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MBA Essentials
MAR 6, 2020

The 3 Paths for Launching Your Startup

By Reiji Yamanaka
iStock/sesame

When it comes to startups, there are a few standard, respected methods for getting a new company up and running. Each has its own developers and history of success. How can aspiring businessowners know which path is best? Perhaps the better question is which path is best for you?

The Stanford Way: The Lean Startup

The concept of the lean startup was developed by adjunct Stanford University professor Steve Blank and Eric Ries, bestselling author of The Lean Startup.

The lean startup method has since become the de-facto standard of entrepreneurship education, especially after Blank released The Lean LaunchPad Educators Teaching Handbook, an online teaching manual for training other trainers worldwide.

Basically, this method is all about repeating the cycle of prototyping (called MVP: Minimum Viable Product), experimentation (customer interviews), and pivoting. Only after confirming the product-market fit can you fix your product and launch a business. While this may sound obvious, the lean startup concept was developed based on the failure of many entrepreneurs, too many of whom spent millions of dollars without ever understanding whether their product actually fit with customers’ needs.


©GLOBIS

The MIT Way: 24 Steps for Disciplined Entrepreneurship

In 2013, Professor Bill Aulet of MIT Sloan School launched a new book entitled, Disciplined Entrepreneurship: 24 Steps to a Successful Startup. He broke down the rigorous process from market segmentation and market identification all the way to final product definition.

Entrepreneurs are often overly eager to jump-start the process and ignore a critical step, such as the customer’s willingness to pay. Aulet created his twenty-four stepsーeverything from market segmentation to determining customer decision-making units and, ultimately, developing a product planーto ensure that no single piece is missed.

©Bill Aulet, “Disciplined Entrepreneurship: 24 Steps to a Successful Startup”

One key difference between the lean startup and these twenty-four steps is that Aulet’s approach forces you to calculate—very MIT! Aspiring startups need to calculate the market size of their initial target segment, as well as future potential market size. To understand profitability, they also need to calculate their customers’ lifetime value and the cost of customer acquisition.

Others have developed similarly systematic approaches to startups. In Japan, Masa Tadokoro’s book Startup Science covers twenty steps of new business development, starting with the initial ideation and concept verification (both less emphasized by Aulet). Tadokoro also crystallized a “transition to scale” process that includes organizational development.

The Babson Way: Just Start!

Babson College, recognized as the No.1 school for entrepreneurship education, takes a drastically different approach to startups. Professors Leonard A. Schlesinger, Charles F. Kiefer, and Paul B. Brown  co-authored Just Start: Take Action, Embrace Uncertainty, Create the Future.

The book criticizes taking too long to plan or try to predict the future. Instead, it emphasizes the importance of taking small but real creative action that triggers the learning journey of entrepreneurs. The authors call this “creaction.” According to their framework, entrepreneurs should keep seeking the next creaction within the range of affordable loss.

This echoes Babson’s key message to MBA students of “entrepreneurial thought and action.” A disciplined thought process is important, but taking action is even more so. The emphasis on action may be the secret sauce of Babson’s entrepreneurship education.

Which path fits you best?

Feeling overwhelmed yet? Rest assured, all three options are great. All three schools are turning out excellent entrepreneurs. Even better, all three methods are proven, under the right circumstances. Does that mean you could pick any path and find your way to success?

Well, not exactly.

Choosing which path to employ is an important decision. Either as an entrepreneur or a new business development specialist in a large corporation, you need to lay out your process. This includes spending just the right amount of time on rigorous analysis before jumping in. How much time is that?

It depends.

The optimal path depends on the nature of your business and the competitive dynamics of the market.