This is a guest post by Andrea Cocchi, Lean Enterprise & Startup Coach and Innovation Consultant based in Milano, Italy.
For Italian companies, Lean mindset is no longer a nice-to-have - it is a must. So why are so few firms getting on board?
It’s not that Italian companies are unaware of Lean, or of the need for innovation; the digital revolution is happening there too, after all.
But overall, innovation is seen as a technical issue: one that is delivered by specific technologies, processes, and tools, and driven by public policies. This view seriously hinders our growth potential.
The lean mindset helps firms approach the challenges of Industry 4.0 from an experimental and evidence based perspective. It allows them to leverage their human capital, encouraging intrapreneurs to emerge. It allows managers to adopt a progressive investment strategy, choosing from a portfolio of different possible options. It provides the opportunity to listen carefully to clients and begin a collaborative, long lasting and growth-oriented relationship. Lean is crucial for Italian companies, because it gives their activities a progressive, evidence-based and human centred direction.
And this is why, when I heard Kromatic’s Tristan Kromer was coming to Italy, I immediately asked him to deliver a Lean Startup workshop. Not only is he one of the foremost thought leaders in the space, he is decidedly non-dogmatic in his approach; to him, lean must be a flexible framework in order to effectively work for living, evolving organizations.
Fortunately, he agreed - and he was happy to sit down with me beforehand to discuss why he’s so passionate about Lean, and how corporations can use it to drive true innovation and keep pace with change.
You’re an evangelist, of sorts, for lean methodology. What drives that, for you?
My personal mission, and my company Kromatic’s mission, is the same: to build exponential innovators. The pace of innovation is threatening to disrupt every industry that doesn’t disrupt itself first. Technology is enabling a radical control over our environment, and our human norms and abilities are not keeping pace.
As individuals, we are living in a chaotic environment where our jobs may change or be disrupted at any moment. Our roles in society are changing and the gap between generations is accelerating. We encounter new, diverse, and sometimes confusing perspectives from different cultures constantly. To fulfill our potential as individuals in this rapidly evolving environment, we need to constantly reinvent ourselves.
Companies face similar challenges as entire industries are disrupted. Sometimes this disruption leads to new opportunities, and sometimes industries are simply replaced by monopolies in a “winner take all” market. Innovation is a required core competency for all businesses.
Even society as a whole is being disrupted. We need to change at the same pace as the tools we use to control the world, or we risk being consumed by the changes we are bringing about. We all need to become innovators who are constantly learning and teaching.
Tell us a little bit about your professional background. What was your journey to innovation and lean methodologies?
I started in the music industry over 20 years ago with the “build it and they will come” approach to business: writing and playing music that I wanted and assuming other people would want it too.
That didn’t work out so well! Sure, I accomplished my goal of playing music professionally, had a lot of fun, and made music I’m still proud of, but it wasn’t sustainable. Unless I was prepared to live in a van for years at a time, which I wasn’t.
After 10 years playing in bands, marketing, producing, and writing, I took my marketing skills and wound up in IT security. I spent 5 years as an intrapreneur building encryption products and learning, again, that just building something wasn’t a sure road to success.
I also started questioning the orthodoxy of business plans. Sometimes you had to ignore what the plan said and just try something out in the market. It might turn out that the clever plan missed something obvious that you could learn in five minutes from the actual customer.
When I moved to Silicon Valley, lean startup was still relatively unknown. The book didn’t exist yet, but people were talking about it. So I had the opportunity to learn and then become an early adopter. I tried to teach myself lean by doing ridiculous things, like building four startups in four weeks.
Then, a friend recommended Steve Blank’s book Four Steps to the Epiphany. It’s not an easy read, as it’s mostly a collection of lecture notes, but it had the core concepts. From there, I followed the breadcrumb trails online to Eric Ries’ blog, Patrick Vlaskovitz & Brant Cooper’s excellent book The Entrepreneur's Guide to Customer Development, and then other great thinkers like Cindy Alvarez, Laura Klein, and Hiten Shah.
What do you like most about lean?
I like that it’s not a methodology, it’s a philosophy. It’s a set of principles that each entrepreneur and intrapreneur can adapt to their own situation.
It’s not a one-size-fits-all solution, which rarely work. It’s just the scientific method applied - as closely as possible - in a business situation where it’s hard to reach statistical certainty or even get a decent sample size. It’s a very flexible approach that’s grounded in reality.
You describe yourself as a lean startup coach. How is lean coaching different from traditional coaching?
It’s still similar to the coach of a sports team. The coach doesn’t play on the field, but the team and the coach have the same objective.
In sports the objectives is ultimately to score points. In lean, teams aren’t even sure what game they are playing. So the objective is to figure out which game to play and what the rules are. A team pursuing a business model should consider choosing not to play by invalidating the business model or pivoting to a different, more winnable, game.
So a lean coach has to focus on teaching the team not just to play, but to discover the rules by rapidly experimenting and seeing when the customer - the fans - cheer.
That means we look to metrics like experimentation and learning velocity rather than simply looking at revenue.
You’ve designed lean innovation programs for entrepreneurs and corporates. Is there a difference in how you teach lean to these two groups?
Seven years ago, I started designing programs around lean startup principles for an early stage boot camp called TechBA for Mexican entrepreneurs. The programs I’ve built for corporates follow many of the same principles, but take a more peer-to-peer approach to education.
Our goal at Kromatic is always exponential impact. In an accelerator, we’re often just trying to get 10-20 companies to adopt lean at a time. In a corporation, however, we have to reach 10,000 people or more - running one class at a time just won’t work. So we don’t train intrapreneurs, we train the trainers. We teach one person who teaches another. Those two then train another two. Those four teach four. And so on.
