It touched a nerve for me personally. In the 90s I ran a computer games company. We didn’t know if a game would be successful until it was released so there was a lot of emphasis on careful design, testing and big brands grab buyers’ attention. We ended up doing games for LEGO, Hasbro and using licences from FIFA, PGA and FIA. It was an expensive business.
The problem was that our projects might take a large team 12-18 months to finish. Because we were locked into these big projects for so long, our ability to learn and change direction was severely limited. It was risk-averse, fault-intolerant and inflexible. To put it another way, it was not an environment that could have produced Angry Birds.
Of course, 20-20 hindsight is a wonderful thing. But I suspect that the problems I had back then are being repeated in IT departments right now.
Since I sold my games company in 2000, I have taken a different approach. Instead of big projects, big teams and big bets, I have tried to operate in a more agile, lean-startup way. I started a marketing company which does great work for great clients. I also started an online business which is now growing rapidly. This is my experience from both sides of the ‘lean’ debate.
- Start small. At the moment, I’m incubating two new businesses, a training company and a neat online utility that makes a popular online project management tool much more usable. Taking the minimum-viable product approach means, in these two cases, spending less than £2,500 each to build a working prototype or website. Starting small doesn’t mean staying small forever. It’s about managing risk and reducing the cost of innovation.
- Agile management. Specifications and plans are very alluring but they can obstruct progress rather than help it. Agile development, as practiced by Pivotal Labs and others, match the lean startup approach very well. By accepting that it isn’t possible to know everything when you start and embracing feedback, this approach makes it much easier to evolve and helps to lift the dead hand of bureaucracy from project management.
- Outsourcing and offshoring. I used to have a big building full of techies and I can remember signing the pay cheques and rent cheques. Ouch! Now, I have a small core of full-time employees, an offshore team of developers and a roster of tried-and-tested contractors. We work virtually and this lets me use the best people wherever they are based without the overhead costs of a fixed base. It also gives me the flexibility to shift resources from one project to another, match costs to revenues and scale up quickly if I need to.
- Portfolio management. Over the past 12 years I’ve killed a couple of businesses that I started, including one that let actors build portfolio sites to promote their careers (it’s a long story!) and an online employee appraisal tool. At the same time, I’ve doubled down on projects that worked, attracted customers and solved real problems for them. I don’t like bet-the-business projects. I prefer to take a dispassionate VC approach to a portfolio of opportunities: pruning here and investing there based on performance rather than unreliable intuition.
Netflix’s corporate culture presentation (described by Sheryl Sandberg as ‘the most important document ever to come out of the Valley’) explains why companies become less innovative as they grow. As departments and responsibilities increase, they believe that the antidote to risk is ever-increasing control, procedures and process. But this drives out talent and suppresses innovation. As Netflix’s experience and Eric Ries suggest, a lean approach to innovation is a better choice. With good people, good management and a trusting culture of creativity and self-discipline, it can be incredibly powerful.
This article, by our CEO Matthew Stibbe, was first published on the The Business Value Exchange from HP, CIO Magazine and IDG.