Lean Scaleup™

Three Interlocked Capabilities
To Unleash Corporate Entrepreneurship
And To Accelerate Building
New Businesses From Innovation.

Lean
Scaleup™

Three Interlocked Capabilities

To Unleash Corporate Entrepreneurship

And To Accelerate Building

New Businesses From Innovation.

The Lean Scaleup Framework

Proven Success Formula.

Proven Success Formula.

Leading companies know which buttons to push to win in innovation.

Leading companies know which buttons to push to win in innovation.

Methodology:
Structure The Journey

Methodology

Lean Scaleup Methodology How To

Define a suitable end-to-end process with right-sized jumps

Your company’s framework and the thinking tools to ideate, validate, and create new businesses from innovation must be effective.

They must cover the whole end-to-end journey, from idea to scaled business. However, almost every framework that we see overemphasizes the early stages. There is hardly any guidance about how to transition validated concepts to Scaling-Up and how to run Scaling-Up.

The frameworks also need to be fit to the ambition. Your company will not win in creating sizable and profitable Digital businesses if your business-building framework has an “inside-out” R&D DNA.

And finally, the heights of the jumps that separate the stages need to have the right altitude. For instance, having won the first customers is not good enough for entering Scaling-Up.

The Lean Scaleup provides the thinking tools and the Best Practices on how to design an effective end-to-end process, from idea to scale.

Validate "worthy to be scaled" in the corporate context

Ideas and concepts are cheap. Scaling-Up is expensive. Succeeding in corporate entrepreneurship requires that only “worthy to be scaled” concepts are scaled up. This does not only relate to customer willingness-to-pay, market size, ecosystem-fit, financial viability, etc. “Worthy to be scaled” also refers to the corporate context.

The corporate context shows up in every phase of the innovation journey. For example, at the very beginning, the fit of the idea with the current and future capabilities of the company is pivotal to create an “unfair advantage” from corporate assets. Later, in transitioning to Scaling-Up, the docking points to the mothership need to be identified. And finally, in Scaling-Up, the collaboration between Core’s functional experts and the scaleup is critical for de-risking and accelerating the journey.

Many companies struggle in business-building because the thinking tools (e.g., the Business Model Canvas) that their incubators and accelerators use do not factor in the corporate context enough.

The Lean Scaleup offers a comprehensive and effectively structured validation set so that your company’s great ideas can be pushed rapidly through the validation piece of the innovation journey.

Validate "ready to be scaled" and transition to Scaling-Up

Research shows that premature scaling an innovation concept is the Number One reason for failure. The statistics tell that even if a startup survives premature Scaling-Up, its revenues are smaller than those of startups that scaled up at the right point in time.

Testing “ready to be scaled” and transitioning effectively to Scaling-Up are crucial to capture the value from an innovation concept that is “worthy to be scaled.” Most companies pay too little attention to these. And so they run into time-consuming and costly loops during Scaling-Up.

By applying the Lean Scaleup framework, companies can be sure that their corporate startup is not only “worthy to be scaled” but also “ready to be scaled.” With these two validations, they can arrange transition to Scaling-Up. In this transitional phase, the Lean Scaleup provides clear guidance on what companies need to do to build a set-up for success that maximizes the chances for creating a sizable, profitable business.

Scale up product, market-making and organization

Scaling-Up is a highly dynamic part of corporate entrepreneurship. Successful scaleups need to sustain more than 200 percent annual growth rates over 3-5 years to fulfill their corporates’ expectations.

The top priorities for scaleups in this dynamic environment are advancing the product, making the market, and growing the organization.

In working with the Lean Scaleup we have found that successful scaleups advance their products via four different types of product work. They also adapt their go-to-market approach wisely to “cross the chasm” to mainstream customers and to win in the “bowling alley” of target markets. And finally, successful scaleups found the solution to grow the organization by orders of magnitude while at the same time maintaining the startup spirit.

Validate "Worth to be scaled" and "Ready to be scaled"

Ideas and concepts are cheap. Scaling-Up is expensive. Only concepts that are “worth to be scaled” and “ready to be scaled” should be scaled up.

The Lean Scaleup helps in validating if the corporate startup/venture has a solid business foundation and a robust business strategy.

It also provides the guardrails on how to design a business with scalability in mind and supports validating “ready to be scaled.”

