Effectuation and Lean Startup in Swiss start-ups: an integrative analysis

Abstract

Founding a start-up entails numerous risks and uncertainties. To minimise these risks and to deal with uncertainties, the popular concepts of Effectuation and Lean Startup, among others, are discussed in entrepreneurship research. Although both concepts are not new, they have gained importance in recent years. Effectuation focuses on dealing with uncertainty and contrasts with causation, which focuses on planning. The starting point for Effectuation is the resources available to the founders, which leads to different business ideas. The core of Effectuation includes four key dimensions: available means, affordable losses, exploiting contingencies and building partnerships. Lean Startup can be understood as a framework for decision-making in which direct interaction takes priority over extensive planning. The approach is based on three fundamental principles: experimentation rather than planning, focus on customer feedback and iterative learning. The core elements include a clear entrepreneurial vision, close contact with the customer, the Build-Measure-Learn feedback loop and the Minimum Viable Product. The key dimensions of Effectuation and the core elements of Lean Startup also form the frame of reference for the empirical investigation. The article examines the extent to which these concepts are applied by Swiss entrepreneurs and whether a combination of the two takes place. The data comes from the business plans of 25 finalists of a Swiss innovation competition from 2022. The business plans are evaluated and analysed in a multi-stage process. The study provides insight into the behaviour of Swiss start-ups, whether they proceed according to Effectuation and apply the Lean Startup principles. Surprisingly, the study reveals that many start-ups proceed according to Effectuation, while relatively few start-ups apply the Lean Startup principles. We were able to show the extent to which the two approaches are used and how they relate to each other. We also found that the origin of the start-up (research-based or industry experience-based) plays a significant role.