New Venture Realization Roadmap: Fresh Perspectives & Insights
A good process is always under review.
Introduction
In this post, I want to update our readers and subscribers on the ever-evolving process of new venture realization. My focus continues to evolve over the years to encompass new theories and practices regarding the creation and growth of new ventures.
I engage with approximately 300 founders each year as a professor and mentor. In this post, I discuss my current thinking on the new venture realization roadmap and shed light on the underlying principles that inform its components. The process breaks into eight modules, each covering a core set of activities to support the development of a new venture or innovation. This post highlights the key topics covered, emphasizing recent trends and insights from the past two years.
I hope that by sharing this updated information, you will find it captivating and thought-provoking, prompting you to assess your innovation journey critically. Whether you are an aspiring entrepreneur, a seasoned business professional, or simply someone passionate about innovation, understanding the essential elements of the new venture realization process is crucial for fostering success in today's rapidly evolving landscape.
New Venture Realization: Principles & Practices [2021 Post]
Roadmap's Eight Modules
The new venture realization roadmap is the foundational structure of all my classes in and outside Columbia University. The roadmap facilitates a deep understanding of entrepreneurship and innovation practices from high school programs to graduate courses and executive education. This knowledge develops by guiding individuals and teams through the new venture creation process as applied to an enterprise idea of their choice. Each module provides the participant with the knowledge and tools to develop a comprehensive new venture plan. At each stage, entrepreneurs learn critical terms, tools that support research and decision-making, and explanations of how each significant planning activity fits into the new venture realization process. Finally, entrepreneurs evaluate their progress at each significant juncture.
Entrepreneurs respond to a series of venture questions and exercises during each module, guiding them through planning. Entrepreneurs identify and evaluate a venture opportunity, develop an initial business model, assess the industry and market attractiveness for their venture ideas, form competitive strategies, develop & test minimum viable products, and generate complete financial statements. The program encourages entrepreneurs to hone such professional skills as creative problem-solving, analytical thinking, project management, financial analysis, and effective team leadership.
In this section, I share the intent and focus of each module within the roadmap. Each module has a description highlighting suggested actions innovators should consider as they progress. Additionally, the article highlights specific outcomes of each module and how these outcomes link to the next module. Further, I hone in on customer behavior's role in each module to illustrate how behavior interweaves throughout the new venture realization process. Finally, you will learn about selected insights and new emphasis areas within each module.
Module 1: Your Idea
Module One focuses on two principal activities, defining the elements of the customer opportunity and conducting an early analysis of a venture's market attractiveness. These two activities allow innovators to generate initial assumptions about their customers and the current marketplace.
In the first module, entrepreneurs frame the opportunity by identifying the customer's goals. Innovators can define the customer's purpose in varying ways, including solving a problem, fulfilling an unmet need, or accomplishing a job to be done. From the start, innovators make assumptions about target customers and the specific context in which they work toward their goals. These early assumptions drive much of the focus in the earlier modules as we move toward customer discovery and early product testing. Modules three through five facilitate several activities required to validate these early assumptions.
Module One begins with crafting an opportunity statement that articulates the customer's problem or job to be done, followed by what outcomes will meet the customer's needs. Even at this early stage, defined customer outcomes should be quantifiable and measurable. Therefore, a primary focus of this first module is identifying key customer behaviors necessary to achieve the desired results. Placing this essential customer behavior early in the process creates a thread that weaves throughout the roadmap and helps define future product market fit.
Opportunity Statement Template
The opportunity involves helping [Target Customer] when in [ContextContext] to [The Goal: Solve Problem, Fulfill Need, Do the job, or Achieve specific result]. In addition, the customer is looking to [ Minimize or Eliminate Obstacles] for [Desired Outcomes and Benefits] measured by these [Metrics]. Therefore, the customer must display this [Key Behavior] to achieve the desired outcome.
Module One also facilitates a preliminary assessment of the venture opportunity in the second series of activities. This early assessment focuses on four primary areas: customer, industry, founders & innovators, and supporting ecosystem.
Pre-screening analyses start with specific prompts for innovators to consider starting with the customer and immediate marketplace. Is there an urgent customer need to be addressed? Is it currently unmet in a satisfactory manner? Is a unique product solution possible? Once one has generated responses to these questions, it is time to conduct a preliminary review of what is happening in the industry. For example, it is essential to have practical knowledge of how competitors or optional solution providers are addressing the current opportunity. What role does technology play, and how is it evolving? Are there any supply chain challenges or other labor shortages? At this point, you are looking for general trends to give a sense of the overall direction of the industry. Later in Module Four, innovators dive deeper into the central marketplace and industry dynamics.
As part of this pre-screening activity, entrepreneurs assess their passion, knowledge, and access to the customer and marketplace. These considerations are essential to determine early on in the process. First, are the founders excited about the opportunity, and is it an area they want to spend considerable time and resources on? Secondly, how much knowledge do they have about the customer need areas and the industry? Finally, how close are they to the customer, the marketplace, and essential industry stakeholders? Most importantly, do they have ready access to many of their target customers?