In the technical track, the Lean Scaleup tells you how to advance the product or technology in parallel to the commercial track so that the product and the business are built at the same pace.

 

Define the pathway to Scaling-Up

There are five generic options for the organizational set-up for Scaling-Up.

Corporate startups can scale up inside an existing business unit, inside the company in a specific department (e.g., a “New Business” business unit), in a dedicated “Scaling-Up function” or outside the company, with company staff or outsourced to a “Venture Builder.”

Depending on the specific situation of the corporate startup/venture, not all pathways are equally suited. Selecting the path that offers the best chance to generate a large and sustainable new business is a crucial ingredient for Scaling-Up success.

Build the launchpad for Scaling-Up success

Turning a corporate startup with a few customers into a multimillion business within a few years means hypergrowth.

Of course, it is not possible to anticipate all the activities of Scaling-Up. But the better the mission-critical areas are defined, the higher the chance to have some stability in Scaling-Up and to get the most of the collaboration between Core and scaleup.

The Lean Scaleup provides help in identifying these areas and in developing a robust Scaling-Up plan.

Having the right funding and governance is also a key factor for Scaling-Up success. Based on the Best Practices of leading companies, the Lean Scaleup uses the same approach as the ones from the most successful Venture Capital firms.

Transition from Validation to Scaling-Up

When validation has shown that a corporate startup/venture is “worth to be scaled” and “ready to be scaled,” the transition into Scaling-up needs careful consideration.

The Lean Scaleup helps in working through the issues. Among them are, e.g., building an outstanding Scaling-Up team, pressure-test fundamental “ready to be scaled” assumptions, and establishing product ownership.

Additionally, the collaboration model for how Core and scaleup should work together during Scaling-Up needs to be defined in this transitional phase.

 

Lean Scaleup Methodology How To

Dual Leadership:
Provide Purpose and Context

Dual Leadership

Lean Scaleup Dual Leadership
Lean Scaleup Dual Leadership

Align Senior Management on the WHY, WHAT, and HOW

Long-term success requires owning the business – not only today but also tomorrow. To do this, Senior Management needs to balance the exploitation of the proven, existing business model with finding and capturing future value. This is THE Number One leadership job-to-be-done.

However, many companies have only a limited risk tolerance. Their management system overemphasizes the NOW and deprioritizes the NEW. Such a myopia prevents that the company profits from emerging value pools and puts it at risk of losing out when trends change and Digital-savvy incumbents or greenfield startups rewrite the rules of the game.

Leading companies have a clear view how the business in 3-5 years will be different from today’s business. They define meaningful initiatives and allocate funding appropriately. They provide startup-ish autonomy to the teams that explore the NEW.

And most of all: they ensure that the entire Senior Management team aligns on WHY the company needs to change, WHAT it needs to achieve, and HOW the company needs to set itself up to maximize the odds for success.

The Lean Scaleup provides a language that helps staff from both side – day-to-day business and innovation – to understand the story.

Align the scaleup with Core and corporate transformation

To de-risk and accelerate its Scaling-Up journey, the scaleup requires support from functional units of the Core. For instance, Procurement experts are needed for global sourcing and Core’s sales units for the go-to-market.

However, these resources are aligned for running the day-to-day business – they are not aligned to support scaleups. Hence, Scaling-Up milestones need to be embedded into the goal and planning systems of Core to ensure formal alignment.

This formal alignment is necessary but not sufficient to ensure Scaling-Up success. It needs to be complemented by a detailed collaboration model and provisions to support the people who are supposed to collaborate (see below) .

In our project work, we also found that many companies have not aligned their (Digital) transformation agenda with their ambition to build new businesses. For instance, Some of our clients aim at building x-as-a-service businesses – but their accounting systems and policies do not support subscription-based business models.

The Lean Scaleup provides thinking models on how to achieve these two types of alignment.

Protect the scaleup and arrange a "startup-ish" autonomy

Every company that aims to balance the NOW with the NEW faces a harsh prioritization reality. The dilemma is whether the company should fund initiatives that strengthen the core business (with a relatively small return but a high level of certainty) or invest the same amount into new businesses (with a relatively large return but a low level of certainty). This dilemma becomes apparent when there are a few bad quarters, and budget-cutting activities are necessary.

