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Spring 2023 Syllabus

   Jerry Neumann

I have always found value in other teachers’ syllabi. I was reminded of this when Henrik Berglund recently shared his excellent syllabus with me. In case anyone else feels the same, here is my current one.

I last posted a syllabus four years ago. Much changed during the pandemic. Most notably—at the instigation of Noelle, who is actually a real teacher—I started using discussion boards because it was very hard for me to get a discussion going over zoom. Every student has to answer one of the case questions on a board and then they have to comment on two other people’s answers, each of the three posts using something from one of the readings. The boards worked so well I continued using them after we were back in person. People really put some thought into their answers. As one of the TAs said to me “they worry much more about what their classmates think than what you think.” OK. Well, whatever works.

Aside from that, the most interesting part is probably the readings. You’ll find them under each unit, grouped into ‘required’, ‘supplemental’, and ‘entirely optional’.

Managing Technological Innovation

TENTATIVE SYLLABUS. THE READINGS AND ASSIGNMENTS WILL BE ON COURSEWORKS

Course Description

This course provides an overview of the introduction and diffusion of technological innovations by small, fast-growing enterprises. We will explore both the theories of innovation as well as the strategic and tactical approaches and processes that these theories entail. We will discuss the practical realities of implementing these approaches and processes in today’s entrepreneurial environment.

Units

The course will be broken up into four units. Each unit will have a lecture class and a case study class. Units two, three, and four will also have a class dedicated to working through how to put the tools learned to use.

Class

Classes will generally be either lecture, case study discussion, or interactive learning (where we will apply the concepts we have learned.) Attendance and participation are important to learning this material. If you can’t come to a class, please let me know beforehand by email.

I am an adjunct professor and neither have an office on-campus nor am on-campus except the days I teach. I will try to make myself available in several ways: after class in person and through a discussion board on Courseworks. You can also contact me through email but because of the volume of email I get through my day job, my responses to in-depth questions there will be slower.

Homework & Discussion Boards

Everything you hand in should be through Courseworks.

Make sure that everything you submit has both your uni and your name at the beginning of the submission.

There will be a case study discussion board for each unit. You are expected to answer one of the questions from the case study on the discussion board and comment on two other people’s answers for each unit. Your initial answer must bring in a concept from the required reading (unless otherwise noted.) Your comments to others’ answers must bring in a concept from the supplemental readings. The reading you are using must be cited in your posts if you want to receive credit. I do not care what format you cite in as long as it is clear where the concept came from. (A suggestion is to use the APA in-text citation style: https://bit.ly/2MRfWqx. For example: “Apple built its moat while the labels perceived them as weak, in accordance with Porter’s idea of strategy (Magretta, 2011, pp. 59-60).”)

Be civil in your responses. The point of your response is not to criticize, but to deepen the original post. If you disagree, do so gently. This isn’t Twitter. If you are not sure you are being civil, be more civil. We are educating one another, not arguing.

Please note: there are three posts to each discussion board. One is your answer to a case question and the other two are responses to others’ answers. Because of the limitations of Courseworks there is a single due date on the discussion assignments. This is the due date of your responses. You must answer the case question the week before, before the Courseworks due date. Please read the assignments ahead of time!

Readings

Each unit will have required readings, supplemental readings, and of-interest readings. The required readings are required, of course. But since you only have to use one of the supplemental readings for the discussion board comments, you only have to read one of the supplemental readings. Choose judiciously. I have included abstracts to help. Obviously, if you want to read more than one, please do! I have found all of them interesting.

The ‘of interest’ readings are just that: readings you may find interesting. You can use them to deepen your knowledge of topics you want to know more about. If you have a topic you can’t get enough of, just ask and I can recommend even more in-depth readings.

The required textbooks for the class are:

  • Magretta, Joan, Understanding Michael Porter, Harvard Business Review Press; 1st edition (December 6, 2011). (~$16 on Amazon.)
  • Fitzpatrick, Rob, The mom test: how to talk to customers & learn if your business is a good idea when everyone is lying to you, CreateSpace Independent Publishing Platform; 1st edition (September 10, 2013). ($10 on Amazon for Kindle, $20 on Amazon for paperback.)