An essential aspect of this pre-analysis is to look at the supporting ecosystem and what is readily available in terms of both industry expertise and entrepreneurial support. As founders and innovators look at their knowledge and access, gaps will arise. Specific domain expertise may be required to address the customer's needs successfully. For example, if you hope to improve a customer's health, what medical knowledge and expertise will be integral in achieving the customer's desired outcomes? Founders may also require additional knowledge from industry experts and thought leaders. Might the founding team need advice from someone with experience bringing new health tech products to market?
These early pre-screening activities cover much ground but at a high level. The goal is to ensure that the venture opportunity excites the founding team and that delivering a valuable product offering to the customer is feasible. This early analysis provides an excellent foundation to generate an initial business model, illustrating how a venture may operate to give value to the customer.
New Insight: Since the last time I wrote about the roadmap and new venture process, I have integrated new thinking about information search's role in an innovator's discovery efforts.
The Role of Information Search in Opportunity Discovery
Module 2: Your Business Model
In the second module, entrepreneurs focus on building the first business model iteration that details early assumptions about how their venture will provide value to the customer. As is commonly agreed to by my Columbia Business School faculty colleagues, we all teach aspiring entrepreneurs and innovators the Business Model Canvas (BMC), created by Alexander Osterwalder and Yves Pigneur. The BMC is a tool entrepreneurs use to develop, refine, and communicate their business models. It allows them to consider all the critical components of their business and how they interact with one another. The canvas has nine key areas that cover all aspects of a business model, from revenue streams to customer relationships. By breaking down the various components of a business model into easily digestible chunks, the canvas makes it easier to create and communicate a model that works for your business.
There are several links between the work that founders do in Module One and the assumptions they list in the various BMC areas. From the customer perspective, each component of the opportunity statement generated in Module One corresponds to the early BMC assumptions about the customer segment and the value proposition. In Module One, you will have made premature judgments about the target customer, their context, goals, obstacles, and desired outcomes. This information supports the two most important BMC elements - Customer Segmentation and Value proposition.
The customer segments element focuses on the specific problem the customer is trying to solve, the underlying task they need to accomplish, and the challenges or pain points they experience while attempting to do so. The customer segments element in the BMC is crucial as it defines the target customers for the product or service. It outlines select demographics, needs, and behaviors. By identifying the customer's needs within a specific context, founders can create a value proposition that resonates with them. The value proposition element addresses what a product or service needs to offer to solve the customer's problem better than other solutions in the market. The value proposition element answers the question of what value the customer seeks from a practical solution and includes functional and emotional outcomes and the relief of pain points. These two BMC elements illustrate the alignment between the customer segment and value proposition in meeting the market's needs. This alignment is commonly referred to as opportunity-solution or product-market fit.
The pre-screening work in Module One also helps to identify several aspects of the remaining BMC elements. As founders work through the current information and trends of the marketplace and industry, they can start to make assumptions about how customers are reached and treated and what they like and don't like about competing products. During this analysis, specific information about pricing models may become evident, thus aiding in some preliminary assumptions of revenue streams. During this early analysis, you also identify important industry and ecosystem stakeholders; many of these may become integral to your business model as key resources and partnerships.
By the end of this module, the entrepreneur generates an overall business model. The model articulates the value proposition and rationale for customer selection or product-market fit; the scope and channels for products/services offered by your venture; proposed organizational design, including key activities, resources, and partnerships; and initial assumptions on revenue streams and cost structures. Entrepreneurs refine this preliminary business model throughout the program. Major refinements occur after innovators have conducted a significant degree of customer discovery, the focus of Module Three.
New Insight: There have been several posts on business model formation. Validating your business model is an iterative process and thus creates a certain amount of redundancy throughout venture development activities.
Managing Redundant Knowledge in Venture Development
Module 3: Your Customer
Module Three focuses on defining your target customer in detail. As part of Modules One and Two, founders consider some early assumptions about the type of customer they should focus on in the early stages of venture development. The choice is vital as these early customers become integral to the discovery and product testing process. I have repeatedly found that when these early customers are selected carefully and engaged empathetically, they become a venture's first customers. The best way to lay the groundwork for growth is to find a narrow, carefully defined market focusing on a specific target customer or end user.
When deciding on your early target customers, consider several criteria. First and foremost, founders need to start with their initial business model. Do they see their venture as a business-to-consumer (b2c), business-to-business (b2b), or either both (multisided) or some hybrid (b2b2c)? I have learned over time that founders are not always clear on where they fit in regarding their target customers. For example, should our venture focus on the supply or demand side or both? This type of question is essential to consider, and the answer can be nuanced. The answer will depend on several factors, including founder marketplace access, who will ultimately be using the product, and who will be paying. Secondly, founders must consider specific questions about their target customers, as shown below.
B2C
Does the customer segment want/need to solve the problem?
Have they been actively looking for a solution?
Are they dissatisfied with current solution options?
Can they afford to purchase your product or service?
Are they readily accessible to you in terms of marketing and distribution?
B2B
Does your target business have a compelling reason to buy your product or service? Is the need urgent?
Are the primary business needs of the customer aligned with your solution?
Do the firms' sales cycles and approval processes work for your venture financially?
Do you have enough contacts | access for customer discovery, MVP testing, and early market entry?
This first part of this module culminates in a detailed customer profile that articulates the essential demographic data, key behavioral characteristics, and the reasons behind selecting said customer as the early target for your venture. Founders are also encouraged to create a companion customer persona that illustrates a fictionalized representation of a target customer within the segment profile. Customer personas allow you to articulate lifestyle and behavioral manifestations to capture their perspective. A standard narrative includes a brief synopsis of customer experience, context, and challenges while working towards a specific goal or job.
