Ken Durand, Ericsson, @atlideafactory With all of the success of Lean in the startup community, this should be pretty easy to implement in the Corporate environment, right? After launching with very little to show in the way of success, the team in Ericsson’s Atlanta Idea Factory had to take a step back and evaluate what changes were necessary to implement Enterprise Lean Startup with success. One key principle had to be learned… People are an organization’s greatest asset, AND its greatest barrier to success.

1. Enterprise Lean Startup
Adjusting for Success

2. I expect this crowd to be much different than normal!
Let’s take a test

3. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 3
A new long term business idea is presented to you. It sounds very promising and
the team is certainly very enthusiastic. Additionally, they have a
background/history that indicates that they might be right about this.
Unfortunately, the outcome is uncertain. What do you do?
A. The team should put together a business plan / business model canvas to
determine if we could make enough money for this to work.
B. Since the idea is interesting, we should commission a market research study
to determine if this market is viable.
C. Sometimes you just need to get started, so let’s get going.
D. We need to understand if this is technically doable or not, so let’s do some
R&D work to determine the feasibility.
Question #1

4. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 4
Management Consultants have given us a set of potential new areas in which to
develop business opportunities over the next 5 to 10 years. We should…
A. Decide which area can be developed with minimum expenditure of resources
such as time, effort, and money.
B. Analyze the market and choose target segments with the highest potential
return on investment.
C. Determine the segments that are most closely aligned with our current
strategy.
D. Develop Proof of Concept ideas for display at trade shows and solicit
customer feedback.
Question #2

5. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 5
From our competitive analysis research, we have determined that our current go
to market approach (including sales, incentive plans, customers, and technology)
will not be acceptable to reach a new and targeted area; even though the
potential revenue is very promising. We should…
A. Step back and look for other alternatives to get to our targets that take
advantage of current strengths.
B. Press forward anyway knowing that we can influence this new market due to
our history, expertise, and resources.
C. Complete a proof of concept with one of our current customers to determine if
we can move forward viably.
D. Find a go to market partner(s) that can fill our sales, incentive, customer, and
technology gaps.
Question #3

6. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 6
A new business concept that we are working on with our customers has
discovered an odd situation. In a focus group, the end users have determined
that they do not like our product offering. In fact, they said they would not want it
in their home. What should we do next…
A. It’s only one focus group, so let’s analyze the questions we asked.
B. Pause the project. Obviously we missed the mark, so let’s broaden our
research to include a better cross section of potential customers.
C. Nothing. Surprises are expected. Learn from it and move on.
D. Stop. If the end customer does not want this at all, we are wasting our time
and money resources to continue working on this.
Question #4

7. We’ll come back to this later
Test results

8. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 8
Understanding the Situation
Invention
• Over 27K patents
• Over 25K
employees in
R&D
Execution
• 118K employees
doing business in
180+ countries
• World class Services
organization
• High Customer
Satisfaction Ratings

9. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 9
Understanding the Situation
Invention
• Over 27K patents
• Over 25K
employees in R&D
Execution
• 118K employees
doing business in
190+ countries
• World class Services
organization
• High Customer
Satisfaction Ratings
Which Ideas are worth executing??

10. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 10
Understanding the problem
Organizational
• Structure
• Technology led
• Communication
• Politics & Bureaucracy
Process
• Built to Execute
• Strategy alignment
• Risk aversion
• Incentive structure
Are these the key issues blocking
authentic transformation??

11. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 11
Real transformative Innovation?

12. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 12
Let’s get on the same page
› Company has adopted the HBR
Innovation Matrix philosophy
› Lean Equates these to Horizons
– Horizon 1 = Core
– Horizon 2 = Adjacent
– Horizon 3 = Transformational
› Innovation can and does happen in ALL
horizons, but TRANSFORMATIONAL
innovation is in Horizon 3
HBR: The Innovation Ambition Matrix © May 2012

13. Why do we believe that the same
people and processes used to
execute Horizon 1 objectives can
be used to govern Horizon 3
transformation?

14. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 14
The first KEY is all
about how we think
Horizon 3 must be different
› 2008 University of Virginia
– Darden School of Business
– 2014 Copenhagen Business School
› Study of Entrepreneurs with >$250M
› MBA Graduates control group
– Ages 25 to 45

15. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 15
›Entrepreneurs THINK differently than
most everyone else!
›Their dominant thinking style is
Effectual Reasoning
The Outcome?

16. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 16
› Causal - We can predict the future, therefore we can control it.
› Effectual - We can control the future, therefore we do not need to predict it.
Causal vs. Effectual Reasoning
Traditional Thinking (Causal)
Distinguishing Characteristic
Selecting between given means to achieve a pre-determined goal
Entrepreneurial Thinking (Effectual)
Distinguishing Characteristic
Imagining a possible new end using a given set of means
GIVEN MEANS
GIVEN
GOAL
IMAGINED
ENDS
GIVEN MEANS
M1
M2
M3
M4
M5
M1
M2
M3
M4
M5
› 81% of MBA Graduates were Causal Thinking dominant
› 89% of Entrepreneurs were Effectual Thinking dominant
© 2012 Society for Effectual Action

17. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 17
Best case - Illustrated
Emotions
Results
Deliver the Goal
Causal
CAGR
Results
Emotions
Change the World
Effectual
CAGR?

18. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 18
› I need a CAT to be successful
› Where the picture of the cat is the
goal and the puzzle box are the
means to achieving that goal
Causal Reasoning

19. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 19
› I need a CAT to be successful
› The LEGO box is my means
› The end is left up to my imagination
Effectual Reasoning
© 2015 The LEGO Group

20. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 20
› Causal Process
– Idea
– Market research
– Financial projections
– Form a Team
– Business plan
– Funding
– Prototype
– Product Management
– Marketing & Business Development
– Go to market
› 81% of MBA Graduates were Causal Thinking dominant
› 89% of Entrepreneurs were Effectual Thinking dominant
Effectual Reasoning
› Effectual Process
– Personal competencies & dreams
– Target customer within personal network
– Idea
– Form a Team
– Value Proposition
– Partner
– Test guesses until you find one that works
– Prototype
– Funding
– Go to market

21. Let’s score the test!

22. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 22
Principles of Effectual Thinking
Bird in Hand Principle - Start with your means rather
than wait for the perfect opportunity. Start taking action,
based on what you know now.
A new long term business idea is presented to you. It sounds very promising and the team is certainly very
enthusiastic. Additionally, they have a background/history that indicates that they might be right about this.
Unfortunately, the outcome is uncertain. What do you do?
A. The team should put together a business plan / business model canvas to determine if we could make
enough money for this to work.
B. Since the idea is interesting, we should commission a market research study to determine if this market
is viable.
C. Sometimes you just need to get started, so let’s get going.
D. We need to understand if this is technically doable or not, so let’s do some R&D work to determine the
feasibility.
+5
+2
-5
-2
© 2012 Society for Effectual Action

23. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 23
Principles of Effectual Thinking
Affordable Loss Principle - Set affordable losses and
evaluate opportunities based on whether the downside is
acceptable, rather than on the attractiveness of the
predicted upside.
McKinsey has given us a set of potential new areas in which to develop business opportunities over the
next 5 to 10 years. We should…
A. Decide which area can be developed with minimum expenditure of resources such as time, effort,
and money.
B. Analyze the market and choose target segments with the highest potential return on investment.
C. Determine the segments that are most closely aligned with our current strategy.
D. Develop Proof of Concept ideas for display at trade shows and solicit customer feedback.
+5
+2
-5
-2
© 2012 Society for Effectual Action

24. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 24
Quilt Principle - Form partnerships with people and
organizations willing to make a real commitment to jointly
creating the future with you.
From our competitive analysis research, we have determined that our current go to market approach
(including sales, incentive plans, customers, and technology) will not be acceptable to reach a new and
targeted area; even though the potential revenue is very promising. We should…
A. Step back and look for other alternatives to get to our targets that take advantage of current
strengths.
B. Press forward anyway knowing that we can influence this new market due to our history, expertise,
and resources.
C. Complete a proof of concept with one of our current customers to determine if we can move forward
viably.
D. Find a go to market partner(s) that can fill our sales, incentive, customer, and technology gaps.
+5
+2
-5
-2
Principles of Effectual Thinking
© 2012 Society for Effectual Action

25. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 25
Lemonade Principle – Leverage contingencies
Embrace surprises that arise from uncertain situations,
remaining flexible rather than tethered to existing goals.
A new business concept that we are working with our customers has discovered an odd situation. In a focus
group, the end users have determined that they do not like our product offering. In fact, they said they would
not want it in their home. What should we do next…
A. It’s only one focus group, so let’s analyze the questions we asked.
B. Pause the project. Obviously we missed the mark, so let’s broaden our research to include a better
cross section of potential customers.
C. Nothing. Surprises are expected. Learn from it and move on.
D. Stop. If the end customer does not want this at all, we are wasting our time and money resources to
continue working on this.
+5
+2
-5
-2
Principles of Effectual Thinking
© 2012 Society for Effectual Action

26. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 26
-20
Effectual
Causal
+20
What is your dominant style
› 81% of MBA Graduates were Causal Thinking dominant
› 89% of Entrepreneurs were Effectual Thinking dominant

27. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 27
Exploration
vs.
Administration
Effectual thinkers are explorers
› Exploration is a mindset imparted to the individual at
birth, so explorers are discovered…not created
› Explorers are regularly marginalized and “drummed
out” of the organization by administrators
› Incredible willingness to be comfortable with the phrase
“I don’t know” (loves ambiguity; life in the grey areas)
› Embrace change every minute…BUT, not stupidly
sailing about without a plan
› Willing to “burn the ships”…exchange the knowable for
the unknowable
› A lifetime of uncertainty needs to be incentivized
differently

28. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 28
› Horizon 3 objectives are BEST run by
Explorers
› If you have Explorers, the idea is LESS
important than the team.
› Not ONLY Explorers on the team
What should we learn?
HBR: The Innovation Ambition Matrix © May 2012

29. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 29
Two years of Projects and Workshops in the Idea Factory
› Enterprise Culture is at the center of success
1. The Enterprise struggles with failure
2. The right team is more important than the perfect idea
3. Culture does not support chaos
4. Small victories are easily ignored
Enterprise Key Learnings

30. ATL Idea Factory: Enterprise Lean | Public | © Ericsson AB 2015 | October 2015 | Page 30
Exploration
vs.
Administration
The Key Principles
Chaos
vs.
Process
Facts
vs.
Opinions
Minimum
Viable
Product
Smallest
Viable
Market