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International Journal of Entrepreneurial Behavior & Research
Enacting
the Lean Startup Methodology: The Role of
Vicarious and Experiential Learning Processes
Journal:
International Journal of Entrepreneurial Behavior & Research
Manuscript ID
IJEBR-06-2016-0195.R2
Manuscript Type:
Research Paper
Keywords:
The lean startup methodology, Prescriptive accelerators, Vicarious learning,
Entrepreneurial learning, Experiential learning, Entrepreneurs' theory of
action
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International Journal of Entrepreneurial Behaviour & Research
International Journal of Entrepreneurial Behavior & Research
1
Enacting the Lean Startup Methodology:
The Role of Vicarious and Experiential Learning Processes
Introduction
Scholarly calls for the development of systematic entrepreneurial methods (Fiet, 2001; Neck and
Greene, 2011; Sarasvathy and Venkataraman, 2011; Wiklund et al., 2011) have resulted in a
number of prescriptive contributions. These contributions include but are not limited to several
attempts developed in isolation by scholars (McGrath and MacMillan, 2000; Sull, 2004; Fiet, 2007)
and practitioners (Brown, 2008; Ries, 2011; Blank and Dorf, 2012). In these contributions, the
recently introduced lean startup methodology that rejects long-term planning and embraces
experimentation and iterative learning has attracted much attention from entrepreneurs, practitioners
and academics (Ries, 2011; Eisenmann et al., 2012; Harms, 2015). A growing number of prominent
entrepreneurship programmes (e.g. Stanford University, Harvard Business School, Berkeley,
Columbia University) and accelerators (e.g. Techstars, 500 Startups, YCombinator) have begun to
favour the use of the lean startup methodology over business planning approaches (Christiansen,
2009; Blank, 2013). These programmes explicitly encourage and, in some cases, require students
and entrepreneurs to follow and adhere to the instructions of the lean startup methodology (Ladd et
al., 2015; Hallen et al., 2016). However, largely due to having been neglected by academic
communities, there is very little insight into how these instructions are manifested in reality. The
prevalence of the lean startup methodology and the lack of understanding of its impact on
entrepreneurs demonstrate the need for studies addressing this issue.
Against this backdrop, a phenomenological interview-based approach is employed to explore
what happens and how it unfolds when the instructions of the lean startup methodology are enacted
in the context of a ‘prescriptive accelerator’– an accelerator that is structured and organised by a
clear prescriptive approach. 22 semi-structured interviews with CEOs and founders of 11 startups as
part of a national accelerator programme provided insights into the impact of participating in the
pedagogical context of a prescriptive accelerator. The findings reveal that the changes to the
entrepreneurs’ thinking and actions were the result of the interplay between the lean startup
methodology and two distinct modes of learning, namely: vicarious and experiential learning
processes. The paper presents a model that demonstrates the outcome of this interplay between
vicarious and experiential learning resulting in the entrepreneurs’ theory of action which is, to a
large extent, in line with the explicit instructions of the lean startup methodology. Taken together,
the findings of this study make two major contributions. First, by exploring the novel empirical
phenomenon of ‘prescriptive accelerators’, the findings shine a light on how entrepreneurs
internalise the vicariously and experientially accumulated knowledge. Second, the paper makes a
contribution to the entrepreneurial learning literature. It provides insights into the learning
mechanisms that denote the process through which entrepreneurs adhere to instructions, adopt new
governing variables and action strategies and, therefore, update their theories of action.
The paper is organised as follows: the next section provides a brief review of vicarious and
experiential modes of learning, and Argyris and Schön’s theory of action. Next, a section on
research methodology including the research setting, research design and data analysis is presented.
This is followed by a detailed presentation of the findings of this study along five salient themes.
Thereafter, the analysis section elaborates on the descriptive findings that provide the foundation
for the discussion section focusing on the analysis of the findings in light of theory. Finally, the
implications of this research and future research opportunities are outlined.
Theoretical Framework
Vicarious learning in entrepreneurial settings
As people are capable of learning through modelling the behaviours of others, a great deal of
knowledge acquisition and subsequent learning occurs in a vicarious
1
manner (Holcomb et al.,
1
Indirect, imitative, no-trial and observational learning have been previously and interchangeably employed in the literature to refer
to ideas encompassed by vicarious learning.
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2009). Research has shown that people learn complex behaviours through observation (Nadler et
al., 2003) and that they then employ the coded knowledge as a reference for future actions. It is also
suggested that individuals learn more frequently in a vicarious way by observing others’ successes
and failures than from personal experiences (Bandura, 1965), specifically in settings where
uncertainty and ambiguity are prevalent (e.g. entrepreneurship). Bandura (1977:392) asserts that
virtually “all learning phenomena resulting from direct experiences” can take place in a vicarious
mode of learning. This is specifically present in pedagogical contexts, such as prescriptive
accelerators, where entrepreneurs are exposed to many second-hand experience episodes. This
exposure helps them to avoid the cost of and obtain the benefits of the accumulated experience and
knowledge of other entrepreneurs (Kim and Miner, 2007). In situations that are specifically
unfamiliar and uncertain, vicarious learning can provide a better and faster path to action than direct
experiences (Holcomb et al., 2009). This is due to the undivided attention that entrepreneurs can
allocate to specific situations, rather than dividing it between observations and forming connections
between action and outcomes. The experiences of others create legitimacy and a standard that can
mimic those gained from personal experiences (Wood and Bandura, 1989). The primary basis of
vicarious learning is the process of “acquiring, developing or altering” existing patterns of
behaviour (Gioia and Manz, 1985).
Vicarious learning can be facilitated in various ways. In the early stages of business
development, providing entrepreneurs with a context that offers some type of social support is
critical to facilitate learning. The process of learning in a social setting is determined by how
intentional and unintentional learning episodes are created and come to be (Brockbank and McGill,
2006). Previous research suggests that in pedagogical situations where vicarious activities precede
direct experience, performance is enhanced (Hoover et al., 2012). Therefore, various social
activities can create a dynamic where entrepreneurs not only reflect on their own but also on other
entrepreneurs’ progress by listening to and discussing it with them (Lévesque et al. 2009). This
process of listening, reflecting and sharing is influential in what is learned and how it is learned.
Participating in educational lectures and workshops can be seen as a means of facilitating vicarious
learning (Bingham and Davis, 2012; Hallen et al., 2016). The learning can be both in the form of
anecdotes and specific experiences from the knowledge acquired through past experiences. There is
a plethora of opportunities for formal vicarious learning through participation in lectures and
workshops and informal vicarious learning through interacting with other entrepreneurs and
investors (Hallen et al., 2016). In the following section, a second mode of learning in
entrepreneurial settings, experiential learning, is briefly reviewed.
Experiential learning in entrepreneurial settings
Experiences account for a great deal of individual learning and development (Morrison and
Brantner, 1992). Experiential learning is viewed as the transformation of experiences into
knowledge, where knowledge structures are formed through the continuous interaction between
prior knowledge and new experiences (Kolb, 1984). This is achieved through individuals
internalising the experiences by making those specific experienced episodes their own (Kolb et al.,
2001; Kolb and Kolb, 2005). Research on entrepreneurial learning suggests that much of the
learning that occurs in entrepreneurial contexts can be considered experiential (Minniti and
Bygrave, 2001; Rae and Carswell, 2001; Cope, 2003; Politis, 2005). This learning process is widely
understood as a process that is situated in certain entrepreneurial situations and contexts (Gibb,
1997; Rae, 2005; Cope, 2005b; Huovinen and Tihula, 2008) and is conceptualised as a circular
process where entrepreneurs move between different phases of learning such as from acting to
reflecting and from reflecting to conceptualisation (Corbett, 2005). It is important to note that this
learning is the learning that is experienced by entrepreneurs during business development activities
rather than a particular style of learning distinguishable from other styles of learning (Ravasi and
Turati, 2005). For the experiences to be useful to entrepreneurs, they need to go through certain
processes of acquiring and assimilating.