With the target segment identified, entrepreneurs develop pre-solution journey maps to enhance their understanding of the customer's experience to achieve the desired outcome. Experience has demonstrated how important this activity is to the innovator's capacity to understand what the customer is going through, including key behaviors and obstacles to a specific goal. I have grappled with the best time to create this first journey map. Many innovators comment that they find it helpful before the interview process, while others prefer to complete it as part of the post-interview documentation. I see both sides, though I feel that conducting this mapping before the interview allows you to design a more contextualized interview protocol that will help to elicit more profound responses to critical behaviors, especially those that customers may be less conscious of during initial descriptions.
Customer discovery and engagement are vital components of the entrepreneur's activities. Extensive customer discovery planning includes identifying early customers to interview and survey. Interviews and surveys are prepared and executed. The resulting customer data helps to validate business model assumptions and drive early product design and testing. This planning leads to the execution of early customer engagement, an activity that continues throughout the venture process.
One of the things I have learned over time is the importance of documenting the stages of the discovery process. Founders are encouraged to establish a primary customer relations management database to track from the early interview and survey requests to response times and follow-up engagement. This customer tracking activity provides an early glimpse of a venture's potential sales cycle and how long it takes to move the customer from initial awareness to paying customer and brand advocate. This early sales cycle data can be integral to customer acquisition strategies (Module 6) and financial projections (Module 7).
New Insight: As I observe entrepreneurs and innovators enter the customer discovery phase of their journey, it becomes more evident the importance of establishing a long-term relationship with customers and stakeholders early in the process.
CRM’s Essential Role in Early Venture Development
Module 4: Your Market
In Module Four, founders add secondary research to their market knowledge. Activities from Modules 3 and 4 run concurrently and influence each other throughout the process. While innovators engage with target customers, they can conduct internet-based research and connect with essential industry stakeholders and domain experts. As part of the discovery process, I always remind innovators that these are ongoing activities, one influencing the other.
Building on early segmentation efforts, entrepreneurs now determine the market size of each target segment resulting in an understanding of how many early customers are available during early market entry. While there are several practical frameworks, I recommend entrepreneurs use a cascading model where you start at the broadest definition of the market and then peel back the layers. Applying a top-down and bottom-up approach, one honed in on the market size that reflects the number of customers likely to reach in the venture's early period. The market sizing activity builds on the customer profile information collected in Module Three. While in the earlier module, creating the profile so that it is quantifiable is emphasized in preparation for this market sizing activity.
Entrepreneurs conduct a comprehensive competitive analysis of various solution providers, identifying key competitors in their industry sector and exploring their respective business models. The emphasis is on thoroughly analyzing every element of each competitor's business model. The message is that differentiation and innovation can come from any part of a venture's business model. As one investigates competitors, look for strengths and weaknesses across their business model. In many cases, founders are surprised to discover that there are opportunities to be different beyond the product offering. Differentiation strategies can emanate from limited segmentation, poor customer engagement, inadequate core competencies, and less-than-desired pricing models. From this analysis, entrepreneurs identify a sustainable market entry positioning advantage, capitalizing on internal strengths and mitigating any challenges and threats from the external environment. As a result, innovators develop strategies emphasizing competition, globalization, sustainability, and market potential for their new ventures.
The last activity in this module asks entrepreneurs to dive deeper into marketplace analysis. It builds on what a founder has learned from early pre-screening activities from module one and information derived from customer discovery. Now, one will have a more informed perspective on the significant domain experts and industry stakeholders. At this juncture, entrepreneurs should identify specific individuals and organizations that they desire to connect with in the service of further analysis and advisement. By the end of this module, entrepreneurs assess the overall marketplace and ecosystem, discover how and with whom to obtain feedback and validation on market acceptance and evaluate the industry in terms of maturity and growth potential.
After considerable market analysis and customer engagement, the entrepreneur will have a significant amount of data to inform the design of their early product offering. Considering all this information and checking what assumptions have been validated or refuted, it is time to consider how to design an earlier version of your product and test it with potential target customers.
New Insight: One of the recent emphasis areas is for founders to use some framework to ensure that they consider any external trends that may impact longer-term sustainability and growth.
Module 5: Your Product
In Module Five, entrepreneurs explore product innovation and develop a plan for development and market testing. The earlier modules' extensive market research and customer engagement inform the design and testing activities. Over the past year, I have increasingly integrated behavioral science practices into the early product design process. Incorporating behavioral design into a minimum viable product (MVP) can enhance the chances for success and growth.
From working with a few hundred founders with this new behavioral focus, the updated module infuses the behavioral design into each step of designing and testing a minimum viable product (MVP). Check out the revised process steps below.
Define the desired outcome: In behavioral science, the desired outcome refers to a behavior's specific result or consequence. It can be measurable and observable, such as achieving a goal, completing a task, or experiencing a particular outcome. For example, a desired result could be improving health or increasing productivity. However, it. It can also encompass more abstract goals, like feeling a sense of accomplishment or satisfaction. By clearly defining the desired outcome in measurable units, the product team can align their design efforts with the specific goals customers seek to accomplish.
