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To write their equally fascinating and practical new book, New Power: How Power Works in the 21st Century—and How You Can Make it Work for You, Henry Timms, the President of the 92nd Street Y, a major cultural and community institution in New York, and Jeremy Heimans, the CEO of Purpose, a company that builds social movements all over the world, joined forces to come up with a guide to navigating the world of crowds and chaos and connections we all live in.
They spent three years talking to practitioners, academics and researchers on the cutting edge of what they call new power, which flows from what they think of as the essential skill of the 21st century: the ability to harness the energy of the connected crowd. Their research and conversations took place all around the world and included everyone from the heads of intelligence agencies in Washington to frontline health workers in the Netherlands. They write about the battle and balance between old power to new power, and show how they’re fueling the defining transformation of our times. But like all fast-moving trends, sometimes it’s hard to see it clearly when we’re right in the middle of it, which makes New Power just that much more important. It’s a guide to spreading ideas, launching movements, raising money and much more.
It was my pleasure to talk with Henry about what he and Heimans have learned about how power structures are changing, how people can get started making the shift from old to new power, how the principles of new power are related to the principles of lean startup, and the responsibilities that come with all the amazing energy being channeled.
It’s also my pleasure to offer three copies of New Power to readers, thanks to Henry and Jeremy’s generosity. Tweet your thoughts on our conversation with the hashtag #newpower and I’ll choose three winners at random on April 12th.
Let’s start with the basics. What’s the difference between old power and new power, and how did you and Jeremy get interested in defining them?
Jeremy and I came at the world from very different places. He’s an activist and movement-builder and launched movements like Avaaz and Get Up! and I run a 143-year old institution. But we were both trying to get our heads around what was really changing in the world. And so often, the conversations about how the world was changing were reduced to quite a shallow discussion about technology--it was all something to do with Twitter, or changing tools. But it wasn't really a conversation about power.
We both in our work started to ask, "What's the right taxonomy to think about all of these changes in the world?" and we galvanized around old power and new power. The old power world is the one we know well, which is very command and control, top-driven, managerial and based on downloading information onto the world. What's emerging is the new power world, which is much more about things that are made by participation, about upload, and about distribution models.
New power--that ability to harness the energy of the connected crowd--has really become the essential skill of the 21st century. If you look at all the people who are coming up on top right now, for good and for bad, what they have in common is the capacity to capture that energy. So whether we look at Trump and Obama and the unexpected victories that they both had politically, or we look at platforms like Uber or Facebook, or we look at movements like #metoo or March For Our Lives, these very different examples all share one thing: the people who are leading them have worked out how to harness this power of the crowd.
Was there a moment in your own life and work when you first saw the effects of new power?
The 92nd Street Y is in New York, where one of the events we all pay attention to is UN Week. UN Week is typically the most old power week of the year. The only people who get anywhere near the action are people who have a UN Grounds Pass or who can afford to go to the Clinton Global Initiative. You had the most exciting people in the world here talking about the biggest issues of the day, and it essentially excluded most people. You couldn't get anywhere near it. Really, what UN Week brought New York was gridlock.
So about eight years ago, we at the 92nd Street Y – along with Mashable, UNDP and the UN Foundation – created the Social Good Summit which I think of as something that looks at the world through a new power lens. We said, "Instead of this being top-down-leader-driven week, how do you get people engaging in these issues in much more connected ways?" We opened up to thousands of bloggers and social entrepreneurs and others to come be part of it at the Y here. Then we encouraged people to meet up and create their own events around the world. We had meetings that first year in twenty-five countries where people collectively organized their own events similar to the Social Good Summit. Now we’ve counted 100 satellite events around the world. I’m speaking this summer at the Social Good Brazil event – which is larger than ours in New York City.
Can you tell me a bit more about your own experiences transforming an old power institution into a new power role model?
The 92nd Street Y is all about strengthening community. In the old power world, the way we did that is people would come through our door and we'd offer them experiences. For years we've created programs and people would pick up the catalog and consume our programs. But all the new tools available now allow us to do that work in a very different way.
#GivingTuesday is a perfect example of that. We took one of the key values of the Y, which is around community and philanthropy and said, "After Black Friday and Cyber Monday, how could you create a day that was really about philanthropy? How would you create something that could really scale around the world?" And that was #GivingTuesday. The design of Giving Tuesday was very new power in a couple of ways. First, we never branded it. We never called it the 92nd Street Y’s Giving Tuesday, and the goal was never that it would be all about us. It was built so that other people would grab it and make it their own. Second, we designed it so people would improve it.
As a result, Giving Tuesday has morphed into all sorts of different hashtags and different campaigns around the world. I remember very early on when Baltimore turned Giving Tuesday into BMore Gives More--Baltimore Gives More. They decided they were going to make it all about how generous Baltimore is. Then the organization Dress for Success, which takes donations of clothing for women getting back into the workforce, turned Giving Tuesday into Giving Shoes Day, which was about women giving professional-appropriate shoes to those going back to the office. University of Michigan turned Giving Tuesday into Giving Blueday, and they used it to raise $5.5 million last year.
In the old power model, we'd say, "Cease and desist.” You've changed our brand, you've altered the frame. But in the new power world these are all signs that your idea is spreading in the right way. At the 92nd Street Y when we’re thinking about the future, we aren’t just thinking about new technology, but new models for building stronger communities.
How did you decide to expand your original Harvard Business Review piece on new power into a book and what the research process was like?
When we did the HBR piece, we started hearing from people around the world who had taken it and worked out ways of using it for their own needs. One of the best examples is a group of health workers and nurses in the National Health Service in the UK who built on the ideas in the HBR piece and made a curriculum for their own work.
We kept hearing, time and again, from so many different sectors that the old power/new power frame was speaking to them and to the challenges and options that they faced. Even spies, who are perhaps the ultimate old power sector, started to engage with the idea, realizing now that they're going to have to work out how to deal with a much broader and engaged and connected landscape if they want to succeed. So even intelligence agencies are experimenting around open innovation and open sourcing and all these things and they recognize that they can mobilize the crowd around the outcomes they want in the world.
The reason we wrote the book was to really lay out this set of skills that help people become more powerful. The book offers a new playbook for a hyperconnected world. It asks and answers questions like: "How do you think about spreading ideas?" "How do you think about transforming an institution?" and "How do you think about raising money?" For that last one, of course, there’s a very new set of dynamics around things like crowdfunding, which everyone now needs to understand. The book is very much a practical guide for how people can think about their own power and how they can think about being more effective in the world.
There are also some cautionary tales. I think it’s fair to say we’ve seen some of the dark side of new power lately, too.
Yes, and that’s why the stakes are so high. If you agree that the essential skill of the 21st century is the ability to harness the connected crowd, you have to also agree that a lot of the people who are doing that well are not on the side of the angels. You look at the capacity of anti-vaccers to out-message health professionals. You look at the power of climate deniers to communicate better than climate scientists. You look at internet crazies who are doing better than academics who have all these truths and all these facts. There's this real surge of new power that is not ending up in the right hands. So while the first bit of the book is a practical guide how people can really get their head around this new set of tools, the second bit is a call to action--which is to say, we really need those on the side of the angels to get good at new power quickly. The voices of reason need to catch up.
I think we're also seeing the beginnings of a new kind of political consciousness emerging against platforms, who have gobbled up a lot of new power and extracted it for their own ends. There seems to be a very big market opportunity for someone who could create platforms that actually create meaningful and fairer connections with the people who create the value.
Who, in the course of your research, have you seen doing that most effectively?
So many of the people who are good at new power think about their work in an experimental, entrepreneurial way – with some real overlap with the Lean Startup method. Rapid experimentation isn’t something that’s just entrepreneurial, it's actually what the best mobilizers do. You talk to any long-time campaigner or activist; they'll tell you that's how they think about their own work-- just constantly experimenting until you see something that hits. I think that's probably the ultimate lesson of new power. It isn't something you do once a year. It's a practice that people need to learn and get good at.
In fact, you can think about the Lean Startup movement itself as an amazingly effective exercise in new power. Leaders all around the world have grabbed the central frame, made it stronger and stepped up to organize, create and collaborate. They aren’t waiting for permission. They all now connect with one-another in dynamic and productive ways, but without a top-down old power mentality. Ultimately, Lean Startup is a community.
How do those two aspects--the practical and the cultural--play out in the business world?
We think a lot about how many of the most powerful businesses we see now have new power models but revert to old power values. Uber's a great example; it has this amazing new power model with terrific execution. But they really resorted to old power values: secretive, very leader-driven, and very transactional in lots of ways and it, obviously, ended up costing Travis Kalanick his job.
Contrast that with a company like Lyft which is trying, with some success, to actually create a business that has both a new power model and new power values. New power values are much more about empowering the crowd, about more transparency and collaboration, and engaging with the wider world. For two companies who essentially offer the same service, there is a real return available around culture and values. When Uber and Lyft were in a recent price war, at the same time that Uber was seeing its drivers organize pickets against it around the country, Lyft, essentially, responded by organizing picnics. They're really trying to build enthusiasm and community amongst their drivers. It will be interesting to see where they go with this.
Facebook offers another example of a new power model with old power values. And the price of that is becoming clear. It's very much about centralizing value, it's very much about Facebook deciding what's good for the world and not the users. It's very opaque in terms of how it's governed and how the algorithms work. For businesses, we think the opportunity is for organizations to build a culture that is based on more than the efficiency of their algorithms, and fosters the human connection they have with people in their network.
What’s your opening advice for someone who’s in an old power organization and wants to start making change?
I think the biggest shift is not about technology, but actually about professional identity. It's about whether you are, in a committed and strategic way, really prepared to think about how you can engage more people more meaningfully in your work. For generations, the only real ask we had of our communities is "do what you're supposed to do" or "buy my product." That was kind of how the world worked. What's so interesting now is those businesses who are doing well are those who are offering more interesting routes to participation – far beyond “just consume”. Airbnb is a great example of that. They have worked out how to get their crowd to be their hosts, they've worked out how to get their crowd to fight their regulatory battles for them, they've worked out how to get their crowd to essentially be their advertising machine. Our argument is that for every business, every organization, every political activity, mobilization is now the key activity if you want to get ahead. The book offers the playbook for the new power world.
Ann Mei Chang is the Executive Director of Lean Impact, the social good division of the Lean Startup Company. This fall, her book based her own experiences using lean approaches to innovate in the social sector, including during her time at USAID, as well as stories from nonprofits, social enterprises, companies, government agencies, foundations, and philanthropists all over the world, will be published. Lean Impact: How to Innovate for Radically Greater Social Good is going to be an amazing resource for so many people from innovators to funders and everyone in between. Ann Mei recently talked with me about the book, some of the structural problems that impede social innovation, how lean approaches are leading to better solutions, and how she came to Lean Impact. It was incredibly energizing!
Let’s talk about what the idea of lean impact is and how you came to it. It’s such an inspiring story of taking skills from one sector to another for social good.
I spent most of my career in Silicon Valley in the tech industry, about 23 years. Then about seven years ago, I decided to make a pivot to spend the second half of my career in the public or social sector, particularly focused on global poverty. I ended up doing a fellowship at the State Department, then I worked at a non-profit called Mercy Corps. After that, I served at USAID as the Chief Innovation Officer and the Executive Director for the U.S. Global Development Lab. It was really a dream job. Our charter was to identify breakthrough innovations that could really bend the curve of progress and also transform the way we the practice of global development itself. We worked on issues around global health, around economic development, around democracy and governance, around agriculture and access to energy--across the board and around the world. I became really inspired at the possibilities of taking some of the best practices for innovation that I learned throughout my career in Silicon Valley and applying them to solving some of the worlds' toughest problems.
What are some of the biggest issues with the way projects happen in the social sector that prevents those problems from being attacked in an effective way?
The traditional approach to global development, and much of the social sector, is to run fairly large size programs that are usually designed in detail upfront, then executed accordingly - something I call an enforced waterfall model. It’s very risk-averse. A foundation or government agency puts out an RFP, and non-profits or contractors then submit a detailed proposal. Then once an award is given, the grantee is expected to spend the next three to five years dutifully implementing on the program as designed.