Leading companies do not fall into the trap of cutting Scaling-Up budgets. They also arrange what we call a “startup-ish autonomy”: a high level of autonomy with adequate risk management. Requiring the scaleup to follow the set of corporate rules will not work since it will slow down too much. But since the scaleup is operating in the corporate risk management context, adequate risk management must be implemented.

The Lean Scaleup provides funding mechanisms and design blueprints for a “startup-ish autonomy” of the innovation teams so that companies can master this challenge.

Build the ambidexterity mindset and nourish a blend of cultures

In too many companies, there is an “Us and Them” between the Core and the innovation units. Core staff speak of “innovation theater,” while innovation units complains that “Core does not get innovation.” It is not helpful to have these conflicts. And when a particular scaleup gets in-between a rock and a hard place, success is in danger.

Leaders create mutual understanding between the two sides, Core and scaleup. They engage in a meaningful way. And they nourish a blend of cultures – especially at transitional interfaces – instead of taking sides.

The Lean Scaleup provides a number of strategies and tactics that help leaders to evoke the “One Company” feeling among staff.

Build the ambidexterity mindset

Past success lures some people into thinking that tomorrow will be pretty much the same as today.
Most leaders are aware that tomorrow will be different from today.

They ponder a big question: Should I focus on making the numbers, often at the expense of the company’s future? Or should I prioritize longer-term strategies over quarterly and annual performance?

True leaders do both. They demand from their management team to own the business, short-term and long-term. They work with them and align them on a clear picture of where the business model and the operating model need to be in 3-5 years. They share a “picture of the future,” if you will.

They establish a clear and broadly accepted mandate for corporate innovation of what it has to deliver – and which support it will receive.

Decide on a few big bets and their growth strategy

In many large companies, a new business’s initial impact is minimal compared to the balance sheet’s size. Leadership may be inclined to use Scaling-Up’s funding instead for initiatives that promise a multiple of the new businesses’ revenues with a lower risk.

The paradox is that there is no proof that the brilliant idea can be the foundation of a billion-dollar business before someone else has built it – but then it is probably too late.

The trick is to arrange a sequence of small bets that eventually build and prove the big ambition. If, for instance, the company assumes that customer expectations are shifting towards service-centered business models, the best route for the company might be to launch corporate startups where each builds “a piece of the puzzle.”

In Scaling-Up these corporate startups, a priority decision needs to be made: Is it more important to create a new business or support Core first? Leading companies do both: they scale up their corporate startups/ventures so that Core profits first but keep an eye on building an external business – while using the Scaling-Up journey inside the company to mature the products and sharpen the value proposition.

Create a supportive environment

There is an “Us and Them” between the Core and the innovation units in too many companies. The one side speaks of “innovation theater” while the other side complains that “they don’t get innovation.” It is not helpful to have these conflicts. And when a particular scaleup gets in-between a rock and a hard place, success is in danger.

Leading companies understand this. Their leaders establish an effective “ground control” – like in the classic movie “Apollo 13”. There are three men in a small capsule, exploring new territory, running into unforeseeable problems – and NASA on the ground with all its resources and constant communication helping these men solve their problems.

Leaders create mutual understanding between the two sides, Core and scaleup. They engage in a meaningful way. And they help to find the best solutions for the harsh prioritization reality. i.e., splitting precious resources between running today’s and building tomorrow’s business.

Manage a blend of cultures

Leading companies found that three Playing Fields need to be managed concurrently to win in innovation. First, the incremental innovation space; second, the space in which radical/disruptive innovation is created and accelerated; third, the middle ground, where radical/disruptive innovations are scaled up and Digital Transformation plays out.

These Playing Fields are not just “three horizons.” They have distinctive success factors, operating models, and cultures.

Leaders who understand innovation recognize this. They nourish a blend of cultures – especially at transitional interfaces – instead of taking sides. For instance, they encourage the interaction between staff from the various cultures, and they also encourage secondments from Core into scaleups.

Culture & Collaboration:
Unleash People to Do The Extraordinary

Culture & Collaboration

Lean Scaleup Collaboration

Define right people profiles, arrange empowered teams

To generate business impact from innovation, your company needs the right teams at every stage. Clarity on which types of people are needed at which stage is essential for success.

In the early stages, the team needs to engage in a collaborative and constantly evolving environment to discover and solve ambitious problems. The team members need to be insight-driven (not process-driven), customer-obsessed, experiment- and data-driven, and be able to find their way in an ambiguous environment while working on the “affordable loss principle.”

