Will Lean Startup thinking work at GE?

Structure eats Culture for Breakfast!

“I make all our managers read The Lean Startup,” says a Wall Street Journal ad quoting Jeffrey Immell the CEO General Electric for Eric Reis’s book. Well, Mr. Immell, I would recommend that unless you change structurally, it is likely that your managers have just read a fiction book. It will not help.

It is for the same reasons that most Lean Transformation or all types of new processes, bold new ideas and other change initiatives may succeed at first and then just return to where they were before. You have seen it:

  • Hire a new manager with all the power to change things around. Six Months later is there any difference?
  • We bring in a consultant team and they help us develop new procedures but a year later, there is little difference.
  • We diet for 3 months and 6 months later we weigh more than what we did before the diet.
  • What about a football team? They have an offensive minded head coach and it never fails when he is replaced, we find a defensive minded individual.
  • Kennedy, Johnson, Nixon(Ford), Carter, Reagan, Busch, Clinton, Busch, OBama. Or should I say Democrat, Republican, Democrat… A few exceptions along the way but for the most part we switch back and forth.

StructureThe structure of the company wins. In politics, Washington wins. It is called structural conflict and most of us have little knowledge of it or choose to put the effort into adjusting for it. In Lean, we just say it is Leadership not staying the course. However, unless we change the structure, any methodology, any new type of thinking will eventually just return to where it was before. The closest understanding of this thought process in the Lean world is Mike Rother in his book, Toyota Kata: Managing People for Improvement, Adaptiveness and Superior Results. He describes a process of tension needed for improvement. In Robert Fritz’s book, The Path of Least Resistance for Managers, the author also discusses structural conflict, the opposite of tension and the patterns of oscillation that occur in organization. Robert also guides us on what needs to change for success to take place. A brief outline from the book on structure:

Structure and Structural Laws

  • A structure is an entity made up of individual elements that impact one another by the relationships they form.
  • Organizations follow the path of least resistance through inescapable structural laws.
  • Understanding these laws will enable us to understand why organizations behave the way they do and how we can redesign them to perform the way we want.

Organizational Advancement and Oscillation

  1. Organizations either oscillate or advance. Advancement means moving from where we are to where we want to be. Oscillation means moving from where we are toward where we want to be, but then moving back to the original position.
  2. In organizations that oscillate, success is neutralized. In ones that advance, success succeeds. When success succeeds, one success breeds a chain of further successes. When success is neutralized, success is short term or ephemeral. Since oscillating movement can take place over a long period of time, and some of that time the organization is moving in the direction it wants to go, oscillating patterns are often hard to see.
  3. Understanding the nature of structure is essential for an organization to redesign itself so that it can change the path of least resistance from oscillation to advancement. If the organization’s structure remains unchanged, the organization’s behavior will revert to its previous behavior.
  4. A change of structure leads to a change of the organization’s behavior.

In my blog post, Your Structure needs to Change before You Create Demand, I discuss this and compare it with David Gray’s Connected Company thoughts. Dave was my podcast guest, What happens if we think of the Company not as a Machine… and Fritz’s podcast will take place next week. They are back to back for a reason.

Dave’s book The Connected Company discusses his view on how a company needs to adapt and conform to become an innovative, Lean Startup type company. I am not trying to say Dave’s model is correct or even doable for you. It is just an example, well thought  with plenty of case studies. What point I am trying to make, is that structure must change to allow innovation to happen. This is why think tanks and those separate little cultures at AT&T or Xerox for example were developed. Most of those great ideas it seemed never made it through the structure of the parent companies. They were spawned and realized their greatness in the structures that developed as a result of the idea.

The closest model I have found to implement or maybe the better word for it would be to identify the structure needed is Alex Osterwalder and Yves Pigneur’s Business Model Generation’s Canvas. It identifies nine building blocks required for the business model. Now, this still falls short in what is needed throughout the company but it is a starting point to see what underlying structure is required to institute change for an innovation.

If you think culture eats strategy for lunch, Prepare Yourself

Structure eats Culture for Breakfast.

If you need to understand structure and how to go about implementing innovation or a new process within your organization, read Robert Fritz’s new edition, The Path of Least Resistance for Managers. He has added a chapter on Lean in the update.

2 thoughts on “Will Lean Startup thinking work at GE?”

  1. Great post… I agree with you that structural as well as cultural conflicts are serious obstacles to Lean, especially in a large, established organization. It’s relatively easy to “decide to go Lean”, but that’s where the ease ends. Everything else requires serious commitment, dedication and constant alignment with the vision to make it work.

    But even in a new startup, these structural and cultural conflicts will arise because each individual brings with them their own set of experiences and ideals. Unless the entire team has been doing Lean for any length of time, there will still be the tendency to return to the old ways of thinking.

  2. I agree with you Jason. However, I think the shared interest and sheer motivation overcome many conflicts in a startup. They will surface as they grow and are a major factor on why many startups fail at the next level.

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