Lean Startup and the Business Model: Experimentation Revisited

Forthcoming in Long Range Planning (Open Access)

6 Pages Posted: 30 Jul 2019 Last revised: 8 Sep 2020

See all articles by Teppo Felin

Teppo Felin

University of Oxford - Said Business School

Alfonso Gambardella

Bocconi University - Department of Management and Technology

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Todd Zenger

University of Utah

Date Written: June 29, 2019

Abstract

Lean startup and the idea of a business model have become popular in the context of startup experimentation, innovation and strategy. In this paper we discuss and critique the assumptions behind lean startup, specifically how the approach conceives of hypothesis development and startup experimentation. While the scientific aspirations of the approach are to be applauded, we argue that the prescriptions suggested by lean startup feature challenges and unintended consequences. Lean startup's heavy emphasis on readily observable feedback and immediately validated learning undersells the entrepreneurial scientist's central task of composing a novel theory and hypotheses, prompting instead a search for value and validation only where it is easy to observe it. In short, we argue that lean startup inadvertently mis-specifies the nature of hypothesis development and promotes incremental experiments that, more often than not, only generate incremental value. Furthermore, the favored hypothesis-generating tool of lean startup—the business model canvas—lacks specificity in helping startups craft unique, firm-specific hypotheses and critical experiments for testing theories. After considering these challenges, we offer the outlines of an amended and alternative approach to startup science, innovation and experimentation.

Keywords: entrepreneurship, lean startup, business model, strategy, organizational economics, innovation, technology

JEL Classification: D2, D83, D84, L26, L1, L2, M1, M13

Suggested Citation

Felin, Teppo and Gambardella, Alfonso and Stern, Scott and Zenger, Todd R., Lean Startup and the Business Model: Experimentation Revisited (June 29, 2019). Forthcoming in Long Range Planning (Open Access), Available at SSRN: https://ssrn.com/abstract=3427084

Teppo Felin (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

HOME PAGE: http://sites.google.com/site/teppofelin2/

Alfonso Gambardella

Bocconi University - Department of Management and Technology ( email )

Via Roentgen 1
Milan, MI 20136
Italy

Scott Stern

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States
617-253-3053 (Phone)
617-253-2660 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Todd R. Zenger

University of Utah ( email )

David Eccles School of Business
1655 East Campus Center Drive
Salt Lake City, UT 84112
United States
801 585-3981 (Phone)
801 581-7939 (Fax)

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