There's very little room for experimentation, for risk taking, for iteration. You have to stick to the letter of the proposal. That's not a great way to innovate. At the Global Development Lab we were pioneering some different ways to tackle problems, to structure our funding so that we could give out smaller grants for people to experiment, give them a lot more flexibility to do so, and then give them increased grants based on their successes. This happened both through development innovation ventures--we called these DIV--which was an open innovation window where we took ideas from anywhere and across sectors, and also through our grand challenges, which we called directed innovation. Those would focus on specific problems where we felt like the solutions we had were insufficient and we were seeking to tap into the worlds' greatest minds to come up with better solutions that could move the needle.
You’ve now spent the last year writing a book about all of this, also called <em>Lean Impact</em>. Can you talk a little about why you wanted to do it in that format and about the process?
When I left USAID, I wanted to continue to take the things I’d done there forward, and a book seemed like the right way to do it. I think a book is a really helpful reference point that anyone can access, whereas only a limited number of people can make it to any individual conference or presentation. We’re also doing events and conferences, either in conjunction with the lean startup community or potentially some independent ones as well, along with workshops and consulting services, all with a nonprofit mindset of looking at how we can help the social sector as a whole become more innovative.
A book is a way to capture all the ideas in one place that can serve as a foundation. The intent of the book is to lay out how we can adapt the same approaches that we've seen lean startup bring to accelerating innovation in business to solving some of the world’s greatest problems. Yet, innovation is far more challenging in the social sector, and doesn’t always easily translate. Lean Impact addresses these unique barriers head on, and shares compelling examples from different organizations who have overcome them. I talked to over 200 organizations in the course of my research for the book, and it’s been really inspiring to hear their stories of how they managed to innovate in the work that they do.
Were there any universal challenges among all the stories?
Absolutely. One of the biggest ones is funding. Startup companies are typically funded by venture capitalist or angel funding that is fairly flexible; you can experiment, you can take risks, and it’s expected, in a sense, when you're a startup company.
For organizations in the social sector, the funding that you get from government agencies, from philanthropists, and from foundations is often fairly restricted and fairly risk averse, as I was saying. It's a real challenge and this is the most common concern that I heard from the people I've spoken with. They wanted to innovate, they wanted to experiment, they wanted to take risks. But the way that they were funded, they felt like their hands were tied behind their back and they didn't have a lot of room to do it. That's one of the things that the book really focuses on: how to make the room, how to be able to do this type of work within the constraints that organizations often have.
Are there some solutions you’ve seen work even for organizations that are in the early stages of adopting lean methods?
I do think there are a lot of things organizations can do, even in the current landscape. It does involve taking some risk. One tactic is that some of the best organizations I spoke with have actually turned down grants that are too restrictive or poorly aligned. It's something that people are often hesitant to do, because they are trying to keep the doors open and they're trying to grow. It's very tempting to take money when it's offered to you. But some of the most successful organizations I know of were picky. They made the difficult choice to turn down money that was offered to them because it didn't allow them to move forward on the things that they thought would be most effective. They took a gamble that they could find other money that would be more flexible and many have. Sometimes it's just making that tough choice and really being patient to find the right kind of funding.
The other problem I would say is that because of how the social sector is structured, we often have a mindset that everything needs to be done fairly big. We create these proposals, we run these big programs. Innovation in general and particularly with lean approaches, should start small. Experimentation isn't something that takes a lot of money. That’s more of a mindset shift: even if we don't have a lot of flexibility, we should take what flexibility we have and for example, just get out of the building. Go talk to your customers. Spending a day doing that can glean enormous insights, even if you're not able to completely transform the way you work. Injecting what you can by running a few small experiments or talking to customers can make a big difference.
What would you say to people who might say that starting small is a little pointless when facing such huge problems?
There's this great graph that the World Bank put out in a report a few years back that really shows the progress that we've made on some traditional poverty alleviation intervention, such as clean water, access to electricity, access to education, and so forth. What we've seen is very slow but steady progress. But if you overlay that with the trajectory of adoption of mobile phones, for example, you see a completely different curve where there's an acceleration of adoption that rapidly eclipses all of those traditional problems. Mobile phones were this new innovation that people wanted, that solved real problems for them, and that had a business model that enabled rapid scaling.
I think it's absolutely possible to bend the curve of progress when it comes to global poverty. What it means is rather than brute forcing our way there--by taking the tried and true things we've been doing for decades and needing another dollar to reach another person--we need to step back and look at how can we find more effective interventions that get us greater bang for buck. We need solutions that people really want and embrace and we need to look at different ways we might go about solving some of these problems and finding one that has the capacity to reach much greater scale and impact in what we are doing today. That’s exactly what small experiments are for.
Who can make that happen? Is it up to funders? Or the people getting the grant money?
I'd love to see funders take a different stance in terms of how they give out grants and the kind of flexibility they offer, to really shift the way they fund to better support innovation in the industry. But I think grantees can help with that shift. One of the things that I've been a big advocate for is building in an innovation window when you apply for a grant. It may very well be the case that your funders out there are going to fund a certain way, so you need to write a proposal to access that funding. But you can include in that proposal, say, a 5% innovation window, where you say I'm going to use 5% of those funds to experiment in order to try to figure out how I can make the other 95% far more cost effective or impactful or scalable. It's a very good use of money. When you show that experimentation does really yield results, then hopefully the funder might consider even larger windows in the future. It's not necessarily what funders are thinking, but by taking some of that risk, I think the reward can be really outsized in terms of what they can deliver in the long run.
It’s pretty clear these issues really need to be addressed from a lot of different angles at once. Can you talk about how lean impact fits into that?
In the social sector, it takes a whole ecosystem to get projects done. In business, the individual business can do a lot on their own: You create a great product, you can go out and there's infrastructure to market that product, to take payments for the product, to be able to distribute the product and so forth. In the social sector, one non-profit, one social enterprise often can't solve the problem completely on their own. They need to work with donors, other partners, government policy, distributors, missing infrastructure. Just getting payments or getting distribution for products can be a big challenge. It ends up being a much more complicated problem that involves bringing together multiple players, multiple stakeholders that can really tackle the problem from different angles. So this concept of lean impact is for all of those stakeholders as well as the philanthropists, foundations, or government agencies distributing foreign aid. It can also be for individuals who are looking at how they can most effectively volunteer their time or make donations of their money to be able to create social change in the areas that they care about.
What stage would you say social sector innovation is in, overall? And what’s needed, besides just spreading the word and the methods, to help it grow?
Innovation has become probably the most overused buzzword in the English language. In the social sector, there has been a lot of interest because people are seeing the kinds of results that innovation is having in business, and they see an opportunity to make better, faster progress on intractable social issues. However, in many cases, I think there has been a misunderstanding of innovation--which has resulted in lots of new ideas being generated for social good, but very few of those ideas are reaching significant impact at significant scale.
One of my favorite quotes is from Thomas Edison, who said that genius is 1% inspiration, and 99% perspiration. That inspiration is the invention, the new idea, which we absolutely need to get started. Lean impact is about that 99%, which is the blood, sweat and tears that goes into the constant testing, iteration, experimentation and feedback loops that take a germ of a great idea, and turn it into a solution that really can reach massive impact at scale. Ultimately the reason to become more innovative is to become more effective, and make a bigger difference more quickly for more people.
To learn more about Lean Impact, go to</em> <a href="http://leanimpact.org/">leanimpact.org</a><br />
While doing research for his extraordinary new book, Great at Work, Morten Hansen studied more than 5,000 managers and employees in corporate America to identify the key practices that explain why some perform better than others. What he and his research team discovered is that seven key practices explain a whopping 66% of the difference in performance among people in the sample.
I was really curious to learn more about his research and findings, but also how these practices apply to working in startups. Both kinds of organizations are experiencing high degrees of uncertainty, and I’ve found they can be more similar than people expect (though there are clear differences when it comes to scale and building new things vs transforming existing structures or processes). We talked about what being “great at work” means in both contexts.
Q: Startups are inherently unstable. Can you explain how the principles that make people successful in more traditional, less volatile work environments can also work for startups? Are there common factors?
A: Startups are clearly different from established companies, yet there are also similarities. Many established companies today are experiencing unprecedented levels of instability in their business models, brought on by technological disruption and, yes, those startups chasing their markets. We found that the best performing people in established companies are constantly innovating in their work. They look for ways to redesign their jobs to add more value, and they keep on learning new things. That means that they experiment and pivot from time to time, just like startups. For example, there’s a high school principal in my book who was leading a severely under-performing school in Detroit where 80% of students were on food stamps. He started experimenting with new ways of teaching which led his school to be the first in the entire United States to flip the classroom for the entire school—homework at school, lectures at home via video clips. Essentially, he applied the “startup way” inside a school. He had a very tight budget, not unlike a startup, and started out by using A/B testing his hypothesis around flipping with a minimal viable approach (using some basic videos and teaching plans) to see how it would work in two social studies courses. The rest is chronicled in the book, but we find these kinds of innovators and learners throughout the corporate world. We just need to give them tools, frameworks, and right encouragement.
Q: In your research, you found that top performers at big companies had two critical skills: they knew how to set a short list of priorities and also how to protect them by being really good at saying no to anything that didn’t align with those priorities—including their bosses. What happens when people at both large organizations, and startups, don’t follow your principle: “Do less, then obsess”?
A: In my experience, startup teams do obsess—they go all in on their startup and fully commit to their work. Their problem maybe the opposite which is too much hyper focus. I recently spoke with a founder of an online education marketplace. He had a laser-like focus on his key for-profit segment, but then some high-profile people approached him to extend this to a non-profit area. Flattered by their attention, he re-allocated resources to that new effort, only to encounter problems in the core area. After a while, he realized that he had prematurely branched out and had to re-focus the effort. It’s a real concern given startups have very, very limited resources. Doing less—and sticking to that narrow scope—is key, yet the temptations to prematurely expand to new customer groups, new features, new products and services, and new geographies is very strong. It requires real discipline to master this principle in a startup environment when little is known and resources are scarce.
In larger, established companies my data show the situation is the opposite and often worse. A lot of people working in innovation encounter the problems of both lack of focus and lack of obsession. Many people in our data reported work environments where people “do more, then stress”. They take on many priorities—for example, working on 3 product development projects simultaneously—and then work hard to accomplish all of them, which means they cannot go all in and obsess over a few things.
“Do more” types fall into two traps: they spread themselves too thin, which leads to them to miss deadlines and deliver lower-quality work. They also fall into the complexity traps: they spend time coordinating and juggling multiple activities. Things get dropped, and error rates go up. Many cope by working long hours and stressing to just keep all these activities afloat. It can work to some extent, but it doesn’t produce excellent work. It certainly isn’t being great at work.
Q: We tend to think of people who succeed at their jobs or in launching a startup as people who are passionate about what they do. Is passion a prerequisite to being a top performer?
A: I initially thought that people who do very well did so because they “followed their passion.” That idea has become cliched, it’s repeated so often. The problem is this: What it really implies is that passion should dictate what you choose to do, regardless of other considerations (the assumption being that it will all work out in the end). Ignoring your passion, doesn’t sound like such good advice, either, as it may just lead to a life of drudgery.
We discovered a solution to this conundrum. Top performers found a third way: they matched their passion with purpose. Passion is do what you love; purpose is do what contributes. Passion asks, what can the world give me (a hedonistic view). Purpose asks, what can you give to the world (an other-orientation). I call this “P-squared”: People who infused their work with both passion and purpose performed much better in our data set than people who had just passion, or just purpose, or neither. They placed in the 80th percentile in the performance ranking on average, while people with only passion (but no purpose) placed in the 20th percentile, and people with purpose (but not passion) placed in the 64th percentile (note that purpose more than passion correlated with high performance).
