(Article) Rice, M., Kelley, D., Peters, L., & Colarelli O’Connor, G. (2001). Radical innovation: triggering initiation of opportunity recognition and evaluation. R&D Management, 31(4), 409-420.
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Regarding the key insights, the article highlights first that the fact that there is a gap between a company’s knowledge and the formation of a project using that knowledge is a major discontinuity in the radical innovation lifecycle. Searchers who make the discoveries of the technical innovations don’t always see the opportunity it can create for the company business.
What we also learn in this article, which may not seem obvious, is that established firms often struggle to advance new technologies to commercialization, because there is high uncertainty in their implementation.
Secondly, what’s interesting about this article is that it provides an evaluation framework that can help researchers decide whether or not to bring their idea to the management. It includes technology related issues, market related issues as well as corporate strategy issues. The tool can also help identifying the strengths and weaknesses of the case.
The complexity of radical innovation resides in calculating the risk. But what is radical innovation? Radical innovation is innovation that consists of creating a new market by marketing new products with significant new technologys. In this article, he talks in particular about technology related issue. If an employee present you a new technology that he has discovered, how do you know if it’s worth researching further and spending money on? So first of all, the article tells us that the chances of successfully commercialising a new technology are higher if the new technology has a link with existing technological capabilities. This means that it has to be new but people have to be able to understand its usefulness. Secondly, there’s really no magic rule that tells us when to take a risk and whether it’s going to pay off. But taking a risk has to be based on your knowledge and your confidence in success. But if you don’t have any experience in this area, you’ve got nothing to draw on.
The two other managerial implications are linked. Even if there is limitations that we will develop after, we will of course recommend to managers to encourage the use of the assessment tool to their researcher.
As explained in the keys insight of the article, using the evaluation framework help researchers to chose to rather present their project or not to the management team. Manager should thus inform and form their researcher about how to use this assessment. By forming their employees they can adapt their expectations to the sector or the type of radical innovation they are confronted to.
Secondly we will also recommend manager to be more flexible with the researchers about what they proposed. In this document they explained that the most difficult part was the initiation of the project. In fact, most of the time, the technologist who discovered the technical insight didn’t have the experience and knowledge to recognise the business opportunity. Manager should thus encourage researcher with the technological insight to share with them future projects with commercial potential .
Heterogeneous research teams provide robustness in the evaluation of case data which offer different perspectives and increase the likelihood of gaining novel insights. So sharing the project with the management team can help to advance these technologies toward commercialization. This method reduces the chances of missing out on projects with commercial potential.
Let’s now turn to the limitations, which refer to specific situations where the key insights we previously identified may not be applicable.
In organizations predominantly focused on incremental improvements, the evaluation framework proposed in the paper might be excessive because it has been originally created for radical innovation. Applying such a comprehensive process to every innovation may hinder the agility required for smaller, routine changes.
In cases where organizations face resource constraints, the detailed evaluation process outlined in the paper might be impractical. Resource limitations may lead to a necessity for quicker decision-making, potentially favouring a more streamlined and less resource-intensive approach.
As for further references, we found two articles that talks about this gap between scientific discoveries and their commercial applications. The first one emphasises the need to be managed and more particularly in the healthcare sector. The author also develops a framework to assess the commercial viability of new healthcare technologies. This framework is based on a survival analysis and judgement of experts.The second article is also about the gap between discoveries and commercialization but in the academia world. It talks about the role of technology transfer office (TTO) in universities. These offices are meant to facilitate the process of bringing research developments to market. They act like channel between industry and academia.
(Article) S. Sinan Erzurumlu (22 april 2020). Topic modeling and technology forecasting for assessing the commercial viability of healthcare innovations – ScienceDirect. Techn. Forecasting and Social Change
(Article) Anders Brantnell (8 april 2022). Understanding the roles and involvement of technology transfer offices in the commercialization of university research – ScienceDirect Technovation
(Video) Steve Blank : The principles of Lean
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The lean start-up stems from the fact that start-ups are not smaller versions of large companies. The startup faces a series of unknowns while the large company works with a known business model.
Startups need their own tools, different from those used in existing companies.
Lean startup is a specific approach to starting a business and launching a product. It is based on “Validated learning”, scientific experimentation and iterative design. It tends to shorten product marketing cycles, measure progress regularly, and obtain feedback from users. From this perspective, companies, especially startups, seek to design products and services that best satisfy consumer demand, with minimal initial investment.
About the implications, there are three. Indeed, lean startup is there to minimize the risks when launching a startup.
Firstly, The Business Model Canvas frames the basic marketing assumptions that startups need to address. This is not everything, but it’s the core. That is, customers, value proposition, how the company will make money, what the costs are, what the partners are, activities, resources etc.
Secondly, there comes the time when you have to get out of the building and test these assumptions, i.e. go out and understand deeply what the customers’ real problems are, what their needs are and what kind of solution could really solve them. So on the one hand, you have to talk to these customers but also build something called minimum viable products that will be useful for the third point.
Thirdly, there is agile engineering. It’s about building incrementally and iteratively. It’s about continually interacting with customers to see if you’re on the right track. So, not just specifying a whole solution, building it and just shipping it.
So these 3 components; business model Canvas, customer development and agile engineering make up the ‘lean Startup’
The first limitation is about the Business Model Canvas, this model is used to describe how a business works. But we learned from an article on the internet that this model takes a lot of time to complete and the start-up environment evolve very quickly. That is why when the start-up has many products, the Business Model Canvas takes too much time compared to what it can provide to the company.