During the process of acquiring and assimilating a method, a great deal of conversion from
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the explicit instructions of the method into practical steps occurs (Nonaka et al., 1996). Prior
research suggests that this conversion process requires updating the beliefs and behaviours of
entrepreneurs in order to accommodate the necessary knowledge development (Politis, 2005;
Argyris, 1997; Tsai and Lee, 2006). Internalisation (a process including acquiring and assimilating)
of the instructions of an entrepreneurial method can, therefore, be understood as a gradual process
that feeds into the ensuing experiences (Landa, 1999). Research has also emphasised that higher-
level learning (Fiol and Lyles, 1985) occurs when entrepreneurs’ experiences force them to review
their beliefs as well as their concrete behavioural patterns and, if necessary, revise them (Argyris
and Schön, 1978; Kolb and Kolb, 2009). Participation in a prescriptive accelerator exposes
entrepreneurs to a learning context where their fundamental beliefs may be tested and over-ridden
(Politis and Gabrielsson, 2009). Such a context provides an environment for entrepreneurs to update
their beliefs and scripts for their behaviours through reflecting on the outcome of their actions in a
more effective way (Cope and Watts, 2000; Pittaway and Thorpe, 2012). In line with the above,
Argyris and Schön’s theory of action perspective is briefly presented as an explicit framework for
addressing the changes to underlying beliefs and behavioural patterns. This perspective that posits
how both beliefs and behaviours are modified during the cyclical learning processes of single-loop
and double-loop learning is briefly reviewed.
Argyris and Schön’s theory of action
All human actions accord with their respective theories of action. Theories of action are everyday
means used to assist our attempts to understand and control our environment, to explain current and
past situations and to predict future courses of action (Parson et al., 1965). The details of these
processes differ but they all take the form of ‘if… then…’. Thus, since deliberate individual
behaviour can be viewed as the result of the theories of action of those individuals, a full schema for
a theory of action would be: “in situation S, if you want to achieve consequence C, under
assumptions a(1) … a(n), do A” (Argyris and Schön, 1974:6).
Argyris and Schön's (1974) general theory of action has three components that help explain
action, namely: governing variables, action strategies and consequences (see Figure 1). Concepts
such as values, assumptions, rules, attitudes, beliefs, and feelings are all examples of governing
variables which individuals try to keep within acceptable ranges. These ranges include the most
worthwhile solutions which are in line with governing variables (Argyris, 1976). Action strategies
refer to specific scripts for actions to be taken by individuals to keep governing variables within the
ranges that they implicitly or explicitly believe are acceptable. Acting in accordance with the action
strategies inevitably has consequences. Some of these consequences are intended (the results that
individuals expect) and some are unintended (by-products of specific actions not envisaged by the
individuals) and have implications for both the individual and others (Anderson, 1995). Similar to
any other setting, in an accelerator setting, changes to these components in various ways and
through different processes are expected to occur. Modifications to any of these components have
various consequences that impact entrepreneurs and the people around them.
–––––––––––––––––––
Insert Figure 1 about here
–––––––––––––––––––
Argyris and Schön (1978) hypothesised that learning is the formation or modification of theories of
action. In this context, learning by implication involves the resolution of incompatibility between
the three components of individual theories of action through adjustments of governing variables
and action strategies. If the consequences of an activity give rise to changes in action strategies,
single-loop learning occurs. If the consequences lead to changes to governing variables, then
double-loop learning can be identified. Single-loop learning emphasises modifications to action
strategies to make them more effective. Double-loop learning works in similar ways to single-loop
learning but instead of only modifying action strategies, first modifies governing variables and then
corrects action strategies. As entrepreneurs often learn by reflecting on their experiences, which is
crucial for making informed decisions, double-loop learning can help to explain some of the
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learning in entrepreneurial contexts (Argyris, Putnam, and McLain Smith, 1985). These revisions to
governing variables and action strategies can be expected in contexts where the focus on learning is
evident. For instance, in a prescriptive accelerator setting, where entrepreneurs are being trained to
make their assumptions explicit, the likelihood of reflecting on and modifying what governs their
actions increases.
With the exception of the articles authored by Freeman and Knight (2011) and Tagg (2007),
the vast majority of the research that cite Argyris and Schön’s theory of action do it only to
highlight the occurrence of single-loop or double-loop learning, without substantiating the
underlying mechanisms of those occurrences. For instance, Freeman and Knight (2011) document
changes to the components of students’ theory of action by only highlighting the modified
components. The similarity of their study with the current one is the pedagogical context where a
theory of action is employed to explain the phenomenon of interest. However, to the best of the
author’s knowledge, the current study is unique in how the theory of action perspective and single-
loop and double-loop learning processes are employed to capture some of the changes resulting
from participating in the pedagogical setting of an accelerator. This helps account for the processes
through which instructions are acquired and employed, and informs us about the consequences of
adhering to them.
Methodology
The research question in this paper is: How do the instructions of the lean startup methodology
influence entrepreneurs? To answer this question, this paper explores how the instructions of the
lean startup methodology were enacted in the context of a prescriptive accelerator. A qualitative
approach was employed to purposefully generate understanding of the learning experiences of the
entrepreneurs (Gephart, 2004). Adopting a learning lens enabled insights into the interactions and
changes that took place within the accelerator context.
Research setting: The BornGlobal accelerator programme
This study was conducted in the context of a Swedish technology startup accelerator programme.
Funded by a Swedish government agency and run by academics at Chalmers University of
Technology, the programme aimed at helping startups find verified and scalable business models.
Experienced entrepreneurs, venture capitalists and university professors were amongst the team that
provided support to the entrepreneurs. The programme required CEOs and at least one founding
entrepreneur from each startup to be actively engaged in the programme and offered dedicated
coaches to each startup during the programme. The programme consisted of nine modules in a
workshop format, with two- to three-week intervals between the modules. The general orientation
of the programme was in explicit accordance with the instructions of the lean startup methodology,
meaning that the majority of the activities within the programme were structured in line with ideas
characteristic to that methodology. During each module, topics related to the business model canvas
were introduced to aid the entrepreneurs in formulating relevant testable hypotheses in regard to
their business models. The author was present during all the modules and accompanied the
entrepreneurs on their Silicon Valley visit. Table 1 presents additional details of the content covered
in each module as part of the accelerator programme.
–––––––––––––––––––
Insert Table 1 about here
–––––––––––––––––––
As the lean startup methodology was an important and integral component of this programme, the
following section provides a brief introduction to the methodology.
The lean startup methodology
Inspired by the lean manufacturing principles (avoiding waste and optimising resource spending)
and Steve Blank’s ideas (Blank, 2006), Eric Ries introduced the lean startup methodology. The
ideas in this methodology are reminiscent of contributions such as ‘disciplined entrepreneurship’
(Sull, 2004), ‘discovery-driven planning’ (McGrath and Macmillan, 2000) and ‘probe and learn’
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(Lynn et al., 1996). The methodology benefits from a set of tools taken from other theories and
methods such as the customer development framework (Blank and Dorf, 2012), rapid prototyping
(Brown, 2008) and agile software development principles (Dybå and Dingsøyr, 2008). Core to the
lean startup methodology is validated learning through purposeful experimentation. Validated
learning is a term that highlights progress through a process of testing a set of carefully formulated
assumptions and analysing solid empirical data obtained from real customers (Ries, 2011; Maurya,
2012).
The lean startup methodology as a cyclical process is grounded in three main sets of activities.
