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Text comes from the book: "Lean Startup: Setting up a company quickly, without risk and successfully" (2014), published by the Munich Publishing Group (MVG), reprinted with the kind permission of the publisher.

Here writes for you:

80Eric Ries founded the lean start-up method and made it popular. He is the author of the startup blog StartupLessonLearned.com and co-founded IMVU, a gaming and entertainment network. In 2007 Business Week named him one of the best young entrepreneurs in the technology sector. In 2010 he became entrepreneur-in-residence at Harvard Business School. He has also co-written many books and continues to be a founder, for example as a senior software engineer at There.com. More information at theleanstartup.com All texts by Eric Ries.

Innovative leadership in the digital age: black box or the surprised manager

The pressure to innovate is enormous. Without the ability to react more agile and engage in experimentation, each would Company At some point, suffer the fate described in the book The Innovator's Dilemma: Year after year higher profits and margins retract until the bubble bursts. But what to do about it?

black-box

How is the company set up?

The core of many departmental feuds is often a rationally based fear - for example, your own status, your own benefices or skills that need to be protected. One company that I advised focused on two customer segments: a business-to-business and a consumer segment.

In the B2B segment, it employed a field sales force that sold the product to a large number of corporate customers, while the end customer sector received its growth impetus mainly through one-time purchases by individual private customers.

Do what all do?

The lion's share of current sales was derived from the B2B sales, but the growth in this segment was declining. All agreed that there was a huge potential for growth in the end customer segment, which had so far not been exhausted.

This growth deficit was due not least to the current pricing structure. Like many companies that are active in the B2B sector, this one also had high list prices and then granted its "preferred" major customers substantial discounts.

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Experiments - or rather not?

Of course, every sales representative was required to make his customers feel like they were among the chosen ones. For the end customer segment, the list prices were unfortunately unaffordable.

The Team, which was responsible for the growth of the retail segment, was to conduct experiments with a lower price structure. The team that was responsible for the B2B segment feared that this could destroy or impair their existing customer relationships.

Find solution alternatives

Unthinkable when their big buyers discovered that the end customers paid less than they did! Anyone working in a company with multiple customer segments will immediately recognize that there are different solutions to this problem:

For example, one could stagger product features in order to offer the respective customers the possibility of buying products of different “levels” (like the seats in airlines) or different products under a different brand name.

Fears of jeopardizing the business

But the company was hard to implement such ideas. Why? For fear of jeopardizing the ongoing business, every proposed experiment was postponed, sabotaged and maneuvered by obscuration tactics.

I would like to emphasize at this point that the fear was well founded. Sabotaging a project is a head-on reaction by managers who see their territory threatened.

If it goes wrong, roll heads!

They were not active in any small startup that had nothing to lose, but in an established company, and for them, much was at stake. When the returns from the core business go down, heads roll. This should not be taken lightly.

How defenses prevent innovations

We would like to frame our internal innovation challenges with the question: How do we protect an internal startup before the parent organization? I would like to change the framework and reverse the question: How do we protect the parent organization before the startup?

In my experience, people are automatically defending when they feel threatened, and innovation can not thrive by giving free rein to these defenses.

Innovation in the secret black box?

Therefore, the widespread recommendation to hide the activities of an innovation team is the wrong approach. There are examples of one-off successes based on “Skunkworks” (the work of autonomous groups freed from bureaucratic constraints and involved in secret forward-looking projects).

Or by outsourced innovation teams (as in the construction of the original personal computer in Boca Raton, Florida, completely separated from IBM's core activities).

Surprised managers become paranoid

But these examples should actually serve as a warning because they rarely led to viable innovations.

Put yourself in the position of the manager, who is completely taken over by the innovation. He probably feels trapped and reacts more or less paranoid.

Fear of unpleasant surprises

If a project of this magnitude can be concealed, what unwelcome surprises lurk in the shadow? Over time, this attitude leads to tactics because managers are eager to recognize such threats for their power, influence, and career at the earliest.

The fact that an innovation turns out to be a success is no justification for this dishonorable behavior. From the point of view of saddled executives, the message is clear: if you are not part of the circle of the initiated, secrets like lightning strike you out of the blue.

Guilt is borne by the management

It would be unfair to denounce this reaction; the Criticism should be on senior management who failed to put in place a support system in which innovation can take place.

This is probably the reason why companies such as IBM have lost their leading position in the new emerging markets, such as the PC sector. They were incapable of developing and maintaining an innovation culture that allows innovation at all.

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2 responses to "Innovative leadership in the digital age: black box or the surprised manager"

  1. Carlos says:

    I'm pretty excited about your blog and just had to get rid of it. Thank you for your brave, clear words!

  2. Georg says:

    The topic LeanStartups is really very exciting!

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