Building a Bulletproof Startup: Business Model Canvas vs Lean Startup vs Disciplined Entrepreneurship

Marius Ursache
Jan 16, 2019 · 12 min read

Startup is a word that gets tossed around a lot and its definition takes on many forms. It’s a state of mind, a disruptive business, a new budding venture, and many other things. Yet there are no set of rules to the game, no magic recipe for success, nor scientific approaches, in spite of all the thousands of books and gurus (including us :-P) that address this topic. That’s why we’ve decided to take a deeper look at the most popular and widespread approaches to building innovative companies.

Startups are anything but traditional businesses

First, let’s do a brief comparison of how building a startup is different from building a traditional business.

Growth vs Scalability

Typical brick and mortar businesses usually aim for steady revenue. They think about the best ways to get and maximize profit. To grow, they have to hire new people and get new resources, which makes the growth stable and linear. You’ll rarely see exponential growth in their case.

The startup approach is a bit different. Most startups rely on building technology products. Which means that growth is not proportional to the number of employees or physical resources. Scalability is almost always top-of-mind, that’s why everyone dreams of becoming a unicorn in the startup world.

Existing markets vs disruption

Think travel agencies vs Airbnb, taxis vs Uber, television vs Netflix. Traditional businesses usually tap into existing markets and have a myriad of examples to follow. Customers are already familiar with the types of products and services they provide.

Startups want to make a splash in these markets. Their purpose is to improve parts of the day to day activities that we didn’t even know need improvement. But walking on roads that others haven’t walked before is dangerous, and most startups die on the way.

Dealing with uncertainty

This is the cause of death for most startups. The old business school approach to starting a venture requires you to create a business plan and jot down the first 3 to 5 years of your company’s life. Which is fine for traditional businesses. Where you can benefit from other people’s experience and knowledge, and use it to envision the company’s life.

Not so much when you’re trying to innovate. The traditional business plan is static and when applied to startups it provides no real way to measure ROI and financial projections. Eric Ries, probably the most famous theorist in the startup world gives the best definition of a startup. Ever (in my humble opinion):

“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”
Eric Ries,
Lean Startup.

Searching for sanity

All these differences make startup building a rather adventurous and unsuccessful activity. Luckily, in the past decade, frameworks that are more tailored for startup’s specific needs, have emerged. Among them, the most popular ones are:

Each one of these methodologies was created with flexibility in mind. They provide a solution for the uncertain nature of innovation-driven enterprises, solving a lot of problems. Through them, you’re encouraged to test. Iterate. Adjust. You build your company knowing real market needs, based on feedback and in-depth research. They expose a much clearer path to success, long needed in a sector where uncertainty is often the only certainty.

Tools for the real world

These startup frameworks seem great when you read the books or attend the courses. In real life, things are very different from the precise process in the books. I’ve seen it mentoring and advising hundreds of startups, accelerators, and incubators, in US, Europe, Asia, Oceania. Everywhere.

The newness of these frameworks means we don’t have enough data to tell whether they’re efficient or not. The percentage of startups failing still goes as high as 90%. Is it because of existing flaws in these methodologies or just human nature? Unlike religions, there is little room for one startup bible. And I’ve found out that blindly following only one of these methodologies creates exposure to their flaws and increases the risk of fragility.

In my view, the startup journey resembles the journey of explorers to uncharted territories or the Gold Rush to the American Wild West. These explorers had little use for Bibles (except for psychological comfort, maybe) but in great need of maps, tools, and new mental models. Thus, my analysis looks at how these startup frameworks fare at this.

Business Model Canvas

The Business Model Canvas is a chart that allows you to create a more visual representation of what the business should look like. It maps out key features, the product design and, once completed, it tells you the exact key points that you need to address when building your company. The Value Proposition Canvas comes as a follow-up but is an integral part of the process as it helps you understand your customer first and how you can create value for them.

“The same products, services or technologies can fail or succeed depending on the business model you choose. Exploring the possibilities is critical to finding a successful business model. Settling on first ideas risks the possibility of missing potential that can only be discovered by prototyping and testing different alternatives.”
Alex Osterwalder, creator of the Business Model Canvas.