And a recommended text is:

  • Osterwalder, Alexander, and Yves Pigneur, Business Model Generation, John Wiley and Sons; 1st edition (July 13, 2010). ($23 on Amazon for Kindle, $19 on Amazon for paperback.)

There are also case studies on the Harvard Business School site that you will have to purchase. You can find these at https://hbsp.harvard.edu/import/1008199 ($12.75).

Some weeks there is more reading than others. In particular, the Magretta book needs to be read in the next couple of weeks. Plan ahead!

Group Papers

You will form groups of four or five people. The group will choose an idea for a startup business and will use the strategies and processes we learn to explicate this business opportunity. There will be two group papers; the first will explore the industry and market your company would be entering, the second will detail your company and business model. There will be the opportunity to turn in a draft of your paper a few weeks before the final due date and get my comments.

Note

This class is unlike most engineering classes: we are learning a way of engaging with society across a broad range of poorly-specified problems. As such, communicating is important, both in writing and verbally. For clarity and conciseness, I prefer a writing style that is heavier on bullet points, charts and other graphical demonstrations, and analytical argument, not the first-person essay-style writing generally taught in high-school. Please see https://bit.ly/3sct2yM for what I am looking for. You may use writing aids, such as ChatGPT or other LLMs to help you craft your writing, with some caveats:

  • You must footnote anything written by an LLM saying which LLM wrote it and what your prompt was;
  • Be aware that although LLMs write things like people write things, they have no motivation to say the right things: assume the LLM invented any facts or quotes until you check them;
  • LLMs generally default to exactly the essay style I dislike. If you use the LLM’s writing as a guide, consider editing it to make it more professional. Note this in your footnote (ie. ‘edited for clarity’, etc.)

Unit 1: Startup Strategy

  • Perfect competition versus excess value
  • Moats and uncertainty
  • Strategy in the face of uncertainty

In this unit we will learn about how startups create value, who gets the value created, how startups can defend against larger companies seizing the opportunities they unearth, and a meta-view of startup strategy.

Case: Apple iTunes

Homework: Introduce Yourself

Required Reading

Magretta, Joan, Understanding Michael Porter, Harvard Business Review Press; 1st edition (December 6, 2011).

I might have said this already, but this is a book and might take a bit of time to read. Plan ahead.

Christensen, Clayton M. “The Evolution of Innovation.” In Technology Management Handbook, edited by Richard Dorf. Boca Raton, FL: CRC Press, 1998.

Supplemental Readings

You must read one of the following and use it in your discussion board replies.

Suarez, F., & Utterback, J. (1995). Dominant designs and the survival of firms. Strategic Management Journal, 16(6), 415–430.

The economic, population ecology and strategic perspectives on firm survival are here complemented by viewing the same phenomenon from the viewpoint of technology evolution as well. The hypothesis tested is that the competitive environment of an industry, and therefore the survival of firms in it, is substantially affected by the evolution of the technology on which it is based. Survival analysis is applied to data from six industries. The results show that by explicitly including technology as a dynamic and strategic variable our understanding of firms’ survival potential and success can be enhanced.

Teece, D. (1986). Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy. Research Policy, 15(February), 285–305.

This paper attempts to explain why innovating firms often fail to obtain significant economic returns from an innovation, while customers, imitators and other industry participants benefit. Business strategy—particularly as it relates to the firm’s decision to integrate and collaborate—is shown to be an important factor. The paper demonstrates that when imitation is easy, markets don’t work well, and the profits from innovation may accrue to the owners of certain complementary assets, rather than to the developers of the intellectual property. This speaks to the need, in certain cases, for the innovating firm to establish a prior position in these complementary assets. The paper also indicates that innovators with new products and processes which provide value to consumers may sometimes be so ill positioned in the market that they necessarily will fail, The analysis provides a theoretical foundation for the proposition that manufacturing often matters, particularly to innovating nations. Innovating firms without the requisite manufacturing and related capacities may die, even though they are the best at innovation. Implications for trade policy and domestic economic policy are examined.

