How To Promote Innovation In Start-Up's: Black Box Or The Overwhelmed Manager



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Reprint: This text is from the book "Lean Startup: Schnell, risikolos und erfolgreich Unternehmen gründen (2014)" by Eric Ries, published at Münchener Verlagsgruppe, and was left to us for reprint.
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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?

How to promote innovation in Start-Up's: Black Box or the overwhelmed manager black-box

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Here writes for you: Eric Ries has established the lean start-up method and made it popular. Profile

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As is the Company positioned?

Overview

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.

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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?

Overview

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 not least due to the current pricing structure. Like many B2B-listed companies, this one had high list prices and then offered hefty discounts to its "preferred" major customers.

Experiments - or rather not?

Overview

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.

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The team, which was responsible for the growth of the end user segment, was to carry out experiments with a lower price structure. The team, which was responsible for the B2B segment, feared that this could break away or affect their existing customer relationships.

Find solution alternatives

Overview

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 characteristics to give each customer the ability to buy different "level" products (such as seated airline seats) or different products under a different brand name.

Fears of jeopardizing the business

Overview

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.

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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!

Overview

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

Overview

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.

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Innovation in the secret black box?

Overview

Therefore, the widespread recommendation to hide the activities of an innovation team is the wrong way to go. There are examples of one-time successes that are based on "Skunkworks" (the work of autonomous, bureaucratically-constrained groups working on 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

Overview

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.

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Fear of unpleasant surprises

Overview

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

Overview

It would be unfair to denounce this reaction; Criticism should apply to senior management, which has failed to set up a supportive system where 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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  1. Carlos

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

  2. Georg

    The topic LeanStartups is really very exciting!

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