First, entrepreneurs map their business idea visually on the business model canvas (Osterwalder et
al., 2005) as testable assumptions. This graphic visualisation contains all the key aspects that
entrepreneurs should have a certain degree of certainty about. Second, entrepreneurs engage in a
process designed to test the assumptions that constitute the business model (Ries, 2011). The
sequence of these tests is determined by the perceived criticality of the results of those tests for the
continuation of the process. One way to test the assumptions is by creating a ‘minimum viable
product’ (MVP). An MVP is the version of the product with the smallest set of features built by
using the minimum amount of time and resources which provides entrepreneurs with the
information to validate or invalidate assumptions (Ries, 2011). Through rigorous evaluation of the
results, the invalidated assumptions are replaced and new assumptions are tested. This process
continues until a reasonable number of tests point to the validation of critical assumptions. Finally,
when all the remaining assumptions are validated, ‘product-market fit’ is achieved. The fit implies
that the product idea has a market and, therefore, customers are willing to pay for the value offered
by the product (Blank and Dorf, 2012). The ultimate goal of the methodology is to guide
entrepreneurs in finding this fit. Figure 2 presents a comprehensive step-by-step schematic of the
process.
–––––––––––––––––––
Insert Figure 2 about here
–––––––––––––––––––
Research design
Interviewing as a common method in qualitative research (Bryman and Bell, 2011) is believed to
provide deep understanding by shedding light on the set of events, why they happened, how they
happened and with what results (Schramm and Roberts, 1974). This study used semi-structured
phenomenological interviews (Cope, 2005a; Berglund, 2015) to gain an in-depth understanding of
the lived experience of the entrepreneurs who participated in a prescriptive accelerator programme,
with a special focus on how they made sense of and enacted the method prescribed (Easterby-Smith
et al., 2012).
The aim of phenomenological interviews is to “carefully, and thoroughly capture and
describe how people experience some phenomenon–how they perceive it, describe it, feel about it,
remember it, make sense of it, and talk about it with others. To gather such data, one must
undertake in-depth interviews with people who have directly experienced the phenomenon of
interest” (Patton, 1990:104). This study aims to understand the phenomenon of prescriptive
accelerators by investigating the perceptions and lived experiences of entrepreneurs. This includes a
two-stage interpretation process where “the participants are trying to make sense of their world;
[and] the researcher is trying to make sense of the participants trying to make sense of their world”
(Smith and Osborn, 2003:53).
To capture change and, therefore, learning, two rounds of interviews, one at the beginning and
one at the end of the programme, were conducted. Similar to Bingham and Haleblian (2012), all the
interviews were loosely structured and consisted of both close-ended and open-ended questions.
Close-ended questions were related to the background information about the entrepreneurs and
helped the conversation to get going. Open-ended questions were primarily intended to capture
entrepreneurs’ experiences and their learning as a result of participating in the accelerator
programme. These questions sought to shine a light on the entrepreneurs’ thoughts about different
aspects of their businesses and the set of activities conducted to progress their business processes.
This design allowed for the capture of their ‘initial’ theory of action and the ‘updated’ one after
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having gone through the accelerator programme. Comparing the entrepreneurs’ statements from the
first and second rounds of interviews and also reviewing the secondary data helped the
identification of the learning processes.
Data collection
The primary source of data for this paper is a total of 22 semi-structured interviews conducted
either face-to-face or via Skype, recorded and transcribed verbatim (see Table 2). All the
entrepreneurs from the startups that participated in the programme were invited to be interviewed to
both have the statements corroborated and to obtain possible alternative points of views. The initial
study design was based on interviews with all the entrepreneurs in the accelerator programme.
Entrepreneurs from 11 out of 18 startups were successfully interviewed in two rounds of interviews.
The initial round focused on capturing how the entrepreneurs conduct different activities and how
they reason around those activities. The second round focused on exploring what and how it was
learned during the programme. Interviews were aimed at providing answers to questions such as
what has changed, where these changes came from and what the consequences of these changes
were.
The first cohort in the programme consisted of eight startups. Six interviews in the initial
round and six interviews in the second round were conducted with the entrepreneurs on-site (at the
accelerator) while each interview lasted on average about sixty to seventy minutes. The reason for
not interviewing the entrepreneurs from all the eight startups was simply lack of access and
availability, which led to the decision to exclude them from the study. The second cohort in the
programme included 10 startups. After discussions with the programme organisers, half of the
cohort was selected for interviews. The criteria guiding the selection were full participation in the
programme, availability for interviews, and openness to sharing their experiences.
The interview data was complemented by weekly surveys, materials from presentations in
each module and the author’s observations during the programme. Weekly surveys inquired about
the activities conducted, the rationale behind them and the activities planned. This provided the
author with first-hand exposure to the phenomenon under study, instead of sole reliance on the
entrepreneurs’ accounts. It is important to note that these three additional data sources were used to
increase the author’s familiarity with the entrepreneurs, to inform the interviews and to provide a
better understanding of the entrepreneurs’ progress.
–––––––––––––––––––
Insert Table 2 about here
–––––––––––––––––––
Categorical data analysis
To facilitate the data analysis process, all the interview transcripts were coded using Atlas.ti, a
qualitative data analysis software. This allowed for a more effective process to keep track of
emerging labels and categories, as well as easier reference to similar concepts and their respective
statements. Throughout, the analysis of the data in this study can be characterised as iterative
because insights emerging from the data were held up against published research. In line with
Alvesson and Sköldberg (2000), this provided a way to re-visit the data with categories and ideas
inspired by theory. Through an open coding process (Strauss and Corbin, 1998), transcripts were
broken down into independent meaning units. Each meaning unit was assigned a label or a simple
descriptive phrase as close as possible to the terms and language used by the entrepreneurs. After
this process was carried out for all the interviews, the labels were grouped under a large set of
tentative categories.
Through revisiting these tentative categories, some of the categories stayed intact, some were
merged to form new larger categories and others were divided into more detailed categories. The
decisions were made based on a number of simple rules: if the category was inclusive in its content,
i.e. all the statements, the category stayed intact; if the category did not fully contain all the existing
statements, the category branched out and formed a new category; and if two or more categories
communicated the same or very similar ideas they were merged and created a new larger category.
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This process resulted in 34 categories. The categories that did not address change, learning and
behavioural consequences were discarded, leaving the author with 25 first-order descriptive
categories. Through a careful process, categories were grouped and resulted in five theoretical
second-order themes. These five second-order themes were later revisited in light of Argyris and
Schön’s theory of action and their related first-order categories were then mapped into the three
components of the theory of action, organised as five sets of governing variables, action strategies
and consequences (see Table 3).
Argyris and Schön’s definitions of governing variables, action strategies were used to
organise the first-order categories. If the categories contained concepts such as values, assumptions,
attitudes, beliefs, and feelings which impacted the activities, the category was considered a
governing variable. For example, the category ‘learning as the main goal of the process’ is related
to how the entrepreneurs assumed the nature of their activities. If the categories implied specific
courses of action or scripts that indicated a set of activities, that category was classed as an action
strategy. For example, the category ‘rigorous evaluation of customer interactions’ refers to a certain
set of activities. If the categories signalled consequentiality of action in terms of outcomes, the
category was considered a consequence. For example, the category ‘improved internal and external
communications’ indicates the consequences of evaluation of customer interactions.
In the case of a mismatch among any of the governing variables and the action strategies
revealed in the first and the second interviews, a learning process was identified. If the learning was
a direct outcome of exposure to the instructions of the lean startup methodology, without any
involvement of concrete activities, a vicarious learning process occurred. For instance, governing
variable ‘technology is the most important component of the product’ was replaced by ‘do not focus
only on your technology’. This was the outcome of explicit instructions that the programme
organisers repeatedly communicated. If the learning was the result of reflecting on the outcome of
actions undertaken by the entrepreneurs, an experiential learning process was identified. In the case
of a mismatch between governing variables in the first and second interviews–brought about by
conducting certain activities–a process of double-loop learning was identified (e.g., the move away
from business plans to validated business models). If the mismatch involved modifications to the
action strategies, a process of single-loop learning was identified (e.g., the change from perfecting
the technology to focusing on activities that improved the entrepreneurs’ customer knowledge).
