My invited talk at TCS AgileCafe, Bangalore on Sep 29. In this talk, I explore how large #enterprises are creating #innovative products using #leanstartups

1. Lean
Startup
in the
EnterpriseTathagat Varma
Knowledgepreneur
http://thoughtleadership.in

2. Let’s hear some stories!
How some organisations solved problems differently
• Services: Google, 2001
• Software: Intuit, 2009
• US Gov: CFPB, 2010
• Systems: GE, 2013

3. Google Gmail, circa 2001
Does the world need another free webmail?
• First version of Gmail was literally written in a day!
“It wasn't very impressive -- all I did was take the
Google Groups (Usenet search) code (my
previous project) and stuff my email into it -- but it
was live and people could use it (to search my
mail…)"
• Code was live from day one!
• “I would just write the code, release the feature,
and watch the response.”
• Re-wrote the frontend about six times and
backend three times by launch (Apr 1, 2004)
• Code for content-targeted ads was written in a few
hours and tested on ~100 unsuspecting
Googlers!
• It was a “Googlette”!
https://paulbuchheit.blogspot.in/2009/01/communicating-with-code.html
http://neilpatel.com/wp-content/uploads/2015/03/image083.png
http://time.com/43263/gmail-10th-anniversary/

4. Googlette?
“The startup within the startup”
• “What is a Googlette? It’s a new business inside of Google that
is just getting started as “the start-up within the start-up”.
We’re looking for an experienced, entrepreneurial manager
capable of offering direction to a team of PMs working on a wide
array of Googlettes. You will define Google’s innovation engine
and grow the leaders of our next generation of businesses.”
• Georges Harik, one of Google’s first 10 employees, held the roles
of director of Googlettes and distinguished engineer. As director
of Googlettes, his team was responsible for the product
management and strategy efforts surrounding many nascent
Google initiatives including Gmail, Google Talk, Google Video,
Picasa, Orkut, Google Groups and Google Mobile.
http://kottke.org/03/08/google-and-the-fabulous-googlettes https://www.gv.com/team/georges-harik/

5. Intuit, circa 2009
Automate information collection from W-2 forms
Two-decade-old dream:
“10-minute tax return”

6. The solution emerges…
Based on conversations with potential customers…

7. Intuit SnapTax
Built incrementally incorporating continuous feedback
• Assembled internal team of 5
• Exec sponsors created “island of freedom”
where they could experiment
• 2010: Pilots in California. Iterated eight times
in eight weeks.
• 2011: Replaced Angry Birds as the #1 App
on iTunes within two weeks of launch; 350,000
downloads in first three weeks of launch
• Reached $50m in first 12months when it
earlier took 5.5years!
• For TurboTax, they test up to ~500 changes
in a 2.5 months tax season. In comparison,
they ran just 1 experiment in 2006.

8. US Government
Consumer Financial Protection Bureau (CFPB)
• 2010: Obama signs Dodd-Frank Wall Street Reform and
Consumer Protection Act into law. Among other things, it
mandated creating a new federal agency. CTO Aneesh
Chopra reached out to Eric Ries.
• CFPB was viewed as a “startup”. Treat the new
endeavours as “experiments”, identify part of plan that
were “assumptions” rather than facts, and figure out way
to test them.
• Idea was to build an MVP and have the agency up and
running on a minor scale before running it with $500m
budget and a large staff.
http://www.govtech.com/pcio/Governments-Take-a-Lean-Startup-Approach.html

9. “Know before you owe”
The government will hear you now…?
“This week, The Consumer Financial Protection Bureau (CFPB)
launched an initiative to engage every American in the design
of a simpler mortgage disclosure form. By visiting Know Before
You Owe, your voice will be heard on what information
lenders and brokers should share when any American applies
for a mortgage. It is the latest “startup” of the Obama
Administration and embodies three important principles:
• A More Open, Participatory Government
• Customer Service at Private Sector Standards
• A “Lean Government Startup” Culture
https://www.whitehouse.gov/blog/2011/05/21/know-you-owe

10. A “Lean Gov Startup” Culture?
Is it even possible for a gov to behave as a lean startup…
“I’ve spent a good deal of time recently with Eric Ries,
a leader in a movement to define a set of principles to
guide successful new companies. He’s written about
the possibility of translating the “Lean Startup”
concept into the government. By establishing a
clearly defined problem, recruiting a small, nimble
team of innovators and financial experts to design
an innovative product, and then rapidly learning
from public feedback, the CFPB team might be the
right case study to demonstrate the merits of such an
approach.”
https://www.whitehouse.gov/blog/2011/05/21/know-you-owe

11. How they did it?
Kept refining based on 25,000 user comments from multiple
rounds of qualitative and quantitative testing over 10 months
User-Centered Design Process
http://files.consumerfinance.gov/f/201311_cfpb_study_tila-respa_disclosure-comparison.pdf