Identify the target behavior: The next step is to identify the key behavior the product intends to encourage, directly contributing to the desired outcome. This behavior should be observable and measurable, allowing designers to analyze the underlying motivations, intentions, and beliefs driving it. By targeting specific actions leading to meaningful change, innovators can focus on promoting behaviors that align with the desired outcome. For instance, if the goal is to increase physical activity, a critical behavior could be taking a daily walk for a specific period or the number of steps.
Identify enablers and barriers: Enablers and barriers can either facilitate or hinder the performance of the target behavior. Enablers refer to resources, support, motivation, skills, and opportunities that make it easier for individuals to engage in the behavior. For example, they can include access to healthy food options or a supportive social network. On the other hand, barriers are obstacles, challenges, limitations, or negative influences that make it more difficult to perform the behavior. These may include factors like a lack of transportation or social stigma. Understanding the enablers and barriers associated with the target behavior is crucial, as it helps inform the design of interventions that maximize enablers and minimize barriers, thereby increasing the likelihood of behavior change.
Prioritize product benefits and features: Product benefits are specific ways in which the product or service helps customers achieve their desired outcome or solve a problem they are experiencing. These benefits should be quantifiable as much as possible to allow for effective differentiation from competitors and to persuade customers to choose the product. For example, if the desired outcome is to improve overall health, a benefit could be a set of features that enable weight management. On the other hand, features are the specific product characteristics or attributes that allow the delivery of the desired benefits. They describe the technical aspects of how the product works. While features describe what the product does, benefits describe how it helps customers achieve their goals or solve problems. For instance, a feature of a weight loss program could be a chat function that connects users with a health coach, facilitating the benefit of weight management. Prioritizing the most valued benefits and selecting the minimum features necessary to deliver those benefits is crucial in MVP design.
Test and iterate with a feedback loop: Once innovators identify the desired features, the MVP must be tested and iterated upon to ensure it effectively encourages the desired behavior. This process involves selecting appropriate MVP approaches based on the current state of development and determining the target customers who will participate in the trial. Continuous testing and iteration are essential to identify the most effective design choices, including user and A/B tests. Additionally, incorporating a feedback loop into the MVP design, such as notifications, progress bars, or gamification techniques, provides users immediate feedback on their behavior. This iterative process allows innovators to refine the MVP and enhance its ability to drive the desired behavior.
New Insight: I have focused on applying behavioral science research and knowledge to the venture realization process in the past two years.
Leveraging Behavioral Science to Drive Early Product Design
Module 6: Your Brand
As innovators begin to validate their product's functionality and value, focusing on positioning your solution in the marketplace is natural. During Module Six, entrepreneurs develop their go-to-market strategy. This strategy includes product positioning, pricing models, promotional tactics, and channel management. The first part of this module discusses the importance of marketing and brand management for ventures, emphasizing the need to attract and retain customers through a portfolio of integrated activities. Next, it introduces the "Four Ps" (Product, Price, Promotion, and Place) as standard tools startups use to design their marketing mix. As before, I suggest focusing on the initial target customer and viewing customer interaction as a transaction with multiple elements that should work together seamlessly. As the venture grows, entrepreneurs review strategies to accommodate different customer segments and their specific needs and desired outcomes.
One of the significant updates to this module is an enhanced look at the role of product positioning. Positioning is crucial for a brand's product as it involves creating a distinct perception in the minds of target customers, emphasizing the key benefits, and distinguishing it from competitors. The goal is to develop a compelling message that moves customers from interest to purchase to advocacy. Founders must consider essential factors in positioning, such as language and context. The words and framing significantly impact how customers perceive and compare the product. By shifting the context, founders can influence customers' thinking and market perception. Startups often have a limited view of their product and its market potential. Understanding the customer's problem from their perspective and aligning solutions is essential for success.
Product Positioning Statement Template
A positioning statement can be structured like this:
For (target customer or market)
Who (have a compelling reason to buy)
Our product is a (product's placement within a new or existing category)
That provides (a critical benefit that directly addresses the compelling reason to buy)
Unlike (primary alternative source [that is, competitor] of the same benefit)
Our product (key difference or point of differentiation to the specific target customer)
The second section of this module focuses on developing cost-effective customer acquisition strategies leading to optimal market entry. During this stage, entrepreneurs prioritize the promotional tactics they plan to test to reach their target customers. By applying sales funnel strategies, the entrepreneur evaluates each promotional activity regarding potential reach and conversion potential. Finally, entrepreneurs calculate the costs to acquire new customers as they move to more comprehensive financial planning in the next module. These activities lay the foundation for early financial projections, the focus of module 7. Calculating detailed sales funnel estimates supports early revenue projections and customer acquisition costs, typically a significant expense item for startups.
The last section comprehensively looks at translating your positioning statement into a compelling brand story for the customer. These activities help to form the early brand presence for your enterprise. For example, when starting a new venture, founders often spend significant time deliberating on the company name, logos, and branding elements. While these decisions are crucial, they alone do not create a brand. Instead, every action the founder takes communicates something about the brand to early customers, emphasizing the importance of addressing customer needs and building transparent relationships.
