07 Dec. 2017 | Comments (0) Share Follow @Conferenceboard
Can a large incumbent company rediscover how to act like an agile start-up?
I believe the answer is yes, though success depends largely on another question: Can the executive team learn to get out of the way?
Behaving like an agile start-up implies speed, a sharply defined mission, and a deep understanding of customers. Those qualities allow a company to consistently formulate the right strategy and execute it cleanly—but also to pivot decisively when conditions change.
Big companies generally don’t act this way, and neither do their leaders. The complex organizations they’ve built to capture the advantages of scale slow them down and dull their reactions. Internal issues and processes muffle the voice of the customer. Divisional politicking fragments the sense of mission. There’s too much planning and not enough doing.
When companies do find a way to recapture the insurgent energy of a start-up, it’s usually because leadership has emphasized two things. The first is clarity. Ask what their mission is and they can tell you in a sentence, ticking off on their fingers the three or four distinctive capabilities that ensure its execution. The second is focus. Starting with a bold strategy, they pick specific battles that must be won and then design initiatives to attack potential failure points—the game-breaking issues that stand in the way of success.
At Bain, we call these initiatives “micro-battles” and believe they are a powerful tool for fighting back against the complexity that slows companies down when trying to implement strategy. Though they may sound like an exercise in micromanagement, they are actually the opposite. Leaders of these companies work relentlessly to focus the enterprise on their strategy’s biggest potential challenges, but they delegate solving these issues to small, cross-functional teams of specialists drawn from across the company. That forces the action closer to the customer, dials up speed, and begins to break down bad corporate habits that have accumulated over time.
Micro-battle teams use agile ways of working to achieve narrowly focused missions, not sweeping divisional priorities. They have the authority to make rapid decisions rather than shop approvals up the line. Their objective is always to get a basic prototype, or “minimum viable product,” in front of customers as quickly as possible. They can then test it, learn from it and devise a new prototype in rapid, iterative cycles based on real-world customer data.
Micro-battles are all about using these fast test-and-learn cycles to innovate—developing new products, opening new markets, figuring out better ways to do things. They also shed valuable light on the corporate behaviors, cultural habits, and complex processes that cut down innovation in its tracks. Building a winning prototype that incorporates both kinds of learning is the first aim of the micro-battle team. But the solution can start to be transformational if the team can turn that prototype into a repeatable model that can be rolled out across the organization.
Needless to say, trusting teams with this kind of responsibility doesn’t come naturally for many top executives. Most leaders, in fact, have been trained not to trust those around them. Their default mode is to second-guess, to challenge, to assume they know better. Rather than solve the specific, their impulse is to broaden the inquiry, which only makes problems bigger.
Even leaders who embrace the micro-battle concept have trouble breaking old habits. One global logistics company CEO, for instance, launched a series of micro-battles in a bold effort to shake up a tired organization and implement a new strategy. The company staffed the battles with 20 of its biggest stars and set them free to start building prototypes. When the teams and top management gathered a month later to talk progress, the CEO showed up late and was clearly distracted. Ordinarily, this would have been a golden opportunity to exercise new coaching muscles and build up team confidence. But that didn’t happen. Instead, the CEO asked: “So whose idea was this thing?”
“Well, actually, it was yours,” answered one deflated micro-battle leader. “Three weeks ago, you asked me to lead what you said was one of your most important priorities.”
Changing leadership behaviors like this is a major part of making micro-battles work. It means standing the typical large-company approach on its head. Instead of creating enterprise-scale solutions at the center and pushing them down through the organization, leaders rely on teams of front-line stars to find solutions that actually work in the real world and then help them clear a path to broad corporate adoption. Leaders set strategy. They make the hard decisions about which micro-battles to fund and at what level. But their most important role is coaching, mentoring, and breaking through the inevitable big-company organizational hurdles that would otherwise block progress. This typically requires a period of behavior modification as leaders buy into moving decision making closer to the front line. But if leaders set the right course and deploy the right people, it should be easy to trust that their teams will deliver the goods.
More than anything else, companies that act like insurgent start-ups know how to get things done. They have finely tuned radar for what customers want and are relentless in delivering it quickly. The most effective micro-battles are set up as microcosms of the fast-moving, strategy-driven insurgent you want to become. Given the chance, that energy will grow and spread across a large organization. The biggest challenge for leadership is stepping back and letting it happen.
This blog first appeared on Harvard Business Review on 11/16/17.