Having passion and purpose in one’s job is important because when you inspire yourself first, it’s easier to inspire others. In today’s workplaces, whether in large companies or startups, you need to get others excited about your initiatives and projects—you can’t just rely on the old style “command and control.” We found that the top performers were really good at inspiring others, surprisingly not through charisma but through other easily adopted techniques to evoke emotions in others (both positive and negative). For example, by “showing and not telling.” One purchasing supervisor we spoke to was charged with the thankless tasks of converting paper to electronic forms in the company, and no one was excited to support him. Then he learned that the CEO would be visiting his office building for a meeting, and he arranged to use the adjacent conference room. He grabbed the CEO in a break and guided him into his room, where he had displayed a mountain of paper on a giant conference table. “Holy cow, what is this?”, the CEO asked excitedly (and not in a good way!) to which he responded, “this is all the paper forms we use in this company.” His project got the support it needed.
If you’re a founder or working in a startup or thinking about forming or joining one, think about this. Don’t just follow your passion in deciding which startup and which role. Try to formulate how you can take your unique strengths and find ways to contribute to the world. What’s your personal purpose statement? We found that a very strong purpose orientation has three components: what value do you create for others—customers, co-workers, company? Is that value meaningful to you personally? And does that value provide societal benefits beyond sales and profits? Then apply this to the startup itself: What value does the company create—and for whom—and is this formidable value creation? How many of the employees find that value proposition personally meaningful? What societal benefits does the company bring, beyond generating its sales and profits and selling stuff to customers (selling advertising or selling an app to a corporate customer does not necessarily provide societal benefits).
Q: So how can people working in both startups and corporate jobs determine if they’re creating that kind of value and those benefits for the people who they work with?
A: They need to pursue different, better metrics. We discovered in our research that people in established companies oftentimes pursue the wrong metrics. They emphasize volumes of activities or internal goals, over value-creating metrics. For example, one logistics manager in a high-tech industrial company tracked the extent to which their industrial products left the warehouse on time, achieving an impressive 99% on-time shipment rate. The problem was, the customers complained that only 65% of the shipments arrived when they needed them. The 99% metric was an internal goal, whereas the 65% metric measured customer value. You need to measure value-metrics and not internal “volume” metrics.
I suspect that many startups also don’t do this. A few months ago, I spoke to the CIO of a large company that is one of the largest paying customers of Slack software. She reported that they tracked very high usage of the software. When I asked whether they had seen higher productivity as a result of Slack or tracked that, she said they had no idea and that it wasn’t clear. Then I asked them to ask Slack whether they tracked such measures of their clients, and so they did and got a negative response. That’s no surprise. When I read about Slack in the news, I come across two typical metrics: the number of users and user engagement (hours of use per day). But those are volume metrics: the fact that a group of engineers in a client company uses Slack extensively during the day doesn’t mean that they are doing better work (that’s like saying that meetings using video-conference tools are good meetings). This is not to single out Slack, which is a terrific company, but to make a general point. Startups also need value-creating metrics: what value do we create for our customers, really? And how can we modify our work and offerings to increase value?
For that logistic person shipping goods, that meant re-organizing the schedule to get better delivery time for customers (value metric: % of shipments arriving when customers needed them). For Slack and many others like that, the real measure of value is the improved results by the customers like the one I interacted with (higher engineering productivity, speed of product development etc). Yes, those are harder to measure, but they are the real measure of value.
Q: Your concept of the “learning loop” draws on the build-measure-learn cycle that is one of the pillars of The Lean Startup and The Startup Way. What does it look like for people who set themselves apart from their colleagues?
A: One of the great virtues with The Lean Startup and The Startup Way methods is the focus on learning empirically, for example by doing A/B testing on MVPs, learning from those, and pivoting if necessary. We found in our research that the best performers apply a similar “learning loop.” They try out a new way of working (say leading a meeting), then get some measurements and feedback (say, feedback on meeting effectiveness), then modify their behaviors, and then repeat. It was also striking to discover how few people do this while working. Many people become competent at a professional skill, then they stop improving—good enough is good enough, it seems. This paucity means that startups and other companies pursuing the lean method in innovation have a huge advantage over others who are not learning at the same rate. Moreover, we discovered that the learning loop method really works not just for idea development but also for most “soft” professional skills, like running a meeting, prioritizing, doing a sales pitch, and so on. Everyone can apply this to managerial and professional skill development. For example, if you’re a sales person in a startup: do you apply such a learning loop to your sales pitch? Do you A/B test it and modify it constantly to become better? Those who did in our dataset improved faster and outperformed the rest. Continuous learning and growth are important in any work environment.
Morten Hansen’s new book GREAT AT WORK is on sale today and available at bookstores everywhere.
Editor’s Note: We wrapped up the 2017 Lean Startup Week in San Francisco just a few weeks ago, and we’re excited to share with you some of the best lessons learned in entrepreneurship and corporate innovation. Expect to read a new story each week straight from our keynote and breakout stages.
In an interview with GE’s Culture Transformation Leader Janice Semper during Lean Startup Week, Eric Ries remarked, “Listen, that's our specialty here. We try to talk to real practitioners about actual, real issues.” And the effort was reflected by the 140 speakers and mentors who took the stage and ran workshops over the course of the seven-day conference. We'll share the lessons we learned from these inspired leaders over the next few months, and give you a taste with these seven highlights from Lean Startup Week.
LESSON #1: Equip your business with a portfolio map and a 21st century org chart.
With industries from banking to transportation being transformed and, in some instances, undermined by new business models and technology, executives are smart to wonder, “Are we next?” To confidently answer no, co-founder of Strategyzer Alex Osterwalder told our attendees, “What you really want to do is work more like Amazon. … The reason Amazon [is invincible] is because they've put a system in place that allows them to continuously innovate.”
To do the same, Alex recommends building two things: a business portfolio map that recognizes invention as necessary and an updated organization chart. “You need a pipeline of tested and validated ideas,” Alex said. The pipeline starts by dividing your business into two distinct functions: innovation and execution. The innovation motto is “Fail fast.” The execution motto: “Failure is not an option.” The innovation function is dedicated to iterative search through experimentation. The execution function is dedicated to the day-to-day business.
To successfully support experimentation, Alex explained you must also create an org chart that mirrors the roles overseeing execution. For example, if a chief executive officer manages the daily operation, a chief entrepreneur heads up innovation efforts. “And the chief entrepreneur has a staff of chief portfolio manager, chief venture capitalist, and chief risk officer, right? Because these Lean Startup people, they do crazy stuff,” Alex joked. “So that gives us two different management structures for these two different portfolios.” Two particularly important roles include the chief venture capitalist, because the investment philosophy for invention is different than traditional finance, and the chief internal ambassador “who connects the two [functions] and builds bridges.”
LESSON #2: Forget innovation. Remember your customers, culture, and connections.
ING Group is an exemplar of supporting continual improvement, so it may be surprising that their Chief Innovation Officer Ignacio Julia Vilar told the Lean Startup crowd that “innovation” is “a little bit [of] a buzzword.” So, ING has redefined the I word. “And to be honest,” Ignacio shared, “the first thing that we said is what it's not about. And innovation is really not about gadgets.” Instead, ING has adopted a company-wide focus on three Cs: customers, culture, and connection. It’s “creating something really useful for the customer that is solving the need of the customer.” And to do this, ING has had to create the right culture and sometimes connect with outside fintech companies.
To support the three Cs, ING has also developed their own iterative practice named PACE. Describing the development of this methodology, Ignacio explained, “We just sat down together and said, ‘Well, let's look at what we're doing. … Let's see what works well, what doesn't work well for us, for our organization, for our culture.’ We tried to define the best for us, and then we started practicing.” The result is a combination of design thinking, Lean Startup, and Agile Scrum, and Ignacio’s innovation team includes 25 coaches who train employees in PACE best practices. To “embed this in the organization,” the company has created PACE Everyday, “a simplified version…to force our organization to always start with what is a problem that we are trying to solve and to test it and to test it in a real way.”
LESSON #3: Avoid these three hiring mistakes.
When it comes time to grow your team, Jeff Jordan and Eric pointed out three hiring mistakes to avoid.
First, do not hire someone just because they have the domain expertise. You want to be sure that they can work with the resources you can provide in terms of staff size and budgets. In other words, be sure they are ready to work at a startup. Jeff elaborated, “You want to tee [your hires] to the state of the company.” For example, don’t court public-ready CFOs when your financials aren’t even on QuickBooks yet.
Second, don’t simply hire your buddies. “You’re kind of looking for founders,” not friends, remarked Jeff. “If you know the true story of any [startup], the early employees are every bit as entrepreneurial, every bit as dedicated … as the true founder,” Eric seconded.
Lastly, question any hiring decision based on “culture fit” alone. While Jeff and Eric agreed that company culture can be powerful and effective, it can also result in a homogeneous company with unexplored opportunities and weaknesses. Eric recounted, “I was just in an interview where someone was saying, ‘I don’t want to hire this person. They’re qualified. I liked all their answers, but my Spidey-sense is tingling. I didn’t feel like they’re a fit around here.’ The human brain is really good at producing intuitive leaps, but we know from the research that those leaps can be biased by irrelevant characteristics. Whenever you hear, ‘They’re not a fit,’ you have to look really carefully.”
LESSON #4: Get creative with your MVPs.
In an interview with Eric reflecting on their work together at GE, Viv Goldstein and Janice Semper, co-founders of GE’s FastWorks, demonstrated that even a hundred billion dollar company can learn from creative, low-cost MVPs. When the CEO of GE’s Sustainable Healthcare Solutions business in India called Viv one day and said, “We've got a problem selling our neonatal incubator,” Viv explained: “We started by asking what is the customer problem we're trying to solve for? What is the impact that our customers need? And what are some of the challenges they're facing with the product right now? Not, ‘what's the technology?’ In GE, technology used to be our lead, and instead we reframed that and started with the customer.” The team discovered that medical professionals in rural clinics in India needed a more suitable and convenient way to place the babies in the incubator, and needed incubators that could hold multiple babies while still providing the right amount of heat and light to each baby and withstand the one type of disinfectant clinics could afford. The first MVP was “a shoebox and a doll.” When confronted with a “safety valve hydraulic thing,” Eric remembered that “all the conversation in the room was about the technology of hydraulics.” But, “the ultimate MVP they had involved sending a team member to go sit on the rig … to find out what the actual safety problems were.” What did the rig-sitter find? The problem “had nothing to do with hydraulics and everything to do with 29 kinds of human error.” And, in response to employees’ desire for more continuous feedback from their manager and peers, a GE team had built a simple MVP for enabling real time 360 feedback; but when they tested the tool, they found that absolutely nobody used it. “What we discovered is that it had absolutely nothing to do with the tool,” Janice shared. Instead, employees “were like, ‘Well, I don't know how to give my peer feedback. I've never done that before. I can't really give my manager feedback. How is he or she going to take that?’” The team learned that they didn’t need to build a better product. It “was much more [about] training around the behavior.”
LESSON #5: Build-measure-learn with an innovation thesis.
According to Tendayi Viki, 54 percent of companies struggle to bridge the gap between innovation strategy and business strategy. He suggested starting by adopting a build-measure-learn loop for your innovation strategy. Here is the step-by step process that he outlined in his presentation:
First, sit down with your team and develop a point of view on where the world is going. Ask “what are the trends that are impacting our business? And what are the things that are coming up in the future that we think we need to respond to? What products in our portfolio are declining that we need to fix?”
Then, decide how you will use innovation to respond to these challenges; this is your innovation thesis. Tendayi explained, “It's actually based on the venture capital notion of investment thesis. If you're a venture capitalist, the whole time you're getting pitched a lot of ideas by a thousand people. You can't invest in everything, so you have to make a decision about the kind of things you invest in and the kind of things you don't invest in.”
Once you have a thesis, every project you support becomes an experiment testing it, and you should review it on a quarterly or biannual basis and change it as needed. This approach also structures your budget decisions. “Not a single dollar moves from the company's bank account into some project except when it’s a specific expression of [your] strategic intentions. There's no let's-see-what-happens dollar. Every dollar moves as an expression of [your] strategic intentions.”
LESSON #6: Fall in love with your problems, not your solutions.