Table 3 presents the initial set of governing variables and action strategies, and the updated ones as
the outcome of participation in the accelerator programme.
Findings
In what follows, the second-order themes are used to organise the presentation of the findings as
they capture the learning of the entrepreneurs in a meaningful way. These are later used to serve as
the basis of the entrepreneurs’ theory of action. The first-order categories are mapped into the three
components of the theory of action and are presented in the following five sets.
Set 1: The importance of having contact with customers
Governing variable: “Understand customer needs and requirements”. The first governing variable
highlights customers as the most important factor to be taken into consideration before major
decisions are made. The lean startup methodology suggests that customers are the best source of
information as they are the ones who have the urge to solve their problems and, thus, are willing to
pay to solve them. As the programme explicitly followed the methodology–and was heavily
influenced by it–programme organisers and coaches emphasised the importance of understanding
customer needs. The entrepreneurs, therefore, allocated a great deal of time and attention to
customer needs and maintained close contact with their customers throughout their participation in
the accelerator programme:
“We are trying to understand our customers better than we did before. We need to focus
on the pains and needs of our customers.” (H); “We think inviting the most active users
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of the app to our office, offering them wine and snacks and listening to their feedback is
very important. We want to ask them about what they want to see in our product.” (A);
“We have to stick really close to our customers and their needs. Otherwise, we will not
have a business at all.” (C)
Action strategy: “Keep close contact with customers to obtain first-hand feedback”. The first action
strategy highlights the importance of having practices and processes in place to systematically
collect and analyse customer insights. In order to understand customers, the entrepreneurs engaged
in various activities to collect feedback. The first-hand feedback was analysed and the insights
gained were then used to convince the founding teams in regard to contentious decisions that were
deemed necessary but not intuitively relevant:
“After interviewing our customers we realised that we need to have the users of our
product in mind and therefore our approach should be bottom-up. This came to light after
talking to a sufficient number of our customers.” (G); “We administered a survey and
asked for feedback from our most active users and followed up with them. The outcome
of that inquiry helped us make some necessary changes to the app.” (I); “We have been
continuously hearing very good feedback from our customers already from the start of
the accelerator programme. This has become a very close part of our culture. We
constantly talk to our customers now.” (A)
Consequences: Adopting the first governing variable and following the corresponding action
strategy influenced how the entrepreneurs communicated decisions and strategic directions within
their teams. This closer relationship with customers posed a challenge. The entrepreneurs had to
find solutions to adapt the internal culture of their teams to be more accommodating to the new
ways of working. For this, they first needed to make explicit how decisions and strategic directions
were communicated. By re-thinking it, they arrived at different ways for communicating with each
other and with others external to their teams. Another consequent change was in relation to how
customers were viewed: from ‘customers’ to ‘collaborators’. The entrepreneurs began to view their
customers as undetachable parts of their early processes, since without customer collaboration, they
believed that their businesses were “sentenced to failure” (E). One of the startups invited their one
hundred most active users to their office to encourage their feedback and create a sense of
belonging. Activities such as administering surveys and organising trips to potential customer sites
provided the entrepreneurs with invaluable insights that were otherwise very difficult to obtain. The
positive and negative results of these interactions resulted in some confusion; on the one hand,
positive feedback created higher confidence as well as higher success probability perceived by the
entrepreneurs. On the other hand, negative outcomes led to doubts and scepticism about the future
of their business ideas and their possible abandonment. The high demands of the lean startup
methodology and the programme also led to some entrepreneurs voicing their concerns about task
overload and possible burn-out:
“We can now communicate in a way that we could not do before. We now know what to
say to investors, to our customers, and to a lot of other people.” (I); “Talking to
customers and learning about their needs, we are more confident about the core business
idea.” (J); “We think conducting customer interviews and analysing them are helpful
practices but we also have daily deliverables. We have the challenge of time.” (B);
“Adoption the [lean startup] methodology has changed quite a lot about how we
internally discuss things among us co-founders. We think it helped us move faster.” (B);
“We have more harmony at work, through more informed internal communications.” (F)
Set 2: Handling of changes
Governing variable: “Allow for frequent changes if necessary”. The second governing variable
refers to both the explicit and implicit impact of the methodology’s instructions on commitment to
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change. During the early stages of the business development processes, frequent changes are
expected. As the business idea is in the experimental stage, its minor and major elements are subject
to revision. This requires a mindset that is open to the possibility of and tolerates the necessity for
frequent changes. These necessary changes need to be warranted and prompted by solid and valid
stimuli. Therefore, the entrepreneurs were instructed that only warranted changes should be
embraced. Accommodating this governing variable required a high degree of flexibility as well as a
high tolerance for ambiguity. This equipped the entrepreneurs with the ability to embrace sudden
changes if reliable data from external sources pointed at the necessity of those changes. This meant
that the ideas or their elements were subject to frequent modification:
“We are not afraid to do pivots [major changes] anymore. This means that any change
can happen.” (A); “We have changed a lot of things during this process, more than what
we did before.” (H); “Some of us take every chance to make necessary changes. We too
have been really trying to use all the possibilities to change.” (K)
Action strategy: “Rigorously evaluate and communicate the results of customer interactions”. The
second action strategy refers to the practices that the entrepreneurs followed to make sense of the
data collected from customers. Embracing frequent changes requires rigorous evaluation of the
evidence that indicates the necessity for change. It also requires effective communication of the
relevance of those changes. A rigorous evaluation process was, therefore, adopted by re-visiting the
documented interactions the entrepreneurs had had with their customers. This process both enabled
the entrepreneurs to obtain a better understanding of customers and market and facilitated internal
and external communications:
“We are definitely more structured in the way we work in comparison with how we
worked before. We have workshops at least once a week. Before we only focused on
what we thought was relevant and not what customers were interested in. But now we
aim at evaluating all the interesting results from different interactions.” (J); “What we do
is to define the hypotheses that we want to test and how we want to test them. After
testing the hypotheses, we come back and say these are what we got from the evaluation
and this is what they mean.” (E)
Consequences: The customer interactions often contained random, but nevertheless interesting,
insights. The rigorous evaluations facilitated more effective internal and external communications
by providing a space where implementing changes appeared to become easier and more natural
over time. Moreover, the need to rigorously evaluate customer interactions added another layer to
the existing organisational structures, contributing to the complexity of their processes. Some of the
entrepreneurs explicitly demonstrated that they embraced all the possible opportunities to change to
make sure that they were flexible enough to accommodate their customers’ needs. This led to
substantial changes both to the business idea itself and the ways of working within the teams. One
of the entrepreneurs stated that they began to question all the assumptions they had held about their
business model by analysing the qualitative and quantitative evidence they meticulously collected:
“We are becoming more open to sudden and big changes if they appear to be rational and
justified.” (H); “We are trying to use all the possibilities to change, if necessary. Nothing
is fixed for us unless validation comes from our customers.” (A); “We turned everything
inside-out based on the metrics collected from our customers.” (I)
Set 3: Accounting for different aspects of business development
Governing variable: “Do not focus only on your technology”. The third governing variable refers
broadly to the salient shift in focus from perfecting the underlying technology of the offering to
greater consideration of customer preferences. Although the technological aspects of what is offered
by entrepreneurs are important in shaping the outcome, customers often pay very little attention to
the technology behind the surface. Therefore, it does not greatly matter what the technology is and
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what possibilities it offers unless it helps to solve customer problems. Adopting the lean startup
methodology and adhering to its instructions impacted what the entrepreneurs focused on. Instead
of spending excessive amount of time on perfecting their technologies, they began to prioritise
gathering detailed feedback from their potential customers and testing their ideas before
incorporating technological specifications into their products. Suddenly, priority setting was not
entirely based on the urgency of technology optimisation but rather on the needs of customers. This
required fundamental changes in the entrepreneurs’ mindset and the logic guiding their actions.