Merton, Robert K. “The Unanticipated Consequences of Purposive Social Action.” American Sociological Review, vol. 1, no. 6, 1936, pp. 894–904.

It has been widely noted that purposive actions often result in unanticipated consequences. This paper advances several explanations. These include lack of adequate knowledge, mistakes, lack of consideration of all aspects of an outcome, and the reflexivity of predictions.

Rittel, H. W. J., and M. M. Webber. “Dilemmas in a General Theory of Planning.” Policy Sciences, vol. 4, no. December 1969, 1973, pp. 155–69, doi:10.1007/BF01405730.

The search for scientific bases for confronting problems of social policy is bound to fail, because of the nature of these problems. They are “wicked” problems, whereas science has developed to deal with “tame” problems. Policy problems cannot be definitively described. Moreover, in a pluralistic society there is nothing like the undisputable public good; there is no objective definition of equity; policies that respond to social problems cannot be meaningfully correct or false; and it makes no sense to talk about “optimal solutions” to social probIems unless severe qualifications are imposed first. Even worse, there are no “solutions” in the sense of definitive and objective answers.

Of Interest Readings

These readings are entirely optional.

Joseph A. Schumpeter, The Theory of Economic Development, Ch. 4, https://archive.org/details/in.ernet.dli.2015.187354

Ellsberg, D., “Risk, Ambiguity, and the Savage Axioms.” The Quarterly Journal of Economics, Vol. 75, No. 4 (Nov. 1961), pp. 643-669.

Are there uncertainties that are not risks? Uncertainties that are not risks. Why are some uncertainties not risks?

Neumann, J:

Unit 2: Industry Research

  • Traditional strategy
  • Determining market and industry
  • Dimensions of competition
  • Customer interviewing

In this unit we will learn the importance of and techniques for understanding the environment your startup will live in: its market, industry, and customers.

Case: Starlink

Homework: Market Sizing

Required Readings

Fitzpatrick, Rob, The Mom Test: How to talk to customers & learn if your business is a good idea when everyone is lying to you, CreateSpace Independent Publishing Platform; 1st edition (September 10, 2013). Available at http://momtestbook.com/ or on Amazon.

Blank, Steve, “Market Size Hypothesis”

Supplemental Readings

You must read one of the following and use it in your discussion board replies.

Mauboussin, Michael, and Dan Callahan, “Total Addressable Market“

Methods to estimate a company’s potential sales.

Kleindorfer, Paul R., “Reflections on Decision Making Under Uncertainty” (December 2, 2008). INSEAD Working Paper No. 2008/73/TOM/ISIC, p.14. Available at SSRN: https://ssrn.com/abstract=1310239

This paper begins with a review of the early literature on management and finance in areas of deep uncertainty (the case of so-called Knightian uncertainty). I consider the differentiating features of uncertainty, separately, for individual decision making (which has been the focus of most research on the subject) and for the organizational or management level. Coping with uncertainty from a management perspective is perhaps best thought of in terms of the metaphor of an explorer entering uncharted terrain. That individual would do well to prepare mentally for surprises, to be agile and unencumbered by heavy baggage, to have increased acuity and perhaps communication capabilities to home base, and in general to have developed the ability to react to unforeseen and unforeseeable exigencies as they arise. This anthropomorphic metaphor of the prepared, agile explorer is helpful in describing some of the research on these questions and the initiatives being implemented in various organizational contexts to cope with the far side of deep uncertainty and complexity that is unfolding before us in the current economy. These questions on management and strategy under conditions of extreme uncertainty are illustrated in areas from lean/agile supply chains to scenario planning.

Kim, W Chan, Mauborgne, Renée, “Blue ocean strategy”, Harvard business review, 10/2004, ISSN: 0017-8012, Volume 82, Issue 10, p. 76.

A blue ocean is a previously unknown market space. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In red oceans—that is, in all the industries already existing—companies compete by grabbing for a greater share of limited demand. As the market space gets more crowded, prospects for profits and growth decline. Products turn into commodities, and increasing competition turns the water bloody. There are two ways to create blue oceans. One is to launch completely new industries, as eBay did with online auctions. But it’s much more common for a blue ocean to be created from within a red ocean when a company expands the boundaries of an existing industry.

