The Energy for Transformation

My most recent book, The Startup Way, is all about the methods and tools big corporations, government, and non-profits can use to innovate: think of it as Lean Startup at scale. One of the things people asked me over and over when I was talking to companies about how to start doing this kind of work, which can feel so daunting, was what it takes to kick off a transformation of this size. What motivates a company to take on such a huge amount of work?

I’ve seen three distinct driving forces behind this kind of change:

1. CRISIS: Sometimes, a crisis forces change. One of the stories I tell in The Startup Way comes from the Federal Government. The very public meltdown of HealthCare.gov, the government’s website designed to implement the Affordable Care Act, was a crisis of the highest order. A huge policy achievement almost went up in smoke because the process of creating the site was so poorly managed it didn’t work on the day it was unveiled. Ultimately, the crisis was the catalyst for real change at numerous agencies across the federal government, beginning with an epic lesson in what can happen if you rely on the traditional “safe” management methods the government used to build the original site.

2. STRATEGY: Other times, a new organizational strategy clearly necessitates a new way of working. At companies like Intuit, change was driven from the very top by a recognition that new strategic imperatives required a dramatic overhaul. This can work only when the most senior leaders in the company have bought into the new approach and are determined to see it through. It is also not the kind of decision that can be made lightly, which is why it becomes critical, after the first stages, to demonstrate how the new methods function and to lay the groundwork for full mobilization across the entire organization.

3. HYPERGROWTH: Success can be its own form of crisis. When a startup achieves product/market fit, it can be forced to grow extremely rapidly. As legendary Silicon Valley investor Marc Andreessen, also founder of Netscape and general partner of the VC firm Andreessen Horowitz, put it (in one of the startup movement’s most famous pieces of writing):

“In a great market—a market with lots of real potential customers—the market pulls product out of the startup…And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house.”