The Interplay Between Open Innovation and Lean Startup, or, Why Large Companies Are Not Large Versions of Startups

Abstract

This article considers the contribution of lean startup to the lack of practical advice for employing inside-out knowledge flows in open innovation. Lean startup offers a series of practical steps for exploring — and validating — potential new business models that might utilize otherwise neglected technologies, or potential general-purpose technologies that may be languishing. Open innovation has some contributions to offer to lean startup as well, particularly in the context where lean startup is employed inside large established firms. We describe the basic principles of lean startup philosophy and discuss how lean startup is implemented in large companies. This is highly related to business model reconfiguration, since in many cases, incumbent companies develop a new business model as part of their innovation efforts, often with great difficulty. This line of reasoning leads us to reconsider how lean startup might work in established companies, and why it is so difficult due to conflicts with many roles that already exist in the established companies. We then bring forward the idea that open innovation can contribute to the corporate venturing process and describe both outside-in and inside-out processes that may help ease the pain of a lean startup implementation in an incumbent firm.

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