“I always thought, ‘How are we going to affect this organization whose heritage is world-class innovation?’ reflected David Kidder during his interview of Procter & Gamble CTO Kathy Fish. Reflecting on how Lean Startup methodologies have changed P&G, Kathy shared that “when you fall in love with the problem and not the solution it opens your mind up in a really different way. So we would typically fall in love with the solution, which would always be a product … As you fall in love with the problem, you start seeing business model opportunities; you start seeing marketing and education opportunities in addition to product opportunities, and it's just much, much richer.”
Focusing on the problem first has also proven cost-effective. Before working with Lean experimentation, the company was “spending a lot of money sometimes before we really should have,” Kathy said. “We've now shifted to a more metered funding approach . . . And we're finding on some of our biggest programs that we're learning faster; we're getting to the consumer a lot faster; and we're spending 25 to 50 percent less money along the journey. It's amazing.”
LESSON #7: Create peak moments.
While Kathy encouraged companies to embrace their problems, co-author of The Power of Moments Chip Heath asked the Lean Startup crowd to create peak moments, or moments that evoke an emotional response. To illustrate his point he told the story of the second highest rated hotel in Los Angeles on TripAdvisor, the Magic Castle. Number three is the Four Seasons. The Magic Castle’s secret is not their shoddy bathrooms, but their butler popsicle service, free candy at the front desk, and free laundry—peak moments.
In Chip’s “toolkit for creating a happy face” are four elements. The first one is elevation. “Elevated experiences are experiences that bring us up in sensory experience to something that rises above the day-to-day.” Chip’s examples included fireworks, sunsets, and cupcakes. The second element is insight. Chip shared the story of the executive who displayed the 424 kinds of gloves his company was buying to help his senior leadership team realize they had a procurement problem.
The third peak element is pride, and finally, there is connection. John Deere redesigned their employee orientation day to achieve both. The welcoming process starts with a personal text before your first day and includes a welcome email from the CEO letting you know that “on your desk is a model of the very first patented plow that John Deere manufactured" 175 years ago. “There is not better leverage than an employee orientation day at John Deere,” Chip said. He advised creating peak moments when you are bringing people onto a team, when you need alignment on direction, when you need people to get along, and when you need to show people how to act.
From startup hiring to enterprise alignment, Lean Startup Week offered learnings for a wide range of entrepreneurial thinkers, but as Eric noted in his opening remarks, one theme was clear: “We have to be thinking about how do we sustain our innovation into the next, and the next, and the next generation. In order to do that … we need to adopt the idea of the startup as an atomic unit of work.” We need to keep learning from the startup way.
This was originally published on Lean Startup Co.'s blog.
Since The Startup Way came out on October 17th, I’ve had a great time traveling with the book, speaking to audiences, and meeting amazing people creating change in all types of organizations. From New York, Philadelphia, and Boston to Los Angeles and San Francisco, entrepreneurs came out to share their enthusiasm -- you really are everywhere. Some great new reviews and interviews from smart, generous readers since my last post:
- Don’t let your hot startup grow into a sluggish, old-fashioned company (LinkedIn Weekend Essay)
- Digital Magic: How Eric Ries Brought The Startup Way to GE (GE Reports)
- The Startup Guru Who Wants Everyone to Think Like a Founder (Wired)
- How Creating An Entrepreneurship Function Can Help Sustain Corporate Innovation (Forbes)
- How to Turn Your Lumbering Dinosaur of a Business Into a Nimble Butterfly (Inc.)
- The missing function of entrepreneurship in most companies, creating a new accountability paradigm, and how to structure promotions and compensation in the new structure (Twenty Minute VC Podcast)
In addition to all the great press, I was honored to see the book make the Wall Street Journal bestseller list in its first week on shelves.
Next stop on the book tour: London. My UK publisher has put together a packed schedule and I can’t wait to talk about The Startup Way across the pond. You can learn more about each event and access tickets at the links below:
Nov 13 | Tech City Nations | 6:00pm | Cass Business School In conversation with Ingrid LundenNov 14 | TechHub | 5:00pm | TechHub London Live coaching hosted by Elizabeth Varley, Founder & CEO TechHubNov 14 | Campus | 7:30pm | Google Campus London In conversation with Sarah Drinkwater, Head of CampusNov 15 | Bookomi / How To Academy | 9:00am | Emmanuel Centre Digital read-along and book discussionNov 15 | Business of Software | 6:00pm | Emmanuel CentreNov 16 | London School of Economics | 6:30pm | Old Theatre In conversation with Dr. Lourdes Sosa
Back in the US, the first printing of the hardcover edition is selling fast, but if you buy one now you can still get all the bonus content we’ve created, accessible only with a unique code printed inside the first edition US print run.
Bonus content includes:
- A five-part video series introducing the key concepts and methods of The Startup Way
- A case study on hiring and onboarding at hypergrowth startup Gusto, not included in the book
- Bonus MVP examples courtesy of Intuit
- A downloadable visualization of The Startup Way
- A workbook to generate and analyze MVPs in your own organization
- A primer on innovation accounting and its key metrics and questions
- Access to The Leader’s Guide online community, a network of new and experienced lean practitioners
We’ll be adding more content over time as well, so be sure to pick up your hardcover copy while supplies last. Don’t forget to tweet a photo of your book to see it on thestartupway.com
Thank you, as always, for your support. I can’t wait to hear more about how you use the #StartupWay in your work.
A few thing as we move into Week 2 of my book tour:
I'm now in Los Angeles and San Francisco to promote The Startup Way. If this week is anything like the last, attendees are in for great events.
If you're in those cities, I hope you'll join me:
10/24 | Los Angeles, CA | 8:00pm | Ann and Jerry Moss Theater In conversation with Mark Suster, Managing Partner at Upfront Ventures
10/25 | Los Angeles, CA | 7:45am | Cross Campus Downtown LA In conversation with Krisztina Holly, Founder of MAKE IT IN LA10/25 | San Francisco, CA | 4:30pm | Bunker Labs Muster @ Slack HQ
In conversation with Todd Connor, Founder and CEO, Bunker Labs10/25 | San Francisco, CA | 6:30pm | Commonwealth Club of San Francisco
In conversation with Todd Park, former US CTO
Speaking of events! An important reminder: Lean Startup Week is in San Francisco October 30 - November 5
The Lean Startup Week team has been working around the clock to put together a program that will suit the needs of any entrepreneur in any organization, all themed around The Startup Way. Whether you're a student or the head of a division at a large company, we have a package to help you get the most out of the conference. You can see the full program agenda here and register for the package that suits your needs here. See you there!
Here’s a round up of early media for The Startup Way
Teaching GE to Think Like a Startup (Fortune)
Eric Ries: Why Companies Need To Create An Entrepreneurial Culture (Forbes)
In Eric Ries’ new book, he tells companies to turn every unit into a cash-strapped ‘startup’ (TechCrunch)
How companies can keep their 'start-up DNA': Eric Ries (CNBC Squawk Box)
Why big companies need to innovate like entrepreneurs (Wired UK)
EDITOR'S CHOICE: The Startup Way (800CEOread) (a terrific in depth review)
Silicon Valley Vs. Wall Street: Can the New Long-Term Stock Exchange Disrupt Capitalism? (WSJ) (nice piece about our efforts with The Long Term Stock Exchange)
One final reminder!
Each copy of the first printing of the hardcover edition of The Startup Way in the US and Canada contains a unique code that grants you access to bonus features at thestartupway.com/bonus. Register with the code in your copy to get access to a five-part video series, a visualization of The Startup Way, bonus MVP examples courtesy of Intuit, and more.
If you're outside the US or purchased via Kindle or Audible, sign up on the site without a bonus code and you'll receive some bonus materials as well.
As always, thank you for your support, and I look forward to hearing what you think as you delve into the book.
Today, my new book, The Startup Way, finally hits bookshelves! It's a huge day for any author, but I also hope it can be a huge day for the future and growth of the startup movement and for the future of our country.
I want people to use my book as a way to start conversations about the critical roles of innovation and sustainable growth everywhere from startups to large corporations to public policy. Together, these institutions can help transform the United States into a thriving entrepreneurial nation that supports and values all of its citizens. The success of the startup movement is about so much more than making cool new products; it's about adapting our country for an uncertain future that holds as many opportunities as it does challenges.
In order to start those discussions, though, people need to read the book. I've always found that the best book recommendations come from the very same source that has powered the startup movement so far: smart, creative, busy people. People like you. We have so many ways of getting information today, and I would really appreciate you using any channel you feel comfortable with to tell your friends and colleagues about The Startup Way. Here are a few suggestions for spreading the word:
1. Share the book socially. Conversations at cocktail parties or over the dinner table are welcome, as, of course, is social media. If you do post online, it would be great if you tag your enthusiasm with #StartupWay. I've included some ideas below and encourage you to create your own based on your experience with the book.
• Insights on how continuous innovation leads to continuous transformation in @ericries new book The #StartupWay. http://bit.ly/2y3lIeY
• The #LeanStartup has grown up to become The #StartupWay, w/innovation framework for orgs of every size. Out now! http://bit.ly/2y3lIeY
• Entrepreneurial mgmt is difference btwn modern & old fashioned co’s. @ericries new book #StartupWay shows why. http://bit.ly/2y3lIeY
2. Write a review on Amazon. The book got some amazing blurbs in advance of publication, but reader reviews also have a huge effect on the buying decision. If you enjoy the book it would mean a lot if you could take a few minutes to write a positive review. Thank you!
3. Pick up a copy. Or five! Every sale makes a difference, even more so if it's from a local retailer, and the first week's sales can make or break a book's trajectory. I encourage you to grab copies for you and your colleagues. We’ve created resources on the Startup Way website for people who buy the US hardcover edition -- there’s a code in each book -- that I hope will help facilitate group discussions.
I am deeply grateful for your support throughout this process. It was an honor to see the impact that The Lean Startup had on so many and to have the support of such terrific friends and readers. I’m hoping The Startup Way will continue that conversation and am so glad to have you along for the ride.
For eight years, our flagship conference has focused on sharing stories and lessons of putting Lean Startup’s entrepreneurial methodology into practice. We’ve hosted talks, workshops, and interactive sessions on the challenges and successes of modern management techniques from a wide variety of business leaders around the world. Lean Startup Week (Oct. 30 - Nov. 5 in San Francisco) allows you to experience seven days of interactive innovation training from our experts and true Lean Startup practitioners—in a city that’s known for being the hotbed of high-growth startups and iconic tech companies (not to mention a great place to eat, drink, sightsee, and shop while you’re talking shop).
This year, we’re really honing in on the feedback from our past conferences, as well as our smaller, more focused conferences in New York and London this year. What we heard was that you want more opportunities to have your specific challenges answered—so to that end, we’ve added new sessions where you can ask our experts your questions directly, including Roundtable Discussions and Live Office Hours with Eric for all attendees, along with our regularly popular sessions such as Speed Mentoring, Networking Dinners, and our Women’s Breakfast. We’re also working very closely with all of our speakers to ensure that the expert knowledge they impart is not only in line with Eric’s new book, The Startup Way, but focuses on actionable takeaways.
We want you to leave Lean Startup Week feeling like you understand your next steps when you’re back at your office trying to put all the pieces together. Because while it’s great to feel inspired after a conference, we can have a bigger impact when we leave you feeling empowered to make entrepreneurship a core function of your organization. And that kind of empowerment only comes when you have 90+ speakers and mentors offering you practical, actionable knowledge, learned from their time in the trenches.
Here are some of the specific things we want to help you tackle:
- Connecting with like-minded entrepreneurs and experts who share your challenges and concerns
- Turning an old school-minded organization on to modern entrepreneurial management techniques
- Starting and scaling an innovation practice in your organization
- Connecting Lean methodology to hiring, team-creation, organizing boards, leading engineering teams, and more
- Ensuring your organization remains committed to innovation practices as you grow
We’ll help you with these solutions by approaching them from a variety of formats:
- Learn by Doing (click here to see how)
- Learn by Example (click here to see how)
- Learn from Experts (click here to see how)
- Learn from Your Peers (click here to see how)
- A rare workshop with Eric Ries (co-led by Lean Startup Labs senior faculty member Marilyn Gorman) on enterprise transformation using the Lean Startup way on Oct. 31 (limited to the first 200 Gold Passholders.) Side Note: Eric and Marilyn will be doing a webcast as a preview to their workshop on Oct 11. Sign up for free here.
