Lean startup is an innovation process with an unfortunate name. Although it is based on lean principles, it isn’t the same. And, although it was based on startup evidence, it also applies to businesses of all sizes, Government agencies and not-for-profits.
It also applies to well established businesses who are well past the startup phase!
Even big companies want to think like startups
For example, did you know that General Electric uses Lean startup approaches? And, they are the oldest company on the US Stock Exchange and one of the biggest companies in the world.
Lean Startup is a methodology for new product development that evolved from agile software development. It focuses on fast learning from customers and fast product development cycles. And, has been used increasingly in the manufacturing sector to improve product-to-market cycles.
GE has used these principles to create FastWorks, a process designed to get products out fast, learn and iterate, and then adjust the design. The program has been so successful since its inception in 2013, that GE lost count of the number of products FastWorks has delivered, at 800! In its first year, 100 FastWorks projects were launched in the U.S., Europe, China, Russia, and Latin America, ranging from building disruptive healthcare solutions to co-creating a new solution for flow metering in multiphase oil wells.
In order to support the cultural change required to make FastWorks a success, GE businesses restructured into cross-functional teams. Each team listened to customer feedback together, bouncing ideas off sales and testing products with designers. They engaged suppliers early on to improve responsiveness to their changing mindsets.
This is how GE explains FastWorks.
Think about how a startup approaches a problem. Successful entrepreneurs test solutions, develop prototypes and adapt along the way. Learning, iterating and paying close attention to data and metrics is necessary at every step. FastWorks isn’t about being fast or simple, though. It’s a rigorous process where a lot of time can be spent on customer discovery and understanding what clients really need and value.
It’s this customer discovery and validation part that’s key. FastWorks begins by asking customers questions to find out what outcome they’re trying to achieve or problem they’d like to solve. Whether it’s being used within areas of GE or other clients, the team working on an issue comes up with a hypothesis for a solution, which also includes certain assumptions. The objective is to find ways to test those assumptions or to get customer validation that says your assumptions are right or wrong.The idea is to test and learn and then make changes based on those findings.
In 2017, the former CEO, Jeff Immelt, who created FastWorks, was replaced by incoming CEO, John Flannery. So far, Flannery has continued to support FastWorks.
With GE maintaining that FastWorks is “changing the way the company makes decisions the way it works with customers. It emphasises continuous innovation, space to experiment and provides a way to validate assumptions and ideas”.
Key messages from General Electric’s experience with lean startup
- Change is inevitable.
- We can’t focus on perfection. Don’t waste time building the perfect version of something that nobody wants.
- Innovation is the key to differentiation and it has to be faster than our competitors.
- R&D has to be market-focused.
- We have to be able to pivot our strategy when we find information that doesn’t support the existing one.
- We need a learning (vs blame) culture.
- Ideas vs experience OR ideas and experience?
- Teams need to have cross functional accountabilities.
- Look for new ways to do things better/faster.
- Ensure that innovation processes can withstand changes in leadership to maintain momentum.
Lean startup is an innovation approach that can apply to our members. Its focus on rapid learning with minimal investment to de-risk product development. While, its engagement with customers maximises the likelihood of innovation (product or service) success. We recommend our members investigate lean startup methods and how they would help them to innovate faster.
We’re speaking from experience!
HERA uses lean startup methodologies internally. And as you know, we’ve been in operation for 40 years – proving this concept isn’t just for the new kids on the block! Lean startup is also the foundation for our Innovation Ready, Set, Go! Program.
If you’d like to join the waiting list for the next Innovation Ready program, please contact our General Mananager Industry Development Dr Boaz Habib.