Of interest Readings

These readings are entirely optional, though the market sizing ones might be useful if you need some help. 

Porter, M. “The Five Competitive Forces That Shape Strategy.” Harvard Business Review, vol. 86, no. January, 2008, pp. 78–94. 

Gentschev, Greg, “The Secrets of Market Sizing”, http://web.archive.org/web/20150308075001/http://www.brekiri.com/blog/77/the-secrets-of-market-sizing/ 

Gentschev, Greg, “A Full Market Sizing Example”, http://web.archive.org/web/20150308082649/http://www.brekiri.com/blog/193/a-full-market-sizing-example/ 

Mike Preuss, “Modeling Total Addressable Market”, https://visible.vc/blog/modeling-total-addressable-market/

Moore, S, B McFerran & G Packard, “The Words and Phrases to Use—and to Avoid—When Talking to Customers”, Harvard Business Review, October 4, 2018, https://hbr.org/2018/10/the-words-and-phrases-to-use-and-to-avoid-when-talking-to-customers

The key to any successful relationship is effective communication. In the business world, this means trying to understand what consumers and clients are saying, and responding to them in ways that reflect that understanding. The retail world in particular abounds with catch-phrases, habits, and commonly-copied templates. But what actually works? Emerging research sheds light on the effectiveness of some common tactics. You can, for example, say “sorry” to a customer too many times. Even if you’re a member of the company’s team, it is often better to say “I” than “we.” And not every piece of communication needs to be perfect; sometimes, a few mistakes produces a better result than flawlessness.

Friedman, A, “The Art of the Interview”, Columbia Journalism Review, May 30, 2013, https://archives.cjr.org/realtalk/the_art_of_the_interview.php

Asking the hard questions about asking the hard questions.

Scanlan, C, “How Journalists Can Become Better Interviewers”, Poynter, March 4, 2013, https://www.poynter.org/reporting-editing/2013/how-journalists-can-become-better-interviewers/

How do you walk up to strangers and ask them questions? How do you get people — tight-lipped cops, jargon-spouting experts, everyday folks who aren’t accustomed to being interviewed — to give you useful answers?

Unit 3: Resources and Goals

  • Determining available resources
  • Generating resources
  • Goal sets and simple rules
  • Scenario planning

In this unit we will learn about how to understand your available resources and how to set goals.

Case: Dropbox

Homework: Business Model Canvas

Required Readings

Business model canvas:

  • Either read the relevant parts (ie. the description of the BMC and its nine pieces) of Osterwalder, Alexander and Yves Pigneur, Business Model Generation, John Wiley and Sons; 1st edition (July 13, 2010).

               –   or   –

 McClure, D., “Startup Metrics for Pirates: AARRR!!!”, https://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-long-version

“Breaking Down a Business Model to Its Drivers” in the Files section.

Supplemental Readings

You must read one of the following and use it in your discussion board replies.

Eisenhardt, KM, and DN Sull. “Strategy as Simple Rules.” Harvard Business Review, January, 2001, pp. 106–16.

When the business landscape was simple, companies could afford to have complex strategies. But now that business is so complex, they need to simplify. Smart companies have done just that with a new approach: a few straightforward, hard-and-fast rules that define direction without confining it.

Baker, T., and RE Nelson. “Creating Something from Nothing: Resource Construction through Entrepreneurial Bricolage.” Administrative Science Quarterly, vol. 50, no. 3, 2005, pp. 329–66.

A field study of resource-constrained firms is used to examine the process by which entrepreneurs in resource-poor environments were able to render unique services by recombining elements at hand for new purposes that challenged institutional definitions and limits. We found that Levi-Strauss’s concept of bricolage–making do with what is at hand–explained many of the behaviors we observed in small firms that were able to create something from nothing by exploiting physical, social, or institutional inputs that other firms rejected or ignored. We demonstrate the socially constructed nature of resource environments and the role of bricolage in this construction. Using our field data and the existing literature on bricolage, we advance a formal definition of entrepreneurial bricolage and induce the beginnings of a process model of bricolage and firm growth. Central to our contribution is the notion that companies engaging in bricolage refuse to enact the limitations imposed by dominant definitions of resource environments, suggesting that, for understanding entrepreneurial behavior, a constructivist approach to resource environments is more fruitful than objectivist views.