About testing hypotheses, honestly it is difficult to find limits to this implication so in our opinion, there are no relevant limitation. If it is compulsory to say one limit, this will be again the time constraint in this quick environment of start-ups. But it is difficult to see a situation where it cannot be beneficial for the company to not test the hypothesis.
And then, the third point, Agile engineering is a way of working with constant changes. So it’s not easy to know what product to sell for the marketing and sales teams and how to sell it because this product always evolve. If the product requires a lot of marketing to sell, then the agile method is maybe not the best idea.
In the journal small business economics, it is also said that the lean startup method was not born out of new ideas but was repackaged to appeal to the software industry. Indeed, it was the first successful adaptation of ideas using experimental approaches to the context of entrepreneurship.
It is a practice that has spread very quickly in the world of entrepreneurship and is now known worldwide. Moreover, research-based methods have had some success, but not the same success as lean startup with entrepreneurs.
According to the ‘lean start-up’ concept, companies should develop their products or services with the minimum amount of effort and do the iterative release to shorten the life cycle. Therefore, defining a proper minimum viable product (MVP) is critical for companies who want to succeed in a lean start-up process. In this approach, each function is evaluated from both customers’ and companies’ perspec-tives based on the revised Kano evaluation table. The results of customer-side Kano analysis and com-pany-side Kano analysis are integrated to suggest the desirable MVP types: core to be MVP, feasible to be MVP, and next priority to MVP. As a result, two functions are determined to be core to be MVP, and one function is derived as feasible to be an MVP, and eight functions are turned out to be next priority to MVPs, which are not urgent as company expected.
Mansoori, Y., & Lackeus, M. (2020). Comparing effectuation to discovery-driven planning, prescriptive entrepreneurship, business planning, lean startup, and design thinking. Small Business Economics, 54(3), 791-818.
Lee, S., & Geum, Y. (2021). How to determine a minimum viable product in app-based lean start-ups: Kano-based approach. Total Quality Management & Business Excellence, 32(15-16), 1751-1767.
Show less(Article) Blank, S. (2013). Why the lean start-up changes everything. Harvard Business Review, 91(5), 63-72
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key insights: The first one is a criticism against the traditional approach to launch a new project : write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as possible. But the majority of startups fail with this approach. Indeed, as a business plan typically includes a five-year forecast of the income, profits, and cash flow, it assumes that it is possible to figure out most of the unknowns of a business in advance, before you execute the idea. The entrepreneur develops the product and invests a lot of resources to get it ready for launch, with almost no customer input. Only after building and launching the product does he get feedback. And too often, after months or even years of development, entrepreneurs realize that customers do not need or want most of the product’s features. The second key insight is about another approach that has recently emerged: the “lean start-up” methodology. This one favors experimentation over overelaborate planning, customer feedback over intuition, and iterative design over traditional “big design up front” development. Only after quick rounds of experimentation and feedback reveal a model that works do lean founders focus on execution. Finally, the last key insight covers the main advantages of the lean method. First, it helps mitigate past constraints of startups: cost of getting first customer, cost of getting out product, long technology-development life cycle and number of risk takers. A lean method eliminates the three first constraints by creating products that customers actually want, and that quickly than by the classic method. That makes starting a business less risky, which weakens the last constraint. This method also eliminates wasted time and resources by developing the product iteratively and incrementally.
implications:The first managerial implication regarding this article is that managers of a start up shouldn’t only hire for experience and ability, but also hire for learning, nimbleness and speed. With a team that is nimble and adjustable, the startup can pivot away from the ideas that didn’t work, instead of focusing strictly on what their initial plan was.
The second implication is that the lean start-up method is very applicable to start-ups within the software industry. Since software can be iterated quickly due to its modularity, the startup can just as quickly abandon an idea, change the idea or use the software in another part of the market, which can result in another business model. A clear example of this is Slack, who from the start was a gaming start-up that was previously called TinySpeck. They shifted from the original business model which was supposed to be an online game based on a subscription model, to a messaging app based on a freemium model.
limitations:The first limitation is that the lean method is not applicable to all sectors. For instance, it cannot be applied to the healthcare sector. Indeed, we can not create a “minimum viable drug”, test its effectiveness and reliability on the patient and modify its composition if it doesn’t work. This could obviously lead to disastrous situations if careful research is not conducted. In fact, to create a drug and put it on the market, it takes sometimes up to 15 years and must be validated by the state, which can take a long time to hand over these decisions. So the lean method seems not efficient in this sector.
The second limitation of the method is its inapplicability on high value technologies, like high speed trains, rockets, and nuclear power plants. For this kind of product, it does not seem possible to create a loop of rapid trial, error and improvement and it is necessary to have a long development cycle.
Finally, a likely risk is to continuously want to improve the product, before putting it on the market. But if it goes too far and takes too much time, the low cost advantage of the lean method is lost. It is thus necessary to set and respect limits to avoid financial resources losts.
further references: For further reference we chose this article because it hilights the pros and cons of lean startup strategies. It is said that customers are not suppose to know what they want, in that sens we can see that lean startup does not really acknowledge that consumers do not always know how to reveal their needs thuss the importance to know when to take a step back. Further more, being eager to go on the field and consult the customers we only get answers to present problems and often forget to see the bigger picture. In short no on strategy gives a hundred percent garantee that the project will not fail, so it is of the up most importance to to point out all the main reasons why to choose or not to choose one strategy or another.
