Lean Innovation

“The only way to win is to learn faster than anyone else.” —Eric Ries, The Lean Startup

The principles of lean manufacturing have increasingly been adapted to create practices for lean innovation. The common elements of such systems in practice are a relentless focus on the customer; the use of quick, iterative learning cycles; and the elimination of waste in the innovation process. These practices are emerging as separate threads in new product development (Agile methods), new business model creation (Lean Startup), and even the redefining of industry boundaries.

Although the principles of lean innovation are clear, their application can be challenging. Technical organizations may find it difficult to establish the kind of intimate connection with customers that lean development requires. Engineering organizations can find it a challenge to embed the learning cycles in existing product development processes, which are designed to assure on-time delivery of a defined product. The true customer focus that is a hallmark of lean methods can lead to business model designs that conflict with the company’s dominant model, requiring learning at higher levels in the organization and across organizational boundaries. Finally, the experimental cycles that create the learning on which lean innovation relies can create conflict between the innovation team and established support functions, such as Procurement, IT, or Legal. This conflict can create delays and waste, and even compromise the integrity of a new offering.

All of these challenges are intensified by the fact that the field is still emerging; the path is not yet charted and best practices have not been fully defined. The articles in this issue grapple with these challenges, illustrating through very different lenses the emergence of lean innovation in corporate environments and providing insight that can be useful in navigating the new terrain.

In “Agile–Stage-Gate for Manufacturers,” Bob Cooper and Anita Friis Sommer discuss the application in manufacturing firms of Agile development methods pioneered in the software industry. Building on previous work each author has done separately, they assessed six companies experimenting with Agile–Stage-Gate hybrid development processes and found in some firms significant improvements in time to market and productivity. The subject companies all used prototyping cycles conducted in collaboration with customers; the Lean methods were implemented differently, however, by each of the companies. Based on the experiences of these firms, and the challenges they faced in implementing the hybrid methods, Cooper and Sommer provide recommendations for others interested in experimenting with such a system.

In “Conducting Business Experiments,” Abhijit Ganguly and I discuss the development and testing of new business models using Lean Startup practices. The focus of our discussion is the use of targeted experiments to generate learning about uncertainties in the proposed business model for a new venture. The article offers a useful discussion of the design and conduct of experiments involving physical products. We also discuss the challenges of doing such experiments in a corporate context, and ways of reducing the waste that can result from organizational resistance to experimenting in partnership with customers and suppliers.

Debbie Kalish and colleagues, reporting on work undertaken by an IRI Research working group, look at innovation through the lens of sustainability. In “Integrating Sustainability into New Product Development,” they observe that thinking about new product development with a sustainability mindset can result in better products as well as better environmental outcomes. A major reason for this is that embedding sustainability thinking at the outset of new product development tends to reduce waste—a key element of lean innovation. Kalish and her coauthors provide a summary of some of the tools that have been used in organizations to embrace sustainability as a value in new product development and suggest how companies can move forward with sustainability-focused innovation efforts.

All of the trends captured by these articles are happening in the context of a megatrend that is making the entire economy leaner: the digitization of everything. Innovations like Uber and Airbnb allow us to get more use out of a given physical asset. Miniaturization means everything is getting smaller, using fewer atoms to provide the same functionality, and often enabling one device (like a smartphone) to perform roles once filled by many (a camera, a music player, and a GPS system). The sale of products as a service (servitization), enabled by digitization and pervasive sensors, extends the useful life of many B2B assets, from aircraft engines to tires. Read more.

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