The Start-up as a Process
This article is a part of the book “How to Build University Start-up Ecosystems: Five Information Patterns for Success.”
Non-technical founders such as Melissa are often advised to go and find a technical co-founder. This advice leaves much of a non-technical founder’s success then to luck, for they might need to attend dozens of events in the hopes of meeting a technical founder, and might never find one. This advice also places non-technical founders in a dependent, supporting role to technical founders.
To change this dynamic Community Information Designers (CIDs) need to help non-technical founders reorient their thinking. The clearest way to do this is through a schema, or information pattern, that can highlight the value of their work to themselves, potential co-founders, and investors. This information pattern is called the Start-up Loop that focuses on the flow of value through a repeatable process.
Schemas of Building
There are currently two consistently cited mental models for how founders should think about building their companies: the Business Model Canvas and the Lean Start-up Approach.
The Business Model Canvas was created by Alexander Osterwalder and Yves Pigneur in their book “Business Model Canvas” in 2010 (Osterwalder). Before the 2000s there was a linear approach taken to product development in start-ups. Start-ups were viewed like typical companies, just smaller in scale. The guidelines for founders was to spend weeks to develop a business plan, complete with five and ten revenue projections and COGs profitability assessments. When the business plans were complete, founders would spend months pitching investors to secure the hundreds of thousands in investment needed to hire a team of software engineers. Then product development happened on the scale of months to years.
As computing costs became lower and coding languages more efficient in the early 2000s, start-up founders found that they could build and test an idea in the two or three weeks it would traditionally take to develop a new business plan. When experimentation could happen faster and cheaper, suddenly start-ups did not need to be beholden to the product development structures of large companies. They could act differently.
The Business Model Canvas, developed in 2010, at its core is a mental model that shows this shift away from long business plans towards short form hypothesis testing across nine key business categories. Just one piece of paper helped reorient the entire business community around a new way to build that was faster than the traditional “waterfall” method. This is the power of a mental structure to be able to change people’s thinking about entrepreneurship in a way that increases the effectiveness of their actions.
In 2011 Eric Ries added to the Business Model Canvas the concept of the lean start-up in his book “The Lean Startup: How today’s entrepreneurs use continuous innovation to create radically successful businesses” (Ries). The lean start-up’s methodology is composed of three actions: build, measure, and learn. Founders should build a Minimum Viable Product that has just enough features to offer value, measure the response from customers, and then analyze whether they should pivot or refine their product.
From Product to Process
The Business Model Canvas highlights how founders should concentrate only on defining how they would create value in key categories, while the lean startup’s Build-Measure-Learn approach emphasizes quick testing and learning.
Both of these models however still position the founder as needing a technical product to test. The Start-up Loop Diagram takes the best components of these two previous methodologies and reorients them for non-technical founders. The product is replaced by a value generation process, and seen as only one aspect of the company; the emphasis is on the flow of value, or money, through the system as a whole.
After each iteration through the Startup Loop process, founders then can make a decision within each of the four categories: to expand (do more of what they are currently doing), make their process more efficient, or to pivot in a new direction.
The end result after founders do this loop dozens of times is likely to be a technical product. In fact, this drive towards increased efficiency and expansion is the primary difference between a small business and a scaling company. But a founder’s first product does not need to start with an app or a website at all, and by visually representing holistic flows over a technical product, non-technical founders can better display the value they do have.
Perhaps Melissa could have started by taking out an ad in a newspaper that offered her services as a consultant for those who had recently lost a loved one, and she would source a funeral home and be an intermediary. Slowly, Melissa could have added customers by word of mouth as she built a directory of local funeral businesses. This approach does not scale, but it does enable action that moves her towards validation of her company’s product market fit hypothesis in a way that looking for a technical cofounder does not.
Information patterns have incredible power. When non-technical founders have a mental picture of how they can move through a feedback loop for their start-up without a product, they can position themselves mentally as having more control over their company’s fate and a more active role in its success. They are no longer founders with “just an idea” waiting for a technical co-founder to do the work. They are validating hypotheses just like technical co-founders, simply with different methods.
When it comes to the moment when non-technical founders do need to scale their work, Community Information Designers can play a pivotal role to create the infrastructure that can help non-technical founders make this transition from process to product.