The second article gives tailer maid instructions on how to build a good team to work on a project using the lean method. As we have underlined above it is of the up most importance to choose people that will know how to be quick and flexible for the smooth running of the project
Ghezzi, A., & Cavallo, A. (2020). Agile business model innovation in digital entrepreneurship: Lean startup approaches. Journal of Business Research, 110, 519-537.
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In the article Agile Business Model Innovation in Digital Entrepreneurship: Lean Startup T Approaches, we analysed the influence of different business models on organisations. After identifying 3 key points, we looked at the implications and limitations of these. The first key point is Business Model Innovation for digital startups. The Business Model is how a firm creates value, delivers it to its customers, and induces them to pay. By contrast, Business Model Innovation deals with designed, new, and non-trivial changes to a firm’s business model and the architecture linking these elements. Many researchers agree that startups should look beyond their isolated product, service, or process innovation, and focus instead on innovating their entire business model, which becomes the new unit of analysis of innovation efforts. An implication is that BMI for digital startups involves a combination of Operational and Strategic Agility. Operational agility is referred to implementing agile and lean methods and strategic agility is the ability to continuously adapt the strategic direction in the core business to create value. Start-ups bring new value models and new uses that meet consumers’ expectations in the digital age. The arrival of digital and technological innovations has opened new opportunities for those who wish to put digital technology at the service of society. Airbnb, Blablacar, Uber are some examples. There are four reasons that companies could fail at business model innovation. Firstly, CEOs and their senior leadership teams don’t want to explore new business models because they are satisfied with the current one and want everyone in the organization focused on how to improve its performance. Secondly, business models that are exclusively focused on products are vulnerable to being disrupted by models that blend both product and service to significantly change the value proposition. For example, Apple didn’t bring the first mp3 player to the market but changed the way we experienced music by delivering on a value proposition that bundled product, an iPod, and service, iTunes. Thirdly, organizations fail at business model innovation because they blindly take cannibalization off the table even if a new business model may have significant upside potential. Lastly, organizations can fail because they apply the wrong financial lens in assessing the attractiveness and feasibility of new business models. The second key point is a proposition from our article which says that if this organizational culture is highly entrepreneurial and innovative, it will benefit business model innovation in early-stage digital startups. For these early-stage startups, the business model is very important because startups struggle to align their business models consistently from the beginning. This incoherence is since, on the internet, startups have a very simple way to easily and quickly test, prototype, and iterate their new business models which results that it’s very volatile at the beginning. One implication could be learning openness to change to the manager and the employees. In order to have an innovative organizational culture we can educate the people influencing the organizational culture to be used to change. One way to do this would be to make lots of constant changes within the company to make them work in a constantly changing environment. One example would be to use flex office so that employees don’t get used to the same desk every day. Another example would be to promote mutual aid in different departments. If you help out someone who is not doing the same job as you normally do, you will learn to step out of your comfort zone to help that person. Anyway, this implication implies some limits. The openness to change can bring a lot in term of innovation of the organizational culture but you still have to be careful. Some people are risk averse because they are used to their habits and scared of changes. We could mention as an example the organizational changes that took place and that still take place due to to the Covid 19 crisis. One of the most famous is the teleworking. We all heard in the news that a lot of employees had difficulties to handle that change of way of working that disrupted their routines. Even if this is an extreme case, it shows the limit of this openness to change that has to be correctly implemented in order to avoid that kind of problems into the company. They said that In the context of early stage digital startups, the concepts used in Lean Startup approaches are at the intersection of business model innovation and agile development. Lean Startup methodology is the build-measure-learn feedback loop. The first step is figuring out the problem that needs to be solved and then developing a minimum viable product (MVP) to begin the process of learning as quickly as possible. The major concern of L.S. is to avoid creating a product that people don’t need. Dropbox is one of the best known examples of a business that has grown using lean startup principles. As a Manager, when launching a digital startup, it can be really interesting to use the L.S approach in order to first reduce the costs. Secondly, it allows you to adapt quickly and chance the goals if needed. And finally, for IT company, using agile development is essential. One negative aspect of the Lean start-up that should not be underestimated is the difficulty for several entrepeneurs to find investors. Indeed, few of them are willing to invest into projects having an economic model without long term vision nor certainty about a future success. You should not believe neither that it would be easy to collect metrics or qualitative feedback depending on the case. In addition, it is also important that the first product is sufficiently successful to obtain customers’ and partners’ trust. Indeed, if the product is of poor quality or defective, the brand image could suffer from it. Another risk is also the stealing of the entrepreneur’s idea by a competitor. In conclusion, you can use a combination of all these approaches to help your organisation better face its challenges. However, you should stay careful and not believe it will be an easy and miraculous solution that works everytime. The first additional articles we chose is “How to make to whole organization Agile”. Which we found really interesting as this paper focuses on agility into large compagnies. The questions that are asked at the beginning of the article are such as “Can large old companies switch form a traditional hierarchical bureaucracy to an agile management? Is this kind of management efficient for such structures?”. Scrum Alliance is an organization whose mission is to transform the world of work made some researches and 3 main aspects came out of their study. The first point is that agility is primarily a mindset. Indeed, companies have to be agile, not do agile. The second point is that agile needs a strong leadership as when using agile leaders need to manage self-organizing teams meanwhile giving directions and be able to adapt to unexpected changes. The last point is that, making its researches, Scrum alliance found out that agility is actually already occurring in most large companies, the doubts about these large companies changing their organizational structure are not valid. The second article we chose is “What can large companies learn from start-ups” and focusses on the lean start-up approach. This approach aims to work with iterations, start-ups propose prototypes to consumers, the goal is the get closer to an operational product. This kind of approach could be a real opportunity for large companies to innovate in another type of way.
