How lean startup thinking can help corporates innovate

How lean startup thinking can help corporates innovate

Startups are known to challenge the norm and disrupt the status quo. They innovate quickly, questioning assumptions, tuning into the mindsets of consumers and rapidly iterating product concepts.

They embrace uncertainty and an unstructured way of working to develop game-changing concepts rather than incremental improvements. With very limited resources, startups win with speed, agility and innovation.

Large organisations on the other hand are known for structure and efficiency, the antithesis of innovation. Often as a result of initial successes and rapid scaling, organisations start establishing policies, systems and processes that stifle innovation. The need for internal approval halts speed and the adoption of a “we know what’s best for our customers” attitude hinders crucial market validation opportunities.

That said, there are a few big name exceptions to the norm. Apple, Google and Virgin often get the best of startup thinking without “risking the house”. How do they do it? These companies typically “buy in” many of their disruptive ideas from startups right in their backyards, often involving an intermediary.

This practice is only increasing. In the last five years, more and more corporates in the US work with business incubators who are in touch with the cultures, structures and philosophies of both the corporate and startup worlds. Incubators are in an ideal position to bring game-changing innovation to corporates by facilitating internal ideation processes and managing delivery projects that operate like startups. It’s time we start doing the same.

New Zealand is full of amazing startups and incubators that follow “lean startup methodology”. Lean Startup author Eric Ries described the methodology as “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”.

By partnering with startups and applying lean startup thinking, corporates can retain some of the excellent qualities of innovation that got them to their business success in the first place. A recent example is Inland Revenue’s APP4IR Challenge.

IR looked to improve communication and engagement with its customers, and with the aid of Creative HQ, developed a 5-week long crowdsourced app competition. This partnership enabled IR to effectively execute a new mechanism for identifying viable and fresh solutions that otherwise would have taken a year to complete.

By using a “startup” tool for ideation, crowdsourcing, IR cut costs of traditional procurement methods and delivered an end result that tapped into local talent and embraced customer-centric product development. IR was seen as innovative, inclusive and transparent.

When done right, collaborations between large organisations and startups can have 'win-win-win' results. Large organisations get to tap into the ingenious local talent. Startups get to work with a high calibre client and see the direct impact of their solutions applied to a large customer base. And finally, consumers win because the solutions put out by startups are customer-centric, innovative and intuitive.

By working with a suitable intermediary to bridge the gap to startups, large organisations can literally have their cake and eat it too. This approach represents such a huge opportunity for NZ companies to embrace the immense local talent we have in our communities.

Come on Fonterra, Air New Zealand, Fletcher Buildings and all other business giants in NZ – are you with us?

Stefan Korn is an investor, entrepreneur and CEO of Creative HQ, Wellington’s startup base. A leading voice in the New Zealand startup ecosystem, Stefan strongly believes in creating New Zealand's future economic wealth through startup-led innovation and developing entrepreneurial talent.