Lean Start-Up Principles: Exploring transferability to the ... ?· and lean start-up principles. Secondly,…

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<ul><li><p>Copyright UCT</p><p>LEAN START-UP PRINCIPLES: </p><p>EXPLORING TRANSFERABILITY TO THE SOUTH AFRICAN CONTEXT </p><p>A Research Report </p><p>presented to </p><p>The Graduate School of Business </p><p>University of Cape Town </p><p>In partial fulfilment </p><p>of the requirements for the </p><p>Masters of Business Administration Degree </p><p>by </p><p>Waldo Noordermeer </p><p>December 2013 </p><p>Supervised by: Trevor Williams </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>i </p><p>PLAGIARISM DECLARATION </p><p>I know that plagiarism is wrong. Plagiarism is to use anothers work and pretend that it is </p><p>ones own. </p><p>I have used a recognized convention for citation and referencing. Each significant </p><p>contribution and quotation from the works of other people has been attributed, cited and </p><p>referenced. </p><p>I certify that this submission is my own work. </p><p>I have not allowed and will not allow anyone to copy this essay with the intention of passing </p><p>it off as his or her own work. </p><p>Waldo Noordermeer </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>ii </p><p>ABSTRACT </p><p>This thesis focuses on a qualitative exploratory study of the constructs of lean start-ups, and the </p><p>transferability of the lean start-up principles to the South African context. </p><p>To this end, the study firstly reviews literature on the fields of study related to lean start-up ventures </p><p>and lean start-up principles. Secondly, it explores the current business practices of South African </p><p>entrepreneurs. The researcher encouraged the entrepreneurs to respond with accounts which were </p><p>strictly based on current or past practices, without leading the respondents with any lean start-up </p><p>concepts or theory. Lastly, by commenting on the divergent and convergent aspects of the theoretical </p><p>lean start-up principles and the observed South African practices, the researcher concludes with </p><p>comments on the level of transferability of the lean start-up principles to the South African </p><p>practitioner. </p><p>Key Words: </p><p>Start-up, Entrepreneur, Innovation, Change, Strategy, Lean start-up, product development </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>iii </p><p>Table of Contents </p><p>PLAGIARISM DECLARATION ............................................................................................... i </p><p>ABSTRACT ............................................................................................................................... ii </p><p>Key Words: ................................................................................................................................ ii </p><p>Acknowledgements .................................................................................................................. vii </p><p>Research Title ............................................................................................................................ 1 </p><p>SECTION 1: INTRODUCTION ............................................................................................... 1 </p><p>1.1 Purpose of the Study ........................................................................................................ 1 </p><p>1.2 Context of the Study ........................................................................................................ 1 </p><p>1.3 Research Problem Statement ........................................................................................... 4 </p><p>1.4 Significance of the Study ................................................................................................. 5 </p><p>1.5 Limitations of the Study................................................................................................... 5 </p><p>1.6 Assumptions ..................................................................................................................... 6 </p><p>SECTION 2: LITERATURE REVIEW .................................................................................... 6 </p><p>2.1 Introduction ...................................................................................................................... 6 </p><p>2.2 Background Discussion ................................................................................................... 7 </p><p>2.2.1 Capabilities of the Firm ............................................................................................ 7 </p><p>2.2.2 Start-up Firms and Complexity ............................................................................... 10 </p><p>Table 1: Decision Making Models based on the Cynefin Model .................................... 13 </p><p>2.2.3 Start-up Firms and Dominant Design Theory ......................................................... 13 </p><p>2.2.4 Start-up Firms and Innovation ................................................................................ 15 </p><p>2.2.5 Start-up Firms and Strategy .................................................................................... 18 </p><p>2.2.6 Start-up Firms and Growth Orientation .................................................................. 19 </p><p>2.3 Literature Relevance, Discussion and Reflection .......................................................... 21 </p><p>SECTION 3: RESEARCH METHODOLOGY....................................................................... 24 </p><p>3.1 Research Approach ........................................................................................................ 24 </p><p>3.1.1 Advantages of Qualitative Research ....................................................................... 25 </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>iv </p><p>3.1.2 Disadvantages of Qualitative Research .................................................................. 25 </p><p>3.2 Research Design............................................................................................................. 25 </p><p>3.2.1 The Scope of the Study ........................................................................................... 25 </p><p>3.2.2 Data Generation ...................................................................................................... 26 </p><p>3.3 Population and Sampling ............................................................................................... 27 </p><p>3.3.1 Population ............................................................................................................... 27 </p><p>3.3.2 Sampling ................................................................................................................. 27 </p><p>3.4 The Research Instrument ............................................................................................... 27 </p><p>3.5 Data Collection .............................................................................................................. 28 </p><p>3.5.1 Data Gathering Sequence ........................................................................................ 28 </p><p>3.6 Data Analysis Techniques .............................................................................................. 29 </p><p>3.7 Limitations of the Analysis ............................................................................................ 29 </p><p>3.8 Validity and Reliability .................................................................................................. 29 </p><p>3.8.1 Validity ................................................................................................................... 29 </p><p>Table 2: Validity and Reliability ...................................................................................... 30 </p><p>3.8.2 Reliability ................................................................................................................ 