Denning, S. (2016). How to make the whole organization “Agile”. Strategy & Leadership, 44(4), 10-17. doi : 10.1108/SL-06-2016-0043
Euchner, J. (2013). What large companies can learn from start-ups. Research Technology Management, 56(4), 12-16. doi : 10.5437/08956308X5604003
Show lessCooper, R.G. (2014). What’s Next?: After Stage-Gate. Research-Technology Management, 57(1), 20-31.
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What’s Next? After Stage-Gate
The Stage-Gate, a project management technique, recognizes that innovation is a process. Robert G. Cooper, the creator of this system, divides the process into a predetermined set of stages. To enter in stages, there are gates, who serve as quality-control and decisions. Each gate is accepted by senior management following the Go/Kill/Hold/Recycle criteria. Even though this method has been largely used by different types of companies, it has received a lot of criticism. It is accused of being too linear, too rigid, not adaptive enough and does not encourage experimentation (Becker 2006; Lenfle and Loch 2010). Therefore, there are new approaches emerging from progressive companies, such as a next-generation system, called the Triple A system.
The triple A system is based on three main ideas, which are our key insights.
First, the Next Generation Idea-to-Launch System should be adaptative and flexible. To get something in front of customers early, it incorporates spiral or iterative development.
Secondly, the next-generation system incorporates elements of Agile Development, the rapid development system developed by the software industry. For example, sprints and scrums are part of the new system.
Then, this system should be focused on accelerating the development process. There is more emphasis on the fuzzy front end, making it sharper and less fuzzy. Therefore, the project is clearly scoped and key unknowns, risks and uncertainties identified as early as possible.
The first implication that the manager must try to apply is to prepare a transition phase within the company. Time and resources must be set for this transition through employee training, which help them react quickly and appropriately to the various changes.
The second implication is that the manager should no longer have a single canvas for all projects, but rather adapt the canvas for each project. The project plan must therefore be adapted to the context and to the needs of the project.
Two limitations are involved by these implications.
Our first limitation concerns the Agile development. This cannot be applied to all product, services or industry. Indeed, principles of short time-boxed sprints and the delivery incrementally of the work are not applicable to everything. The manager must be sure that the model is appropriated at the beginning of the project.
Our second limitation concern the fact that the Triple A process may not be suitable for everyone. Some people have difficulties to manage the pressure and are therefore less efficient. Indeed, they are facing a process that is based on acceleration, which partly means that the product has to be put on the market as quickly as possible. This challenging environment and constant pressure can lead to burn out.
Bibliography :
Cooper, R.G. (2014). What’s next?: After Stage-Gate. Research Technology Management, 57(1), 20-31.
Dukovska-Popovska, I., Hedegaard, C., Sommer, AF., Steger-Jensen, K. (February 2015). Improved Product Development Performance through Agile/Stage-Gate Hybrids: The Next-Generation Stage-Gate Process? Research Technology Management, 58(1), 34-44.
Globocnik, D., Kock, A., Salomo, S., Schultz, C. (September 2018). Application and performance impact of stage–gate systems – the role services in the firm’s business focus. R&D Management, 49(4), 534-554.
Show lessJoh, J. & Mayfield, M. (2009). The discipline of product discovery: identifying breakthrough business opportunities. Journal of Business Strategy, 30 (2/3), 70-77. https://doi.org/10.1108/02756660910942481
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One of the biggest challenges for businesses today is to find opportunities for innovation that meet the needs of consumers. This article draws on the experience and advices of the director of strategy and the director of product discovery of Motorola to find areas of opportunity.
There are two key elements in this article. First, it’s not necessary to find or develop new approaches to manage opportunities. It is more important to apply the right methods than to create new ones. Businesses need to focus on understanding their consumers in order to respond properly to their demands. In order to work more efficiently, it is advisable to work with small teams to manage everyone’s knowledge and bring out ideas more clearly. Then, opportunity discovery can be separated into 4 pieces of a puzzle. The first piece is to define the boundaries of the project. Then you need to stay up to date by constantly renewing your information (immersion). The third piece is the response, i.e you brainstorm ideas based on what you learn. Finally, the alignment piece considers the constraints that might be encountered when setting up the project. Bringing these four pieces together, opportunities should appear more clearly.
The implications of this are as follows. Managers are advised to make smaller teams to work in a more efficient way. It makes it easier to manage everyone’s knowledge and bring out ideas more clearly. Working with smaller teams implies that you need to have diversification in your team, in expertise but also in background to uncover non-obvious insights. The second implication is the use for managers of the “one pager” method. It is a method that allows the team to compare different ideas on the basis of a project description given on one page. Indeed, it is important to be able to summarize the essential information to bring forward the rigor in the investigation. The information on the page should be different depending on who consults it because the interests in a project are not the same for all stakeholders.