- Justin Rosenstein, co-founder of Asana, presents a new approach to thinking about your startup's culture from the ground up, mapping the idea of intentional culture design to the familiar tenets of product research, design, and management
- Tim O’Reilly, founder & CEO of O’Reilly Media, discusses how to avoid getting sucked into the vortex of me-too thinking by ensuring all the parts of your business work together, a theme from his new book, WTF? What’s the Future and Why It’s Up to Us
- Anil Dash, CEO of Fog Creek Software, on mindfully building modern companies in a more humane and ethical way
- Chip Heath, best-selling author & Stanford Graduate School of Business professor, on The Power of Moments in creating organizational change
- Zach Nies, VP of Education at Techstars & Marcus Gosling, VP of Product at Long-Term Stock Exchange, co-host Startup Office Hours, an interactive Q&A where you can ask the experts your questions on sustainably implementing Lean Startup and other like-minded methodologies into your growing business
- Vanessa Colella, Head Of Citi Ventures & Chief Innovation Officer, Citi, on how Citibank uses growth boards to provide seed funding to internal startups
- Alex Osterwalder, co-founder of Strategyzer, on protecting your organization from disruption
- Eric Ries & GE FastWorks Co-Founders Viv Goldstein & Janice Semper on GE’s Startup Way strategy
- Bionic CEO David Kidder and Procter & Gamble CTO Kathy Fish on P&G’s innovation pathway
- Making diversity & inclusion an actionable, trackable metric at your company with industry thought leaders, including eBay’s Helen Kim, CodePath’s Michael Ellison, Pivotal’s Michele Perras, and Intuit’s Cassie Divine
- Innovation, Impact & Design Thinking for social good with IDEO.org
Sounds great! So how to attend?
If you haven’t been to one of our Lean Startup Conferences, this is the year you won’t want to miss. So get ready to take selfies with the Bay Bridge, snag a burrito in the Mission district, and step foot into some of the hottest tech companies up and down Market St. We have passes for all budgets:
Gold Pass - For those who are serious about diving deep into the Lean Startup methodology and getting hands-on experience, join us for the full seven days of innovation training at Lean Startup Week (Oct. 30 - Nov. 5). This is perfect for teams looking for their best off-site yet! Register here.
Silver Pass - For those who are tight on time but want to get highlights of what we offer, get access to the two-day main conference on Nov. 2 & 3 and a seat at our Ignite Opening Night on Nov. 1.
Bootstrapper Pass - Offers the same benefits as the Silver Pass, but brings the cost of the conference down to $350 for people who otherwise wouldn’t be able to attend (think: fledgling solopreneurs, employees at very young startups, and small non-profits). Apply for a Bootstrapper Pass here.
Livestream - Because we’re all about community building, we invite you to host or join one of our free livestream meetups. Get details here. You get all the mainstage talks and the most popular breakouts, along with access to live Q&A and moderated chat.
Volunteer - If you’re a student, you can apply to volunteer here. Pitch in for a shift, and we’ll give you a Silver Pass.
We hope you’ll join us in San Francisco at the end of this month!
In just a few weeks, my new book, The Startup Way, will be available in print, digital, and audio formats.
One of the most gratifying parts of writing a book is heading off on tour with it and finding out how it’s engaging actual readers. Some of the most inspiring conversations I’ve had about my work have happened at book events, and I’m looking forward to more of them. I can't wait to get out on the road with The Startup Way and talk to you about the methods and principles of modern management.
Here’s the current list of my planned stops. If your city is on the list, come by and say hello! More information and tickets available at the links below:
10/16 | Philadelphia, PA | 6:45pm | Prince Theater
In conversation with Adam Grant, author of Give and Take, Originals, and Option B
10/17 | New York, NY | 12:00pm | Grand Central Tech
10/18 | New York, NY | 7:00pm | The Strand
In conversation with Beth Comstock, Vice Chair of GE
10/19 | Cambridge, MA | 7:00pm | First Parish Church
In conversation with Tom Eisenmann, Harvard Business School professor
10/24 | Los Angeles, CA | 8:00pm | Ann and Jerry Moss Theater
10/25 | Los Angeles, CA | 7:45am | Cross Campus Downtown LA
10/25 | San Francisco, CA | 6:30pm | Commonwealth Club of San Francisco
In conversation with Todd Park, former US CTO
Meanwhile, I’m offering early access to a special 5-part video series on The Startup Way for those of you who pre-order. Enter your order confirmation information at bit.ly/thestartupway to see the videos. I had a great time exploring another medium for sharing my ideas and hope you find the series beneficial in advance of the release of the book. I can’t wait to hear what you think. Join me on Twitter using #StartupWay to share your reactions.
“If The Startup Way can transform the federal government—and it has—it can transform your company. For everyone who's thought 'there has to be a better way,' here's your proof and a playbook to make it happen.”
-- Jennifer Pahlka, Founder and Executive Director, Code for America
Finally, the 2017 Lean Startup Week is themed around The Startup Way. October 30 through November 5, we're gathering thousands of thought leaders in downtown San Francisco for a week of keynote talks, interactive workshops, speed mentoring, roundtable discussions, industry dinners, innovation bootcamps, and startup tours. You'll take in the book's concepts and learn from technology thought leaders like Tim O'Reilly and Anil Dash, seasoned enterprise leaders including Viv Goldstein and Janice Semper of GE, founders of high-growth startups like Justin Rosenstein of Asana, government innovators from the NSA and 18F, and non-profit practitioners deep in the trenches. Plus, every attendee will receive a copy of the book. I hope you'll join me there.
“Think big. Start small. Scale fast.” This is the mantra of Lean teams described by Eric Ries in his upcoming book, The Startup Way. Whether you’re struggling in an actual startup or trying to build an internal one at an established organization, a Lean team approach can maximize efficiency and results in uncertain times. But assembling a group that can execute on this vision comes with the routine challenges of team-building as well as questions unique to the methodology. Drawing on the advice of experts and recent research, here are seven insights on how to best build a Lean team.
Eric often refers to Amazon’s “two-pizza team,” which means starting small when it comes to new innovation groups, aiming for a number that you could easily feed with just two pizzas. A tighter team provides several advantages. First, small groups typically bond faster, leading to better communication within the team. Second, with fewer decision-makers, experiments can happen faster. There is also greater accountability because it’s easy to know who’s doing what.
Make your team cross-functional.
Just because the team size is diminutive doesn’t mean its skillset should be. A hallmark of Lean teams is cross-functionality. Members should bring a diversity of skills and/or represent different departments within the company. In enterprise organizations, teams are often comprised of employees from the same department, and once their work is “completed,” the results are passed along to another department. This siloed approach is inefficient, and the lack of varied perspectives often results in subpar solutions.
To build a cross-functional team, Eric suggests starting by asking what departments are needed to make meaningful progress that won’t get roadblocked along the way. In The Startup Way, Eric provides the example of an industrial project that might require a product designer, someone with manufacturing expertise, and a salesperson who understands customers’ wants and needs. An IT project, on the other hand, might include an engineer, a designer, and a marketer. As Eric says in the book, “There are endless permutations, depending on what needs to get done.”
Every team leader should also know whether you’re planning to do something that could require approval from legal. If so, be sure to include a representative from that department to prevent delays. Another tip from Eric: If you lack the budget or influence to get someone from a necessary department assigned to your team, ask for volunteers.
Don’t over-rely on your natural team players.
Relying on the same employees to contribute to teams can create collaboration overload, which in turn negatively impacts work satisfaction and productivity. A study published in Harvard Business Review found that typically 3 to 5 percent of employees contribute 20 to 35 percent of effective collaborations, but “those seen as the best sources of information and in highest demand as collaborators in their companies—have the lowest engagement and career satisfaction scores.” According to the researchers, simple solutions for avoiding collaboration overload is to cancel unnecessary meetings and to let individuals who are most often tapped for teams know it’s okay to say no and to suggest another capable person to take their place.
Train people to be team smart.
To ensure that every employee can excel in workgroups, invest in team training. “[Companies] focus a lot on professional development at the individual level. They have robust programs for people, but they won't necessarily be focused on teams,” says Janet Brunckhorst, principal product manager at Carbon Five. Employees and managers are rarely educated in how to be an effective contributor or how to make a better team. In short, many companies are team dumb, which is a problem because there’s evidence supporting the idea that a team’s collective intelligence is independent of the intelligence of its individual members.
Even if a company has the smartest employees, its teams can fail. In research published in the journal Science in 2010, psychologists from Carnegie Mellon, M.I.T. and Union College found that what they label the “c factor” (another term for collective intelligence) is correlated with “the average social sensitivity of group members, the equality in distribution of conversational turn-taking, and the proportion of females in the group.” The same research suggested that a team that failed at one thing was likely to fail at every task it attempted. A simple way to increase your team’s c factor is to bring in someone versed in guiding groups through the best practices of teamwork and Lean methodologies, whether that’s an internal leader or an external coach.
Create a pro-risk environment.
Finding innovative solutions and creating breakthrough products requires bold ideas and often big missteps, so individuals on Lean teams must learn to welcome risk and failure. Creating this mindset can be challenging in a traditional failure-is-not-an-option environment, and the dynamics of a team can exacerbate the desire to play it safe. (Nobody wants to look foolish in front of their colleagues.) However, with some psychological insights and pragmatic tools, teams can be coached to feel good about taking risks and failing.
“There are lots of things that carry through all teams. Mostly, that we are all human, and the psychological and behavioral patterns are the same,” says Carbon Five’s Janet Brunckhorst. While it may seem obvious, the insight is often overlooked. Companies often focus on expertise or personalities when selecting team members, but research suggests that any group of people can succeed if the right atmosphere is created.
Google’s Aristotle Project, an effort launched by the company in 2012 that surveyed 180 of their teams to better understand what made them work, found that the key to a highly-functioning team was psychological safety. In a 2016 New York Times article discussing the Aristotle Project, Abeer Dubey, a manager in Google’s People Analytics division, said, “The ‘who’ part of the equation didn’t seem to matter.’’ In other words, it wasn’t about the balance of skills or diversity of personalities. Instead, high performing teams shared two characteristics: 1. Members contributed to conversations equally, and 2. They were adept at interpreting how others were feeling based on nonverbal cues and addressing those feelings. Creating this type of environment does not come with a one-size-fits-all approach, but Google found that simply sharing the research findings inspired teams to work differently.
People also need to know that their decisions will not result in the loss of millions of dollars or litigation. This is an idea that Courtney Hemphill, partner at Carbon Five, calls reversible risk. It means that teams understand what can be undone. “Teams need to have a reverse button,” she says. “Productive teams are able to say, ‘Well, that didn’t work. Let’s fix it, learn from it, and not do it again.’ But then continue to make decisions and move quickly.” If a team can define its reversible risks, people are less likely to get bogged down in a blame game.
Understanding what your team needs means understanding their assumptions.
Everyone comes to a team with certain assumptions about how work gets done, how to communicate, and a million other things. To function as a cohesive unit, people need to understand what assumptions they are working with. “In a team, there may be someone interrupting and talking all the time, and your assumption might be that they’re a jerk,” says Christina Wodtke, principal of her firm, Wodtke Consulting, and professor at California College of the Arts and Stanford Continuing Education. “Everybody is walking around with an idea of how you are supposed to behave in business, and it is not the same idea, believe you me.”
For this reason Christina recommends that every team create a charter of norms: “Norms are just, ‘How do we agree we are going to work together? What are we going to do when we disagree? Are we going to make proposals? Are we going to just fight it out? How do we make a decision?’” To help develop a team charter, she suggests starting with the eight scales outlined in Erin Meyer’s book The Culture Map. The scales address expectations surrounding communicating, evaluating, persuading, leading, deciding, trusting, disagreeing, and scheduling.