Consider several factors before finalizing the company name, logo, and unique selling proposition. The brand's personality and customers' perception of it is vital, as it shapes the venture's identity and is influenced by the founder's behavior and actions. Consistency in messaging and experiences across all customer interactions is crucial in establishing a strong brand identity. Credibility is another essential element, as customers need to believe in the venture and its offerings. Articulating the purpose, problem-solving abilities, and value provided by the product or service is challenging but crucial. Expressing this value through a concise tagline or unique selling proposition can be effective.
Additionally, highlighting what sets the product apart from existing solutions in the market and motivating customers to try something new is essential. Getting the branding right early on enhances the resonance of future marketing efforts and ensures the brand can grow and adapt to the business. Finally, sustainability, extendability, and the ability to drive future creative directions are vital for long-term success. By addressing these issues, founders can make informed decisions contributing to an effective and enduring brand.
One of the recent updates to this module focuses on the importance of creating a set of brand guidelines. Startups should generate a set of branding guidelines to ensure consistent and coherent representation of their brand across all stakeholders, from team members to channel partners. These guidelines serve as a blueprint that outlines the essential elements of the brand identity, including the logo, typography, colors, tone of voice, and visual assets. By establishing clear and comprehensive branding guidelines, startups can maintain a unified and professional image, fostering brand recognition and loyalty. It helps team members understand and embody the brand's values, consistently communicating its message and maintaining a cohesive brand identity. Additionally, by extending these guidelines to channel partners, such as distributors or resellers, startups can ensure that their brand is accurately represented and aligned with the intended image, regardless of the touchpoints through which customers interact with the brand. Ultimately, branding guidelines provide a framework that helps startups build a solid and recognizable brand presence, enhancing their competitive advantage in the market.
New Insight: Recent writings have emphasized one of the significant decisions startups face regarding positioning their product offering in the customers' minds.
Product Positioning for Startups
Module 7: Your Financial Plan
All the research and decisions support the assumptions required to build the business's overall revenue and profit models. First, entrepreneurs create preliminary financial projections based on estimated revenues, cost of goods, and anticipated operating costs. This module starts by highlighting the common mistakes made by founders when generating early financial projections.
Three major startup financial planning mistakes are overestimating customer demand without conducting thorough research and understanding customer behavior, leading to inaccurate demand forecasts and potential revenue and sales overestimation; underestimating resource requirements and costs by failing to consider hidden costs and the impact of economies of scale, resulting in inadequate budgeting and potential financial strain as the company grows; and miscalculating the capital required to operate the venture, including the burn rate, which can lead to running out of funds before reaching revenue or investment milestones. To mitigate these mistakes and others, conducting a breakeven analysis and establishing a detailed cash flow statement to monitor cash position and ensure financial sustainability is crucial. As a starting point, founders are encouraged to build a one-year model to help focus on early revenue drivers and startup costs. Once key assumptions are defined, venture teams generate a three-year projected income statement and cash flow analysis.
Entrepreneurs select important startup metrics to measure and monitor as the venture evolves to support goal attainment. In the early stages of a startup, it is crucial to emphasize metrics that focus on customer engagement. While metrics such as revenue and user acquisition are essential, they may not provide a comprehensive picture of the business's long-term success. As your venture moves from early product testing to product launch, you shift your focus from customer engagement to acquisition. You are not interested in the acquisition in the early MVP iterations, only in engagement. In fact, in most cases, it is an excellent strategy to constrain the number of potential customers actively engaged with your product as it evolves. Once you know that one hundred customers are continuously using your product and are already recommending it to others, you are ready to focus on acquisition. The metrics you focus on are very much associated with your product's development stage. For example, in most business models, you step from activity to stickiness to virality. Only then do you lean into acquisition and retention?
By the end of this module, innovators choose the optimal sources of capital for venture fundraising, and entrepreneurs define how much money they need and when. In recent updates, the emphasis has focused on early funding sources that don't involve equity sharing. There are a growing number of funding sources available for new ventures. For early-stage startups, self-funding, friends and family, crowdfunding, and loans are usually the most feasible options. Recently, startup founders are also taking advantage of government support programs to supplement the more common sources. I think it is worth taking these early funding stage methods seriously. There are several advantages and little downsides. Along the way, founders learn how to focus, create a disciplined approach to their venture development, and possibly find ways to build a business without requiring outside funds.
New Insight: The more I work with new founders, the more apparent the role of bootstrapping plays in creating a management and financial discipline at the earliest stages of development.
Module 8: Your Launch
In this last module, entrepreneurs learn about important startup legal considerations in the final module, including intellectual property management, founder's agreements, and equity decisions. One of the newest legal trends that startup founders should be aware of as they develop their ventures is the increasing importance of data privacy laws. In recent years, there has been a growing awareness of the importance of protecting personal data, and governments worldwide have enacted new laws to regulate the collection, use, and disclosure of personal data. These laws can have a significant impact on startups, as they may require startups to obtain consent from users before collecting or using their data, and they may also need startups to take steps to protect the security of personal data. This module addresses the importance of startups developing a privacy policy that outlines how customer data is collected, used, shared, and protected clearly and transparently.
The module has always emphasized protecting the startup's intellectual property. However, artificial intelligence (AI) and machine learning (ML) are becoming increasingly crucial for businesses of all sizes. However, AI and ML can also raise intellectual property concerns. Therefore, startups that use AI or ML should be careful to ensure that they are using the technology in a way that does not infringe on the intellectual property rights of others.