In contrast, Scaling-Up requires people who love to take action, are more “implementers” than “conceptualizers,” and are entrepreneurial and driven by building the new business. These are people who enjoy the permanent race against the clock in a highly dynamic environment. They deliver and at the same time build scalability into the system.

The company needs to arrange a “startup-ish autonomy” (see above). But the teams need to seize this entrepreneurial freedom and run with it.

The Lean Scaleup has the thinking models to select the right teams and help them to live up to their entrepreneurial role.

Ensure that teams have the required capabilities

Finding, validating, and scaling new businesses require almost inevitably capabilities that the company and the innovation team members do not possess.

As stated above, teams need to be empowered to work through the issues at a pace. But the company also needs to ensure that the issues the teams are working on are relevant and comprehensive and the quality of findings and decisions is high.

Hence, the company needs to ensure that the innovation teams have the right profiles and additionally a comprehensive capability set.

The Lean Scaleup framework helps to analyze the capabilities that needs to have (or need to embed). 

Ensure that startups have a validation culture and scaleups a growth culture

Almost every company has a framework for validating concepts for new businesses. Most of these frameworks are not complete. And too many teams work through their company’s framework in a “tickbox exercise” mode. They are more interested in showing progress than diving deep to find real problems and optimal solutions. Consequently, many companies try to build new businesses on wrong assumptions – which inevitably will lead to disappointing results.

CXOs of scaleups need to create a growth culture to support them in the race against time and stakeholders’ expectations. In a growth culture, people build their capacity to see through blind spots; they acknowledge insecurities and shortcomings rather than unconsciously act them out; they spend less energy defending their personal value to have more power available to create the company spirit and the external value. In scaleup organizations, how people feel — and make other people feel — becomes as important as how much they know.

Lean Scaleup helps to ensure that teams have the right culture.

Ensure a productive collaboration between Core and scaleup

Accelerating and de-risking Scaling-Up requires a productive collaboration between functional experts from Core and the scaleup. Alignment, as described above, is a necessary condition to achieve this. But it is not sufficient. Individual people need to collaborate. And almost everywhere, Core’s people tick very differently than scaleup people. For instance, the former think in annual plans and avoiding risks, whereas the latter think in bi-weekly Sprints and experiments.

This friction needs to be managed and mitigated. Leading companies understand this. They see the collaboration between Core and scaleup not as a necessary evil but also as an opportunity.

Because every scaleup has two functions. The first, explicit one is to generate business impact. The other, a more subtle one, is to be a vehicle for transforming the Core’s culture.

Heads of Organizational Developers, HR and Digital Transformation in leading companies are aware of this. They help organize support for the scaleup – but expect to return the scaleup to support them, as a case in point, in their corporate change agenda.

The Lean Scaleup helps companies to arrange a productive collaboration between Core people and scaleup people and to embed corporate entrepreneurship into a bigger transformation context.

Align Core and scaleup

The “corporate antibodies” that eat away innovation are deeply rooted in the KPIs which measure Middle Management and functional experts’ performance. These metrics govern Core’s day-to-day operations and plans – but they do not foster innovation.

Hence, to build a solid launchpad for Scaling-Up success, the scaleup needs to be integrated into Core’s planning systems and their associated KPIs. Middle Managers and functional experts need a tangible reason why they should support the scaleup.

Having this formal alignment in place is necessary but not sufficient.  Additionally, Middle Management and functional experts on the one side and the people from the corporate scaleup on the other side need to define the “partnership balance.” The resulting agreement should spell out each side’s benefits and the individual contributions and risks during the Scaling-up journey. It should also state how customers profit from the Scaling-Up partnership between Core and the scaleup.

Often, this discussion is a powerful tool to align both sides.

 

Create a productive culture and workstyle

When Middle Managers and functional experts meet the people from the corporate scaleup, two different cultures meet. On the one side, there is a process- and efficiency-driven culture with predictability and zero mistakes as top values. On the other side, there is an agile, entrepreneurial culture.

To accelerate the Scaling-up journey, a psychologically safe space for mixed teams with people from both sides is needed. This is particularly relevant when the scaleup establishes a new business model or even replaces the existing one or when there are other potential conflicts, e.g. sales channel conflicts.