Measure to learn and improve your team. Whether you’re starting a new team or trying to improve an existing team, “you can’t really take your first step without looking at the team and measuring,” Janet says. This could mean tabulating assumptions, as with The Culture Map scales, or assessing the current sentiment—in other words, how do people feel about the team spirit. “It could be something as simple as every time you have a team meeting, doing a team temperature gage—a one-to-five scale or thumbs up/thumbs down,” Janet says. From there, the important thing is acting on that information. For example, understanding why a team may be feeling closer to a one, and then working to remedy the problem. Fundamentally, it is applying the Lean Startup methodology of build-measure-learn to your team dynamics.
Although teams vary across companies, an effective Lean team should start small and be cross-functional. Creating clear ground rules, working to ensure everyone contributes, and checking in regularly to assess how individuals are feeling helps create a productive working environment, and from there, you can continually fine-tune based on feedback. Accept that you will have to iterate your team because effective teams are committed to continuous improvement. “It means never accepting your team as done,” says Christina.
To learn more about building Lean teams, join us at Lean Startup Week October 30th - November 5th in San Francisco. Christina Wodtke, Courtney Hemphill, and Janet Brunckhorst will be leading breakout sessions on crafting effective teams.
This post was originally published on Lean Startup Co.'s blog.
In the opening paragraphs of Eric Ries’s upcoming book The Startup Way, Eric sets the scene: He arrived at GE in the summer of 2012 amidst a multi-hundred-million-dollar, five-year plan to develop a new diesel and natural gas engine. He knew next to nothing about the engine but a good bit about entrepreneurial management, and GE Chairman and CEO Jeffrey Immelt and Vice Chair Beth Comstock thought the insights he’d developed in The Lean Startup could ensure that the plan would succeed.
And the plan did succeed. GE released the test engine, known as Series X, sooner than originally anticipated and immediately received an order for five engines.
It was the start of a partnership that lasted several years and transformed GE’s business practices while also inspiring the company’s FastWorks program. It demonstrated to Eric that Lean Startup methodologies could help organizations of all sizes, and it inspired GE to train every CEO and top manager in what Eric now calls the Startup Way, which he explains in the book “combines the rigor of general management with the highly iterative nature of startups” and incorporates several Lean Startup processes.
The Startup Way includes several learnings from Eric’s work with GE (among other enterprise and high-growth organizations) and Marilyn Gorman was part of the original team at GE that worked with him to build training for senior leaders. Today, she is senior faculty at Lean Startup Co. and travels the world providing businesses with innovation tools and training. As a special treat for our community, Marilyn and Eric will be co-facilitating a limited-capacity workshop focused on The Startup Way during Lean Startup Week (Oct. 30 - Nov. 5) this fall.
As a teaser for that workshop, below are a few lessons Marilyn has learned about teaching an established corporation to practice the Startup Way, along with additional insights from the book.
You need a leader. The subtitle of The Startup Way is: How Modern Companies Use Entrepreneurial Management to Transform Culture and Drive Long-Term Growth. Understanding fundamental distinctions between “modern companies” and “old-fashioned companies” is an important first step in refashioning management in a large enterprise. One of the many distinctions Eric points out is that an old-fashioned company “is composed of managers and their subordinates.” But a modern company “is composed of leaders and the entrepreneurs they empower.”
Marilyn knows this truth firsthand. “A lot of people are saying, ‘We’re trying to drive a change to a more entrepreneurial mindset from the bottom up,’ and while it is important to start with small teams, you do need leader support. It is critical,” she says.
Without a commitment to a new approach from higher-ups, teams tasked to work with Lean Startup methodologies are more likely to be blocked by existing procedures and expectations. For example, being told, “There is no budget,” shuts down a project pretty quickly. As Eric recounts in The Startup Way, when working with GE, he asked teams to be honest about what they really needed, and “many of them simply needed senior leadership’s assurance that if they worked in this new way they wouldn’t be eaten alive by middle managers.”
Be ready to change more than your scorecards.“I had companies call me when I was at GE and say, ‘Tell me about how you changed your performance management approach,’” Marilyn says, “and I couldn’t do it without talking about the Lean Startup mindset of building, measuring and learning. People would sometimes reply, ‘We just want to change how we score people at the end of the year,’ but there is no shortcut for implementing a Lean Startup approach.”
Marilyn recalls that as GE started to implement Lean Startup practices, management began to recognize that there were systems and processes that stood in the way of being successful. “Corporations have lots of policies in place to reduce risk and to put out as perfect a product as possible, but Lean Startup is all about taking risk and putting test products in front of customers,” she explains. “The natural evolution was realizing that we needed to change other things inside of the company.”
GE’s realization reflects two of the five key principles of the Startup Way: continuous innovation and the missing function of entrepreneurship. Leaders often want one key innovation that will unlock unrealized potential, but companies should be focused on developing a method for finding breakthroughs as a sustainable part of their long-term pathway.
However, without embracing entrepreneurship, long-term growth driven by new products is unlikely. In the book, Eric recommends starting by making entrepreneurship a core discipline, which means ensuring that someone is responsible for it on the org chart just as departments are responsible for marketing and finance.
Start with, “What can we do.”Of course, a fully functional Startup Way practice will take more than a box on an org chart. Ultimately, every department will be asked to work a little differently, and that requires some tough conversations across an organization. “Often the conversation will start with, ‘Here is what we can’t do,’ and in fact, the focus needs to be on what you can do,” Marilyn advises.
In the book, Eric shares the story of a leader who realized that the legal department was preventing rapid innovation, and he wanted a solution. He facilitated a meeting with everyone in the legal department. The legal team actually lamented having to always tell people no, but felt constrained by rules and regulations. The solution: a one-page document that laid out a series of parameters within which teams would be pre-cleared to experiment with new ideas. By working with the legal team to brainstorm what could be done, the company was able to speed up product development.
When things get hard, eat chocolate. “Making this kind of profound change to an organization’s structure is like founding the company all over again, whether it’s five or a hundred years old,” Eric reflects in The Startup Way. It is what he calls “the second founding,” and founding a company is not easy work.
“It’s hard, and it’s going to take time. But, chocolate helps,” Marilyn jokes. Plus, it is worth the effort. “At GE, we started to work faster and simpler. We were learning more quickly about opportunities for success and what opportunities would fail, so we could stop wasting time on them. It definitely had a positive impact.”
Join us at Lean Startup Week October 30th-November 5th, where Eric Ries and Marilyn Gorman will co-lead a 4-hour workshop focused on "The Startup Way". It will give participants an opportunity to consider some of the challenges of bringing Lean Startup practices into an enterprise and address what it takes to scale and deploy new approaches in their own companies. Participants will also receive a workbook featuring tools that they can use to implement the Startup Way. You can pre-order "The Startup Way" here.
Lean Startup Week has it all: keynote talks, hands-on workshops, networking opportunities and lively flashes of inspiration from our extended community in the form of Ignite Talks.
Yup, our Ignite Talks are back because you all love filling your heads with new ideas over cocktails—and apparently dozens of savvy founders, intrapreneurs, city planners, retailers, and consultants are just dying to become performers with five minutes in the spotlight. Our brave Ignite presenters use their stage time to deliver lightning talks (and, occasionally, witty musicals) on the theme of innovation.
So we’ll spend happy hour on November 1st watching them breeze through 20 slides (that automatically advance every 15 seconds) while extolling their wisdom in an entertaining fashion about topics ranging from:
- Barry O’Reilly from ExecCamp throwing down the challenge to reinvent your business to beat the average company lifespan
- Nicole Shephard from Travelport Labs describing the fail shots that led to wins at a $2 billion travel tech company
- Kelly McAdoo from the City of Hayward outlining the importance of using Lean Startup methodology to empower government employees and improve resident satisfaction
- Beth Sordi of BabyCenter comparing raising children with creating space for new ideas
- Peter Szanto of SpringTab detailing how to connect with your most loyal customers through personalization
- Consultant Ranjit Das mapping out how companies can develop a collaborative ethos by overcoming existing cultural baggage
- Bhavin Parikh of Magoosh offering his company as a case study in successfully bringing Lean Startup principles to life
- Consultant Tami Reiss revealing the secrets behind Gmail plug-in Just Not Sorry getting $100k in 30 days using the core tenets of Lean Startup
We don’t want to give away the whole program just yet, but as a hint, our Ignite Talks presenters also include Monty Campbell (Lean Mobile Apps), Lynn Johnson (Spotlight:Girls), Janet Bumpas (InnoLeaps), Cindy Peterson & Janel Wellborn (Macy’s), and consultant Charu Nair.
Ignite Talks are the perfect way for attendees to experience the breadth of Lean Startup in one session. It’s your chance to hear from founders in all industries talking about how they applied Lean Startup in short dynamic presentations. It’s also one of many group activities at Lean Startup Week—from the Ignite Talks to a 5k run, yoga classes, and our networking dinners, we’re offering plenty of opportunities to break from the typical conference status quo and have some fun while you learn.
Join us Oct. 31-Nov. 6, 2016 in San Francisco for Lean Startup Week. Register before August 31 and save up to $700.
Some exciting news about this year’s Lean Startup Week (Oct. 30-Nov. 5) for all you potential speakers out there: we’re shaking things up in 2017. The flagship conference is directly tied to Eric Ries’s upcoming book, The Startup Way, and we’re hosting the event at two locations in downtown San Francisco (The Warfield and The Village). We’re bringing to life new case studies, advanced strategies, and inspiring areas where Lean Startup is making an impact around the globe, with an emphasis on how to put the practice into place for the long haul at large organizations—from the tiny startup that ballooned to the government or corporate team that’s only known extra large operations. If you’ve ever considered applying to speak at our conferences, now’s the time to go for it. This year will be a biggie for the Lean Startup community.
What We’re Looking For
This part hasn’t changed. We’re passionate about bringing in fresh stories about how Lean Startup methods are being practiced in startups and established companies, nonprofits and civic organizations, and other areas we’ve yet to explore from the stage.
Our goal is to bring the most interesting, relevant, and impactful stories to the conference. We’re looking for practitioners who are doing the real work, particularly women and people of color, and specifically Lean Startup practitioners working at the intermediate and advanced levels. That’s where you come in—especially if you haven’t spoken at our conferences before. As a speaker, you’ll have the opportunity to share your advice, insight, failures, and successes in order to help and benefit from the Lean Startup community.
What is Your Lean Startup Story?
If you have Lean Startup experience to share, we encourage you to propose a talk via our Call For Proposals form regardless of whether you have public speaking experience. Submit your idea as a short video, ideally under three minutes. iPhone videos are totally acceptable, just make sure the sound quality is high enough that we can hear you. Here’s an example of a speaker application that we loved.
There are a limited number of spots available to speak. Below, you’ll find a few helpful tips on how to submit a proposal:
- You don’t have to be a Lean Startup all-star to apply. You just need a good story, useful tips for intermediate/advanced practitioners, compelling advice, or practical applications to share.
- The core of your proposal should be simple. Focus on answering one of the questions posed in the Call For Proposals form (you’ll find them on page 2).
- Deliver the pitch in your application as though you’re speaking from a stage. Although there’s still time to practice, stage presence matters.
Would You Rather Attend?
Lean Startup Week is the best way to connect with 2000+ other experts in the Lean Startup community. You’ll receive practical ways to immediately implement the Lean Startup methodology into your daily business. We’ve got a package for every budget (and options to bring your entire team at an affordable rate). Join us.
I’m excited to reveal the final cover for Eric’s next book, THE STARTUP WAY, coming October 17. I’ve been working with Eric since the IMVU days and designed the cover for The Lean Startup… I was excited to help with the new cover and, after months of testing different iterations, we’ve decided on a design that checks all the boxes that Eric, the Crown Business publishing team at Penguin Random House, and I wanted to hit going into this process:
- It’s eye catching, whether on a bookshelf or online storefront
- It demonstrates a clear evolution from The Lean Startup
- It captures the book’s message of entrepreneurial management
- And, of course, it tests well with buyers
The first drafts I showed to Eric and the team played with two graphics: an infinity symbol and a chevron. The infinity symbol represents the continuous innovation that’s possible within any organization, regardless of size. The chevron represented a clear path into the future through entrepreneurial management. While both are essential concepts to the book, the chevron was a clearer departure from The Lean Startup circle. We looked at a number of color treatments for both graphics and knew we wanted to test several options.