Team selection and management for new ventures have challenges, especially when many skills are required but limited resources. This module explores strategies and tactics to bring together the right players to provide the necessary expertise and core competencies to meet the new venture's value proposition and position the company for future growth. In addition, looking for co-founders and partners, managing family relationships, and partnering with complementary organizations are addressed to support the business model and overall innovation launch into the marketplace.
This module increasingly looks at the importance of fostering the right startup culture in alignment with the founders' values. There are specific steps to enable a startup culture that drives innovation through inclusive leadership and collaboration in behavior and practice. For example, at Columbia Business School, we have added special class sessions on the importance of diversity and inclusion to create a culture that enables sustained innovation and growth. Founders can use the business model canvas to identify ways for an organization to have an inclusive culture by analyzing each section of the canvas and ensuring that inclusivity is a critical element of each of the nine areas.
New Insight: Founders ignore that trademarks are a vital strategy for protecting a startup's intellectual property.
Intellectual Property | Trademark Strategy for Startups
Cross-Cutting Themes
As entrepreneurship practices continue to evolve, new perspectives shape how founders approach opportunity identification, venture creation, and driving growth. Four emerging areas thread through and influence the startup journey:
Behavioral science provides insights into consumer behavior that inform product design and marketing.
Knowledge management practices empower systematic idea capture and expansion.
Artificial intelligence presents new possibilities for accelerating and enhancing various startup functions.
Social responsibility trends create demand for sustainable and ethical practices.
These cross-cutting themes introduce essential considerations into the entrepreneurial process regarding leveraging behavioral insights, optimizing information flows, responsibly applying AI, and incorporating environmental, social, and governance goals. We will explore how these perspectives empower founders to create ventures that better meet customer needs, make informed decisions, harness technology for competitive advantage, and embed responsible values for long-term success.
Behavioral Science. Applied behavior science has become a prominent part of any conversation focusing on behavior change. Our good colleague Matt Wallaert states, "Applied beSci works by centralizing behavior as an outcome and science as a process…applied beSci is explicitly about changing behavior." Generally, behavioral science refers to studying human behavior and its influencing factors. It encompasses a range of disciplines, including psychology, economics, and sociology.
Behavioral science design is crucial in supporting new venture development through various means. First, by leveraging behavioral science insights, ventures can gain a profound understanding of their target customers' needs, preferences, and behaviors. This understanding empowers experiences to design products and services that are more appealing and effective, resulting in enhanced customer satisfaction and loyalty. Secondly, behavioral science design promotes a human-centered approach to product and service development, prioritizing user needs and experiences. This approach creates more intuitive and user-friendly products, fostering greater adoption and success.
Additionally, behavioral science enables ventures to create more impactful marketing and advertising campaigns. By comprehending the psychological factors that influence consumer decision-making, ventures can craft messaging that profoundly resonates with their target audience, motivating them to take action. Moreover, integrating behavioral science principles into product and service design enhances the user experience, making it more engaging and satisfying. This improved design, in turn, increases usage and customer retention rates. Finally, behavioral science designs encourage behavior change among users. Ventures can design products and services that subtly influence users to adopt healthier habits or embrace more sustainable practices, generating a positive societal impact and gaining a competitive edge.
The modules allow founders to integrate behavioral science principles during customer discovery, product design, and go-to-market strategy. For example, creating detailed customer persona psychographics enables more targeted messaging. Prototyping product features informed by behavioral biases facilitates greater engagement.
Knowledge Management. We continue to work through the importance of managing the volume of information that innovators must consider throughout the venture process. To support these efforts, we have created the SCORE Method: Search, Capture, Organize, Recognize, and Expand.
Information Search involves both active and passive search approaches. Entrepreneurs actively search for information on potential opportunities, while passive search involves chance discoveries during unrelated activities. Optimizing the search activity requires utilizing both methods to enhance information gathering. Entrepreneurs should also be aware of cognitive biases affecting their information search, such as the availability heuristic and confirmation bias. Strategies to offset these biases include embracing cognitive awareness, seeking diverse perspectives, and applying structured design thinking.
In the search for new opportunities, entrepreneurs focus on specific areas and conduct knowledge self-assessments to identify gaps in understanding. Pre-screen categorization involves creating separate folders or notebooks for customer information, problem solvers, and solution providers. Searching and capturing data from various sources helps build a meaningful customer profile and identify potential solutions. Keeping a search journal and utilizing tools like Google Alerts can optimize the search process by tracking effective keywords and monitoring new content from relevant sources. By following these strategies, entrepreneurs can gather and organize essential information to assess the viability of venture ideas and make informed decisions.
The process emphasizes optimizing information search, organized capture, and connecting insights across modules. For instance, search strategies can leverage AI to generate innovative ideas. Capturing information inaccessible knowledge bases informs assumption testing.
Artificial Intelligence. While AI has been developing for some time, the advent of generative AI has profoundly impacted how we think about information, creativity, and innovation in general. Innovators apply tools like ChatGPT to every conceivable area of business formation and operations. Generative AI (or regenerative AI) is the application of artificial intelligence techniques to generate new ideas, designs, or solutions. Generative AI can be a valuable tool for entrepreneurs and innovators in the context of new venture creation.
