Why Large Companies Struggle With Lean

To compete against startups and other disruptors, large companies need new approaches to innovation.

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Steve Blank, entrepreneur and author

Steve Blank, entrepreneur and author

When serial entrepreneur Steve Blank published his first book, The Four Steps to the Epiphany, in 2005, he had no inkling that it would become a founding document of what’s become known as the Lean Startup movement. But 15 years later, Blank’s ideas about customers and how to create minimum viable products have been embraced by startup entrepreneurs everywhere — and, increasingly, by leaders of large corporations and government agencies.

Blank, who has founded a string of startups in Silicon Valley and currently teaches and lectures at Stanford and Columbia, worked with the National Science Foundation to design a program called Innovation Corps (I-Corps), whose goal is to help scientists in universities commercialize their research. Using an approach he developed called Lean LaunchPad, I-Corps combines experiential learning with the best-known building blocks of lean startups: the business model canvas, the customer development model, and agile software development. Today, the program is offered at more than 100 sites around the country and is credited with accelerating the formation of hundreds of companies.

Large corporations, however, have found that applying the principles of lean can be more complicated than they expected. MIT Sloan Management Review correspondent Frieda Klotz spoke with Blank about the current state of lean management and what he thinks the next set of challenges for innovators will be. This is an edited version of their conversation.

MIT Sloan Management Review: What problems were you trying to solve with lean?

Blank: The Lean Startup methodology was developed in response to a view that startups weren’t just smaller versions of large companies. The advice many startup founders received was that they should use the same tools that big companies used: business plans, five-year plans, and executing as though they were working with clearly identified customers and products. But it became clear that these assumptions were fundamentally incorrect. Startups weren’t smaller versions of large companies. The first derivative of this was that [small companies] needed new tools to do something very different, which was not to execute known business models, but to search for new ones.

Your early focus was squarely on small companies, but interest in lean has spread considerably. Has this surprised you?

Blank: When I wrote Four Steps to the Epiphany 15 years ago, I was focused on startups, not corporations.

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An MIT SMR initiative exploring how technology is reshaping the practice of management.
More in this series

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Comment (1)
"The problem, when lean is introduced in a large company, is that it becomes a discrete activity among hundreds. What companies really need is an end-to-end innovation process — something that covers everything from sourcing to problem curation to prioritization to solution exploration to incubation to delivery. That pipeline needs to be part of an overall innovation doctrine."

This is a key point.  Every element of lean represents significant culture change.  But it's most often implemented as a collection of discrete projects and tactics with a hope that the organization can realize all the anticipated benefits without having to actually change much about its own business and operations models. 

Rick Bohan
Akron, OH