Chapter 12: Innovate

Chapter 12: Innovate

1. Three structural attributes: Startup requires three structural attributes: scarce but secure resources, independent authority to develop their business, and a personal stake in the outcome. And it doesn’t have to be financial. The parent organization have to make it clear who the innovator is and make sure the innovator receives the credit for having brought the new product to life – if it is successful.

2. Startup budgets: Too much budget is as harmful as too little – startups are extremely sensitive to midcourse budgetary changes. Startups are both easier and more demanding to run than traditional divisions; they require much less capital overall, but that capital must be absolutely secure from tampering.

3. Experimenting with autonomy: startup teams need complete autonomy to develop and market new products within their limited mandate. They have to be able to conceive and execute experiments without having to gain an excessive number of approvals. They have to be able to build and ship actual functioning products and services, not just prototypes. Handoffs and approvals slow down the build-measure-learn feedback loop and inhibit both learning and accountability. Without the ability to experiment in a more agile manner, a company will suffer the innovators dilemma; ever-higher profits and margins year after year until the business suddenly collapse

4. Rapid iteration: The sandbox also promoted rapid iteration. When people have a chance to see a project through from end to end and the work is done in small batches and delivers a clear verdict quickly, they benefit from the power of feedback. By making the sandbox small, the sandbox method allows teams to make cheap mistakes quickly and start learning.

5. Operational excellence: In most cases, the product will attract copycats and imitators. Once the market for the new product is well established, procedures become more routine. To combat inevitable commoditization of the product in its market, line extensions, incremental upgrades, and new forms of marketing are essential. In this phase, operational excellence takes on a greater role, as an important way to increase margins is o lower costs.

6. Speed: It does not matter how fast we can build. It does not matter how fast we can measure. What matters is how fast we can get through the entire loop.

7. The lean startup as framework: Those who look to adopt lean startup as a defined set of steps or tactics will not succeed. In a startup situation, things constantly go wrong. Ultimately, the lean startups are a framework, not a blueprint of steps to follow. It is designed to be adapted to the conditions of each specific company. Rather than copy what others have done, techniques such as the five why´s allow you to build something that is perfectly suited to your company.