Despite the importance of technology as the underlying enabler for providing the offerings, the
entrepreneurs came to realise that customers are less concerned with technology than they had
imagined:
“Before, we decided that a proposed feature is technologically feasible and agreed on
pursuing what was necessary to realise it, but now we believe that we need to know what
our customers think about that feature before making the decision to commit resources.”
(B); “We changed from the mindset of ‘we have this great product or feature idea, who
would not like it?’ to ‘this sounds interesting. I wonder what our customers would think
about it’.” (E); “We have become more customer-oriented. Before we were very much
technologically focused. We have started to move more and more to the customers’
side.” (G)
Action strategy: “Let customers decide what you offer them”. The third action strategy refers to the
gradual move to involve customers and their insights in determining what values the offerings
provide. In line with the explicit focus of the lean startup methodology, the entrepreneurs began to
run systematic experiments and to engage in regular customer interviews over extended periods of
time to complement their knowledge about their customers. By focusing more on understanding
their customers, the entrepreneurs came up with new ways to set priorities. The priorities were
grounded on the results of the evaluation of customer interactions. These priorities were later
screened to ensure that they conformed with the strategic direction of the startup:
“During customer interviews we told our customers ‘imagine that there is a magic
solution for you, what would that be?’ They responded: ‘I would like to …’. This gave us
some ideas about what our customers might need.” (E); “We are not trying to push
features on our customers anymore, instead we are trying to get them to tell us honestly
what they want us to do for them.” (I); “We try to put the interactions we have with our
customers into use and get inspiration from them.” (A); “We will have follow up
interviews to see how our customers found us, what they saw in our product, what values
we provide them, and what they need from us.” (F)
Consequences: In order to gather relevant information, processes by which priorities were agreed
upon and therefore communicated within the teams were put into place. Changes to priorities led to
various activities such as customer interviews being valued highly and being conducted more
frequently, in turn leading to a deeper knowledge of market and customers. Through this process,
customers were given a new voice which was different from before. They could directly influence
the activities that required attention. In addition, the new routines adopted as part of the programme
such as conducting systematic customer interviews, running rigorous experiments and gathering
relevant information put an extra burden on the entrepreneurs. This meant that there was a higher
demand on the entrepreneurs in terms of expected responsibilities and made the process of setting
priorities integral to their processes:
“Based on customer feedback, we decide together whether or not we need to do activity
x. Now we need a new process to prioritise the activities. We have to adapt to the new
reality.” (B); “We ask ourselves do we really need this feature in our offering or not?
This is a major change in how we work. The results of testing the MVPs with our
customers allow us to become better in prioritising.” (K)
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Set 4: Maintaining a learning-oriented mindset
Governing variable: “Focus on learning from customers rather than selling to them”. The fourth
governing variable denotes the change from viewing customers only as a source of income to
viewing them as a source of information and inspiration. Instead of treating the interactions with
customers as opportunities to ‘sell’, the entrepreneurs shifted their focus to use interactions to learn
and improve their understanding about customer needs and problems. The entrepreneurs realised
that they needed to allocate more time to activities that provided learning opportunities about their
customers, and to ensure that learning is the goal as well as the outcome of those interactions. Soon,
the importance of this change and the significant consequences it had on how the entrepreneurs
made decisions became apparent to them:
“We want to help our customers instead of only targeting them to sell our product.” (F);
“We realised that we were pushing to sell our product to our customers and focus more
on having a dialogue instead of trying to force them into deals.” (I); “We have shifted our
focus from selling to learning. We now focus on understanding the fit between our
product and its features, and our customers’ needs.” (J); “Our meetings were more sales-
oriented rather than attempts to understand the needs of our customers. Now I think if we
approach our customers with the mindset of understanding them, we will get much more
out of the interactions with them.” (K)
Action strategy: “Employ the results from customer interactions in making informed decisions”.
The fourth action strategy refers to the employment of customer insights as important inputs to steer
decision making processes. One of the main impact the lean startup methodology had on the
entrepreneurs was the way in which they made decisions, both at the individual and team level.
Instead of relying on gut feelings and ad-hoc internal discussions, the entrepreneurs followed new
routines to make informed decisions (decisions grounded in information relevant to the context of
the decision):
“The discussions, internally as well as externally, are more fruitful when we
acknowledge that it is not only the people present in the room who know the answer. We
can indeed agree that our idea is a good idea, but then we need to ask our customers
before making important decisions.” (B); “We made our first pivot. We do not yet know
if it was right or wrong, but from what we know from customer interviews we believe it
was.” (D); “Drawing on the idea of product-market fit and through our interactions with
customers, I think we have successfully managed to tease out the important issues before
making decisions.” (C)
Consequences: The information gathered through various channels was employed to provide a
neutral space where personal cognitive biases and logical fallacies were consciously addressed. In
this space, customers were not viewed exclusively as sources of income but rather as providers of
crucial information and insight. These insights were highly valued and employed as input for
making informed decisions. Moreover, the entrepreneurs recognised the relevance of involving
others in making decisions. They appreciated how insights and opinions other than their own should
be taken into consideration before minor and major decisions were made. Even if their ideas
appeared to be sound on an intuitive level, they acknowledged the need to review alternative
aspects of their ideas. This change, directly induced by participation in the accelerator programme,
resulted in a higher perceived quality of decisions. Another important consequence was that while
the entrepreneurs’ views about the business development process had changed, their investors and
board members still regarded the process as a linear process of following business plans. This
divide was detrimental to the development of the business ideas. On the one hand, entrepreneurs
were encouraged to abandon their business plans and follow an emergent process and on the other
hand, they were required to show progress in line with the projected goals in their business plans:
“We refocused directly based on the insights regarding what people were actually
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looking at while browsing the app.” (I); “The internal workshops for making strategic
decisions are centred around the insights that we gathered through interacting with our
customers.” (D); “We have been very driven in generating income and getting the sales
going. This is mainly from the goals and income prognosis that our owners have set for
us. However, we feel we are still in an iterative process. Our investors are asking us to
generate income according to the plan but we need more time to learn. We are not on the
same page as our investors.” (I); “From the investors’ point of view, we should have
already sold the product. This creates some difficulty for us in following the lean startup
[methodology]. We get so many new inputs and we want to apply what we have learned.
When we discuss the insights with our investors they do not understand what we are
talking about.” (G
Set 5: Embracing the experimental nature of the process
Governing variable: “Focus on searching for a business model rather than executing a business
plan”. The fifth governing variable concerns the importance of validating business models.
