Consider two hypothetical office workers, one male, one female. Both work sedentary jobs. Clem is a 62-year-old guy with bad sleep habits who wants to drop five pounds for the coming beach season. Sadie is a 27-year-old woman who wants to lose 10 lbs before running her first 5K two months from now. It doesn’t take a genius to know that Clem has the tougher row to hoe. He can exercise twice as much as Sadie does, eat a third of what she eats, and he’s not going to lose upholstery as fast as she will because of his age, sex and health habits. For the same reasons, Sadie has the metabolism of a BioChip-20 wood chipper.
Everyone prefers to run lean. It’s a virtue that seems to belong exclusively the young, agile and wood-chipperlike. In business, what does it look like when an enormous, established corporation adapts Lean methodology for improving the quality and speed of its output?
It looks like an oxymoron.
The Gospel according to Steve Blank says, “A startup is a temporary organization designed to search for a repeatable and scalable business model.” Yet major corporations like GE, ING, and Samsung have been successfully implementing Lean strategies for years, and that trend will only continue.
The struggle for corporations
Blank has been quoted as saying, “The first time a few brave corporate innovators tried to overlay the Lean tools and techniques that work in early-stage startups in an existing corporation or government agency, the result was chaos, confusion, frustration and ultimately, failure. They ended up with ‘Innovation Theater’ – great projects, wonderful press releases about how innovative the company is – but no real substantive change in product trajectory.”
Most of the reasons why corporations struggle with adapting Lean methods are conceptual; for example,
- Lack of ecosystem thinking: You can’t throw a team of part-timers into the mission and expect it to succeed. You have to think ecosystem.
- Lack of the proper mindset. Management teams themselves need to evolve in order to grok the model.
- Lack of willingness to change. The Lean process is a learning process. Sometimes what you learn is that you’re headed in the wrong direction, and the necessary pivot could be a sea change.
The GE experience
Probably the largest implementation of lean startup on the planet, according to Lean Startup author Eric Ries, was the adoption of the Lean Startup method by GE, among the world’s most successful, most complex multinational corporations. Founded 1892, GE is no startup. It’s so huge, it practically creates its own weather.
They went about implementing Lean in 2014 by creating an internal, autonomous startup structure within the larger corporate framework. Dubbed FastWorks, it’s an entrepreneurial framework based on Lean principles, designed to respond “to this drive for speed and need to align more closely with customers’ needs.”
Johanna Wellington, CEO of GE Fuels, has said that GE is “about as far from a Silicon Valley software startup as you can get.” So they had to apply a different lens in seeing how to apply lean principles. Wellington’s particular responsibility was to develop a manufacturing MVP as an internal startup to commercialize new, high-end, hybrid fuel-cell technology. Building a “startup” within a large corporation was treated like the MVP itself. According to Bloomberg, it was one of more than 300 FastWorks-backed projects at GE. And it’s succeeding beyond all expectations.
Keys to FastWorks’ success:
- Buy-in. FastWorks is fully embraced by senior leadership who fully understand that, to survive, organizations must evolve. With training, GE’s rank and file immediately bought into the concept as well. Interestingly, she found peers to be more risk averse.
- Autonomy. Management considers FastWorks projects as pilots. Wellington’s project had its own funding and it’s own board of directors. Working by different standards, with unique timelines and expectations from the rest of the corporation emphasized the critical importance of independence.
- Compensation. The startup team receives milestone-based, not equity based, compensation and no phantom stock.
- Collaboration. Communicating with other project teams speeds the iteration process. Learning from others’ failures is better than learning from one’s own.
- Accepting uncertainty. That’s tough for people in large corporations. Everyone must admit that learning is required.
- Overcoming fear of failure. Admit that you don’t know everything and that you’ll do things wrong sometimes. But failing early and often yields a higher probability of success of hitting your milestones.
- Breaking rules. Figuring out how to streamline the process demands openness and honesty within the team.
- Setting expectations. Projecting clear expectations about the inevitable failures to come and the messy time frames proved invaluable in maintaining morale, understanding and effort.
- Engaging and empowering your employees. Train and incentivize them. Give them authority to stop production when needed.
Challenges that Wellington faced were sometimes due to the nature of a multinational: working globally means having to deal with different cultural attitudes regarding lean methodology. She also notes the difficulty of working with teams that don’t move as fast as others. She tries to own her own destiny to the degree possible.
At the 2015 Lean Startup Conference, Mark Little, GE’s chief technology officer and former leader of GE’s Global Research Centers, presented specifics about the wider range of GE’s lean buy-in & transformation. He focused on the critical importance of the pivot and the creation of dedicated teams that made scaling Lean startup possible across the enormous range of GE’s businesses:
- Trained business leaders and their teams
- A trained team about 150 coaches
- Hundreds of FastWorks projects as of 2016
- “Growth Boards” which allocate resources to internal startups
Where to go from here
Given the complexity of GE and its FastWorks success, health care is another obvious, critically important domain that can benefit from the methodology. Lean method is not new to health care and its benefits have been compared to other improvement methods. But the diversity of the space may not lend itself wholly to the Lean paradigm, particularly where government is concerned. One example comes out of an interesting, granular conversation between Eric Ries and Annesh Chopra, the first CTO of the U.S. About halfway through their talk, they discuss how the first iteration of the faulty Healthcare.gov website adhered to Lean principles while “Healthcare.gov 2.0” did not — and failed massively.
Great potential for improvement is noted in this early review published in the Hospitalist. At a number of midwestern hospitals, including University of Michigan Medical Center in Ann Arbor, LeBonheur Children’s Medical Center in Memphis, St. Joseph’s Mercy Hospital in Ypsilanti, and the Denver Health System, improvements resulting from putting Lean principles to work included reductions in discharge time, reductions in wait times for tests and treatments, optimized physicians’ patient loads, and improved control of supply inventories.
“Lean is definitely not a set of cookie-cutter procedures,” the review noted. “Each hospital has its own bottlenecks and waste points.” Discovering an organization’s unique bottlenecks is what Lean Startup is all about.
With an ironic nod to the origins of the Toyota Production System, the MIT Sloan Management Review published a study in 2014 noting that for 10 years, “Many multinational manufacturing companies have introduced their own lean programs.” Companies include Caterpillar, DuPont, Electrolux, Heinz, Honeywell, Johnson Controls, Siemens, Volvo and Whirlpool, to name a few. The study questioned whether Lean methods would yield greater improvement early on (the low-hanging fruit) or later as the methods became more deeply rooted. It concluded that, at the Volvo plants studied in Sweden, the maturity of the organization proportionately benefited plant performance.
Could Lean principles work for your company?
Probably. Gartner estimates that “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.” And there’s a simple reason why. As Gartner analyst Bruce Robertson phrased it, “Businesses must change how they change.”
Your company may not be suffering from hardening of the arteries, but if you’ve been around a while, your wood chipper metabolism may have slowed. Find out how to implement by talking to the experts at tekMountain, the Lean, mean innovation machine of southeastern North Carolina.