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.Forthe most part, buyers found it valuable to advertise their prices byentering them into the system.In addition, a social network of pricecollectors was recruited to enter daily prices from the markets.Analgorithm determined which prices would be relevant to individualfarmers based on the crops they grew.Two or three times a day, thefarmers received pricing information and messages from buyers intheir own language.Farmers who could not read quickly learned the CHAPTER 5 BREAKTHROUGH INNOVATION 149few words they needed to decipher the messages.Within two weeks,1,500 farmers were registered on the system, and the team knew it wason the right path.The first experiment was a resounding success, mea-sured not just by the number of farmers but also by the fact that theincome of farmers using the system had increased by more than 15%.The system grew steadily over the next few years, one experimentat a time.By the end of 2012 the team had conducted over 20 majorexperiments and Fasal had 1.2 million registered farmers, 90% of themactive users.It was growing at the rate of 20,000 farmers a week.Why? Farmers found that Fasal increased their income by an averageof 20%. Every farmer, at minimum, is bringing us at least two ad-ditional farmers, Bachu says. So you can start to see the network inplace. 15The service is free for farmers, and for some time it was funded byIntuit.In fact, there were occasional attempts by senior executives tokill the program, according to Kadaba. But it was hard to shut themdown.Why? Because they were spending so little money. 16 So withminimal funding, the internal startup grew steadily and eventuallyfound a way to make money through advertising in the form of tar-geted SMS messages.Otto: That was a pretty small team just a few peoplehad to do everything!M&T: A small team can be a big advantage.When theentire product team is responsible for the product ssuccess, everybody develops a deep understanding of the customers,their lives, their problems, their constraints.The whole team getsinvolved in each experiment, so people with diverse perspectivesimagine, implement, and measure the results of an experiment.Cre-ating small, complete teams inside of the company is a great way tobring a startup mindset to big companies.From Efficiency to DecentralizationInnovative companies are decentralized companies.Generally, decen-tralization doesn t appear to be the most efficient way to run a com-pany, so companies with serious cost pressures have a tendency tocentralize functions and control remote operations more rigorously.15.This quote is from Carr, Intuit Taps Text Messages. 16.This quote is from Kadaba, Lean Startup Conference. 150 THE LEAN MINDSETBut the important question to ask is Where did the cost pressures comefrom? Were they always there, or did they arrive unexpectedly? Is itpossible that cost pressures are the result of a deeper problem? Mightthere be an unnoticed change in market dynamics? If this is the case,focusing on efficiency is probably the wrong approach; understand-ing the essential problem and finding an innovative solution to it willlikely yield better results.When a company comes to believe that innovation is essential toits survival, the time has come to switch its focus from efficiency todecentralization.There are several reasons why decentralization fos-ters innovation.First of all, it takes a team to field a new product orservice, and if a company is structured around independent businessteams at multiple locations, innovation has a lot of incubation zones.Second, there is wide agreement that if innovation teams are subject tothe same processes and metrics as core business units, they are likelyto fail; processes and metrics more suited to a startup business shouldbe used.17 Third, tightly coupled systems are fragile.A decentralizedsystem is a decoupled system, which can more easily tolerate the fail-ures that go hand in hand with innovation.Lines of DecentralizationWhen it comes to promoting innovation in a company, the questionis not Should we decentralize? The question to ask is How should wedecentralize? In other words, Along what lines should decentralizationtake place? Decentralization is not a one-size-fits-all affair
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