We also looked at the cover options in a field among other business books. It was important to know that our jacket would stand out to readers looking for the next great business book.
Once we decided to focus on the chevron shape, I started playing with the color scheme -- some variations on The Lean Startup scheme and some total departures. While anyone who caught a glimpse of the options had an opinion, I knew we wanted to test buyer decisions rather than simply survey friends and family.
We ran ads targeted toward business readers on Facebook with the four different cover variations shown above. Clickthrough was strongest on the red cover with silver in second. We tested the actual purchase decision on our testing site, thestartupway.co. The blue covers led the way, followed by red, then silver a distant fourth.
We realized we ran the Facebook ad with the cover on a dark backdrop while the testing site had a white background. Given most buyers are shopping online, we had to see how the covers would look in an online retailer’s storefront. As you can see on the CEOreads page above, the silver was quickly lost on the white background. I tweaked the color schemes to find a blue chevron we all liked and we moved forward with testing one red and one blue design.
Down to these two color schemes, I extended the chevron to the edges of the page, adding to the boldness and drama of the design. With that change in place, Eric had a new test in mind, one we had run while designing The Lean Startup cover.
Using a website called fivesecondtest.com, we showed participants one of the two bookshops above for five seconds. When the image disappeared, we asked which books they recalled seeing. 2/3 of all respondents named The Startup Way as one of the first three books they remembered, with participants shown the red cover slightly more apt to name the title.
Anecdotally, but interestingly, a few participants mentioned the “red book” or the “orange business book” while there were no comparable mentions for the blue cover.
We continued testing clickthrough on Facebook, where there wasn’t a discernible difference between the red and blue covers.
At the same time, we tested purchase decisions on the book landing site, where the red cover held a slight edge over the blue. Given the buying preference for the red cover (and my and Eric’s personal inclination for it, assuming testing didn’t show it to be a terrible option), we decided to move forward with the red design.
Once we were settled on color, I spent a Sunday afternoon, paintbrush in hand, modifying the brushstroke of the chevron.
The outcome of the paint party was an evolution in chevron design, from smooth to more energetic. Eric liked the options with more streakiness to the chevron; we both felt the streakiness indicated a work in progress. The busier the streaks became, though, the more the title became lost in the design.
While the silver title, much like the silver cover, would look great on a bookshelf we decided to see what it looked like in an online storefront vs. a white title. It was immediately evident that the white title popped off the page regardless of how streaky I made the chevron. While Eric and I continued to tweak, we stuck to a white title from then on.
We played with chevron angle, thickness, size, streakiness, and splatter. The above shows how far we’ve come from the first draft. We tweaked accent colors, font style, font size, and font spacing. Three and a half months after our first conversation about chevrons and infinity symbols, we’re excited to reveal the final cover for THE STARTUP WAY:
Thank you to the Crown Business team who managed the Facebook and five second testing, to anyone who preordered through the landing site (whether you knew you were part of the testing or not!), and of course to Eric for helping balance art and science in the design process. We can’t wait to hear what you think of the physical product when it hits shelves October 17!
I'm the CEO of a new company with a mission to fix the root cause of one of the worst problems plaguing our whole business ecosystem: the malign philosophy of short-termism that emanates from our public markets. We call this new company The Long-Term Stock Exchange (LTSE). Our goal is to create a new venue for great public companies to list on, one that uses its regulatory power to incentivize long-term thinking on the part of both managers and investors.
Although I've been working on this project for several years (I even wrote about in The Lean Startup). But I haven't wanted to become part of Silicon Valley's hype machine, and so our testing and experimentation have for the most part been quiet and behind the scenes. It's only now that so many people are involved that I felt it was time to be a little more public about it.
If you'd like to learn more, I've shared some details in a post on Medium. There's also an in-depth profile in the new issue of Bloomberg BusinessWeek (if anyone sees it in print, please send me a pic) as well as coverage on Quartz.
And, for a little blast from the past, here's the original passage in The Lean Startup that got this whole thing started:
As always, I want to thank all of you for your support. As the Lean Startup movement grows and spreads, I hope we continue to tackle bigger and more difficult problems. Let's solve them from first principles, at the root cause. I'll see you there.
The Lean Startup movement brings together the brightest minds in Silicon Valley to share the best advice for entrepreneurs, from entrepreneurs. AOL co-founder Steve Case, who just released his new book, The Third Wave: An Entrepreneur’s Vision of the Future, is one of the big thinkers we’re excited to team up with. Steve has a lot of insight into the ways innovative leaders can transform “real world” sectors (such as health, education, transportation, energy, and food), and their ability to change the way we all live and work.
You can catch Steve in an interview with our own Eric Ries this Wednesday, April 27th at the Commonwealth Club in Santa Clara. See event details here.
And if you haven’t devoured his new book yet, here’s a sneak peek of The Third Wave: An Entrepreneur’s Vision of the Future by Steve Case:
My brother Dan was just thirteen months older than me, and a year ahead in school. We shared a room growing up and, like most brothers, were fairly competitive. We hated to lose. That was especially hard for me, since Dan seemed to be good at just about everything he tried. He was the more natural athlete, and always at the top of his class. When I realized I couldn’t compete with him head-to-head, I tried to find interests apart from his. If he was going to play tennis, I decided, I was going to play basketball. But there was one interest we both shared that never felt like a competition. I wanted to be an entrepreneur, I was sure of it, before I even really knew what that meant. And Dan genuinely wanted to help. I got immense satisfaction from coming up with an idea, and he would revel in trying to help me turn it into something real.
We started our first business when I was ten years old. Dan was eleven, and brought to bear all of the wisdom of that extra year in our operation. We called ourselves Case Enterprises, and hoped that no one would notice that neither of us was old enough to drive. We billed ourselves as an international mail-order company. At one point we became the exclusive distributor in Hawaii for a Swiss watchmaker, though I can’t recall actually selling any watches. Most of our efforts involved knocking on doors trying to sell greeting cards to our neighbors. Most of our customers were buying what we were selling just to be nice. But Dan didn’t care. He called it our comparative advantage. Said it was part of our brand. We actually talked like this; our parents, a lawyer and a teacher, had no idea where we got it from. They used to joke that when I went to my room, I was going to my office.
Our early ventures may not have provided much in the way of cash, but they did provide a wealth of experience. And the process of coming up with new business ideas, or new ways to sell, left a deep impression on me. When I left Hawaii to attend Williams College in Massachusetts in 1976, I kept looking for new business opportunities. I started six little businesses while at school, including delivering fruit baskets to students during exam week (paid for by parents, of course). I had a growing interest in the music business, and spent a lot of time in New York clubs like CBGB, trying to find new talent to bring to college campuses.
I was diligent about going to class and doing my homework, but these side businesses were my real passion. That didn’t go over so well at Williams. At one point my advisor pulled me aside and suggested I was spending too much time on my entrepreneurial efforts, and would regret it. “Look at all the educational opportunities in front of you,” I remember him saying. “You should immerse yourself in them. Your business pursuits are distracting, and, frankly, they are ill-suited for campus life.” He wasn’t alone in thinking that. I remember one of my fellow students attacking me in a school newspaper editorial. “I swore I would never go to a Steve Case party or buy a Steve Case record album,” the article began. “It’s nothing personal, it’s just that I despise rampant laissez-faire capitalism on the college campus.”
In my final year at Williams, I took an introductory computer class. I hated it—and almost flunked it. This was still the era of punch cards, where you had to write a program and then take your cards to someone to run them. Several hours later, you’d get the results—which usually (at least for me) meant finding a mistake and starting the process all over again. The tedium, and the resulting low grade, almost prevented me from graduating. And yet the experience stuck with me. The punch cards were a nuisance, but if used the right way, they could be powerful. We were building very basic computational programs, rudimentary by contemporary standards. And yet even then, the potential was obvious. Computers were solving problems in seconds that would otherwise take days, even weeks. Frustrating as it was, in retrospect, I think it was formative. It was the first time I really began to grasp the potential of computers. Still, if I hadn’t stumbled upon Toffler’s book that year, I’m not sure I ever would have pursued the path I did.
With graduation approaching in the spring of 1980, all I could think about was breaking into the fledgling digital industry. I applied for a lot of jobs, always including, with my résumé, a cover letter breathlessly predicting the dawn of a digital age.
There were few takers. Most of my letters went unanswered. On a few occasions I did get interviews, but I rarely got past the first one. People seemed put off by my musings, worried that they were getting a nutty young kid who’d never be satisfied in a normal job. As the rejections piled up, I realized that my future would require my keeping my mouth shut—at least for a time. There was not much of a startup culture then, and of course no Internet, either. If I was going to get a job and learn any useful skills, I concluded, I’d have to join a big company. I eventually accepted a job at Procter & Gamble in the brand management department. It was a great place to land, all things considered. I could learn useful skills during the day while continuing to dream about the digital world at night.
If Procter & Gamble knew one thing, it was how to make a product understandable to everyday people. When radio serials were first introduced to the public, P&G saw an opportunity to advertise its home cleaning products to its key audience. So they began sponsoring programs, starting with Oxydol’s Own Ma Perkins back in 1933. They were known as soap operas. When the public jumped from radio to television in the 1950s, so did P&G.
The people I worked with were experts in understanding consumer preferences, doggedly pursuing R&D, and seeking breakthroughs that could give their products an edge against the competition. And they were world-class marketers, often ahead of their time. P&G was also responsible for pioneering the concept of giving away free samples to encourage trial use. (I later borrowed that idea when we launched AOL’s trial program and blanketed the nation with free trial discs.)
After a couple years of working at P&G in Cincinnati, I moved to Kansas to join Pizza Hut as Director of New Pizza Development. To this day, I’ve never had a better title.
My motivation was twofold: First, I was offered a healthy increase in salary and responsibility, and second, I thought it would be helpful to understand how a more entrepreneurial company worked. Pizza Hut was founded in 1958 by two brothers, Dan and Frank Carney, while they were still students at Wichita State University. It had grown from a single location at the corner of Kellogg and Bluff to become the nation’s largest pizza chain, which it accomplished largely by enabling franchisees to innovate. This bottom-up approach to innovation differed from P&G’s top-down style, and I wanted to understand it.
Originally, the job involved my working in the test kitchens in Wichita. But I advocated that we hit the road to find out what was happening throughout the country. My view was that, though innovation was possible within our walls, most of the innovation was happening beyond them. I created and led an advance team, and we started roaming the U.S., looking for a great idea to incorporate into the new menu. The company would send me to places like Washington, DC, put me up in the Four Seasons in Georgetown, and then task me with eating the city’s best pizza. There are worse ways to live. I did learn rather quickly how difficult it was to take something out of a test kitchen and then execute it across five thousand restaurants where the chefs were teenagers with limited skills. A lot of our ideas that made sense in theory flopped in practice.
At the time, one of the concepts we were testing was home delivery. This was 1982, and though pizza was popular, delivery wasn’t yet universal. We were also working on ways to make pizza more convenient and more portable. We spent a lot of time trying to figure out if calzones or pocket pizzas could work as a carry-out option for people on the run. It’s funny to think, looking back on that year, that the things we were focused on—convenience and portability—would become such crucial parts of the company I would later help build. So would our desire to keep things simple and focus on the basics.
I only lasted at Pizza Hut for a year. My obsession with Toffler hadn’t subsided; it had intensified. I wanted to be part of his vision. I needed to find a way in.
Liked what you just read? You can still grab a ticket to see Steve Case with Eric Ries: An Entrepreneur's Vision of the Future this Wednesday, April 27th. See you there!
Guest post by Kirsten Cluthe, editorial director of Lean Startup Co.
Speaking at Lean Startup Week offers renowned and emerging industry leaders the opportunity to share their stories with our global community. And by renowned and emerging, we mean you, person who deserves recognition from our community of 2,000 attendees for the awesome work you’re doing! If you’re interested in presenting at our flagship conference during Lean Startup Week Oct. 31 - Nov. 6 in San Francisco — alongside folks from Google, General Assembly, Hint Water, Sama Group, GE, Salesforce, and IBM, among others — we’d love to hear from you.
