Gartner estimates by 2021, more than 50% of established corporations will be leveraging lean startup techniques at the business level to increase the pace and success of business transformation.
“Businesses must change how they change — they must enhance and rebalance their transformation capabilities to handle uncertain environments as well as certain situations,” said Bruce Robertson, vice president and distinguished analyst.
Avoid the big bang model
In a rapidly changing world, larger businesses might discover that they aren’t good at changing. However, businesses are also discovering that change is essential to success — whether that means keeping up with customers, beating out competitors or diving into new markets.
Part of the problem is that larger companies often only have practiced one way to change: the big bang mode. While this approach has worked in the past, it requires a future that is understood with certainty, yet this certainty does not exist in the digital business world.
“ Lean startups look to eliminate waste in transformation and innovation activities”
The solution is to enable an increasingly balanced bimodal operational approach, with a BizOps Mode 2 alongside the traditional big bang Mode 1. This bimodal operation will enable a company to experiment with innovations and transformations and then stabilize and scale up those changes.
GE uses this bimodal approach in FastWorks. The company has developed a portfolio of investments, but they aren’t traditional big bang projects or initiatives.
Use MVPs to validate assumptions
A critical challenge for many organizations will be adopting radical MVP thinking in the business (not just in IT). Businesses must define what is the least investment needed (in time, budget, resources, etc.) to test the most uncertain assumptions for the new product or service.
For example, when the Queensland state government needed a better system for connecting businesses to a complex array of international agencies for services and certifications, they created the State Assessment and Referral Agency (SARA). SARA was up and running — and gaining kudos — just seven months after legislation. The agency’s case management system was not integrated with back-end agency systems. Instead, the case managers made phone calls and contacted agencies directly.
This surprisingly imperfect and incomplete implementation (and much smaller investment than usual when floating an entirely new government agency) allowed the state to validate the assumption that it was worth creating the intermediating business “customer-” focused agency, and they didn’t waste time attempting to implement the perfect IT solution in the meantime. Plus, this more agile approach meant the state was able to revamp the solution sooner than planned when the laws changed.
Traditional companies focus on gaining consistency and eliminating waste during execution for business operations, but lean startups look to eliminate waste in transformation and innovation activities. To get big changes or transformations while living with uncertain business conditions, businesses need to act small — like a startup, or more precisely, a bunch of little startups.
MVPs enable businesses to act small to validate assumptions about the value of transformational changes in both business and operating models. By connecting existing agile and design techniques to the lean startup MVP techniques, enterprises can test and validate ideas while allowing for necessary changes.