Finally, we have identified three limitations to the key points and implications. Firstly, the “one pager” method can be challenging if the innovation is quite complex and unnecessary for very simple projects. Secondly, the article encourages great diversity, thus increasing the chances of discovering non-obvious ideas or making connections. However, too different cultures or points of view can lead the group into a conflictual situation. These conflicts could be detrimental to the effectiveness of the team and less controllable because of the small number of people involved. The last limitation is related to the fact that integrating the three dimensions of the innovation process (capacity, competition, consumer) at the very beginning of the process can in some ways limit the generation of ideas. Indeed, being immersed directly in the three dimensions could lead to ideas being missed because one does not take the time to investigate new strategy boxes.
Further readings could be interesting to continue and complete the subject of the article:
• Bell, S. T., Villado, A. J., Lukasik, M. A., Belau, L., & Briggs, A. L. (2011). Getting Specific about Demographic Diversity Variable and Team Performance Relationships: A Meta-Analysis. Journal of Management, 37(3), 709–743. https://doi.org/10.1177/0149206310365001
• Gruber, M., Kim, S.M. & Brinckmann, J. (2015). What is an Attractive Business Opportunity? An Empirical Study of Opportunity Evaluation Decisions by Technologists, Managers, and Entrepreneurs. Strategic Entrepreneurship Journal, 9(3), 205-225. https://doi-org.proxy.bib.ucl.ac.be:2443/10.1002/sej.1196
Show lessHill, L.A., & Davis, G. (2017). The Board’s new innovation imperative. Harvard Business Review, 95(6), 103-109.
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This article talks about the incentives to innovate within a board. Here are the 3 main key insights we highlighted.
Nowadays, the board of directors in most companies know they need to innovate to stay competitive. However, there are some obstacles along the way like an outdated innovation point of view (focusing only on the core business), insufficient time, lack of expertise or bad communication
Boards are re-structuring their composition, looking for more diverse members. They are also changing the way they interact by re-defining the partnership (making management and board members as equals), and working with creative abrasion.
Innovation requires passionate discussion, debate, and even conflict—most often among individuals with diverse perspectives
In the implications we will give you, we will focus on what a manager can set up to influence the board to implement innovation.
First, set the agenda to make sure you create time for innovation. You have to find board time to focus on growth and disruptive activities.
Second, train your board. You can show them how crucial it is to innovate. To do so, you can bring in experts from different or adjacent industries to hold “master classes”, hold sessions with angel investors and venture capitalists to gain their industry insight, make visits to technology hubs such as Silicon Valley, etc. These prompt important discussions about their appetite for innovation by exposing them to “next practices,” not just best practices.
There are two limitations to those implications. First, making time isn’t always very obvious, especially for financial services, energy, and health care. We can have a look at hospitals which are always full, there isn’t enough staff working. There is a lack of resources allocated to this sector which makes it very difficult to find time for new innovations.
Second, EY conducted a survey of 365 corporate directors on the topic of disruptive technology. The results show that 52% of corporate directors believe that their board is sufficiently capable of carrying out the company’s innovations. So the limit here would be the willingness of company directors to train their board members even more and this would hinder access to all these training courses.
If you want to go further, we suggest you these three articles;
5 Innovative Meeting Formats that Boost Creativity and Strengthen Engagement. Sara Coene. (2016) https://innovationmanagement.se/2016/10/24/innovative-meeting-formats/
Why Large Companies Continue To Struggle With Innovation. Tendayi Viki. (2018). https://www.forbes.com/sites/tendayiviki/2018/11/04/why-large-companies-continue-to-struggle-with-innovation/#315bad4667b4
(Article) Felin, T., Gambardella, A., Stern, S., & Zenger, T. (2019). Lean startup and the business model: Experimentation revisited. Forthcoming in Long Range Planning (Open Access).
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Firstly, the paper speaks about the definition of lean startup. The lean startup is a concept with the aim to rapidly determine if a business model is viable thanks to shorten product development cycle. This guideline is popular because it seems to be a “scientific approach to the creation of startup”. This approach provides a lot of useful tools and concepts including the minimum viable product, customer development and validation and the business model canvas. The paper then critiques the assumptions behind lean startups. Indeed, while the scientific ethos of the approach is good, the suggested requirements by lean startup presents challenges and unexpected consequences.
The three implications of the paper are : lean manufacturing, customer validation and canvas business model.
The lean startup concept is built on the following lean manufacturing principles: waste reduction, inventory management (just in time), optimization of supply chain and continuous improvement. These guidelines are like an application of the lean thinking to the process of innovation and startup activity.
Lean manufacturing puts a strong emphasis on experimentation and customer interaction. It is important to go out of the theory and interact with customers. Startups should quickly develop a minimum viable product and then improve it according to customer feedback rather than wait for the product to be perfect in theory before selling it.
Canvas business model is an important framework in entrepreneurship and aims to help start-ups to “sketch hypothesis” and “search for a business model”. It possesses nine characteristics to meet: key partners, key activities, key resources, value propositions, customer relationships, channels, customer segments, cost structure, and revenue streams. When start-up fill in these features, they can find valuable hypotheses that are relevant enough to be tested.
The first limitation of the paper is Mismatch between radical innovation and lean manufacturing .The main problem is that lean was not designed for radical innovation. Lean production techniques were developed for continuous and incremental improvement of existing processes and products. However, the lean startup approach argues that implementing lean will lead to successful startups. This creates a mismatch, especially for startups who seek to create radical new products rather than incremental improvements.