30 </p><p>3.9 Informed Consent and Research Ethics ......................................................................... 31 </p><p>SECTION 4: RESEARCH PLAN ........................................................................................... 32 </p><p>Table 3: Research Plan..................................................................................................... 32 </p><p>SECTION 5: RESEARCH FINDINGS ................................................................................... 33 </p><p>Table 4: Emerging Codes..................................................................................................... 33 </p><p>5.1 Community Focused ...................................................................................................... 33 </p><p>5.1.1 Strong Customer Relations ..................................................................................... 34 </p><p>5.1.2 Meaningful Customer Feedback ............................................................................. 34 </p><p>5.1.3 Collaborative Product Development ....................................................................... 35 </p><p>5.1.4 Building Partnership ............................................................................................... 35 </p><p>5.2 Start-up Strategy ............................................................................................................ 36 </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>v </p><p>5.2.1 Growth Orientation ................................................................................................. 36 </p><p>5.2.2 Planning .................................................................................................................. 37 </p><p>5.2.3 Clarity and Focus .................................................................................................... 37 </p><p>5.2.4 Scaling..................................................................................................................... 38 </p><p>5.3 Learning Approach ........................................................................................................ 38 </p><p>5.3.1 Past Mistakes .......................................................................................................... 38 </p><p>5.3.2 Lack of Initial Business Knowledge ....................................................................... 39 </p><p>5.3.3 Continuous Learning ............................................................................................... 39 </p><p>5.4 Attitude towards Change ................................................................................................ 40 </p><p>5.4.1 Adaptability............................................................................................................. 40 </p><p>5.4.2 Innovative Ability ................................................................................................... 41 </p><p>5.4.3 Revision of Goals Period ........................................................................................ 41 </p><p>5.4.4 Speed of Change ..................................................................................................... 42 </p><p>5.5 Characteristics of the South African Entrepreneur ........................................................ 42 </p><p>5.5.1 Driven by Passion ................................................................................................... 43 </p><p>5.5.2 Time Constraints ..................................................................................................... 43 </p><p>5.5.3 Inherent Optimism .................................................................................................. 43 </p><p>5.5.4 Past Experience and Current Skillset ...................................................................... 44 </p><p>5.6 Applied Lean Practices .................................................................................................. 44 </p><p>5.6.1 Design Constraints .................................................................................................. 45 </p><p>5.6.2 Financial Constraints .............................................................................................. 45 </p><p>5.6.3 Human Resource Constraints .................................................................................. 45 </p><p>SECTION 6: ANALYSIS AND DISCUSSION...................................................................... 46 </p><p>SECTION 7: RESEARCH CONCLUSIONS .......................................................................... 51 </p><p>SECTION 8: FURTHER RESEARCH RECOMMENDATIONS .......................................... 53 </p><p>SECTION 9: IMPLICATIONS FOR ENTREPRENEURS IN SOUTH AFRICA ................. 54 </p><p>REFERENCES ........................................................................................................................ 56 </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>vi </p><p>APPENDICES ......................................................................................................................... 65 </p><p>Appendix A: Differences between lean and traditional start-ups .................................... 65 </p><p>Appendix B: The Research Instrument ............................................................................ 66 </p><p>Appendix C: Consistency Matrix..................................................................................... 67 </p></li><li><p>Copyright UCT</p><p>MBA Research Report 2013 </p><p>vii </p><p>Acknowledgements </p><p>Foremost, I would like to express my sincere gratitude to my supervisor Trevor Williams for his </p><p>support, wisdom and guidance during the research process. Working with him has been my privilege </p><p>and pleasure. </p><p>A special thanks to Mary Lister for assistance in the library. Without her friendly guidance and words </p><p>of encouragement this institution would have been a lesser place. </p><p>I also want to acknowledge Heidi le Sueur and Kate Hunter for giving me direction during the early </p><p>stages of this project. </p><p>Lastly, I thank all my fellow students for the shared memories during 2013. In particular, I extend a </p><p>word of gratitude to Johnny Appleseed my seminar room comrade and confidant. </p></li><li><p>Copyright UCT</p><p>1 </p><p>Research Title </p><p>Lean start-up principles: Exploring transferability to the South African Context </p><p>SECTION 1: INTRODUCTION </p><p>1.1 Purpose of the Study </p><p>This is an exploratory research report that aims to understand the level of transferability of </p><p>the lean start-up principles to the South African entrepreneur. The incentive to determine the </p><p>level of transferability of these principles to the South African entrepreneur lies in: (1) the </p><p>benefits that lean start-up principles offer entrepreneurs, especially in resource-stricken </p><p>environments, (2) the high failure rates of South African start-up ventures and (3) the </p><p>simplicity of teaching and applying the lean start-up principles (Ries, 2011). Business </p><p>schools around the world have started teaching the lean start-up methodology (Ries, 2011). If </p><p>the lean start-up principles proved to be transferable to the South African entrepreneurs, then </p><p>there is a strong argument for South African education institutions to adjust their syllabus </p><p>accordingly. </p><p>1.2 Context of the Study </p><p>Start-up </p><p>Based on the work of Blank (2006), Ries (2011), argued that A startup is a human institution </p><p>designed to create a new product or service under conditions of extreme uncertainty (Ries, </p><p>2011, pp. 27). </p><p>Lean </p><p>With the turn of the new century a group of scholars (Ries, 2011; Furr and Ahlstrom, 2011; </p><p>Blank 2006) built on existing entrepreneurship literature and established what they claimed </p><p>was new methodology called lean start-ups. Ries studied the lean manufacturing ideas, </p><p>originating in the Toyota Production System in J...</p></li></ul>