The Lean Enterprise: How Corporations Can Innovate Like Startups

Chapter 3

Corporate Structure

Large companies often try to innovate within the existing corporate structure. It rarely works. The limitations on what can be accomplished cascade from the executive imagination down to the rank and file, affecting every aspect of product development and marketing. We frequently work with innovation teams that aren't allowed to talk with customers, can't allocate funds without approval from the comptroller, or can't risk failure without endangering their jobs. We've heard leaders at American Express say, “We can't do this because it would put us head-to-head against Intuit.” We've heard their counterparts at Intuit say, “We can't do that because it's not what Intuit is good at.”

The constraints of resource dependence, legacy competencies, and brand identity are deadly to creativity and risk-taking. An enterprise that seeks to be innovative must find a way to escape them. Otherwise, it will never match the kinds of innovations that pour out of the idea factories of Silicon Valley, New York, Boulder, Seattle, and Boston.

The ability to innovate must be built into the fabric of an organization. Innovation teams shouldn't have to think about how to navigate the corporation to get ideas approved or resources allocated. If they have to do that, they've lost the war before a shot has been fired.

The goal of producing disruptive innovations demands a new organizational structure. Existing products, customers, markets, and competitors are irrelevant to the ...