At some larger companies we’ve trained hundreds of people who then go on to train others. The intrapreneurs are required to improve their own methodology to deal with the unique challenges in each company. So the programs change and evolve - sometimes, I learn something new from a workshop I originally created, which is great! We continue to learn right along with them.
What about implementation - are there differences in how a corporate actually uses lean, as opposed to a startup?
The standard answer is that companies are executing an existing business model and startups are searching for one.
That’s true, but very large companies aren’t comparable to startups and they don’t have just one business. So they aren’t simply executing a known business model. Large companies are more like ecosystems which can contain many many startups inside them, each trying to discover a new business model to disrupt and re-energize the parent company. So the goal of a large company is to create an environment where startups can truly thrive.
The most important thing a corporation needs to do is learn the core competency of admitting ignorance. Corporations are too used to knowing everything and simply doing business as usual.
But in a rapidly changing environment, that arrogance can leave a corporation vulnerable to disruption by a scrappy three-person startup that is prepared to move fast and experiment.
What role does management play? Or perhaps the better question is: what role should management play?
Their role is to get out of the way. Management is typically a form of control and it’s impossible to implement a well controlled process for an unknown and yet-to-be-discovered business model. So generally, we need management to stop implementing yesterday’s process onto tomorrow’s business model.
Unfortunately, that’s not so easy. Middle management is often afraid of changing the process because they think the C-level is too stubborn and won’t adapt to a new way of doing things; at the same time, the C-level thinks the middle management is too stubborn and won’t adapt to a new way of doing things. Meanwhile, the HR department has set everyone’s bonuses on executing the prior business model with the same old KPIs.
So everyone is unhappy and blaming each other for lack of change, but the real problem is a system that is designed to prevent variation and change. Unfortunately, innovation is variation and change.
What about manufacturing and service-oriented firms? Are there differences in how they should adopt the lean mindset?
It used to be that manufacturing a product allowed for efficient economies of scale. Although there is nothing easy about scaling a supply chain, services inevitably deal with tricky human-based experiences that are hard to reproduce consistently.
Now, those differences are shrinking because consumer preferences are demanding ever-increasing differentiation. Products have become experiences. From Walmart greeters to Apple’s high design aesthetic, going to a store is less of a chore and more of an event.
So in the future, the difference will disappear. Manufacturing doesn’t end with the production of the product. The user experience begins when the customer first hears about the product and ends when they finally throw it away. And in-between, the customer may be subscribing to add-ons that augment the physical product.
Can the lean startup framework be applied to any kind of organization - like schools and public administration, for example - or is it strictly for business?
Any organization. There are a ton of examples of lean startup, and the associated concepts of agile and design thinking, in unusual places: from companies like SpaceX rapidly iterating on rocket design, to the San Francisco government open innovation initiatives, to the UK governments redesign of UK.gov. Examples abound. Even the US army famously used agile in its creation of the Polaris submarine.
I was fortunate to hear about the US Army’s use of agile methods to invent the MRAP troop carrier and how they are implementing agile procurement processes. I’ve also had the pleasure of speaking with Norway’s procurement department and defence industry. So I’m seeing more and more clever people finding small ways to experiment in extremely tricky environments.
Back to corporates - what does it look like when a company gets lean right?
There are some wonderful public case studies but my favourite personal experience is with a team that started a project by showing me a Gantt chart. On that Gantt chart was a two week window in a 6 month plan clearly labelled “lean startup.” They thought that they were going to do this “lean startup” thing for two weeks and then be done and get back to the real work of building a product.
Fortunately, the team really took to it once they got into the field. They sometimes ran six comprehension tests in one day to make their value proposition clear. Within three months, they had a conversion rate for a B2B product that was so high we thought that Google Analytics must be double counting conversions.
After the ability to admit ignorance that I mentioned before, corporate teams need to learn to cheat. In the standard corporate mindset, if there is a rule then you don’t break that rule.
Intrapreneurs need to adopt the entrepreneurial mindset: if there is a rule, there is a way around it. If an entrepreneur sees a rule, for example, they start trying to figure out how to manipulate it. They make do with what they have.
One of my favourite team leaders wanted to try lean startup for a project and he just refused to take no for an answer. He wanted me to work with the team but it was going to take me 9 months to get through the procurement process in order to pay me and then another 90 days to get paid. So he wound up paying me out of his pocket on credit card, and then expensed it in small increments.
Then I told him he’d never make any progress without a dedicated team so he just started creating four hour blocks of meetings and inviting people for three months straight. People just had to show up.
One of the people in the team liked the methods so much she wound up teaching and running a half-dozen other teams. She’s probably one of the best leaders I’ve had the pleasure to meet. Her energy and enthusiasm for ignoring the conventional wisdom and not waiting for approval was infectious.
Final question: what does ‘being lean’ mean to you in 2018?
It means we embrace a mentality of continuous improvement.
Always getting better. Bit by bit.
Learn how to implement Lean Startup from Tristan Kromer in Milan, 31 May/1 June
There is extensive theory regarding what teams should do to prioritize risks, run experiments, and build a business. But few teams are skilled in execution. This 2-day workshop is carefully designed by Tristan Kromer to improve your understanding of lean startup and improving team performance. It will address in-depth how to effectively manage a startup’s needs, goals and priorities in a large organization. This includes:
- how to accurately quantify speed and progress
- knowing when to bring in support
- how to manage stakeholders and investors
- innovation accounting (yep, you need math!)
This is an interactive training program, where you'll work on your actual projects. Therefore seats are limited. It's the first open workshop Tristan's hosting in Italy, and the only one this year- so don't miss out!
Check out more info and secure your seat