12. GE: World’s Largest Startup!
130yo, $150B company: From Six-Sigma to Lean Startup…
• Based on Eric Ries work, FastWorks aims to speed new product
development, reduce costs, and increase customer engagement
• The group constantly takes its ideas to customers throughout the
development process to learn what will sell and what won’t, redesigning
it before devoting the time and money to creating a final product.
• 100 projects in 2013 to 300+ in 2014; 40,000 employees trained
• Examples:
• Monogram-series refrigerator went through 18 iterations
• High-output 7HA Gas Turbine: developed 40% more cheaply and 2
years faster
• Lightbulb with a built-in wire-dimming chip
• Oil well flow meter
https://www.bloomberg.com/news/articles/2014-08-07/ge-taps-lean-startup-ideas-for-faster-cheaper-product-rollout

13. GE “Monogram” Refrigerators
How do you design new refrigerators on shoestring resources?
https://hbr.org/2014/04/how-ge-applies-lean-startup-practices
• GE Appliance’s first attempt to apply FastWorks
has been to create a refrigerator with French doors
for their high end “Monogram” line.
• In January 2013, Chip Blankenship, CEO of GE
Appliances issued a challenge to the newly formed
team: “You’re going to change every part the
customer sees. You won’t have a lot of money.
There will be a very small team. There will be a
working product in 3 months. And you will have a
production product in 11 or 12 months.”

14. http://www.ge.com/ar2015/assets/images/letter/fastworks-c3c0d4af.jpg
GE FastWorks
“FastWorks means getting to
market now with something that
may not be a 100% solution but
that allows your customer to
provide real feedback"
https://www.ge.com/sites/default/files/ge_webcast_presentation_09152014_0.pdf

15. So, what’s common here?
The more they’re different, the more they’re same!
• Think of a “big idea” (as opposed to making small incremental optimization)
• Built a small cross-functional team (instead of traditional bloated functional silos)
• Teams had creative autonomy to experiment (instead of following rigid diktats)
• Formulate riskiest hypotheses (instead of detailing out all the requirements)
• Develop rapid prototypes (instead of building out the entire product)
• Validate key assumptions early by talking to potential customers (instead of developing
without testing them, and testing them only post-launch)
• Fail fast, fail cheap and fall forward (instead of “achieving failure” or making costly mistakes too
late in the day)
• Incorporate customer feedback periodically (instead of handling them as changes after the big
launch)
• Learn quickly from the real-world and actionable data, and correct mid-course as needed
(instead of proceeding with unvalidated assumptions which might lead to huge costs of failures)
• Get new ideas to market sooner with core set of features (instead of waiting till all 100%
features were ready)
• …

16. Hey, that’s not usual!!!
Large enterprises don’t usually behave like…
That’s right…that’s more
like how startups
work…

17. So, what’s a “Startup”?
Isn’t a startup the proverbial “garage” where new and crazy
ideas are born and baked?
• A startup is a human institution designed to create a new
product or service under conditions of extreme uncertainty.
• Size of company, the industry, sector of the economy —
none of it matters!
• The goal of a startup is to figure out the right thing to build
- the thing customers want and will pay for - as quickly as
possible.
• Startup success can be engineered by following the
process, which means it can be learned, which means it
can be taught.
The Lean Startup - Eric Ries

18. OK, a “Lean Startup”?
Startups are meant to be “lean”, so what’s that?
• Lean Startup is a new way of looking at the
development of innovative new products that
emphasises fast iteration and customer insight,
a huge vision, and great ambition, all at the same
time.
• It is a set of practices for helping entrepreneurs
increase their odds of building a successful
business
The Lean Startup - Eric Ries

19. Lean Startup Principles
How do we manage lean startups better?
The Lean Startup - Eric Ries
• Entrepreneurs are everywhere
• Entrepreneurship is management
• Validated learning
• Innovation accounting
• Build-measure-learn

20. So, who’s an “Entrepreneur”?
Aren’t these the young and restless techies who live in garages?
• A person who sets up a business or businesses,
taking on financial risks in the hope of profit.
• Entrepreneurs who operate inside an established
organisation sometimes are called “intrapreneurs”
because of the special circumstances that attend
building a startup within a larger company.
• Entrepreneurship is the pursuit of opportunity
without regard to resources currently controlled.
http://www.inc.com/eric-schurenberg/the-best-definition-of-entepreneurship.htmlThe Lean Startup - Eric Ries

21. Validated Learning
You mean learning isn’t often “validated”
• Learning is the essential unit of progress for
startups.
• The process of demonstrating empirically that a
team has discovered valuable truths about a
startup’s present and future business prospects. It
is more concrete, more accurate, and faster than
market forecasting or classical business planning.
• I call this validated learning because it is always
demonstrated by positive improvements in the
startup’s core metrics.
• It is not after-the-fact rationalisation or a good story
designed to hide a failure.
• It is the principle antidote to the lethal problem of
“achieving failure”: successfully executing a plan
that leads nowhere.
Traditional Learning
Validated Learning
https://leanstack.com/3-rules-for-building-features-in-a-lean-startup/The Lean Startup - Eric Ries

