We all know that successfully incubating transformational new growth businesses is very, very hard. Corporate innovators learn pretty quickly that blending “all the strengths of a big company with all the strengths of a startup” can be an elusive goal.
A more common day-to-day reality is feeling like the big corporate machine, and all its “protect the core” rigidities and instincts, are locking in on incubating initiatives like a professional boxer going after an amateur.
One of the most sobering realities is that corporate startup teams will almost always lose that internal boxing match before they can develop and deliver to market a true, revenue-generating, minimum viable product (MVP). In my 12 years wearing different corporate innovation hats, it has become clear to me that the external market rarely kills corporate startups. Rather, things like internal politics, culture, and values almost always do the dirty work first. That’s where the preponderance of risk lies.
During my seven years at Innosight, a strategy and innovation consulting firm, I helped lead many action learning programs, during which my colleagues and I would coach cross-functional corporate teams through design thinking, lean startup, and agile development activities. While everyone involved always aspired to lay the groundwork to launch the next world-changing idea, the reality is that we almost always defined success as the creation of a good venture pitch that senior leaders could support (or not).
What that taught me is that every big idea or high-potential new venture needs a strategy to win over two kinds of customers in parallel: internal customers and external customers.
Out of the countless teams I coached over the years, one in particular stands out. That team — led by two amazing women at the HR consulting firm Mercer, Barbara Marder and Patty Sung — did the work, created the pitch, got the resources they sought, and actually ended up quitting their day jobs to run the new venture. It not only became the company’s first internally-incubated startup, but actually generated revenue.
Here’s why they succeeded while so many others fail. Barb and Patty knew that senior leadership support was critical to their success. So they applied design thinking and lean startup techniques to understand their internal senior leader customers and to “sell” the new business to them. Barb and Patty knew intuitively that those internal customers would need to “buy” first to ensure that their team had the leeway to get their external customers to “buy” as well.
Thinking through my days as an analyst at the research firm IDC, as an Innosight consultant, and now as an innovation leader at the Brazilian aerospace company, Embraer, here are my five key takeaways from that experience — the things that worked really well.
1. Putting the Right Team Leaders in Place
First, Barb and Patty were a potent pair. Barb is an experienced leader who brought decades of experience, quantifiable results, extensive connections, political capital, and the broad respect of those above and below her in the company. Patty was just a few years into her career at the company at the time, but had spent time as the Chief of Staff for a senior leader and had earned a reputation as a very personable, energetic, driven, hard worker. Their passion for the challenge was obvious and contagious, opening many doors for them and their team.
2. Taking the Time to Understand the Internal Decision Making Unit (DMU)
At the beginning of the program, Barb, Patty, and their team developed quickly a sense of the individuals in the corporate hierarchy who made up their project’s Decision Making Unit (DMU) — more specifically, the buyers (those who would need to contribute resources to their project), the users (those who would need to adopt their eventual solution), and the influencers (those who could sway the others).
3. Discovering Important DMU Jobs-to-Be-Done
The team then met regularly with those key buyers, users, and influencers — and particularly at the early stages of the project, tried to listen more than they spoke. They empathized with those leaders and drew out in those meetings the leaders’ views of market opportunities and challenges, as well as their personal passions and interests. They sought to understand what would really “light them up” — their personal functional, emotional, and social jobs-to-be-done which, if satisfied, would win them over. Barb, Patty, and the team then kept these insights in mind as they moved forward, recognizing that they would never succeed if they didn’t first achieve this “internal product/market fit.”
4. Moving through Internal and External “Build/Measure/Learn” Activities in Parallel
As the team proceeded through the project, they regularly ideated with those leaders, sharing their ideas and letting those leaders help shape those ideas. Barb, Patty, and the team then prototyped and tested their solution concepts with both their internal and external customers in parallel. At times, they may have had to prioritize the product/business vision most attractive to their internal customers over that desired by their external customers. They knew, however, that once they had achieved enough internal leadership buy-in, they would have the space to make the adjustments necessary to win over the external market as well.
5. Sharing Progress and Learnings Effectively, Both Internally and Externally
Finally, as the team built momentum in the market and began to get the resources it needed, it found opportunities at both internal company events and at external industry events to share what they were doing, the progress they had made, and their key learnings. By sharing their success, Mercer’s senior leadership commitment to innovation came through loud and clear, which in turn further increased the team’s momentum.
In the end, Barb, Patty, and their team conceptualized, developed, and commercialized an MVP which created significant value for Mercer beyond the revenue it generated. It led to Mercer’s first investment in a Series A startup, a new patent, and it generally elevated the company’s brand as an innovator. The team itself earned recognition as experts in the application of data analytics to talent development. Their success also paved a path for Mercer to work more closely with startups, and led to the development of a broad new suite of internal corporate innovation capabilities.
The team’s success was possible because Barb and Patty understood that to have a chance to win in the external market meant that they had to win in the internal market first. They knew they had to develop a careful understanding of their internal customers and their important jobs-to-be-done before iteratively developing a solution and broader business story that got those jobs done. They applied the same tools — design thinking, lean startup, and agile development — as other corporate startup teams use every day, but in this case, made sure to win with both sets of their customers.