Traditionally, entrepreneurs were expected to write business plans not only to raise money but also,
among other reasons, to signal legitimacy. The explicit distance of the lean startup methodology
from long-term planning approaches disposed the entrepreneurs to focus on formulating hypotheses
about their customers and organise activities to test them. The entrepreneurs no longer took for
granted the validity of highly speculative business plans that could prove to be wrong, especially in
the rapidly changing markets in which they were conducting business. Instead, they set out to
systematically verify the elements of their business models through rigorous evaluation of the
results of interactions with customers. This validation entailed the move away from long-term
planning and execution of their business plans to the search for a fit between their offerings and
customer needs. This move required a great deal of adjustment in how the entrepreneurs viewed
their business ideas and the set of activities they needed to conduct:
“We had a launch date in our business plan. We wanted to execute it and be on time with
our projection. We thought we were ready to launch and to scale quickly. We presumed
there was a need out there for our product. We certainly would have failed if we had
launched our product.” (E); “We had a really strong plan and wanted to stick to it and
execute. Now we take one step back and test things before executing.” (B)
Action strategy: “Validate the hypotheses before proceeding with developmental efforts”. The fifth
action strategy deals with the need to acquire a thorough understanding of all the various aspects of
the business idea. To do so and to validate their assumptions, the entrepreneurs began formulating
working hypotheses aimed at answering the uncertainties related to their core ideas. This helped to
collect credible input feeding the advancement of their processes. Some of the entrepreneurs
delayed the initiation or continuation of the development activities until they were assured of the
match between their product ideas and their potential customers’ needs:
“Together with our development team, we decided that we will not write a single row of
code during the first three months until we exactly know what our customers want.” (C);
“We began to set explicit hypotheses about our business model. We are going to continue
this approach of hypothesis testing.” (F); “We think that our users want inspirational
data. This was one of our hypotheses. We tested it before proceeding with curating
content.” (I); “We have decided not to change anything unless we validate the necessity
to change.” (D)
Consequences: While largely perceived as positive, adopting a hypothesis validation strategy
created a disconnect among some team members, especially among those members of the startups
with established organisational frameworks. Attempts to assimilate the lean startup methodology
were met with scepticism. Some team members became confused about their responsibilities and
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found it hard to maintain the necessary balance between participating in the validation of the newly
formulated hypotheses and delivering to their existing customers. Several entrepreneurs expressed
concerns about how their attempts to assimilate the instructions created a divide among employees
and, therefore, hindered progress. The conflict between delivering to existing customers while being
flexible to continuous changes and absorption of new insights disturbed the desired balance
between these two types of internal activities. This issue was less of a concern for those startups yet
to launch their products officially:
“We had a lot of discussions about how to adopt the instructions without dividing the
company. We have been very keen in involving the whole company in the process and let
the employees understand what we were doing.” (B); “We think that the customer
interactions are very helpful, but what stops us from doing it more are the daily
deliverables.” (G); “We also need to run the normal business in the meantime while
changing, evaluating, and being adoptive to new ideas. We are speaking to real
customers, doing real projects and delivering to them. This is dealing with the reality and
deliverables at the same time as doing this developmental work.” (D); “Everyone in the
company is frustrated that we cannot focus fully on validating hypotheses. There are a lot
of administrative issues to take care of.” (H)
Analysis
This section shines a light on the mechanisms underlying the findings. First, the entrepreneurs’
theory of action is presented and discussed by juxtaposing the initial governing variables and action
strategies with the updated ones. Next, the occurrences of vicarious and experiential learning
processes are substantiated.
The entrepreneurs’ theory of action
Table 3 documents the updated entrepreneurs’ theory of action as the outcome of participation in
the accelerator programme in juxtaposition with the entrepreneurs’ initial governing variables and
action strategies. The entrepreneurs’ theory of action is comparable to the notion of ‘practical
theory’ (Shotter, 1993) in providing cognitive and analytical devices to understand, decide and act
in entrepreneurial situations. Although it is relatively difficult to access theories of action,
“experientially grounded narratives” can provide systematic access to these theories (Pitt, 1998).
The interactive effects of direct experiences and the reinforcement of vicarious episodes inevitably
take place together in everyday activities (Bandura, 1977). Therefore, these theories include
experientially and vicariously accumulated knowledge (Agor, 1986) that manifest in and through
contacts with others and reflection on the experiences (Boyce, 1995). The five identified themes
make reference to micro entrepreneurial theories of action as opposed to a ‘general theory of action’
(Parsons and Shils, 1962), collectively leading to a coherent set of governing variables and action
strategies. Here, the entrepreneurs’ theory of action refers to the set of governing variables and
action strategies that govern the entrepreneurs’ thinking and actions in the process of creating a
business. Revised in alliance with the lean startup methodology, the entrepreneurs’ theory of action
is practically stored in the minds of entrepreneurs and is largely observable and retrievable from
their business-related practices (Argyris, 2002). In the following section, the learning processes that
substantiate how the instructions of the lean startup methodology were enacted and eventually
resulted in the entrepreneurs’ theory of action are examined.
–––––––––––––––––––
Insert Table 3 about here
–––––––––––––––––––
Occurrences of vicarious learning
The social nature of the accelerator allowed the entrepreneurs to learn from observation and second-
hand experiences; both by listening to other entrepreneurs during the status updates and by listening
to their coaches through scheduled coach-entrepreneur meetings. Through these exchanges of
experience, a great deal of vicarious learning occurred. During the status updates, sharing of
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experiences was encouraged and applauded. The entrepreneurs reported their current status that
included activities undertaken, number of customer interactions, metrics collected through online
customer interaction, how they were analysed, and more importantly their planned activities.
Observing others’ progress created peer pressure and encouraged the entrepreneurs to conduct more
activities related to the lean startup methodology. The status updates gradually turned into
competitions where the entrepreneurs sought to outshine each other. Another salient effect of these
status updates was the possibility they provided to receive feedback, referrals and assistance from
other entrepreneurs and coaches. These occasions helped the entrepreneurs to model others’
behaviours and experiences. As the entrepreneurs dealt with similar issues, the behaviours modelled
did not differ much in terms of content and complexity. This resulted in an important outcome. By
hearing about the attempts to adhere to the instructions, the entrepreneurs succeeded in imagining
possible scenarios in which they could use others’ experiences to fit their own specific situations.
For instance, at times they followed other entrepreneurs’ novel ways to collect and analyse
information. By adapting those ways to their own contexts and accounting for their available
resources, they spared needless errors and, therefore, managed to better utilise their limited
resources.
Occurrences of single-loop and double-loop learning
Consider the following as an instance of single-loop learning. One of the main pillars of the lean
startup methodology is to understand and learn about customers. By vicariously learning about this
through participating in the educational lectures, the entrepreneurs began to interact with their
customers to obtain feedback. They, therefore, used all the means at their disposal to improve their
familiarity with their customers. By attaining and maintaining close interaction with them and
reflecting on the insights they provided, the entrepreneurs continued to refine their business models.
As the overall perception of the consequences of these interactions was positive, the entrepreneurs
internalised the methodology’s instructions in relation to customers. Having customers in mind
became more embedded in the individual behaviour of the entrepreneurs as well as in the collective
behaviour of their teams through repeated processes of ‘single-loop learning’. As a result, the action
strategy ‘keep close contact with customers to obtain first-hand feedback’ was internalised. Similar
processes occurred to the other action strategies. Each situation and each interaction that the
entrepreneurs engaged in was another opportunity to test the related action strategies. Figure 3
illustrates a schematic of this process.
–––––––––––––––––––
Insert Figure 3 about here
–––––––––––––––––––
Now consider the following as an instance of double-loop learning. In line with the emphasis on the
necessity of customer interactions and once again through vicarious processes, the entrepreneurs
were reminded of the importance of rigorous evaluation of customer interactions. They employed
various analytical tools to evaluate and analyse customer interactions. The results provided
important insights and led to minor and major changes. The perceived benefits of the results of the
evaluations of the interactions led to fundamental modifications to the entrepreneurs’ governing
variables. Instead of focusing on rigid business plans, they embraced the necessity for frequent
changes as a natural part of their business development efforts. The modification to the governing
variable enforced the corresponding action strategy and played a big role in internalising it.
Through processes of ‘double-loop learning’, the entrepreneurs updated their theory of action by
adding ‘allow for frequent changes if necessary’ to the set of their governing variables and
‘rigorously evaluate and communicate the results of customer interactions’ to their action strategies.
Figure 4 depicts a schematic of this process.