The second limitation is : Customers imagination is limited to what is presented to them. Startup founders sometimes have to look beyond the present and into an unknown future and for this, customers are not able to help. Customers can help companies to improve a product but not to create a new product. This is not their job to invent a whole new product.
The last limitation is : Initial step should not be a canvas but build a valuable hypothesis. None of those indicators help the firm to find its own strategy, point of view and commitment. Just fill out the business model canvas and interact with customers, like said before, won’t help the entrepreneur to find a unique theory of value from which a hypothesis can be derived.
When creating a new business, entrepreneurs should first develop a hypothesis based on the entrepreneur’s belief and value. Hypotheses derived from a theoretical logic, can at its best provide guidance for what to look for in the first place. In short, the entrepreneurial exercise should begin by deciding what to look for, rather than cataloging what you see. Then, a well-developed business model may be built as an aspirational ending point and not a starting point to generate hypotheses.
Further references:
R.Goduscheit(2019),” Lean Start-up in Established Companies: Potentials and Challenges”
https://www.researchgate.net/publication/320235691_Lean_Startup_in_Established_Companies_Potentials_and_Challenges ,Learning and Innovation in Hybrid Organizations, pp.269-287.
S.Blank(2013),“Why the Lean Start-Up Changes Everything”
https://hbr.org/2013/05/why-the-lean-start-up-changes-everything, Harvard Business Review
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ADANT Aurore, CALCUS Sophie, CLOQUET Nelson, VANDEN HERREWEGEN Géraldine, VIDREQUIN Charles.
Rigby, D. K., Sutherland, J., & Takeuchi, H. (2016).
Embracing agile. Harvard Business Review, 94(5), 40-50.
Executive summary
This article was about the agile methodology and how managers should implement the method. The three key insights are a roadmap towards an agile venture. The article started with the 5 conditions for agile to work. Those are: an unpredictable market environment, a high-level of customer involvement, innovation type meaning complex problem and importance of close collaboration, modularity of the work if incremental developments can get value in the customer eyes and finally the impact of interim mistakes.
Secondly the article said that a new agile dynamic should start small within the company and then let the word spread. They also mentioned that agile methods once set, can and should be customize by experienced practitioners.
The third and last key insight is about embracing agile for the top management. The authors talk about 3 points of action to implement agile in top management: catching up with the troops, the leader as engine of the agile transition and finally aligning departments.
That implicates that manager should decide with good care whether the anticipated payoffs will justify the effort and expenses of transition. Agile tends to have no result in routine operation such as purchasing and accounting for example. Being agile requires training and time to be fully operational. It also implies that some company could face tension between agile and non-agile team. It means that the message delivered by the decision maker should get everyone on the same page.
While keeping those implications in mind, managers should pay attention to the development of the agile methodology. Inexperience in such domain can lead to failure, SIREN is an UK case of large-scale IT project that lacked understanding of the agile approach. It led them to inadequate governance, to communication issues and wrong estimation of costs. Another limitation is not recognizing the immediate significance of organizational culture which could lead to inefficiency in Agile method.
Further references:
• Kiv, Soreangsey; Heng, Samedi ; Kolp, Manuel ; Wautelet, Yves. An intentional perspective on partial agile adoption. Louvain Research Institute in Management and Organizations Working Paper Series; 2017/10 (2017)
• Keeley Wilson; Yves L.Doz. Agile Innovation: A Footprint Balancing Distance and Immersion. California Review Management; Winter 2011 ; Vol.53, No. 2
(Article) Still, K. (2017). Accelerating Research Innovation by Adopting the Lean Startup Paradigm. Technology Innovation Management Review, 7(5).
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Key Insights
1)What is the lean Startup? The lean startup is the launch of an economic activity according to scientific experiment. It gives a solution toward a specific customer problem. The method is based on interaction with customers, understanding of their needs and quick market implementation. Finally, the main goal is to build a successful business by following a precise and scientific method and accelerate the market entry of the innovation. Lean startup can be separated into three steps. (Appendix 1) 2) The importance of the context : The context could enable an acceleration of the innovation process. Entrepreneurial innovation is profoundly affected by its context. (Autio et al. 2014) The environment an individual works in is likely to have a great influence on his behavior. The main environmental factors identified by Kalar and Antonic are the culture, the policies and the routines. The entrepreneurial activities at the research context differ from the entrepreneurial activities in startups and internal startups in established organizations. This article highlights the interdependencies of the research context’s innovation process with the surrounding innovation ecosystem. The context does make a difference and the research context has been approaching innovation from a different perspective. 3) The European Paradox: Technology Transfer : The article comes further with the “European paradox” which is the perceived failure of the European countries to translate scientific advances into marketable innovations. This is the problematic of the” Technology Transfer”. The role of universities is to produce new knowledge but also to disseminate this knowledge to industry and society. In most areas, the results of scientific research are not directly useful for technological advances. The university researchers tend to be more focused on technology development than on other equally important aspects of business. It appears that business organizations and the public research organizations have different goals. (exploration VS exploitation).
IMPLICATIONS:
1- The Innovation Acceleration Model: How to address that European Paradox? It’s necessary to stimulate the private sector and to remove the bottlenecks that stops innovative ideas from reaching the market. The author builds a new model inspired by the lean startup paradigm to address that issue. It is the Innovative Acceleration Model. (see Appendix 2)
2- Why research organizations are seen as valuable partners in business? There are two ways to implement the Innovative Acceleration Model. the first one is by partnering with Research Organizations. When a company is launched, at the beginning the need of resources is very important but human resources are also often limited. In this case, finding a research organization as partner can be helpful. It has been proved that firms who collaborate with Public Research Organization are more likely to develop innovation.
