Startup is a word that gets tossed around a lot and its definition takes on many forms. It’s a state of mind, a disruptive business, a new budding venture, and many other things. Yet there are no set of rules to the game, no magic recipe for success, nor scientific approaches, in spite of all the thousands of books and gurus that address this topic.
Growth vs Scalability – Typical brick and mortar businesses usually aim for steady revenue. They think about the best ways to get and maximize profit. To grow, they have to hire new people and get new resources, which makes the growth stable and linear. You’ll rarely see exponential growth in their case.
The startup approach is a bit different. Most startups rely on building technology products. This means that growth is not proportional to the number of employees or physical resources. Scalability is almost always top-of-mind, that’s why everyone dreams of becoming a unicorn in the startup world.
These differences make startup building a rather adventurous and unsuccessful activity. Luckily, in the past decade, frameworks that are more tailored for startup’s specific needs, have emerged. The most popular ones are:
- Business Model Canvas (2010) created by Alexander Osterwalder and Yves Pigneur (the BMC).
- Lean Startup (2011), Steve Blank’s “Customer Development Model” and Eric Ries agile based on lean manufacturing.
- Disciplined Entrepreneurship (2013), developed by Bill Aulet based on his experience nurturing startups out of MIT for more than 9 years.
Steve Blank wrote the book Four Steps to the Epiphany establishing the customer interaction for evidenced-based design and used the Osterwalder BMC as his tool. Eric Ries was in his first class at UC Berkeley. The percentage of startups failing still goes as high as 90%. Is it because of existing flaws in these methodologies or just human nature? Unlike religions, there is little room for one startup bible. And Marius found out that blindly following only one of these methodologies creates exposure to their flaws and increases the risk of fragility.
The Business Model Canvas is a chart that allows you to create a more visual representation of what the business should look like. It maps out key features, the product design, and, once completed, it tells you the exact key points that you need to address when building your company. The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.
Lean Startup is a methodology that encourages you to always ask and never assume. To push forward your minimum viable product, to test things and adjust as required, and to keep your user at the center of it all. The Build—Measure—Learn (Agile) feedback loop is a core component of this framework. It emphasizes more on having the right attitude and mentality, rather than what steps need taking. “The ability to learn faster from customers is the essential competitive advantage that startups must possess.”
Disciplined Entrepreneurship is a structured approach that guides the starting entrepreneur through specific actions that need to be taken before jumping into developing the product or service. This methodology shows how innovation-driven entrepreneurship can be broken down into discreet behaviors and processes which can be taught in just 24 steps.
The methodology introduces to the startup world useful concepts such as beachhead markets, personas, high-level product specifications, quantifying value, decision-making units, and many more. They are not only presented in an easy to understand way but are linked with the author’s experience as a serial entrepreneur and highly adapted to tech innovation. DE evolved from MIT entrepreneurship is probably more suited for engineering concepts.
The combined approach
Start planning your journey by using the Business Model Canvas or the Lean Canvas. Understand your destination before anything else, and your motivation (because that is what is going to keep you and your team together on the path when things get hard). A moonshot or North Star is more important than anything. But then what matters are the first steps.
Understand how Lean Startup works, how to start discovering customers. Get out of the building and talk to them, no framework or toolbox is going to replace that. Create the profile of your persona using the structured framework Disciplined Entrepreneurship provides. Get to know your customer. Your “beachhead market”, and your TAM (DE terms). The information that results from following the first steps of this framework is more detailed and provides more insights into user/client needs and it will make it easier for you to work with the Value Proposition Canvas (Osterwalder) or the empathy maps from Ideo, CA design company used by Silicon Valley.
Startups are all about the unknown. And flexibility. And testing. There is no one right formula for becoming successful and any entrepreneur looking to start an innovation-driven enterprise should know in advance that fixating on one tool to solve all problems is rarely the answer. You wouldn’t leave on an expedition taking only one thing with you (as long as it’s not a spiritual or religious one), so don’t be a blind follower or zealot of any startup trend.
Lean Entrepreneurship Guide
In January 2019 at the Annual USASBE Conference in St. Petersburg FL the Lean Entrepreneurship Guide (or chart) was introduced and each attendee left with a copy of the 6-page, laminated guide:
Shortly after the conference teachers began to use pieces of different lean startup methods in the guide (they are all 14 in the guide) to help students design more successful startup businesses. It was not much longer that users discovered the final business model was stronger and the business more thriving when two to three methods were combined. One professor in Tennessee starts with Blank’s lean launch using the BMC, then shifts to the first half or 1 through 13 of Aulet’s DE steps until returning to customer development and interaction. After DE’s steps 14-24, the class finishes with lean launch and stays with the BMC and customer inputs on a continuous basis.
The Lean Entrepreneurship Chart can be bought for $10 on Amazon using this link, cut and paste (bulk sales are less expensive and brand the institution on them):
Thanks to base article by Marius Ursache (founder of Metabeta and Disciplined Entrepreneurship Toolbox November 22, 2020).