Generative AI is revolutionizing new venture creation in several ways:
It aids in idea generation by generating innovative concepts based on specific criteria, providing entrepreneurs with disruptive ideas they may have overlooked.
It assists in product design and optimization by training AI models on user feedback, enabling the creation of products that better cater to customer preferences, thus enhancing market competitiveness.
Generative AI analyzes extensive data to extract valuable market and consumer insights, empowering entrepreneurs to identify emerging opportunities and make informed decisions.
It contributes to business model innovation by generating alternative models and simulating scenarios, helping entrepreneurs identify new revenue streams and develop innovative approaches.
These tools automate creative content generation in marketing and advertising, enabling entrepreneurs to produce personalized, compelling content at scale and effectively reach their target audience.
This application is emerging rapidly. Innovators must remember that while generative AI can be a powerful tool, human expertise and judgment drive strategy and decisions. Entrepreneurs and business owners need to provide guidance, validate generated ideas, and refine them based on their domain knowledge and market understanding. Generative AI serves as a supportive tool that expands the possibilities and aids in the process of new venture creation.
Social Responsibility. Startups today face increasing stakeholder demands to integrate environmental, social, and governance (ESG) considerations into their business practices. Climate change, data privacy, diversity and inclusion, and ethical supply chains have entered mainstream dialogues. Consumers, employees, and investors evaluate companies based on sustainable and responsible behaviors aligned to their values.
As a result, embedding social responsibility into the startup's ethos early on provides strategic advantages. Adopting eco-friendly operations, ensuring representative hiring, and safeguarding customer data privacy demonstrate social commitments that attract talent and investment. Prioritizing ESG also sparks product and business model innovation aligned with macro trends that shape markets. Startups that purposefully build environmental sustainability, community engagement, ethical governance, and inclusivity into their culture are better able to access capital, talent, and new opportunities.
Consider proactively developing ESG policies on issues most material to your stakeholders. Set goals around waste reduction, green energy use, data stewardship, diverse leadership, and governance transparency. Track progress by reporting metrics in these areas to stakeholders in your community. Highlight social responsibility efforts in your external messaging and brand narrative. Spot opportunities for product features or partnerships that generate positive impact aligned with your ESG vision.
Embedding social responsibility principles within startups lays the foundations for purpose-driven brands that stand out to consumers and talent. As societal expectations on businesses continue to rise, companies recognized for pursuing ethical growth alongside profits will thrive.
Core Principles of New Venture Realization Process [From 2021 Post]
Principle #1. Multistep processes are rarely linear. Nonlinearity complicates the articulation and demonstration of how the process works, moving from one step to another, both forward and backward. Innovation is never linear. Identifying a problem and finding an effective solution is a long, winding road with many wrong turns and redirections. From a project management perspective, there is much concurrency, tasks happening in parallel, overlapping, and iterating. There can be quite a bit of redundancy, sometimes vital, other times wasteful. At times, it is hard to tell the difference. Specific redundancies are positive as they serve as reminders to check for areas needing revision based on business model changes or overall venture goals.
Principle #2. Innovation generates quite a bit of noise. There are so many essential tasks to accomplish in short periods. The innovators can quickly become overwhelmed by all the demands, making it difficult to focus and prioritize. But these two behaviors are critical for successful innovation outcomes. Many frameworks provide a long list of required steps and tasks. Trust me; continually adding to the entrepreneur's task list is easy. The demands come from multiple directions, and all seem to need a response immediately. I have been just as much at fault with this as others. Earlier versions of the new venture realization roadmap had 16 modules. I have struggled with my demons to bring it down to eight. Ultimately, the process is only as good if entrepreneurs follow it.
Principle #3. Complex processes create excessive cognitive load. A practical approach optimizes the innovator's mental and behavioral efforts. Throughout the process, some activities require deep thinking about select aspects of your venture. For example, it takes great effort to understand the customer's experience, create iterative solutions, and delve into the intricacies of a venture's economics. Placing intense intellectual activity in these areas pays off, but finding the time and mindset to focus effectively is vital. To help navigate this effort, I provide prompts to guide an entrepreneur through these deep-dive activities.
Principle #4. Structured check-in points are essential. In product development, many practitioners call these checkpoints "gates." I have designed each module to stand independently as a learning experience and provide natural checkpoints so a venture team can assess their progress against performance criteria or other venture milestones. Every practical innovation roadmap creates opportunities to check team progress against pre-determined criteria. Throughout this new venture realization process, many opportunities exist to set and monitor goals frequently. For example, in our module about your customer, the innovator plans for customer engagement activities, and teams can establish how many target customers they plan to reach and interview each week. You can easily monitor your progress on how many customers you contacted for interviews, the number of interviews scheduled and conducted, and so on.
I provide an end-of-module series of reflection questions along with the progress checkpoints. These reflections are designed for founders to consider how they apply the venture process. Here, you can evaluate each step, determine how the structure works for your venture, and if you need to revisit the approach. Of course, there are always aspects of the process that innovators view through a specific industry or business model.
Principle #5. The process must be repeatable. One of the more vital elements of any structured process is that it must be repeatable. Similar to how entrepreneurs must strive to create a repeatable business model. The fact that these outcomes are aligned is no coincidence. Throughout the venture realization process, you must go through aspects of the process each time you add a target customer segment or develop a new product.