3- Partnership with existing startups
The other way of applying the Innovative Acceleration Model is to buy the knowledge to another company. Indeed, some startups develop new technologies but don’t have the sufficient capabilities to exploit all the possibilities of this technology (lack of financial resources or lack of human capital for example). In this case, it is interesting for bigger companies to redeem these little startups. It is the case of DIGISFERA, a Portuguese company acquired by Google to improve Google Street View.
3) Limitations
1- Limited validation of the proposed Innovative Acceleration Model: The number of research approaches analyzed was limited; And the approach was aligned with a single case example from VTT.
2- Entrepreneurship = state of mind
Only the methodological aspect is taken in account in the Innovative Acceleration Model, but the author doesn’t speak about the human resources necessary to succeed as an entrepreneur. In business, there is a particular state of mind required. An entrepreneur must be motivated, persistent, optimistic and it must have a leader attitude to manage team. These elements don’t fit into the analysis of research Organization and that is why there is no magic spell to always succeed in business, because this is based on humans, all different.
3- Clear definition of responsibilities: Clear call for clarity of roles and responsibilities of various ecosystem players and for addressing the dynamics of such systems.
4- Further research on the growth phase: Growth discovery phase absent of the researches: Doesn’t explore further the growth discovery/scaling being largely absent from the research context.
Further references :
FURTHER REFERENCES:
-Täuscher, Karl & Abdelkafi, Nizar. Modelling the Lean Startup: A Simulation Tool for Entrepreneurial Growth Decisions. Proceedings of the 16th EURAM Conference,Paris, June 1–4 2016.
As we mentioned in the limitations, the growth discovery phase is absent of the researches, and this article suggests that entrepreneurs should identify the dominant feedback loop driving the growth of their business and consequently focus their resources on this “engine of growth”. Because it is difficult to assess the strength of different feedback loops, this research therefore develops a decision support tool to help entrepreneurs in their strategic growth decisions.
-Erik Stavnsager, Rasmussen and Stoyan Tanev.The Emergence of the Lean Global Startup as a New Type of Firm. Technology Innovation Management Review. November 2015 (Volume 5, Issue 11).
This article deepens the concept of lean start-up. It discus about two different cases: one referring to generic lean startup that have undertaken a rapid internationalization strategy. And the other discuss about startups that have started operating on global scale since the beginning and then adopted the lean startup approach. The article also highlights some aspects that could be helpful to conceptualize lean global startups as a special new type of firm.
-Edvardsson, Kristensson, Magnusson and Sundström. Customer integration within service development-A review of methods and an analysis of insitu and exsitu contributions. Technovation. August 2012.
As we learned on the key insights, lean startup is a method based on customer interaction, and this paper precisely covers this issue. Indeed, the article reviews and classifies methods for customer integration and also presents a new framework that suggests four modes of customer integration.
Appendix 1 :
1) Customer discovery: producing an initial concept: vision for a new business with committed people. 2) Solution discovery: high-value concept with user acceptance and resources to move forward. 3) Value proposition discovery: (go-to-market) validated and desired solution produced with an initial business model and resources to move forward. 4) Growth discovery: scaling and creating a sustainable business, which then is expected to result in money to create new business ideas, as well as channels, networks and brand. This is a model of continuous refinement.
Appendix 2 :
1) Ensure that the product vision matches with problems customers can have and that are worth solving (=customer centric, qualitative observation). 2) build a Minimum Viable Product that customers can try because a qualitative feedback is important. 3) Launch the MVP on the market and check if there is a viable market for the solution.
Denning, S. (2013). Why Agile can be a game change for managing continuous innovation in many industries. Strategy & Leadership, 41(2), 5 – 11.
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Key insights :
There are many myths and beliefs about Agile working, such as : 1) « Agile is only for small firms and small projects and does not fit with all kind of industries. Those with big projects or big processes like manufacturers cannot apply Agile. » That myth is due to decades of using the same way of working. However, today’s managers should assume the opposite because nowadays customers have multiple choices and a fluctuant demand so that business success depends on the ability to answer to these fluctuations. 2) « Agile does not fit to many companies’ cultures ». Agile does not fit the old and bureaucratic structure like production departments. But what does not fit bureaucracy either is the needed responsiveness to the market demand. 3) « Agile need self-motivated, skilled and responsible workers, which is tough to find. So tight control is the best solution available ». On the contrary, many organizations have seen benefits in the recent years from recognizing team performance rather than individual success or assuming that employees are proactive and responsible.
Implications :
1. Change the culture and the mindset by changing employee’s behaviour. The company might use agile business “game” for the employees (ex. week-end organised by Mastercard) and must promote initiative without grumbling the failure (ex. 5000 prototypes of Dyson). The objective is not to take risk (by launching prototype) but to learn.
2. Reduce management control so that project teams can be increasingly autonomous and have more responsibilities. It could be done by creating smaller teams with constant and informal feedbacks. More and more companies try to achieve even more this objective by setting up an horizontal organisation, it promotes initiative and individual responsibilities. Concrete tools like Trello and other team management softwares can be used.