–––––––––––––––––––
Insert Figure 4 about here
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Discussion
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The purpose of this paper is to explore what happens and how it happens when the instructions of
the lean startup methodology are enacted in the context of a prescriptive accelerator. The
phenomenological interview-based study design allowed the identification of what the impact of
this enactment process is and how it came to be. Bruneel et al. (2010) suggested that amongst other
processes, new knowledge is acquired and accumulated through two distinct theoretical modes of
learning: vicarious and experiential learning. By explicating the complementary relationship
between learning processes, they suggest that entrepreneurs can greatly benefit from learning
processes such as vicarious learning instead of relying only on experience. Learning can be
captured when individuals exhibit changes which enable them to conduct certain activities
differently and more effectively (Rae, 2000). This paper, therefore, relies on vicarious and
experiential learning modes to discuss the findings of the study. Acting in concert, vicarious and
experiential learning processes resulted in what is termed here as the entrepreneurs’ theory of
action. Figure 5 summarises and depicts the architecture of interactions between vicarious and
experiential learning processes.
Vicarious learning in entrepreneurial settings
As we listen to or observe people around us–be it through direct observation of other people or
participating in pedagogical settings–we internalise the gist and content of those events and use
them to our benefit when a similar situation occurs (Wood and Bandura, 1989). Although much of
the entrepreneurial learning literature has focused on the experiential side of entrepreneurial
learning (Cope and Watts, 2000), an important part of the results of this paper is concerned with the
changes that indicated a process of vicarious learning. The social interactions between the
entrepreneurs and the coaches and participation in lectures and workshops as part of the programme
contributed to this process. They greatly influence the accumulation and assimilation of relevant
knowledge, impact the ensuing behaviours, and contribute to the entrepreneurs’ theory of action
through sparing needless errors (Tuschke et al., 2014).
As vicarious learning is represented by the two main activities of listening and reflective
thinking (Nehls, 1995), through listening and reflecting on the practice encounters of the others, the
entrepreneurs learned vicariously. The amount of influence the observations and interactions could
exert varies and depends on the type of activities being modelled or how highly the entrepreneurs
valued the outcome of such behaviour changes (Gioia and Manz, 1985). As a result, listening to and
reflecting on other entrepreneurs’ experiences and interacting with coaches and investors produce
knowledge that ultimately contributes to ‘enlarged experiences’ (Polkinghorne, 1988). In the end,
the corpus of experience and knowledge throughout the programme is extended by the
entrepreneurs learning vicariously from and alongside each other.
Furthermore, participating in educational lectures and workshops offers several additional
opportunities for vicarious learning. Simply hearing about the experiences of lecturers and
workshop facilitators can be beneficial to this process. A factor that fosters vicarious learning as
part of the educational lectures and workshops is the acknowledgement that other entrepreneurs
offer insights–through the retelling of their experiences–that are perceived as applicable to the
entrepreneur’s own specific case (Ellis et al., 2004). This is directly linked to the notions of
legitimacy and authority and how they were signalled successfully early on or acquired during the
programme (Clegg et al., 2007). These notions become especially relevant as the ideas
communicated from the position of authority and legitimacy are often treated as truth and therefore
often not subject to scrutiny and interpretation (Harden, 2000). This suggests that building trust and
legitimacy is of great importance in facilitating vicarious learning in educational settings. Both
discussed sources of vicarious learning had direct influences on the entrepreneurs’ way of thinking
and acting and, therefore, impacted how they thought about developing their business ideas and
what they did in order to achieve their goals.
Experiential learning in entrepreneurial settings
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In line with Weick’s (1969) assertion that learning has to be viewed in accordance with and guided
by a theory of action, Argyris and Schön’s (1974) theory of action has been used to help to explain
learning through the experiential processes of single-loop and double-loop learning (Lumpkin and
Lichtenstein, 2005; Freeman and Knight, 2011). If the consequences of certain actions are at odds
with entrepreneurs’ expectations, a process of change seems inevitable. However, entrepreneurs
need to have access to alternatives to replace and restructure their theory of action to fit the given
context. The introduction of an external stimulus (the lean startup methodology in this case)
provides an alternative and facilitates the change process (Anderson, 1995). Being exposed to the
lean startup methodology makes it more accessible for entrepreneurs to revise and restructure their
theory of action. If the consequences prove to be in line with expectations from and promises of the
instructions, the respective governing variable and action strategy become internalised. In
pedagogical settings such as prescriptive accelerators, entrepreneurs acquire the instructions
primarily in a vicarious way through educational lectures and workshops. However, it is not until
they experience the outcomes of the vicarious learning in action that they cement the related
knowledge as their theory of action. In other words, by participating in such programmes,
entrepreneurs accumulate knowledge that impacts their theory of action, however, an experiential
learning process is critical in internalising that knowledge and restructuring their theory of action.
This outlines the complementary relationship between vicarious and experiential learning processes
and the distinct roles they play in how the instructions are enacted.
Grounded theoretical model of the entrepreneurs’ theory of action formation process
As illustrated in Figure 5, the instructions of explicit methods such as the lean startup methodology
serve as a catalyst to both experiential and vicarious learning processes. In pedagogical settings
such as prescriptive accelerators, entrepreneurs accumulate knowledge that is largely–but not
exclusively–acquired through second-hand experiences (Bandura, 1977). The vicariously acquired
knowledge brings about a set of changes to entrepreneurs’ thinking and actions. Through repeated
experiential processes of single-loop and double-loop learning, parts of the accumulated knowledge
become internalised. It should be noted that not all the acquired knowledge needed to undergo
processes of experiential learning. By virtue of participating in pedagogical settings, entrepreneurs
adhere to newly adopted governing variables and related action strategies. The cumulative outcome
of these two theoretically distinct learning modes is the modification of the existing entrepreneurs’
theory of action. The updated entrepreneurs’ theory of action is context- and path-dependent and
largely conditioned by the consequences of adhering to the instructions of the methodology. What
distinguishes this theory of action from the lean startup methodology is the inclusion of context-
specific experiences and a set of personal heuristics.
–––––––––––––––––––
Insert Figure 5 about here
–––––––––––––––––––
Implications
The findings of this paper contribute to the literature on accelerators, the lean startup methodology
and entrepreneurial learning and have implications for theory and practice. Taken together, two
main contributions stand out. The first contribution concerns the literature on accelerators and the
lean startup methodology. It sheds light on the novel phenomenon of ‘prescriptive accelerators’
where systematic methods such as the lean startup methodology are employed as structuring
frameworks to guide entrepreneurial action. As the findings suggest that participation in a
prescriptive accelerator fundamentally impacts the entrepreneurs’ theory of action, the agenda
should cater for an environment where modifying governing variables and action strategies is
planned and is, therefore, both a goal and an outcome. Moreover, by presenting the concluding
entrepreneurs’ theory of action, this paper alludes to some of the important consequences of
following the lean startup methodology. They include but are not limited to the conflicts that
adhering to its instructions may inflict on the entrepreneur-investor dyad (Khanin and Turel, 2015),
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and on team members, and the dilemma of simultaneously following the instructions of the lean
startup methodology and delivering to existing customers.
The findings of this paper provide further insights for accelerator managers. These insights
can be used to reflect on the existing structure of the activities and services offered. In order for
these accelerators to be effective catalysts of action, various ways to impact both governing
variables and action strategies should be considered. Previous research suggests that contexts that
provide entrepreneurs with the possibility to combine experiential and vicarious learning increase
perseverance in difficult conditions (Bruning, 1965). An instance of such contexts is ‘prescriptive
accelerators’. Therefore, it is advisable that accelerator managers provide entrepreneurs with
environments where opportunities to learn both vicariously and experientially are readily available.
These two learning modes should be seen as vehicles for accelerating knowledge accumulation and
internalisation. As entrepreneurs like any other human “learn faster than do the performers of the
shared experiences” while completing tasks which require more conceptual rather than manual
skills (Banudra, 1977:122) i.e. entrepreneurship, rethinking the agenda of accelerator programmes
becomes imperative. Therefore, these programmes should incorporate carefully planned vicarious
and observational activities into their pedagogical agenda (Hoover et al., 2012). Following up
vicarious learning episodes with concrete activities fosters experiential learning by releasing
entrepreneurs from the heavy cognitive demands of experiential efforts (Kolb and Kolb, 2005).