Mauboussin, Michael, et al. “Measuring the Moat: Assessing the Magnitude and Sustainability of Value Creation.” Credit Suisse, 2016, pp. 1–73.

Assessing the magnitude and sustainability of value creation.

Sarasvathy, Saras D. “Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency”, The Academy of Management Review, Vol . 26, No . 2 (Apr, 2001), Pp. 243-263.

In economics and management theories, scholars have traditionally assumed the existence of artifacts such as firms/organizations and markets. I argue that an explanation for the creation of such artifacts requires the notion of effectuation. Causation rests on a logic of prediction, effectuation on the logic of control. I illustrate effectuation through business examples and realistic thought experiments, examine its connections with existing theories and empirical evidence, and offer a list of testable propositions for future empirical work

Ramírez, R., S. Churchhouse, et al. “Using Scenario Planning to Reshape Strategy”, MIT Sloan Management Review, June 13, 2017, https://sloanreview.mit.edu/article/using-scenario-planning-to-reshape-strategy/

Rather than trying to predict the future, organizations need to strengthen their abilities to cope with uncertainty. A new approach to scenario planning can help companies reframe their long-term strategies by developing several plausible scenarios.

Of Interest Readings

These readings are entirely optional.

March, JG. “The Technology of Foolishness.” Decision Making Under Ambiguity, 1979, pp. 253–65.

A critique of rational decision-making as the optimal ‘technology’ to approach all problems. An argument for adapting a goal-less process that maximizes discovery through play and by tolerating rational foolishness.

Maier, HR, et al, “An uncertain future, deep uncertainty, scenarios, robustness and adaptation: How do they fit together?”, Environmental Modelling & Software, Volume 81, 2016, pp. 154-164, doi:10.1016/j.envsoft.2016.03.014.

A highly uncertain future due to changes in climate, technology and socio-economics has led to the realisation that identification of “best-guess” future conditions might no longer be appropriate. Instead, multiple plausible futures need to be considered, which requires (i) uncertainties to be described with the aid of scenarios that represent coherent future pathways based on different sets of assumptions, (ii) system performance to be represented by metrics that measure insensitivity (i.e. robustness) to changes in future conditions, and (iii) adaptive strategies to be considered alongside their more commonly used static counterparts. However, while these factors have been considered in isolation previously, there has been a lack of discussion of the way they are connected. In order to address this shortcoming, this paper presents a multidisciplinary perspective on how the above factors fit together to facilitate the development of strategies that are best suited to dealing with a deeply uncertain future.

Agrawal, A., Kapil Chandra, et al., “Planning for uncertainty: Performance management under COVID-19”, McKinsey & Co., May 11, 2020, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/planning-for-uncertainty-performance-management-under-covid-19

Companies need a new approach to financial planning and performance management—one that informs rapid realignment of plans and actions and ensures organizational resilience.

Unit 4: Methods & Tactics

  • Iteration and analytics
  • Financial modeling
  • Partnerships & ecosystems
  • Hiring and financing

In this unit we will learn how to operate the startup once started.

Case: Zipcar

Homework: Unit Economics and LTV

Required Readings

Supplemental Readings

You must read one of the following and use it in your discussion board replies.

Fisher, G., et al. “Legitimate to Whom? The Challenge of Audience Diversity and New Venture Legitimacy.” Journal of Business Venturing, vol. 32, no. 1, Elsevier B.V., 2017, pp. 52–71, doi:10.1016/j.jbusvent.2016.10.005.

We examine how entrepreneurs manage new venture legitimacy judgments across diverse audiences, so as to appear legitimate to the different audience groups that provide much needed financial resources for venture survival and growth. To do so, we first identify and describe the different mechanisms by which entrepreneurs can establish new venture legitimacy across diverse audiences. We then account for the institutional logics that characterize different new venture audience groups, and use this as a basis for uncovering how and why the legitimacy criteria for a new technology venture may vary depending on the audience. We then consider how leaders of entrepreneurial ventures may use framing as a means to manage legitimacy judgments across various audiences, and thereby improve their chances of accessing critical financial resources for venture survival and growth.

