4 Lean Thinking Principles for Large Organizations

Too often established organizations become stagnant and stiff. They create heavy policies and rules to regulate their processes, controlling internal interactions and the way the creative potential is unlocked. But, paradoxically, these organizations also try to encourage creativity and innovation, risk taking and an entrepreneurial mindset... but only within the existing frameworks.

Large and established organizations that want to ensure sustainability and return on investment must put in place a new approach to promote continuous and flexible innovation. This approach must rely on internal brainpower to constantly disrupt, create or scale ideas and innovations. The big problem is that many layers of old-school thinkers still prevail in management and leadership. Robert Quinn together with a team of researchers formulated a leadership framework called Competing Values. In it, control and creativity are values that require a different set of skills, are competing with each other and demanding attention. 

In a volatile world full of uncertainties and complexities, where competitive advantages change often too quickly (if they exist at all in the convoluted reality that we are living in), there is a need to embrace a new thinking. Large organizations (in the profit and nonprofit worlds) are getting huge pressure to stay relevant.  And some of them think that the way to achieve it is by putting in place more and more processes to ensure the maximum amount of output per input. In reality, in this changing environment, staying relevant comes down to disruption and innovation. And so an interesting challenge emerges for organizations to ensure high productivity, while allowing their people to turn their attention to continuous improvements and innovations.

Established organizations that have set rules and processes are getting run over by smaller, disruptive and highly innovative startups. This is not happening for a lack of operational capabilities within those large organizations, but because of their incapacity to translate their real capability (brainpower) into better products and services. The question is how to do it, how can these type of organizations take advantage of their people creative and innovative spirits and potential, and their inner curiosity, to tackle challenges, disrupt the market and come up with more innovations? Lean thinking is a powerful and useful answer.

Steve Blank, one of the Harvard Business Review’s “masters of innovation”, and, later, his mentee, Eric Ries, proposed the lean methodology as an approach to innovation for tech entrepreneurs. At the heart of the lean methodology there are three basic premises: 1) experimentation instead of heavy strategic and elaborate planning; 2) customer-centered design and ongoing feedback, based on their experience using products and services, instead of forecast on how customers would use them; and 3) pilot, measure and learn as opposed to big developments and designs.

How can these three principles be translated into promoting more innovation and disruptive thinking in large organizations? Here I propose 4 ideas:

1. Establishing the main areas for innovation (key challenges or problems): the first idea is some sort of combination of the old and new thinking approaches. Within large organizations, the most successful strategies revolve around specific areas in need for innovation. Senior management need to let go of their necessity to control the organization and simply establish the main areas where they see potential gains from innovative and disruptive thinking. This premise offers two main advantages. One, that people will focus their attention and creative power in these main areas. The other, that the organization will be able to incrementally embrace and implement those ideas. If an organization opens up all doors at the same time for any kind of innovation, it might be setting itself for failure and a lack of possibility to respond to all. The consequences will be frustration from their people, and a waste of time and resources.
2. Setting clear hypothesis: lean thinking is based on setting clear hypothesis and expectations. Together with the hypothesis, real and actionable metrics to measure success. It is critical that before implementing an innovation, organizations are clear about what they want to prove. One way to ensure failure is by measuring the wrong metrics. Thus, clearly defining what the organizations would expect to see as results, and how to measure whether they accomplish it or not is fundamental.
3. Experimenting: heavy strategic planning under fast-changing conditions has become useless. As I mentioned before, competitive advantages are in constant and fast evolution. Organizations cannot rely anymore in heavy processes and new product or services development. Experimentation is critical when designing and deploying new innovations. Actually, in uncertain and volatile conditions experimenting on smaller scale with is essential. Eric Ries in the book The Lean Startup talks about a minimum viable product. This is, the innovation that delivers the maximum amount of benefit with the least amount of design and development effort. Too often, organizations spend a lot of time designing and planning how to deploy a new service or product. These organizations want all the fanfare when rolling out those innovations. But, in a world full of content and similar product/service offering, it is better to experiment with smaller audiences, with the core of the innovation, verify whether the hypothesis are met measuring the real metrics, and then going for larger audiences.
4. Designing with a customer-centered feedback approach: users don’t want to be told what product or service they have to use, let alone they want to be excluded of the product design and creation processes. In the past, the supply was more limited and often monopolize by a few organizations. These days competition is total, startup and entrepreneurs are flooding the market with newer applications, products and services that offer great quality, with better experience and prices. Large organizations need (NEED!) to include their customers in the design of their innovations. Piloting an innovation usually gives the impression that the product has already been designed, and that users will only provide feedback on functionality. Customer-centered design and feedback is more powerful as it includes and involves customers from the early stages of design, rather than as passive-feedback-providing users at the end of the development.

Large and established organizations are heavily pressure to remain profitable and sustainable. But even more important than that, they are challenged to remain relevant in a world where hundreds of startups, applications and entrepreneurs show up every day. Large organizations can’t (and shouldn’t) continue on the path of setting heavy and highly-controlled processes and rules to go about their innovations. For them to survive, a fluid approach to thinking about their innovations design and implementation is necessary. Lean thinking is one of those approaches. It requires setting clear areas of innovation, hypothesis and actionable metrics, experimenting on small scale while including customers in the design process. All these phases will prove very useful for quick and effective design and deployment.

Follow me on Twitter: @erubio_p
Visit my blog: www.innovationdev.org

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About the Author: Enrique Rubio is an Electronic Engineer and a Fulbright scholar with an Executive Master’s Degree in Public Administration from Syracuse University. Enrique is passionate about leadership, business and social entrepreneurship, curiosity, creativity and innovation. He is a blogger and podcaster, and also a competitive ultrarunner. Visit the blog: Innovation for Development and Podcast. Click here to follow Enrique on Twitter. 

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