How many people at your company have what it takes to explore new market opportunities?
At privately-held W.L. Gore & Associates, headquartered in Newark, Del., the answer was “not enough.” So the company, which makes everything from guitar strings to GORE-TEX fabric to medical devices, has now run three classes of employees through a nine-week lean startup training program, totaling about 100 participants so far. A fourth cohort will begin in the fall.
“We started as an electronics products company,” says Greg Hannon, right, Head of Innovation at Gore. “We grew from that to include fabrics, and later, medical products and industrial products. So we have good examples from the past of using the cash existing businesses generated to explore new spaces.”
In a recent interview, Hannon shared what they’ve been doing.
• What’s behind the push? The roots, Hannon explains were, first, to “increase the sense of urgency for innovation, and the speed at which we innovate.” Second, Gore felt that far-off “Horizon 3” terrain was “getting neglected. Some of our Horizon 1 businesses have become quite large, and they tend to do much less exploration the larger they get.”
• Hannon says that he has brought in speakers like Alex Osterwalder, Mike Tushman, and Steve Blank to address senior leadership and give master classes on the business model canvas, ambidextrous organizations, and lean startup methodology. The company’s training program for employees was designed by LaunchPad Central, and Gore uses that company’s software for filling out the business model canvas.
• Hannon says that Gore is “using the lean startup methodology to explore,” but that “the rigor and methodology we’re applying to that exploration is very high — it’s not like the Wild West. We’re being very disciplined.” The diagram at right shows how the company is trying to get teams to focus on opportunity spaces where there is potential for growth, and “where our technology base can provide a solution.”
• The nine-week class teaches employees about lean startup and the business model canvas. “The whole thing is driven by customer interaction,” Hannon says. “The expectation is that the teams of two or three people, plus a mentor, will do at least 100 customer interviews by the end of the class. The majority of our teams have gotten there. Some consumer markets are easier; the business-to-business ones are difficult.”
• Participants in the class take time off from their day jobs to participate. Hannon says that is essential. “If doing Horizon 3 exploration is 20 percent of your day, on top of 100 percent of the work you already do, the burning customer issues usually take precedence. So we make our [employee] explorers full-time devoted to it.” At the end of the class, Hannon is advocating that a decision be made to allow individuals to take a sabbatical from their day job if their idea is worth exploring further, “or if we reached a dead end, they will go back to their day job.”
• Ideas that survive are funded to their next milestone, Hannon says. “Most still need some vetting on the technical side, since the main focus of the [lean startup] course is product-market fit.” The intent, he says, “is to nurture these ideas outside of existing businesses, and not hand them over too soon.”
• Teams bring together employees with business and technical skills. “This is not a tech-only push or a business-only push. It’s a combination of technical and business together,” Hannon says.
• Hannon says that it’s important to be realistic about the friction that often exists in organizations between innovation-oriented groups and the majority of more operationally-focused departments. “Your Horizon 1 organization is doing what it needs to survive. It has very good processes for short-term delivery of results. Your Horizon 3 organization is doing its thing for longer-term opportunities. When those things collide, you get friction,” he observes.
Innovators at Gore developed a list of eight areas where they expect to encounter friction — like confidential disclosure agreements that require the involvement of the legal group, or purchasing pricey materials. “My request to [the innovators] is that they move with the greatest sense of urgency and speed. If you run into headwinds or friction points, let me know and we’ll start working through it.” As an example, innovators can use their corporate credit card to buy materials up to a certain specified spending limit, and a part of the legal team is available to expedite any agreements.
• “Your existing businesses cannot fail, as it would be the end of the company, and most organizations are set up to execute and minimize risk. Exploration is at the other end of the spectrum, where the risk in failure is low. A project ends and you go to the next one. The language, behaviors, cultures, and metrics are completely different at both ends of the spectrum. So for large companies, it usually becomes a challenge to do both well,” Hannon says. He shared the diagram at right as a way to express the company’s goal — a balance between execution and exploration.