Originally used by Lockheed Martin to identify a secret aircraft development group within the larger company, the term “Skunk Works” is used today to broadly describe an autonomous company within a company.
The skunk works is usually a small group of people who are allowed to work on a project in an unconventional way, unhampered by most of the restrictions of bureaucratic red tape, much like a small entrepreneur with a start-up company. They report directly to ownership or senior executives.
Operating with the freedom of a small outside company and usually under cover, this approach to new ideas and product development can provide the big company with unconventional solutions that come from outside the corporate mindset. They can keep larger companies relevant by allowing a fresh, ‘independent,’ outside perspective on ways to address the ever-changing needs of the market.
If you are contemplating a skunk works for your big company, here are some suggestions to get the most out of the experience:
1. Define your Goals. The purpose of the skunk works should be clearly defined with deadlines, metrics, and budgets.
2. Allow Autonomy. The manager should be given almost complete control in all aspects. He should report directly to a division president or higher.
3. Keep it Small. Use the minimum number of people required to develop the idea. Let them contract and sub job outside services from the larger company or others.
4. Separate Location. Physically separate them from the main company. This will encourage freedom and reduce “contamination.”
5. Keep it Clandestine. It’s better to keep the existence and goals of the “works” under wraps to reduce notoriety, pressure, and personnel issues.
6. Few Reports. Keep reports to a minimum but require that senior executives are regularly informed of significant developments.
7. Separate Investment. Just like an investor funds a proposal and business plan, the big company “funds” the “works” to develop the product or service. This helps keep the relationship outside the bureaucracy.
Some big companies have taken this concept beyond the developmental role by creating special teams to execute marketing on an ongoing basis of certain products. This allows greater focus and builds brand identity.
Creating your own small company outside your big company can be a breath of fresh air!
With limited budgets and direct access to ownership, small start-ups are light on their feet and can change course quickly. They can’t afford to suppress imagination through compensation or structural restraints. They don’t care how far down on the ladder a good idea comes from. To them, company survival and growth are more important than job preservation. Learning from small companies and employing their tactics can be the keys a big company needs to unlock the good ideas from its own people.
This concludes our 7-part series on how big companies can become more entrepreneurial. What ideas do you have that can help big companies become more imaginative and relevant?
Who We Are
Michael Houlihan and Bonnie Harvey co-authored the New York Times bestselling business book, The Barefoot Spirit: How Hardship, Hustle, and Heart Built America’s #1 Wine Brand. The book has been selected as recommended reading in the CEO Library for CEO Forum, the C-Suite Book Club, and numerous university classes on business and entrepreneurship. It chronicles their humble beginnings from the laundry room of a rented Sonoma County farmhouse to the board room of E&J Gallo, who ultimately acquired their brand and engaged them as brand consultants. Barefoot is now the world’s largest wine brand.
Beginning with virtually no money and no wine industry experience, they employed innovative ideas to overcome obstacles, create new markets and forge strategic alliances. They pioneered Worthy Cause Marketing and performance-based compensation. They built an internationally bestselling brand and received their industry’s “Hot Brand” award for several consecutive years.
They offer their Guiding Principles for Success (GPS) & Shelf Smarts courses to help consumer product brand builders achieve success. Their book, The Entrepreneurial Culture: 23 Ways To Engage and Empower Your People, helps corporations maximize the value of their human resources.
Currently they travel the world leading workshops, trainings, & keynoting at business schools, corporations, conferences. They are regular media guests and contributors to international publications and professional journals. They are C-Suite Network Advisors & Contributing Editors. Visit their popular business site at www.thebarefootspirit.com.
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