on uncertainty, exploring uncharted territories and pushing boundaries in pursuit of long-term objectives. These systems have different success rules and require different leadership styles, mindsets, metrics, and ecosystems.

The challenge lies in transitioning validated concepts from the “blue shirts” to the “red shirts” for scaling up. Many companies lack an organizational home and playbook for this scaling-up phase, resulting in a high failure rate.The areas of tension between the red and blue shirt systems are where the problem lies. Hard-docking these systems will not work.

Eventually, the “reds” would always win if not properly managed.

What does this look like for the different stakeholders in corporate innovation?

Meet Michael: Michael is the CEO of a corporate spinoff and the Head of a Business Unit of a company in the materials industry. Michael developed a platform for the whole industry. So, he might be asking:

• Is the business ready to be scaled?
• How does the business align with the mothership?
• Which of those core assets is most relevant for the business?
• Where is the go-to market?
• How to have the discussions with the C suite?
• How to scale outside of the company, which the company has never done?
• How to leverage core assets and where to use them?

Meet Leon: Leon is the head of a business model incubator of a $bio software company. Leon might ask questions like:

• How to better align with the mothership?
• The business is basically operating in a vacuum and needs to become more dynamic. How to do that?
• The company needs to take more risk, yet governance is super complex. This slows us down and brings down morale. How to tackle this?

Meet Pete: Pete, responsible for innovation labs, faces the challenge of ensuring entrepreneurial freedom while establishing a clear structure for funding and governance. Pete may be struggling with issues like:

• Our mothership company is not prepared for us to scale up. How can I engage leadership of the core to support us in crossing the chasm?
• How could we more pro-actively align with stakeholders in the business, so it’s not a surprise to them that we even exist, once we start gaining traction?

What is the Solution?

The solution to this problem lies in a symbiotic arrangement, where both “red” and “blue” entities coalesce, ensuring the enterprise remains robust yet forward-looking. There are disparities in leadership styles, mindsets, metrics, and ecosystems that exist within these realms.

To be clear; the solution is not another canvas. It’s a systems problem. You need a gearbox to connect these two incompatible value-creation systems. This gearbox has three cogwheels: methodology, leadership and culture.

Firstly, there is the issue of methodology. This pertains to the ‘how to.’ Examples are ‘how to design an effective end-to-end process’ and ‘how to establish a collaboration model between the existing business and the emerging new business.’

Secondly, Leadership’s actions are crucial. Examples for these are aligning NOW and NEW on shared goals, allocating resources, protecting the emerging business against the naysayers and sceptics, and communicating that this is one company, not a NOW company and a NEW company, and both are needed to future-proof this company.

Lastly, people/culture aspects are essential. Even with effective facilitation, achieving productive collaboration at scale between NOW and NEW domains can be challenging when there is no formal collaboration model and no clear leadership communication that fosters a ‘one-company mindset’ throughout the organization.

For an effective solution to the NOW/NEW system problem it is mandatory to address all three dimensions simultaneously.

With the Lean Scaleup framework, you can define per venture as well as for your company overall, what’s needed based on an assessment of the current status and the goals. By putting together the modules as listed below, you will be able to address any issue related to the three cogwheels; dual leadership, methodology and culture.

The modules of Lean Scaleup are

• Transition to Scaling-Up
• Scaling-Up
• One Company mindset
• Ambition for NEW, aligning NOW and NEW
• 4x4 pre-Scaling graduation
• Ambidextrous performance management
• Business building toolbox
• Collaboration model and culture in the interface
• Startup-ish autonomy
• Culture of growth and growth resources
• Capabilities, people profiles and A-teams
• Structure, funding & governance

Together, these 12 modules make up the management infrastructure that companies need to succeed in creating new businesses.