3. Be customer-oriented to propose to clients customized products that will fit their needs. To do so, companies could launch prototypes of their final product to see what can be improved and ask for client’s feedback. (ex: Apple Genius Bar which help to solve customer’s issues).
Limitations :
1. Agile is not adapted to every industries. For example, industries where there are a lot of routines and where people cannot take initiatives (ex: Audi A1 plant in Brussel with a linear process flow). Moreover, industries which based their business models on economics of scale cannot afford to do agile, otherwise, they will not be able to do economics of scale anymore.
2. Another limitation is the problems of mindset inside the company between departments, particularly between an agile management and operations department. On one side, you want flexibility with responsibilities to launch prototypes, but on the other side you want a clear process flow, a plan with some equipments which are build to design a product and not to change over time.
3. It is hard to change the culture in hierarchical and well established companies. The resistance might come from the top where managers with years of experience do not want to change their way of working and want to keep their strong position by not giving too many responsibilities. There is also another reason why they do not give so easily responsibility, it is because if you do, you must trust the person in charge and so, there will be part of work which will be uncontrollable and less certain.
Further references:
– (Video) Agile working: an innovation in the way we work | Anne Cantelo | TEDxWoking. Online : https://www.youtube.com/watch?v=Y92DoljtYTk , consulted the 13 of December 2018. ↳ Anne Cantelo explain why Agile will help productivity, environment, communities, well being, etc.
– Grangel, R. & Campos, C. (2018), Agile Model-Driven Methodology to Implement Corporate Social Responsibility, Computers & Industrial Engineering,
Vol. 127, pp. 116-128. Online : https://www.sciencedirect.com/science/article/pii/S0360835218305928 , consulted the 13 of December 2018. ↳ This article will help you to implement Corporate Social Responsibility with an agile model-driven methodology.
– Denning, S. (2017), “The age of Agile”, Strategy & Leadership, Vol. 45 Issue: 1, pp.3-10. Online : https://www.emeraldinsight.com/doi/abs/10.1108/SL-12-2016-0086 , consulted the 13 of December 2018. ↳ This article describes the way agile model can be used to accelerate improvement performance.
Cooper, R.G. (2021). Accelerating Innovation: Some lessons from the pandemic. Journal of Product Innovation Management, 38(2), 221-232.
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This article highlights three different ways to accelerate innovation: Digital tools, lean development and agile development.
First, Rapid Prototyping and 3D printing have made prototype development faster, easier and less expensive. Not only does this technology aid in costumer testing, but also in gathering feedback. Using AI and machine learning in innovation predict outcomes of technical solutions; in 2020 machine-learning systems and computational analyses played an important role in the COVID-19 vaccine quest, helping researchers understand the virus, and predict which of its components would provoke an immune response. Digital testing and simulations are used for technical testing and customer testing of products before they physically exist. Examples include Volvo Construction who evaluates new truck designs before a working prototype is built, using a real-time simulator
Then, the main goal of lean development is to remove waste and inefficiencies from business processes to make them more efficient. In practice, the goal is to remove the unneeded tasks, delete the work that do not bring any value to save time and allocate it differently. You can then re-design your process into a parallel process – It allows you to overlap tasks. Another way to cut time cycles stays in the move of some of the key decisions points forward even if taking such a decision before the fields of trial are done is risky (but rapid manufacturing could be worth the risk). Example: Accelerated Covid vaccine development (Result was a significant reduction in the field trial times and the elimination of recycles). A last interesting thing is that this Lean approach is consistent with Agile’ principles.
Last, Agile development is an incremental and iterative method, allowing you to adapt your project as he moves forward as the development process is broken into a series of short sprint (typically around 2 to 4 weeks). The whole thing based on self-managed project teams allowing 100% dedication to the one selected project.
When speaking about managerial implications, two aspects must be addressed.
To ensure optimal project selection, managers need to create effective portfolio management, using methods like the Productivity Index or Qualitative Scoring Models. The Productivity Index optimizes portfolio value by weighing project value against limited resources, while Qualitative Scoring Models predict new-product outcomes, fostering transparent decision-making.
To accelerate a project, dedicated core team members need to only focus on a particular project using problem-solving techniques to address delays or streamline lengthy tasks. Moreover, the agile method is recommended to boost flexibility in responding to changes and to enable quick adaptations.
The topic of accelerated innovation is under-researched, and the limited research that has been conducted has yielded inconclusive results about acceleration’s expected benefits. One reason for this inconclusive outcome comes from unreliable and often invalid metrics that try to capture the benefits of speed to the market. In order to cut time cycles, a firm may undertake less innovative projects and cut corners. Similarly, to speed up development, a company might skip certain steps or checks in the development process. Using Agile methods when developing a physical product is much different than a software. In the same way, in all projects, project teams, driven by time, may become too committed to the initial project and plans, and fail to pivot when needed.
Additional relevant sources:
Balzano, M., Marzi, D. (2023). Exploring the pathways of learning from project failure and success in new product development teams. Technovation, 128.
Aiqi, W., Song, D., Yihui, L. (2022). Platform synergy and innovation speed of SMEs: The roles of organizational design and regional environment. Journal of Business Research, 149, 38-53.
Xiaocuan, Z., Zhenxin, X., Maggie Chuoyan, D., Jibao, G. (2019) The fit between firms’ open innovation and business model for new product development speed, A contingent perspective. Technovation, 86-87, 75-85
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