Additionally, a productive work style needs to be designed and agreed as well – it does not come by itself. Typically, at the beginning of Scaling-Up, this is a more Sprint-oriented style of work, whereas in later stages this is a more functionally-driven one with overarching OKRs (Objectives and Key Results).

Manage hypergrowth, create a growth culture

Managing a hypergrowth business with a CAGR of 80 percent or more is not an easy task. Only a few successful serial entrepreneurs know how to do this. So typically, the leaders of such rapidly scaling Emerging Business Opportunities need guidance to master the challenge.

Some fundamental pieces are: being clear on what the scaleup needs to achieve until the next milestone; having transparency on the critical (non-financial) KPIs they need to master and the decisive levers; running a hypergrowth business while at the same time invest in more scalability; lean and agile management to advance the whole scaleup at pace, with constant prioritization.

Leaders of scaleups also need to create a growth culture to support them in the race against time and stakeholders’ expectations. In a growth culture, people build their capacity to see through blind spots; they acknowledge insecurities and shortcomings rather than unconsciously act them out; they spend less energy defending their personal value to have more power available to create the company spirit and the external value. In scaleup organizations, how people feel — and make other people feel — becomes as important as how much they know.

 

Support cultural assimilation Core / Innovation

Every corporate scaleup has two functions.

The explicit one is to generate business impact. The other, a more subtle one, is to make support the transformation of the Core’s culture.

When this interface between the company’s “Run the business” and “Change the business” parts is functioning well, a virtuous can emerge: more openness and innovation capabilities generate more innovative ideas, and these create more openness towards innovation and innovation capabilities.

Heads of Organizational Developers, HR and Digital Transformation in leading companies are aware of this. They help organize support for the scaleup – but expect to return the scaleup to support them, as a case in point, in their corporate change agenda.

Lean Scaleup Collaboration

The References.

Companies that co-created / work with The Lean Scaleup™ framework.

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On a regular basis we share insights about the Lean Scaleup, how it is applied and the results being achieved.

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The References.

Companies that co-created / work with The Lean Scaleup™ framework.

Tell me more!

On a regular basis we share insights about the Lean Scaleup, how it is applied and the results being achieved.

Sign up to get these insights delivered straight to your inbox.

  • This field is for validation purposes and should be left unchanged.

The Time To Act Is Now.

The Time To Act Is Now.

Scaling-Up excellence is not an option – it’s a must.

Scaling-Up excellence is not an option – it’s a must.

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The Lean Scaleup™ Works.

The Lean Scaleup™ Works.

It addresses the pivotal points of the corporate Scaling-up problem.

It addresses the pivotal points of the corporate Scaling-up problem.

Toolbox

Before the Lean Scaleup, there was no solid methodology on how to validate “Worth to be scaled” and “Ready to be scaled” in a corporate context.

The Lean Scaleup is also the first framework that addresses Scaling-up planning, funding, governance for corporate startups.

Toolbox

Before the Lean Scaleup, there was no solid methodology on how to validate “Worth to be scaled” and “Ready to be scaled” in a corporate context.

The Lean Scaleup is also the first framework that addresses Scaling-up planning, funding, governance for corporate startups.

Focus

There are many other approaches that focus on the early stages of innovation, i.e. ideation and incubation.

Up so far there has not been a framework that focuses on Scaling-Up – The part which decides if your company’s innovation is a costly hobby or if it generates business impact.

Focus

There are many other approaches that focus on the early stages of innovation, i.e. ideation and incubation.

Up so far there has not been a framework that focuses on Scaling-Up – The part which decides if your company’s innovation is a costly hobby or if it generates business impact.

People

If a corporate startup wants to create business impact, it needs to establish an unfair advantage in the marketplace. To do so, an intelligent and effective collaboration between the Core and the scaleup needs to be established.

All frameworks that came before the Lean Scaleup™ missed this aspect.

People

If a corporate startup wants to create business impact, it needs to establish an unfair advantage in the marketplace. To do so, an intelligent and effective collaboration between the Core and the scaleup needs to be established.

All frameworks that came before the Lean Scaleup™ missed this aspect.

Let’s Talk.

Let’s Talk.

What is the biggest issue that you want to have solved?

What is the biggest issue that you want to have solved?

  • This field is for validation purposes and should be left unchanged.