Sometimes, you review current assumptions and actions in light of new information or pivot direction. But specific activities will need to be repeated in light of these new activities. For example, once you have validated your business model for your early customer, your most enthusiastic adopters, you will need to review, revise and act upon it again as you scale towards a more mainstream customer. You will not only check your business model for these new customer categories but will need to look at possible changes in other areas of the process. These areas include competitive positioning, product attributes, brand messaging, promotional channels, and unit economics, all of which need to be reviewed and refined to serve these mainstream customers best.
Principle #6. The process must be adaptable to different contexts. A robust structured approach should be practical across many contexts and use cases. Specific steps and activities must be versatile, flexible, and scalable. The entrepreneurs and innovators I work with apply this realization process across many settings and business models. The design aims to support new ventures by entrepreneurs, small and medium businesses looking to grow, and corporate innovators. The modules help owners review existing business models (B2C, B2B, Multi-Sided) and develop new product innovation and market expansion strategies. Many business owners need a structured way to scale their business. A fresh look at their existing business model, including core competencies and operational capacity, can help strengthen the foundation to scale effectively.
The process has been used quite effectively in large corporations. Many corporate leaders adopt startup practices to become more agile to produce incremental and disruptive innovations and quickly enter new markets. While many processes may be in place, a fresh look at applying specific elements across the stages can refresh an organization. Many large companies integrate the minimal viable product approach into product development roadmaps. I have worked with corporate innovators on getting early solutions into customers' hands to test and provide feedback. Co-creating solutions are today's version of integrating the voice of the customer into early product innovations.
Principle #7. Experimentation and assumption testing are essential activities. Since my early investigations on corporate innovation, a culture of experimentation has always been integral to sustained innovation. Innovative companies demonstrated inquisitive activity behavior leading to hypothesis testing and continual experimentation. We know that iterative testing and refinement are critical tenets of the lean product development method. Whether a startup or corporate innovator, you design innovative solutions in small incremental stages step by step. The process must allow for a scientific approach to testing assumptions about a new product's capacity to provide the desired value to the customer, both functionally and emotionally.
Principle #8. Performance outcomes must be measured and monitored. The process creates opportunities to measure performance to achieve venture goals. There are several points during the process where quantification is encouraged. At the start of Module One, entrepreneurs quantify customer pain points or outcomes. Anytime one can quantify these customer needs, it facilitates design specification once the solution becomes the focal activity. In Module Three, innovators attempt to validate these numbers during the interview process, looking to the customer to specify acceptable ranges in a new solution.
Identifying key metrics is an integral part of the venture realization process. Entrepreneurs should consider measures to monitor throughout the process. It is essential to realize how to measure changes as you go through the process. For example, early in the process, you will want to monitor how many customers respond to discovery surveys and request to stay connected. Later metrics shift to actual purchases.
Principle #9. The customer must be central to the process. By nature, the customers are the hero of the entrepreneurial journey. At each step, their needs must influence each decision. As part of this mandate, entrepreneurs continually reflect on serving the customer with a particular decision or action. The importance of engaging the customer throughout the process has been a well-recognized best practice in product innovation.
For this reason, I encourage extensive preparation for customer engagement early in the process. Entrepreneurs must learn as much as possible about the customer's needs. Once you achieve this level of understanding, you can engage them in creating the solution. Engaging customers early gives you an empathetic knowledge of their problems, pain points, and desired outcomes. They become co-creators of the solution, thus building a solid bond with your brand.
Continuous Review Warranted
This "new venture realization roadmap" represents a dynamic and evolving approach to entrepreneurship and innovation. It is crucial to acknowledge that the landscape of business and technology is constantly changing, and what may be cutting-edge today could be outdated tomorrow. Therefore, this type of review and refinement of the roadmap is an ongoing process.
Numerous revisions, advancements, and discoveries can emerge in entrepreneurship in a year. Researchers publish new articles, authors release insightful books, and startups engage in substantial experimentation and learning. All these inputs contribute to a continuous evolution of knowledge and understanding of the entrepreneurial journey.
It is imperative to take the time to articulate the prevailing thinking and application of the new venture realization roadmap. By doing so, entrepreneurs, business owners, and corporate innovators can benefit from the latest insights and adapt their practices accordingly. In addition, this iterative process ensures that the roadmap remains relevant and effective in guiding the creation and growth of new ventures.
Future posts will delve deeper into best practices, address specific challenges and issues, and incorporate the latest research findings and practical knowledge. In addition, these updates will reflect the ongoing evolution of the entrepreneurial landscape and capture the emerging trends and strategies successful innovators employ.
As the entrepreneurial community continues to apply the new venture realization roadmap, it serves as a living framework that evolves alongside the dynamic nature of the business world. By embracing new knowledge and actively engaging with the entrepreneurial ecosystem, individuals and organizations can navigate the complexities of innovation and increase their chances of success.
In summary, the understanding and application of the "new venture realization roadmap" will continue to evolve as entrepreneurs, business owners, and corporate innovators gain more experience and learn from their endeavors. Ongoing reviews, incorporating the latest research, articles, books, and startup engagement, will ensure that the roadmap remains relevant, effective, and adaptable to the ever-changing entrepreneurial landscape.
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