Don’t worry about having some kind of conference track record. Our speakers hail from scrappy startups, global enterprise companies, government agencies, faith-based organizations, and the education and social sectors. We highly value diversity in our lineups, and we encourage people of all genders, races, ages, and ethnicities to apply.
If you have Lean Startup experience to share, we encourage you to propose a talk via our Call For Proposals form, regardless of whether you have public speaking experience. Submit your idea as a short video, ideally under three minutes. iPhone videos are totally acceptable, just make sure the sound quality is high enough that we can hear you. Here’s an example of a speaker application that we loved.
There are a limited number of spots available to speak. Below, you’ll find a few helpful tips on how to submit a proposal:
- You don’t have to be a Lean Startup all-star to apply. You just need a good story, useful tips, compelling advice, or practical applications to share.
- The core of your proposal should be simple. Focus on answering one of the questions posed in the Call For Proposals form. (you’ll find them on page 2)
- Deliver the pitch in your application as though you’re speaking from a stage. Although there’s still time to practice, stage presence matters.
- Presentations in 2016 will be shorter but no less dynamic. Design your pitch as if you were giving an Ignite talk. Here’s more information on how to create an Ignite style talk.
A few reasons why our speakers decided to participate in the 2015 conference:
“I really got a lot out of Lean Startup [Conference] 2014. ... It has been a great tool for me and my team to make real transformation.” - Freyja Balmer, Director of Product Management, Food.com at Scripps Networks Interactive Inc.
“[I realized] that my experience was valuable for others to hear...[It was] nice to be needed. I [felt] compelled to ‘give back’ as others have done for me.” - David Telleen-Lawton, Career Development Manager, UC Santa Barbara
“I wanted to get more connected to a strong startup community, share my perspective and experiences, and also continue to establish myself and my company among other thought leaders, influencers and doers.” - James Warren, founder, Share More Stories
Ready to apply? We want to hear from you! Applications are due by Friday, May 20, 2016.
Over the last eight years, we’ve learned that our Lean Startup community members are constantly searching for better ways to build and scale products. Whether you need advice on how to design a good experiment, how to get buy-in from your boss, or what key metrics to track to hold your team accountable, we’re here to help.
We’ve got two learning opportunities for you this spring:
Join us at Lean Startup Conference New York (May 10-11) in Brooklyn for an intensive two days of specialized corporate innovator education and networking. You won’t just hear inspirational and motivational talks (though we’ll have plenty of that!). More importantly, you’ll get effective how-to’s on the next steps for applying Lean Startup within your organizations. Our workshops and keynotes cover:
- Connecting Lean Startup strategy to execution to avoid siloed efforts that fail to shift the organizational culture, with Lean Startup Co. senior faculty member Jonathan Bertfield
- The importance of creating islands of freedom, with Lean Startup Co. senior faculty member Marilyn Gorman
- Planning, tracking, and running experiments & framing teams’ work around innovation, with Sense & Respond authors Jeff Gothelf and Josh Seiden
- Exploring the key components of and strategies behind robust customer discovery, with The Startup Owner’s Manual co-author Bob Dorf
- How Microsoft is making the change from traditional to Lean, with Cindy Alvarez
- Unlocking your company's innovation capital, with Launchpad Co-founder and Executive Chairman Jim Hornthal
- How Lean design systems allow teams to move fast and scale design, with GE Digital Design Director Ken Skistimas and Carbon Five’s Courtney Hemphill
- Lean concepts that helped the design transformation at Nordstrom, with Jyoti Shukla
If you live closer to Big Ben than the Big Apple, we’ve got something else in store for you...
We’re holding the Lean Startup Summit London (June 13 & 14) during London Tech Week to bring our innovation training across the Atlantic, featuring seasoned Lean experts from Silicon Valley and around Europe. This summit will focus on the practical ways UK organizations in areas like fintech, cleantech, Lean Impact, and Lean enterprise continuously adapt and innovate for the long term through techniques validated in environments of extreme uncertainty.
Get the initial London program details here, including:
- How to implement Lean Startup (a foundational workshop for newbies and a refresher for the pros), led by Lean Startup Co.’s Phil Dillard
- Practical tools to set up, run, and measure innovation experiments, with the founder of the Business Model Canvas, Alex Osterwalder
- Build a transformation roadmap for large organizations, with former Pearson SVP Sonja Kresojevic
- Fireside chat on GE’s FastWorks journey—including how the company has developed, measured, and scaled the program to 250,000+ employees—with FastWorks Skills Director Sinéad Clarkin
- Fireside chat with Pernod Ricard’s Head of Employee Development on how the beverage company embarked on a 1,000-day, Lean Startup-driven business transformation journey called “Project Ingenuity”
- A practical guide to innovation accounting with The Corporate Startup co-author Tendayi Viki
As an attendee of either event, you’ll get an extra bonus: a virtual keynote by Eric Ries, along with a pre-publication copy of his latest book, The Startup Way, which focuses on the implementation of Lean Startup techniques inside large companies. Bring your burning questions for this interactive talk, and Eric will do his best to get them answered.
The Startup Way won’t be available to the public until October, but as an attendee, you’ll receive a special early conference edition of the uncorrected paperback proof, being printed especially for you this summer. Attendees will also receive the hardcover book in the fall.
We’ll have even more to announce in the next few weeks leading up to the event. We hope you’ll join us in New York and/or London to get the latest skills sets and techniques necessary for building a modern company.
Across the board, all of them are engaged in one thing: entrepreneurship.
It may sound crazy to you to call the Federal Government entrepreneurial. Or that a company like GE, which was founded in 1892, is comparable to one like Airbnb, which was founded in 2008. But both of these things are not only true--they're the key to The Startup Way.
Regardless of size, mission, or sector, no organization can survive without the ability to adapt continuously. I believe that ability has to be a structural part of every organization--that companies need a standardized way to test ideas, run experiments, and follow through on the ones that will bring sustainable growth and long-term impact. If you've read The Lean Startup, those ideas will sound familiar. In that sense, The Startup Way is a book about how to use Lean Startup tools at scale. But it's also a book about leadership. No tool can bring change if it doesn't have the support of the people in charge, who, after all, inspire and direct others to new heights.
The book is a combination of real-life examples of how these leaders have done just that, and deep explanations of the methods and practices that together make up The Startup Way of working. It's been truly inspirational for me to see so many smart, passionate people make real change in these last years. My hope for the book is that it will give many, many more the tools they need to keep that change growing and spreading. I can't wait to see what happens.
You can pre-order the hardcover edition here. Your order will grant you access to The Leader's Guide community, an exclusive network of new and experienced Lean Startup practitioners, where I'll be sharing excerpts from the book and the results of the design and content testing I'm doing to shape the final product.
I wanted to share a video with you, which contains my opening remarks from the conference. It's mostly my reflections on a new set of ideas about entrepreneurship as a management discipline, and in a normal year that's what I would be highlighting in this blog post. But ever since I gave the speech, most people have wanted to talk to me about my brief editorial views on politics (which come at around the 9:00 mark, if you want to skip the management mumbo-jumbo).
This is not an ordinary year and it requires us to take extraordinary steps to safeguard our community and our nation. I've pasted a transcript of my that part of the speech below the video. And at the bottom of this post I have some links for for further reading and suggestions for how to take action.
If you're thinking about voting but aren't sure if you can or how to do it, please email me. I will personally try and help you however I can. Need a ride to the polls? Need to know if you're registered? Aren't sure where to go? I'll do my best to hook you up.
Please vote. Thank you,
I think some of you have noticed that in the United States we have an election coming up. Normally the thing to do in a polite space like this for me to say, "listen it's very important to all of you to vote. so please vote." and that's it. Everyone would say that's great. But this is not a normal year and I don't really feel that is adequate to the challenge that we face as a nation. So I know this will make some people unhappy but I feel the need to editorialize for a moment so just bear with me. This is not a normal election and these are not normal times, when you can vote if you feel like it or you can cast a protest vote if you want to. I think all of us need to view this as a moral obligation to stand up for the values that make this country great. The practice of democracy and the ability for people to come together and build a civic Republic is under threat. We have to stand up for that. This is very personal to me. My grandparents were children of the depression and the Holocaust. I have ancestors who fought for the USA in the Pacific and who were victims of the death camps in Europe. They lived through a darkness that I can scarcely imagine. They lived through it but they never talked about it in the past tense. They never boasted or bragged or said we defeated the darkness and it's over. They always said to me and my sisters: beware the signs, know your history, be ready. I mean I grew up in San Diego California as a middle-class white American. This country's been so good to me - I mean, look at me now - so as a child I found this story hard to take seriously. I thought they were paranoid. When I was a teenager, I would roll my eyes. I was not that interested in that message and I frankly thought they were being silly with such dark talk. Let me tell you, I don't think that anymore. In 2016, I take this very seriously. I think we are seeing that darkness come again and we have an obligation to stand up to it. If you are a US citizen, I ask that you exercise your moral obligation - your sacred obligation - and vote.At the conference this year, for the first time, we are going to be phone banking and doing get out the vote activities. If you would like to join us, please do, it is strictly optional. This is important too: for those who that don't agree with what I just said you're still welcome here. It's not the official position of the conference and I hope that everybody will feel comfortable talking about this and bring the same experimental rigor and open-mindedness to this as to any other topic as we go through the conference. I think it's critically important. Entrepreneurship requires a supportive public policy effort. There are real policy implications for what we do as entrepreneurs also on the ballot this year so I urge you to take it seriously. What does a pro-entrepreneurship public policy look like? The evidence is clear. It requires an openness to new people and new ideas. It requires us to imagine what someone was doing in the minutes before they became ane entrepreneur: they were a student, an immigrant, an ordinary worker. We have to have policies that encourage orindary people to take new risks and try new things. These policies are not easily categorized as "right" or "left" so they get lost in the din of campaign coverage: abolishing non-compete agreements, portable health insurance, open regulations that allow new business models, open data and government APIs, appropriate bankrupcy laws, patent reform. The list goes on. If you study the candidates' campaign websites, whitepapers, and promises, as I have, you'll realize there is only one choice. And just in case I wasn't completely clear earlier, I want you to vote. I personally will be enthusiastically and unapologetically voting for Hillary Clinton and I hope you will do that too. Thank you. I know not everybody is applauding right now. That's ok. We don't normally talk politics at events like these, and some of you probably think I've opened up a can of worms. I accept that. Please, I want you to treat each other with respect. This is an important election but we have to still listen and talk to each other and take each other seriously. Thank you.
The following links and suggestions come from my friend Reid Hoffman. There's also a movement afoot in Silicon Valley for startups to give their employees the day off Monday and Tuesday so everyone can both vote and help in their communities to get out the vote. If you are thinking about doing this and need help or suggestions, please email me and I can share resources with you.
Take Some Action:
- Make calls for Hillary: hillaryclinton.com
- Help get out the vote + early voting. Made easy! voteplz.org
- Election Update: Why Clinton’s Position is Worse Than Obama’s fivethirtyeight.com
- Deeply Disturbing talkingpointsmemo.com
- Clinton email explainer vox.com
- America and the Abyss nymag.com
- Donald Trump’s Moments and Missteps: A Look Back nytimes.com
- The Late Show with Seth Meyers: What’s the difference between Trump and Clinton anyway? youtube.com
- Need help with California ballot measures? peterates.com
- No one should forget that @realDonaldTrump began his campaign by attacking #immigrants as “criminals” and “rapists” on his very first day #GoVote
- Anyone who sees and treats #women as Trump does is unfit to be president #WhatHeBelieves #GoVote: https://youtu.be/Oy8HRdlLGCQ
- Literally the easiest way to check & register if you’re not already + find early voting locations: https://www.voteplz.org/ #GoVote #VotePlz
- The Death Penalty Can’t be Fixed. It Needs to be Ended. https://medium.com/@reidhoffman/the-death-penalty-cant-be-fixed-it-needs-to-be-ended-644e4ac1be09 - .8nv4l2c55 #YesOn62 #NoOn66
- Rarely has a single vote had so much consequence: https://medium.com/@reidhoffman/this-election-day-whats-the-worst-that-could-happen-8b501fef5a2#.x56kh0heh #GoVote #VotePlz