- U.C. Berkeley, Haas Business SchoolLecturer, 2002 - present
- Stanford UniversityLecturer, 2005 - present
- California Coastal CommissionCommissioner, 2007 - 2013
You fix technical debt by refactoring, going into the existing code and “cleaning it up” by restructuring it. This work adds no features visible to a user but makes the code stable and understandable.
While technical debt is an understood problem, it turns out startups also accrue another kind of debt – one that can kill the company even quicker – organizational debt. Organizational debt is all the people/culture compromises made to “just get it done” in the early stages of a startup.
Just when things should be going great, organizational debt can turn a growing company into a chaotic nightmare.
Growing companies need to understand how to recognize and “refactor” organizational debt.
After seeing the results of 500+ teams through the I-Corps, the NSF now offers all teams who’ve received government funding to start a company an introduction to building a Lean Startup.
Here’s Edmund’s description of the I-Corps Lite program.
Here’s his story.
I hadn’t heard from Roberto in awhile and when we caught up, it was clear his initial optimism had faded. I listened as Roberto listed the obstacles to the new innovation program at Sprocket, “We’ve created innovation teams in both the business units and in corporate. Our CEO is behind the program. The division general managers have given us their support. But the teams still run into what feel like immovable obstacles in every part of the company. Finance, HR, Branding, Legal, you name it, everyone in a division or corporate staff has an excuse for why we can’t do something, and everyone has the power to say no and no urgency to make a change.”
Roberto was frustrated, “How do we get all these organizations to help us move forward with innovation? My CEO wants to fix this and is ready to bring in a big consulting firm to redo all our business processes.”
Bob summarized Acme’s impediments to innovation. “At our company we have a culture that fears failure. A failed project is considered a negative to a corporate career. As a result, few people want to start a project that might not succeed. And worse, even if someone does manage to start something new, our management structure has so many financial, legal and HR hurdles that every initiative needs to match our existing business financial metrics, processes and procedures. So we end up in “paralysis by analysis” – moving slowly to ensure we don’t make mistakes and that everyone signs off on every idea (so we can spread the collective blame if it fails). And when we do make bets, they’re small bets on incremental products or acquisitions that simply add to the bottom line.”
Bob looked wistful, “Our founders built a company known for taking risks and moving fast. Now we’re known for “making the numbers,” living on our past successes. More agile competitors are starting to eat into our business. How can we restart our innovation culture?”
What Drives Innovation?
I pointed out to Bob the irony – in a large company “fear of failure” inhibits speed and risk taking while in a startup “fear of failure” drives speed and urgency.
If we could understand the root cause of that difference, I said, we could help Acme build a system for continuous innovation.
“We’re at 70 people, and we’ll do $40 million in revenue this year and should get to cash flow breakeven this quarter. ” It sounded like he was living the dream. I was trying to figure out why we were meeting. But then he told me all about the tough decisions, pivots and firing his best friend he had to do to get to where he was. He had been through heck and back.
“I made it this far,” he said, ”and my board agreed they’d bet on me to take it to scale. I’m going to double my headcount in the next 3 quarters. The problem is where’s the playbook? There were plenty of books for what to do as a startup, and lots of advice of what to do if I was running a large public company, but there’s nothing that describes how to deal with the issues of growing a company. I feel like I’ve just driving without a roadmap. What should I be reading/doing?”
I explained to Patrick that startups go through a series of steps before they become a large company.
Kathryn Gould co-founder of Foundation Capital
Mar Hershenson co-founder of the VC firm Pejman Mar Ventures
Sophie Lebrecht co-founder and CEO of Neon Labs
Unfortunately the Build, Measure, Learn diagram is the cause of that confusion. At first glance it seems like a fire-ready-aim process.
It’s time to update Build, Measure, Learn to what we now know is the best way to build Lean startups.
BMNT, a new Silicon Valley company, is combining the Lean Methods it learned in combat with the technology expertise and speed of startups.
At the same time Berkeley was also developing Cold War weapons systems. However its focus was nuclear weapons – not something you wanted to be spinning out. nuclearSo Berkeley started a half century history of “inward facing innovation” focused on the Lawrence Livermore nuclear weapons lab.
Given its inward focus, Berkeley has always been the neglected sibling in Silicon Valley entrepreneurship. That has changed in the last few years.
Today the U.C. Berkeley Haas Business School is a leader in entrepreneurship education. It has replaced how to write a business plan with hands-on Lean Startup methods. It’s teaching the LaunchPad® and the I-Corps for the National Science Foundation and National Institutes of Health, as well as corporate entrepreneurship courses.
Here’s the story from Andre Marquis, Executive Director of Berkeley’s Lester Center for Entrepreneurship.
Stephen and SynbiCITE, just launched the world’s first Lean LaunchPad for Synthetic Biology program. Here’s his story.
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