22. Innovation Accounting
How do you determine “health” of a startup?
The Lean Startup - Eric Ries
To improve entrepreneurial
outcomes, and to hold
entrepreneurs accountable,
we need to focus on the
boring stuff: how to
measure progress, how to
setup milestones, how to
prioritize work. This
requires a new kind of
accounting, specific to
startups.
Dave McClure’s Pirate Metrics

23. Build-Measure-Learn
Accelerate the feedback loop and learn faster
The fundamental
activity of a startup
is to turn ideas into
products, measure
how customers
respond, and then
learn whether to
pivot or persevere.
The Lean Startup - Eric Ries

24. Minimum Viable Product
No, we are not going to ship a poor-quality product!
http://www.startuplessonslearned.com/2009/08/minimum-viable-product-guide.html
The minimum viable product
(MVP) is that version of a new
product which allows a team
to collect the maximum
amount of validated
learning about customers
with the least effort.
It is that 20% of the product
that allows 80% of riskiest
assumptions to be validated.

25. Pivot or Persevere?
How do we continue, especially when goals aren’t met?
http://theleanstartup.com/principles
Once the MVP is established, a
startup can work on tuning the
engine. This will involve measurement
and learning and must include
actionable metrics that can
demonstrate cause and effect
question…When this process of
measuring and learning is done
correctly, it will be clear that a
company is either moving the drivers
of the business model or not. If not, it
is a sign that it is time to pivot or
make a structural course correction
to test a new fundamental hypothesis
about the product, strategy and
engine of growth.
https://www.alexandercowan.com/wp-content/uploads/2013/06/Scientific-Method-Lean-Startup-Pivot-or-Perseve

26. Recap
• A startup is not a physical space or garage-style startups. It is a
mindset for solving hard problems creatively.
• Lean Startup offers a set of principles and toolkit to manage extreme
uncertainty in a methodical and “frugal” manner.
• The core idea is to identify riskiest assumptions, build a smaller
version of the product to validate them in shortest time, and
incorporate the learnings before continuing.
• Lean Startups offers a framework to innovate with lower risks inside
large enterprises that are otherwise optimised for efficiencies and
economics of scale.
• More than any specific process, methods or tools, it needs the culture
that promotes experimenting and learning with speed and agility
before scaling and further growth.

27. References
• The Lean Startup - Eric Ries, 2011
• The Lean Startup Case Studies, http://theleanstartup.com/casestudies
• Governments Take a Lean Startup Approach, http://www.govtech.com/pcio/Governments-Take-a-Lean-
Startup-Approach.html
• Lean Startup: Changing Government Services and Agencies to Better Serve the Citizens, https://
www.digitalgov.gov/2014/07/11/lean-startup-changing-government-services-and-agencies-to-better-serve-
the-citizens/
• How Small Group of Entrepreneurs transformed Government Services, http://www.nextgov.com/cio-briefing/
2014/05/how-small-group-entrepreneurs-transformed-government-services/83872/
• Governments Take a Lean Startup Approach, http://www.govtech.com/pcio/Governments-Take-a-Lean-
Startup-Approach.html
• The Lean Startup Goes to Washington, https://ssir.org/articles/entry/the_lean_startup_goes_to_washington
• Intuit’s CEO on Building a Design-Driven Company, https://hbr.org/2015/01/intuits-ceo-on-building-a-design-
driven-company
• Eric Ries: How to Bring Lean Thinking to Big Companies, http://www.inc.com/tom-foster/eric-ries-how-to-
bring-lean-thinking-to-big-companies.html
• Bringing the Lean Process to Big Finance Corporations, http://leanstartup.co/bringing-the-lean-process-to-
big-finance-corporations/

28. References
• The Innovation Catalysts, https://hbr.org/2011/06/the-innovation-catalysts
• How Intuit Innovated by Challenging Itself, https://hbr.org/2014/02/how-intuit-innovates-by-challenging-itself
• General Electric Wants to Act Like a Startup, https://www.bloomberg.com/news/articles/2014-08-07/ge-taps-
lean-startup-ideas-for-faster-cheaper-product-rollout
• GE Panel, The Biggest Implementation of Lean Startup on Earth, https://youtu.be/nhmQNW1mkSk
• The Service Startup, http://www.theservicestartup.com/
• Enterprise Lean Startup Experiment Examples, http://www.movestheneedle.com/blog/enterprise-lean-startup-
experiment-examples/
• How GE Applied Lean Startup Principles, https://hbr.org/2014/04/how-ge-applies-lean-startup-practices
• A New Kind of Startup, http://www.geautomation.com/blog/new-kind-startup
• The Biggest Startup, http://www.gereports.com/post/82723688100/the-biggest-startup-eric-ries-and-ge-team-
up-to/
• Large Companies Innovating Parts of Their Company with Startup Mentality, http://www.forbes.com/sites/
drewhendricks/2014/11/05/large-companies-innovating-parts-of-their-company-with-startup-mentality/
#18dfcf6e7749
• How to Implement the Lean Startup Method at Large Organizations, https://www.usertesting.com/blog/
2015/12/11/how-to-implement-the-lean-startup-at-large-organizations/