Organizations across industries are setting up startup teams. They’re sometimes called innovation teams or skunkworks projects. Many of these teams are missing a critical piece of the puzzle: The Executive Sponsor.
If you’re part of a big organization’s innovation team, the Executive Sponsor is your fairy godmother. Most teams need to either find one or train up the one they have. Here’s what they do, in a nutshell:
- Provide executive air cover
- Hold the team accountable to learn what’s most important to learn
1) Executive Air Cover. It’s not about funding and aligning all the roadmaps.
First, let’s talk about executive air cover. Think of this as helping make exceptions for your team’s unorthodox requests.
Companies over 20-years-old are set up to execute well at scale. The structures and processes within big companies hinder the pace of learning for startup teams. Your sponsor is there to help you. For instance, consider this scenario (based on true stories)…
A startup team within a durable goods company has a new product idea: A refrigerator that knows when your food is going to go bad, and then suggests new food items for your family. The team is charged with determining if this product idea is worth investing in. To do so, they need to learn a few things. Things like:
- Does anyone have pain around food going bad, or what to buy next?
- Are there enough people with this pain to sustain a business?
- Does our product idea solve that pain well enough?
- Can we get the distribution partners we need at the price point that works?
To find out the answers to these questions, the startup team needs to work outside of normal channels and processes. The normal channels are designed for execution at scale and are much too slow for answering questions like this. They’re optimized for throughput and focus on aspects other than what the startup team needs to learn. It’s the wrong tool for the job.
Here is how that scenario is likely to play out (based on true stories)…
This startup team wants to see if people have a problem with food going bad and what food to buy next. If they can talk to a handful of prospective customers, they expect to see many of them have this problem. And if very few do have this problem, they will know right away not to invest in the idea as it is today. They feel 10 people will be enough for this important gut check.
Someone on the team recalls a focus group last month with people who would be great prospects. So the team reaches out to the marketing department to see if they can get some names from last month’s focus group.
The marketing department sends them to the contact person for this sort of thing. And she promptly sends the team the form for setting up focus groups. After explaining to 3 people to no avail that they simply need 10 names, the team realizes it might be faster just to set up a new focus group!
So they begin the paperwork and quickly discover that in order to set up a focus group, the team needs to have a product charter. To have a product charter, they need an approved idea that’s been vetted on certain success criteria (IP, price, performance, weight specifications). The team is now stuck after spending the better part of a week trying to get a handful of names!
It’s easy to see how our startup teams can spend significant time explaining themselves. Explaining why you’re not crazy is the primary activity of teams attempting to innovate in an enterprise. And this is exactly how many teams are undone. They are perceived as trying to take short-cuts, cut corners, or as just ‘not-getting it’. They are turning heads… and not in a good way.
Imagine if it played out this way instead (also based on true stories)…
When the startup team sees they’re expected to request a new focus group, they reach out to their Executive Sponsor right away.
The Executive Sponsor, well aware of the normal charter process, immediately sees the problem here. She picks up the phone and talks with the marketing manager to see if there’s any real problem with grabbing 10 names off of last month’s focus group list.
She explains “It’s not the way we normally do things, but we need to make an exception here to check our gut before going further.” And the marketing manager forwards a list of contacts to the team. They are on their way to learning something crucial about their product idea!
Working by exception is a great way to start growing entrepreneurial capabilities within the organization. Eventually, companies will need to support startup teams as a norm and not as an exception.
2) Accountability. It’s not about making sure the product succeeds.
Now let’s talk about accountability. Startup teams are charged with determining if a product or business idea is worth investing in. To accomplish that goal, they need to systematically learn what it will take for that product or business to succeed. This is called validated learning.
When startups refer to ‘running experiments’ they are talking about validated learning. Validated learning is the practice of gaining insights based on real evidence. Startups put an early product (MVP) in front of the customer and measure their actions in response to it. And then use that feedback to direct their product plans. That’s it. To be sure, many times the product plan becomes, “Whoa, let’s not do this product at all.” In fact, it’s essential to have a healthy kill-rate on your ideas.
Executive Sponsors need to be in the loop about what is most important to learn right now. And they need to hold teams accountable for learning those things. Sponsors and teams meet briefly and as often as needed to make pivot-or-persevere decisions based on validated learning.
Be aware of this common misconception: Validated learning is not about uncovering how to make the product succeed in the market. Because you can’t actually do that. As Erika Hall, co-founder of Mule Design Studio, tells us, “you don’t get to determine under which circumstances your product will succeed”. Rather, validated learning is about discovering if it can succeed under the existing market conditions. This is a simple but critical distinction.You don’t get to determine under which circumstances your product will succeed. Click To Tweet
The Executive Sponsor helps the startup team learn fast by providing executive air cover. And then holds them accountable to what they’ve learned. That’s how teams truly discover whether the product or business idea is worth investing in.
Here’s what you need in an Executive Sponsor:
- The Executive Sponsor is someone senior enough to clear roadblocks (and has the moral authority to do so), but not so senior that they cannot meet with the team.
- The Executive Sponsor is someone who is in touch with the mission of the team. That mission is something they care about and is linked to their business unit (hence the moral authority comment).
- The Executive Sponsor must be willing to gain a basic understanding of how validated learning works. Validated learning is simply making product and business decisions based on evidence.
There are plenty of startup teams in large companies doing the work without an Executive Sponsor, and they are feeling the pain. These teams are doing very noble (and largely thankless) work. They do it because they believe in the company. And they want to get to value faster with less waste.
Thanks to Andi Plantenberg for contributing this piece. If you seek to bring the entrepreneurial spirit to your organization, Lean Startup Co. can help.