What are the hypotheses that have started this strategic journey?
Modern startups recognize that the path from initial concept to successful launch is not a straight line. In fact, it involves almost literally going in circles.
In 2008 Eric Ries wrote a blog post titled “The lean startup” which reflected changes that he’d been observing in the entrepreneurial environment. The name stuck and a few years later he expanded it into the best selling book The Lean Startup.
For each of my first few startups we followed the old model. My co-founders and I had a great idea. We spent a few months researching and writing a business plan. We pulled together the resources to make it real. Built everything and launched.
That business plan was full of “truth” statements that started with phrases like “we will…”, “customers will…”, and “the market will…”. We really believed all those statements! In reality, once we launched we found out that customers didn’t…, the market wouldn’t…, and we couldn’t actually do all those things. Sometimes it all worked out okay as we figured it out as we went. But statistically, 9 out of every 10 new businesses failed to survive that startup phase.
The new model described by Ries focused on high tech startups that could leverage new technologies and new development approaches to try a radically different model. Instead of spending months developing a lengthy document full of statements claiming to be true, startups could recognize that what they had was a collection of hypotheses that needed to be tested. Technology made it (relatively) easy to rapidly and inexpensively test those hypotheses to find out whether or not they actually were true.
The lean startup methodology replaces the lengthy business plan phase with a period of rapid iteration and learning. For any given hypothesis, the team builds a test, runs an experiment, evaluates the results, modifies the hypothesis, and then repeats the whole process over again until they know what is true. This is called the “build-measure-learn” loop.
Startups are still wrong (at least) 9 times out of 10, but those mistakes are made in rapid inexpensive experiments that don’t kill the company, but rather lead to the most successful launch possible (or sometimes abandoning a bad idea before much money and time is lost).
While this lean startup methodology is best understood in terms of product development, I believe that it also applies to strategy.
When I work with startups, I encourage them, very early in their life, to develop what I call the Startup Strategy Strawman.
In business, a strawman proposal is a simple concept provided as a starting point for debate with the hope and expectation that team members will quickly “poke holes” in it, pointing out its weaknesses and identifying ways to make it stronger. Apparently, the U.S. Department of Defense originated the term and had a series of names to reflect the strengthening of the work — from strawman to woodenman to tinman and eventually to stoneman.
So, the Startup Strategy Strawman is a starting point for the business strategy. It captures the key initial hypotheses behind the startup concept, with the expectation and hope that flaws will be found and the overall strategy significantly strengthened before actual business launch.
A Startup Strategy Strawman should at the very least contain three hypotheses:
- Problem: What problem are you trying to solve? Who has this problem?
- Solution: How are you going to solve this problem?
- Cash Flow: Ultimately, how will this solution be funded? For a business, this is usually reflected in the revenue model. For a non-profit, it may be a broader funding strategy.
So, for this SDG Games startup business idea, what is the Startup Strategy Strawman?
- Problem: When most Christians read the Bible, they don’t know much about the geography being discussed, and so they lose important context in the stories that God has provided “for teaching, for reproof, for correction, and for instruction in righteousness” (2 Timothy 3:16).
- Solution: Develop games that Christians of all ages will enjoy playing that will engrain in their minds an understanding of Biblical geography so that they will naturally envision the places and journeys involved as they read God’s Word.
- Cash Flow: We will sell these games for a profit to Christian families.
In the spirit of lean startup and strawman proposals, please let me know your reaction to these hypotheses. Feel free to drop me a note at email@example.com to “poke holes” in this concept.
In coming articles, we will test and refine these hypotheses.