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This article was published on October 1, 2014

The enterprise innovation primer: Why and how lean enterprise works

The enterprise innovation primer: Why and how lean enterprise works
Corey Eastman
Story by

Corey Eastman

Corey Eastman is a Director at Climax Media, a digital technology agency who specialize in building customized platforms for enterprise clie Corey Eastman is a Director at Climax Media, a digital technology agency who specialize in building customized platforms for enterprise clients.

Corey Eastman is a Director at Climax Media, a digital technology agency who specialize in building customized platforms for enterprise clients. This post originally appeared on the Climax Media blog.

Every large company is investing in innovation. JP Morgan Chase is starting up an innovation lab. Enterprises such as AT&T, Staples, Nordstrom, Verizon, Vodafone, Kraft, Ford and McLaren all have their own labs divisions to contribute to innovation.

Innovation often requires new processes and perspectives to challenge the same fundamental problems. Lean enterprise is a systematic, methodical, and replicable method that companies have approached innovation.

Essentially, the method is all about creating solutions in fast cycles and sharing them with users or stakeholders frequently to get feedback, and adapting the solution accordingly.

While this sounds straightforward enough, most companies currently use the waterfall method of development, which doesn’t involve any customer or stakeholder input during the process. Companies have since recognized the power of lean, but have taken different approaches to implementing it into their own teams and seeing if the process produces results. This typically starts off in an organization’s innovation labs with their teams.

Let’s see how three enterprises have implemented lean processes, and how they’ve benefited from it:

Telus Labs

Canadian national telecommunications company Telus launched its Labs division to redesign its website and explore the processes that going lean had to offer. Telus’s VP of Digital, Shawn Mandel, recently spoke at a LeanEnterpriseTO event about how using these processes sped up its time to market by 15x and capital efficiency by 20x.

While Telus Labs uses lean enterprise methodologies for its own productions, which Telus Labs’ Elizabeth White covers in-depth here, the rest of Telus still operates using waterfall.

White writes in her blog post, “There will be projects where waterfall methodology makes perfect sense, there are some – much like ours, where a hybrid approach is best and there will be some, where lean, in its purest form, is the correct path.”

In order to retain Telus Labs’ lean system and to preserve its developing culture, the team moved into their own room sectioned off from the rest of the company. White writes “While our door is always open, the temptation of our stakeholders to pull the team away from our process is quelled when they see what we are doing and how fast we are doing it.”

One of the main differences between running a lean enterprise compared to a lean startup involves keeping key stakeholders accountable. Telus Labs’ Marysol Elorriaga shares a few strategies in a blog post, including how to engage key stakeholders, build excitement, and share information through different departments.

Additionally, in order to maintain speed and flexibility in the face of staff shortages or sudden influxes of tasks, Telus Labs makes use of staff augmentation by creating and maintaining a network of contractors and agencies to help out as necessary.

Pivotal Labs

It would be difficult to explore the topic of lean enterprise without exploring one of its predecessors, known as extreme programming. In contrast to the traditional waterfall method of programming, extreme programming focuses on creating solutions using short development cycles and frequent iterations, feedback, and testing.

A fundamental difference that extreme programming introduces is the concept of pair programming: one software developer works as a “driver” and writes code, while a second developer works as a “navigator” and watches the code get developed.

The two switch roles when the driver gets tired. Although this might sound less effective than two individual developers working separately, according to The Economist projects built with extreme programming have 15% fewer bugs.

These frequent meetings and sharing of iterations means that the solution can be shown to the customer in stages, and the team building it will be able to gather feedback and build a solution closer to the client’s vision than a team using waterfall process would be able to provide.

Pivotal Labs is a company who has done extreme and agile programming for over a decade. One of Pivotal Labs’ more interesting client services involves pairing up with clients’ developers with one of their own to build the client’s app (such as what they did with Plink).

Not only does it enhance knowledge transfer (since the client developer is working on the app as the process unfolds), it also serves as a lesson into lean methodology and how that could potentially work for the client’s business operations.

Intuit Labs

Lean processes in enterprise also holds benefits for product development. As Intuit Labs’ Vice President Hugh Molotsi said in an interview with PandoDaily, the team is moving away from research and formal pitches to a process that is much more lean.

“Instead, we’re trying to create a meritocracy of ideas where people can actually work on them, get data from customers by putting these minimum viable products in customer’s hands, then, based on that, learning if the idea is good or not. Of course, in that process, you can iterate and make improvements. The lean experimentation works really well with unstructured time.”

Similar to the tradition originated by 3M and made famous by Google, 10 percent of Intuit Labs’ employees have unstructured time to work on their own side projects. The unstructured time has been beneficial for their company. It was the start of mobile payments application GoPayment, and an app called ViewMyPaycheck.

Similarly, Intuit’s SnapTax was also created through unstructured time and Intuit Labs’ lean processes. When this idea was originated, the team had shown customers the app’s mockups where they could do taxes on their mobile phone.

The feedback was unanimous: customers said they’d never use it. Molotsi recalls what happened next:

“Undeterred, the team created a minimum viable product that was essentially a mobile app with several screens for tax filing, although in truth there really wasn’t much behind them.

One of the innovative things the team did was claim that a user of the app could snap a picture of a W2 and it would pull up the information it, which if you are a 1040 easy filer, that’s over half of the information that you need to provide to complete your taxes. Just by supplying those fake screens in the mobile app, customers did a complete 180.

All of a sudden customers said, ‘Wow, this is great. Can I keep this and use it for my taxes?’ From there progress was incremental. They built the app in 2009 and released it to California tax filers the following year.”

Closing thoughts

Lean processes aren’t just for fast-moving startups. They can be implemented on an enterprise-level to great success, as these three examples demonstrate. They can streamline operations, improve communication, and enhance product development, amongst many other benefits.

How will you innovate from within?

Read next: Why big companies struggle with innovation