Burr, Thomas. “Building Community, Legitimating Consumption: Creating the U.S. Bicycle Market, 1876-1884.” Socio-Economic Review, vol. 4, no. 3, 2006, pp. 417–46, doi:10.1093/ser/mwl015.

Economic and organizational sociologists tend to define markets as sets of producers, and research mostly supply-side issues. They generally ignore the role of consumers and their use of products, the source of profit for producers, a neglect especially problematical with regard to understanding market creation. A definition of markets as ‘producers and consumers of a product’ highlights the efforts to organize and legitimate product use that consumers, as well as producers, must undertake to help create markets. Much of this organization and legitimation involves setting up networked communities of producer and consumer organizations, which are also devoted to practical support of product use. In this article I trace the history of the early U.S. bicycle market to show how producers and consumers worked with each other and separately to organize and to confer legitimacy on product use, which supported the market.

Thomke, Stefan. “Experimenting Early and Often.” Experimentation Matters, 2003, pp. 161–200.

Case studies on optimizing the process of product experimentation.

Tan, Vaughn. “Using Negotiated Joining to Construct and Fill Open-Ended Roles in Elite Culinary Groups.” Administrative Science Quarterly, vol. 60, no. 1, 2015, pp. 103–32, doi:10.1177/0001839214557638.

This qualitative study examines membership processes in groups operating in an uncertain environment that prevents them from fully predefining new members’ roles. I describe how nine elite high-end, cutting-edge culinary groups in the U.S. and Europe, ranging from innovative restaurants to culinary R&D groups, use negotiated joining—a previously undocumented process—to systematically construct and fill these emergent, open-ended roles. I show that negotiated joining is a consistently patterned, iterative process that begins with a role that both aspirant and target group explicitly understand to be provisional. This provisional role is then jointly modified and constructed by the aspirant and target group through repeated iterations of proposition, validation through trial and evaluation, and selective integration of validated role components. The initially provisional role stabilizes and the aspirant achieves membership if enough role components are validated; otherwise the negotiated joining process is abandoned. Negotiated joining allows the aspirant and target group to learn if a mutually desirable role is likely and, if so, to construct such a role. In addition, the provisional roles in negotiated joining can support absorptive capacity by allowing novel role components to enter target groups through aspirants’ efforts to construct stable roles for themselves, while the internal adjustment involved in integrating newly validated role components can have the unintended side effect of supporting adaptation by providing opportunities for the groups to use these novel role components to modify their role structure and goals to suit a changing and uncertain environment. Negotiated joining thus reveals role ambiguity’s hitherto unexamined beneficial consequences and provides a foundation for a contingency theory of new-member acquisition. 

Navis, Chad, and MA Glynn. “How New Market Categories Emerge: Temporal Dynamics of Legitimacy, Identity, and Entrepreneurship in Satellite Radio.” Administrative Science Quarterly, vol. 55, no. 3, 2010, pp. 439–71, http://asq.sagepub.com/content/55/3/439.short

We theorize how new market categories emerge and are legitimated through a confluence of factors internal to the category (entrepreneurial ventures) and external to the category (interested audiences). Using qualitative and quantitative analyses and multiple data sources overtime, we study the evolution of the U.S. satellite radio market over its initial sixteen years. We offer convergent evidence to show that the legitimation of a new market category precipitates shifts in the focus of market actors’ attention from the category as a whole to the differentiation of firms within. This effect was demonstrated for entrepreneurial identity claims, linguistic frames, and announcements of interorganizational affiliations and endorsements, as well as in the focal attention of media and financial audiences. We synthesize these findings to offer an integrated theoretical framework on new market category emergence and legitimation. 

Barnett, WP. “The Organizational Ecology of a Technological System.” Administrative Science Quarterly, vol. 35, no. 1, 1990, pp. 31–60.

