Corporate innovators must start with four things
that help to adapt to budget cuts, to set up the company for post-crisis growth and to maintain corporate innovation’s role within the company:
- Understand the “new normal”
- Spot the opportunities coming from changes in customer needs, customer journeys, shifts in the channels and from new business models
- Align with digital units to identify where a collaboration could provide short-term benefits to the company
- Select the right corporate startups and ventures that will be the basis for post-crisis growth
After these actions have been done, the Lean Scaleup framework will be helpful in accelerating and scaling the selected corporate startups and ventures. In the current situation, the aspects mentioned below are of particular importance.
A snippet from Frank Mattes' session during the Innov8rs Connect Unconference, June-September 2020. To watch the full session recording, join Innov8rs Community with a Content or Premium Pass.
Pre-Scaling Up Cornerstones
Typically, the models companies are using to judge whether a particular innovation initiative is worth to be scaled, are not specifically designed for the corporate context.
In the current situation, in which so much is shifting (customer needs, customer journeys, value chains, ecosystems, etc.), a thorough 360° validation is needed, investigating quite a few aspects, asking questions like: do we have a superior value proposition? Do we have an unfair advantage?
The Lean Scaleup framework arranged the boxes to be checked in a clear procedure. It is important to add however that validation is not just a checkbox exercise; it requires a non-confirmation-biased, open mindset and an effective, sprint-based work style.
A second cornerstone of the Lean Scaleup that is of particular importance in the current situation is determining the right scaling up pathway. Scaling up can be done inside the company (in an existing business unit or in a separate unit) or outside the company, with own staff or via a venture builder. There are generic pros and cons for every alternative but in the light of the current situation they need to be discussed carefully.
A third cornerstone from the Lean Scaleup toolbox is scaling up planning. Generically, this refers to what needs to be done during scaling up, arranging metered funding and establishing an effective governance.
In the current situation, it is imperative to have a hard look at the growth strategy of the corporate startup/venture which is to be scaled. Pre-crisis, the mission was often to “build a new business” and/or to “support corporate transformation”. Now, many companies have changed priorities– the mission has become to “support core short-term and then build it into a business”.
Transition to Scaling
The companies that have co-created the Lean Scaleup all underline that there needs to be a distinct phase in which the corporate startup or venture switches from ideation/validation mode into a hypergrowth scaling up mode. In the current situation it is even more important than ever to get this right.
We have identified six actions in this transitional phase:
- Pressure test key assumptions on “ready to scale” – bring in outside-of-the-team experts to eliminate bias
- Ensure proper funding and governance. Earmark the overall funding for scaling up and set milestone for metered funding (i.e. release the funding pro rata as scaling up milestones are achieved)
- Build an outstanding execution team. Scaling up requires a different skill set than exploration, ideation and validation.
- Establish product ownership – the approach to define, to develop and to market product features that was used in the ideation and validation phases (Minimum Viable Product, Minimum Marketable Product, etc.) will not work in scaling up anymore
- Arrange a collaboration model between core and scaleup. Provide access to corporate assets, create a formal alignment and support for practical work.
- Support preparations for post-scaling up pathways-to-growth. Depending on whether the initiative is going to be reintegrated into the business, remain a corporate entity, spun out, JV’ed with another company, etc. additional activities may be needed in the scaling up phase
Dual Leadership
Dual Leadership, i.e. balancing the optimization of the core while simultaneously building new business, is one key pillar of the Lean Scaleup framework. With smaller innovation budgets and an increased pressure on managers and functional experts, it is even more important.
Top management needs to be prepared to make tough decisions if they want to see their company set up for post-crisis growth and not just only in survival mode. These decisions will certainly center around budgets but also around whether mission-critical managers and functional experts should support the day-to-day business or accelerate the journey of the corporate startup / venture.
Culture And Collaboration
The third key pillar of the Lean Scaleup framework is culture and collaboration between the core and the corporate startup/venture. Define roles as specifically as possible to avoid confusion later. Specify what the benefits are (for core, for startup/venture and for customers), who does what and who will collect which part of the rewards.
In these challenging times, corporate innovators need a clear map and effective tools for navigation. The Lean Scaleup, a best practice framework co-created with more than 20 leading companies is one of these tools. It will be publicly available in the next few months.