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 Are We.
Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.
Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.
We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.
Michael Houlihan and Bonnie Harvey
-Barefoot Wine Founders