Pros

Cons

Lean Startup

Lean Startup is a methodology that encourages you to always ask and never assume. To push forward your minimum viable product, to test things and adjust as required, and to keep your user at the center of it all. The Build — Measure — Learn feedback loop is a core component of this framework. It emphasizes more on having the right attitude and mentality, rather than what steps need taking.

“The ability to learn faster from customers is the essential competitive advantage that startups must possess .”
Eric Ries, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses

Pros

Cons

Disciplined Entrepreneurship

Disciplined Entrepreneurship is a structured approach that guides the starting entrepreneur through specific actions that need to be taken before jumping into developing the product or service. This methodology shows how innovation-driven entrepreneurship can be broken down into discreet behaviors and processes which can be taught in just 24 steps.

“The single necessary and sufficient condition for a startup to succeed is a paying customer”
Bill Aulet, MIT Sloan Professor, Disciplined Entrepreneurship author

The methodology introduces to the startup world useful concepts such as beachhead markets, personas, high-level product specifications, quantifying value, decision-making units and many more. They are not only presented in an easy to understand way but are linked with the author’s experience as a serial entrepreneur and highly adapted to tech innovation.

Pros

Cons

And now what?

An in-depth overview of the methodologies reveals a hidden truth: none of them is universally valid. As I said, there is no one Startup Bible that guarantees redemption from uncertainty and the perilous journey. Each of them focuses on very different aspects of a startup. Using them together, as different tools and toolboxes in the arsenal of an entrepreneur, is the best approach to building a successful venture. Instead of choosing one and hope for the best possible outcome, I would recommend combining them.

Start planning your journey by using the Business Model Canvas or the Lean Canvas. Understand your destination before anything else, and your motivation (because that is what is going to keep you and your team together on the path when things get hard). A moonshot or North Star is more important than anything. But then what matters are the first steps.

Understand how Lean Startup works, how to start discovering customers. Get out of the building and talk to them, no framework or toolbox is going to replace that. Create the profile of your persona using the structured framework Disciplined Entrepreneurship provides. Get to know your customer. Your beachhead market. Your TAM (what?). The information that results from following the first steps of this framework is more detailed and provides more insights into user/client needs and it will make it easier for you to work with the Value Proposition Canvas or the empathy maps from Ideo.

Use our Problem Statement Canvas to understand the problem without considering any solutions. Then go back and adjust the nine blocks of the Business Model Canvas. Then go more in-depth, trying to go to the level of detail in the Disciplined Entrepreneurship Canvas, by going through the steps of the framework. Don’t start building the product yet, we know you have that itch. Get to understand your assumptions first, only then define the metrics and experiments, based on the Running Lean process, which is the best implementation manual for the Lean Startup philosophy. Don’t build an app when you can build a landing page, or Powerpoint, or Kickstarter campaign. Don’t build an AI if someone in your team can do it using email and a spreadsheet. Have them pretend they are THE chatbot to validate it’s a business first before you start writing code.

Make small improvements based on user feedback, not on your grandiose vision (you’re not Steve Jobs or Elon Musk, although you could be better). But don’t focus just on the product. Building a business is much more important and people often overlook that. And don’t spend time listening to the advice of mentors, authors or gurus (like us) — instead, listen to your customers. Then do it again.

Startups are all about the unknown. And flexibility. And testing. There is no one right formula for becoming successful and any entrepreneur looking to start an innovation-driven enterprise should know in advance that fixating on one tool to solve all problems is rarely the answer. You wouldn’t leave on an expedition taking only one thing with you (as long as it’s not a spiritual or religious one), so don’t be a blind follower or zealot of any startup trend.

Think for yourself and choose your tools wisely, because your journey is unique.

Disciplined Entrepreneurship

Disciplined Entrepreneurship is an intensive process…

Disciplined Entrepreneurship

Disciplined Entrepreneurship is an intensive process, created by Bill Aulet, that shows how innovation-driven entrepreneurship can be broken down into discreet behaviors and processes which can be taught in just 24 steps.

Marius Ursache

Written by

CEO @ Metabeta (data-driven portfolio management for early-stage startup investments).

Disciplined Entrepreneurship

Disciplined Entrepreneurship is an intensive process, created by Bill Aulet, that shows how innovation-driven entrepreneurship can be broken down into discreet behaviors and processes which can be taught in just 24 steps.