Does Lean work at big corporations?

by Ashvini Thammaiah

As someone who’s not going to spend much time at a startup in the near future, I find it interesting to think about how well Lean methodologies can be applied at big corporations.  From my experience at larger companies and my understanding of the methodologies, I think it would be difficult to implement Lean methodologies well given the current systems in place at larger companies.

Product Development
Large corporations may try to apply the iterative short work cycles of the Agile methodology in their product development.  However, the decision making processes at large corporations severely mute the power of this methodology.  Given the financial planning systems and the need to product quarterly results, large corporations tend to be risk averse and resist deviating from plans made during their annual planning period.  Any changes that are attempted go through numerous meetings to get buy in from all the different key decision-makers across divisions.  Just the mere delays brought about by the amount of time it takes to get the players in the same room, can cause the product development to slow down.  

Unlike startups, employees at large corporations tend to have more of a fixed salary compensation structure rather than one heavily dependent on equity so employees may not be as aligned with the needs of the company as they would be at a startup.  Also, since big corporations tend to be more stable than startups, there may be a feeling that an employee’s individual work doesn’t have a significant impact on the overall sustainability of the company given the sheer size of the corporation (free-rider problem).  Finally, since most people who come from other companies will be used to traditional corporate budgets, they may not be scrappy with resources.  Thus, the incentives and cultures at big corporations are different than those at startups and so may attract people who aren’t as effective with being lean.  

Customer Interaction
While many large corporations do surveys and talk to current customers, it’s tough for them to use more accurate information gathering methods, such as smoke tests.  Large companies have to be concerned with their image and the effect that any actions may have on their existing business.  To get around this, companies can ask their employees to test out new products but that can lead to imperfect information.  An example of this is Google Buzz failing with mainstream consumers even after being tweaked in Google’s Sandbox.  Also, given that many firms have established sales divisions, talking to customers directly can be difficult.  If the sales team is involved, additional time and effort is expended coordinating additional people.  However, if they are left out of the conversation, it can be seen as stepping on their toes.

While large corporations have much they could benefit from the Lean methodology, I don’t think that most will be able to implement it in an effective manner without changes to how they run their business currently.  Given the challenge, it seems like some companies are creating separate internal innovation groups or investing in startups, which can be more lean given their independence from the large corporation.