Lean Startup (Opportunity Development)

strategies to deal with uncertainty

• opportunity development activities

• lean statrtup

• business planning, causation

• effectuation

• bricolage

idea vs opportunity

• ideas are essential but not a sufficient condition for opportunities to emerge

• commercial viability, potential market demand profitability, competition and sustainability need to be considered

opportunity development process

• continuous process of shaping and developing the idea

• engagemetn of other social actors to further develop the idea

• refine, elaborate, change

• different insights shape the raw idea into a valid opportunity

ideal opportunity development process model overall

ideal opportunity development process focused engagement with community of inquiry

with entrepreneurial team of generalists:

• gathering specific information

  • from selected experts

  • unidirectional conversation

  • show sophisticated prototype late to potential customers

• generating related alternatives

  • improve existing features

  • focus on expert feedback

• confirming conjectures

  • infrequent interactions

  • build on positive feedback

  • ignore negative information

results in: termination or starting over with team changes (open engagement)

ideal opportunity development process open engagement with community of inquiry

with entrepreneurial team of varied specialists:

• gathering specific information

  • wide range of community inquiry

  • highly interactive, bi-directional

  • show basic prototype early to potential customers

• generating multiple alternatives

  • co-created with many community members

  • focus on unexpected information

  • withhold own assumptions

• disconfirming conjectures

  • induce critique

  • build on negative feedback

results in: opportunity progress

intentional feedback

• ask different people individually to get inconsistent feedback (in- and outside your own bubble)

• experts have especially strong mental schemas → not always a reliable source

• track feedback

lean startup

• develop a hypothesis and engage in “scientific” experimentation to test assumption (A/B split testing)

• build on and test MVP

• principles

  • validated learning: run frequent experiments to test your ideas, asses real behaviour (not intentions)

  • build-measure-learn (progressive learning): build and test a minimum viable product (MVP), engage with a feedback loop to decide to pivot or persever

  • innovation accounting: develop a metric, set milestones (goals), measure progress

build-measure-learn

• continuous feedback loop

• build → product → measure → data → learn → ideas → …

• minimise time through entire feedback loop

• experiment to obtain feedback

lean startup MVP

• minimum viable product

• the simpler the better (easier to engage with in split testing)

• doesn’t need to be a perfectly polished product, acceptable if it’s buggy, incomplete or a compromise

• don’t want to begin with a high-quality mainstream product

continuous judgement process

• set quantative goals

• pivot: don’t hesitate to completely change your idea

• lean: start small, small batches

entrepreneurship as belief formation, testing and reponse process

continuous cycle:

1. belief formation: formulate belief about novel and value-creating assembly of resources

2. belief testing: test belief in the market and analyze feedback

3. response definition: update belief on higher level of product-market fit

• experiment to obtain feedback

• update beliefs

• progressive learning

error orientation and monitoring model

error orientation definition

• positive attitude toward errors or deviations from previously set goals and standards

  • high: maximise positive consequences of deviations in terms of learning, innovation and motivation, which is reflected by setting higher goals for the venture

  • low: deviations induce strain having detrimental effects on motivation, protect and withdram

• learning is as essential unit of progress: learn fast, learn often

• high error orientation combined with high changes lead to a higher probability to reach goals

monitoring definition

• using feedback to reevaluate one’s goals and actions based on a comparison between goals and performance outcomes and the assessment of progress towards performance and outcomes

• depending on positive or negative assessment: continue, change or stop

forms of pivot

• zoom-in: single-feature becomes whole product

learning goals

• build on scientific findings and active engagement

• value hypothesis: does it deliver value? to whom?

• growth hypot hesis: how to discover new customers?