The main thing that distinguishes product development choices in startups from those in established organisations is the types of risk that are involved in this process. Startups are mainly faced with the risk of not having a market. Here, pivoting is therefore a response rather than an additional source of risk. In contrast, existing companies have sunk a lot of money into their revenue generating products. This in addition to appeasing customers and shareholders makes it a risk to pivot (Ries 2011 ch. 8).
While it is relatively easy from a practical point of view for startups to change direction, established companies face problems other than risk when trying to integrate lean ideas into their organisation. With hundreds or even thousands of employees, companies typically have layers of bureaucracy which can inhibit both innovators and the flexible and the fast inter-team communication needed for exploration and innovation (Owens and Fernandez 2014 ch. 1). For example, if teams are organised around services that make up products rather than products themselves, new ideas concerning the whole product are more difficult to realise, because even prototyping requires the help of many different teams.
Therefore, in our opinion, the main thing that established companies can learn from the Lean movement is to have a structure that allows for more innovation (Ries 2011 ch.12). Although pivoting might be too extreme, a weaker form of exploring new features and businesses on a small subset of existing users and new customers can be done. This will benefit the long-term development of the company, allowing it to stay competitive by responding to new market entrants, while not inhibiting the existing business by damaging its reputation (Owens and Fernandez 2014 ch.1).
In conclusion, being too focused on existing products and markets inhibits your ability to innovate and participate in new markets (Owens and Fernandez 2014 ch. 1). Careful adaptation and adoption of Lean ideas can widen this focus to include new ideas in a corporate setting.
- Owens, Trevor, and Olbie Fernandez. 2014. The Lean Enterprise: How Corporations Can Innovate Like Startups. Wiley.
- Ries, E. 2011. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. Crown Business.