Why large companies need small garages for their digitization initiatives

When Steve Blank - serial entrepreneur and Startup-Guru in the Silicon Valley - talks about his one major key learning in the past years, he says: “Startups are not smaller versions of big companies”. Startups are about searching for a business model versus executing a plan efficiently. Like children are not just small adults, kids follow stages of their development, each which its distinctive behaviors and psychology. As a startup you might not just hire a VP of sales, to get the sales job done (that comes later, when a repeatable sales model have been found). First you have to be ready to learn and eventually pivot several times, before success is happening.

... get ouside the box
Many established companies face the challenge of digitization and possible disruption by innovative startups or new market entrants. Digitization is all about testing new business models – exactly what innovative startups are mostly good at. So what do I tell them when they should switch to a “searching” instead of an “execution” mode? “Sorry guys, you are too big to innovate – you will never get it”? Certainly enough, also large companies have been able to come up with disruptive innovations outside of their existing business model. But what comes more naturally to startups, large companies have to think of ways on how to escape their efficiency traps, regulations and silo thinking. Founding or buying startups is a way of doing so. When it comes to digitization or transformation of a company, you may not want to happen all the “cool stuff” outside your organization and culture. You want to have it “inside” – and being able to think and act “outside the box” inside your own (organizational) box.

... and go into a garage
For my clients, I use the metaphor of a “garage” to describe what it takes to create a startup spirit within your organization. So if you face uncertainty, a challenge or a thread of disruption, the “garage” takes you as close to a startup-like environment as possible: Build a small interdisciplinary team which works for a specific time frame and budget on a project. The members have to get out of their existing jobs for the time being in the garage – no line management, no duties, no calls from the boss or rigid dependencies. Regulations and procedures do not apply in the garage – you may use resources from your company, but only if it does not hold you back. In the garage you concentrate on what will be working in the market, what the customer loves and is willing to pay for. Everything in the garage is made to let your idea evolve – it is all about searching, learning and not execution or efficiency.

Let’s assume you have a great team who is ready to take up the challenge to make an idea visible or even successful in a couple of months. The team is working co-located, almost literally in one garage. In the garage you use powerful tools from Lean Startup, Design Thinking or Agile methodologies to turn your idea into reality; step-by-step. No status is coming out of the garage – following reporting lines just distracts commitment to success of the idea: You are not running the garage for somebody else! The team inside the garage is destined to create something which can life on its own. If somebody want to know what’s going on, let them go there, they will see all information visualized on the wall, or they may talk to people inside the garage.

pitch-slam for innovation
Things are changing when the budgeted time of the garage runs out. Again, the garage borrows ideas from the startup world, more precisely from the Venture Capitalists. The garage ends with a “Venture-Pitch”, which brings everything together in a couple of minutes: The team, the product, the business model and what they have learned. It also contains financial outlook, major milestones for marketing the product and what it takes to bring the work to the next stage or to scale up. The pitch itself should be in front of C-level and stakeholders and ideally bring its first customers. The more pitches at the same time, the better it is for stakeholders, because it helps you to look at the results from a greater distance. At my company ti&m, we connect our clients with startup and venture specialists, so that they can give a truly independent opinion on the content of the pitch and ideas. General speaking, a Venture Pitch is a great tool for your innovation process – but that’s a different story which will be told later.

The ideas of the garage are also captured this slide deck: http://bit.ly/2mRPGOR.