This paper investigates organizational mortality in the early American telephone industry, in which thousands of companies proliferated and failed under conditions of technological change. Drawing on the theory of community ecology, it is predicted that when technologies are systemic, technological change does not necessarily favor advanced organizations. Instead, mutualism is predicted among both advanced and primitive firms, as long as they are technologically standardized and differentiated. Competition is expected when organizations are technologically incompatible or noncomplementary. The hypotheses are supported by dynamic models of organizational mortality, estimated using archival data describing the life histories of all telephone companies that operated in Pennsylvania up to 1934 and in southeast Iowa from 1900 to 1930. 

Aldrich, HE, and CM Fiol. “Fools Rush in? The Institutional Context of Industry Creation.” Academy of Management Review, vol. 19, no. 4, 1994, pp. 645–70, http://amr.aom.org/content/19/4/645.short.

New organizations are always vulnerable to the liabilities of newness, but such pressures are especially severe when an industry is in its formative years. We focus on one set of constraints facing entrepreneurs in emerging industries–their relative lack of cognitive and sociopolitical legitimacy. We examine the strategies that founders can pursue, suggesting how their successful pursuit of legitimacy may evolve from innovative ventures to broader contexts, collectively reshaping industry and institutional environments. 

Davis, JP, et al. “Optimal Structure, Market Dynamism, and the Strategy of Simple Rules.” Administrative Science Quarterly, vol. 54, no. 3, 2009, pp. 413–52.

Using computational and mathematical modeling, this study explores the tension between too little and too much structure that is shaped by the core tradeoff between efficiency and flexibility in dynamic environments. Our aim is to develop a more precise theory of the fundamental relationships among structure, performance, and environment. We find that the structure-performance relationship is unexpectedly asymmetric, in that it is better to err on the side of too much structure, and that different environmental dynamism dimensions (i.e., velocity, complexity, ambiguity, and unpredictability) have unique effects on performance. Increasing unpredictability decreases optimal structure and narrows its range from a wide to a narrow set of effective strategies. We also find that a strategy of simple rules, which combines improvisation with low-to-moderately structured rules to execute a variety of opportunities, is viable in many environments but essential in some. This sharpens the boundary condition between the strategic logics of positioning and opportunity. And juxtaposing the structural challenges of adaptation for entrepreneurial vs. established organizations, we find that entrepreneurial organizations should quickly add structure in all environments, while established organizations are better off seeking predictable environments unless they can devote sufficient attention to managing a dissipative equilibrium of structure (i.e., edge of chaos) in unpredictable environments. 

Andries, P., et al. “Simultaneous Experimentation as a Learning Strategy: Business Model Development Under Uncertainty.” Strategic Entrepreneurship Journal, vol. 7, 2013, pp. 288–310, doi:10.1002/sej.1170.

Ventures operating under uncertainty face challenges defining a sustainable value proposition. Six longitudinal case studies reveal two approaches to business model development: focused commitment and simultaneous experimentation. While focused commitment positively affects initial growth, this commitment and lack of variety jeopardize long-term survival. Simultaneous experimentation implies lower initial growth levels but facilitates long-term survival by enacting variety in a resource-effective manner. This article enriches organizational learning theory by demonstrating that not only distant search but also simultaneous experimentation results in variety. Moreover, simultaneous experimentation implies effectual behavior and reconciles the apparent juxtaposition between ‘action’ and ‘planning.’

Of Interest Readings

These readings are entirely optional.

Baird, Ross. “Why Most Entrepreneurs Hate Fundraising—And How to Fix It”, June 7, 2017, https://medium.com/village-capital/entrepreneurs-and-vcs-need-to-be-more-precise-in-the-way-they-talk-to-each-other-3e714e7a5245

Duhaime-Ross, Arielle. https://www.theverge.com/2014/4/1/5553910/driven-how-zipcars-founders-built-and-lost-a-car-sharing-empire

Neumann, J. Zipcar Fundraising Breakdown

Kwon, Jason and Aaron Harris, “A Standard and Clean Series A Term Sheet“, YCombinator

“Series Seed Term Sheet”

“Sample Note”