Moreover, accelerator programme managers need to be upfront in regard to recommendations on
how entrepreneurs should deal with the consequences of adhering to them.
The second contribution of this paper relates to the literature on entrepreneurial learning.
Contrary to the prevailing understanding that most of the learning in entrepreneurial settings is
experiential in nature (Cope, 2005b), the findings of this study indicate that in the pedagogical
context of prescriptive accelerators, vicarious learning often precedes and informs pro-active
experiential learning. Through bypassing the necessity for some of the individual experiences, the
second-hand knowledge acquired acts as a script to guide the actions and interactions of
entrepreneurs. This suggests that in addition to learning that is unguided and experiential,
entrepreneurship scholars should also focus on learning processes that are not purely grounded in
action and experience. Moreover, amid the confusion as to the nature of interactions between these
two modes of learning (Haas and Hansen, 2005; Bresman, 2010; Argote and Miron-Spektor, 2011),
this paper echoes Hoover et al.’s (2012) results. The findings highlight that vicarious learning could
both replace and complement the need for direct experiences, depending on the context of learning.
The importance of these vicarious processes is the role they play in reducing the economic and
psychological costs and heavy cognitive demands of learning and performing skills. However, it
should be noted that not all of the experiences should or even could be replaced by vicarious
activities. Lastly, the proposed theoretical model provides insights into the mechanisms through
which vicarious and experiential learning occur and result in entrepreneurs’ theory of action. The
model contributes to our understanding of the modifications to the entrepreneurs’ theory of action
by accounting for the stimuli that incite and the mechanisms that shape these modifications.
Conclusions and future research
While the phenomenon of prescriptive accelerators and the lean startup methodology are becoming
more popular, this paper has explored how the instructions of the lean startup methodology are
enacted in the pedagogical setting of a prescriptive accelerator programme. Through a
phenomenological interview-based approach, this paper makes a number of contributions. Taken
together, the findings contribute to an understanding of the theoretical and practical aspects of the
lean startup methodology and the novel phenomenon of ‘prescriptive accelerators’.
There are two main limitations to this empirical study. One is the reliance on interviews at two
points in time as the main source of data. As interviews provide a snapshot of the process, future
research can provide a more fine-grained account of the evolution of the entrepreneurs’ theory of
action over time by relying on multiple sources of data. Secondly, this study is conducted in the
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context of one Swedish accelerator and poses limitations in regard to the generalisability of the
findings. It is, therefore, necessary to focus on other contexts and other countries.
There are a number of avenues for future research. Firstly, future research could explore the
mechanisms that bridge vicarious and experiential processes (see Holcomb et al., 2009). Secondly,
as the lean startup methodology is being appropriated to larger and more established organisations,
future research could investigate the possible organisational conflicts that the lean startup
methodology may produce. Lastly, it would be interesting to provide answers to how entrepreneurs
best internalise explicit instructions of prescriptive methodologies. To do this, scholars could look
into how transfer mechanisms from explicit to implicit knowledge play out in the context of
accelerators. Finding answers to these questions can help scholars to better assist entrepreneurs in
transforming the instructions into action.
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Figure 1 – Single and double loop learning (Adapted from Argyris and Schön, 1974)
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Table 1
Description of the modules, activities and their purpose
Module Activities Description
Module1
Introduction,
business model and
customer segmentation
Lectures and workshops The business model as a concept and the business model canvas as
a tool were introduced. In addition, customer development as a
process model for the lean startup methodology was presented and
discussed in detail. This was followed by an exercise aimed at
taking a close look at the entrepreneurs’ value propositions by
matching the values their offerings provided to their target
customer segments.
Module 2
Silicon Valley week
Inspirational seminars,
lectures,
visits to several startup
HQs,
public pitch event
The whole cohort travelled to Silicon Valley for a week. They met
with knowledge leaders in the lean startup movement, including
Steve Blank and Laura Klein as well as with founders and venture
capitalists familiar with the lean startup methodology. The cohort
also visited experts at Tesla, Andreessen Horowitz, Airbnb and
Google and attended lectures on various related topics. The visit
concluded with entrepreneurs presenting their ideas at a public
pitch event in front of a panel of venture capitalists organised and
moderated by the Swedish-American chamber of commerce.
Module 3
Business review 1
Presentation of ideas by
employing the business
model canvas
During the business reviews, entrepreneurs received feedback on
the current state of their ideas from external coaches, serial
entrepreneurs and venture capitalists–all well-versed in the lean
startup methodology.
Module 4
Revenue streams and
customer relationships
Lectures and workshops Different ways and logics through which startups can generate
income were discussed by zooming into various aspects such as
pricing and revenue models. Next, entrepreneurs engaged in a
workshop that focused on how entrepreneurs could reach their
customers and manage and sustain relationships with them.
Module 5
Distribution channels
Lectures and workshops During this module, channels through which products and services
could be sold were introduced. The organisers helped entrepreneurs
to formulate a clear understanding of their possibilities.
Module 6
Key resources,
partnership,
activities and
cost structure
Lectures and workshops This module concluded a thought-through and clearly defined
business model by covering the required key resources, available
partnerships, essential set of activities and also an estimation and
optimization of costs associated with keeping the startups running.
Module 7
Business review 2
Presentation of ideas by
employing the business
model canvas
During the business reviews, entrepreneurs received feedback on
the current state of their ideas from external coaches, serial
entrepreneurs and venture capitalists–all well-versed in the lean
startup methodology.
Module 8
Financing and funding
Lectures and workshops This module covered different ways to raise funds for the
continuation and growth of startup operations as well as a
workshop to prepare entrepreneurs to pitch in front of venture
capitalists.
Module 9
Demo day
Final presentation in
front of serial
entrepreneurs, public
funding agencies and
venture capitalists
The demo day, a setting that provided opportunities for potential
funding, was dedicated to the presentations of the revised business
models and entrepreneurs’ final achievements, completing the
accelerator programme. Entrepreneurs previewed their prototypes
and final products (depending on their progress).
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Figure 2 – The schematic of the lean startup methodology process (Adapted from Eisenmann et al.,
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Table 2
Description of entrepreneurs, their startups and data collection efforts
Firm Size Interviewees 1st interview 2nd interview Industry LSM*
Knowledge
A 3 Two co-founders Over Skype Over Skype Collectibles trading None
B
11 Three co-founders Over Skype Over Skype Online book publishing Some
C 6 Two co-founders Over Skype In person Idea management solution None
D 3 Three co-founders Over Skype Over Skype Interactive event management Little
E 2 Founder In person Over Skype P2P physical items lending None
F 4 CEO In person In person Interactive visualization system None
G
4 CEO and founder In person In person Industrial measurement solution Little
H 7 Two co-founders In person In person 3D scanning technology Some
I 3 Two co-founders In person Over Skype Personal styling app None
J 4 Two co-founders In person In person Physical interactive toys None
K 3 Three co-founders In person In person Home energy management Little
* The lean startup methodology
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Table 3
The entrepreneurs’ theory of action
Theme Initial governing
variables
Initial action
strategies
Updated governing
variables
Updated action
strategies Consequences
The importance of
having contact with
customers
Complete the product
development and
customers will buy the
product. Focus on after-
sale customer
relationships.
Utilise all the necessary
resources to make the
complete offering
available as soon as
possible to obtain first-
mover advantage.
Understand customer needs
and requirements.
Keep close contact with customers
to obtain first-hand feedback
(use all means necessary to
enhance familiarity with customers,
raise awareness of the importance
of customers’ role in the process).
More direct and indirect interactions
with customers, more confidence in
the viability of the business idea,
improved internal and external
communications, deeper understanding
of customers, task overload.
Handling of
changes
Changes are necessary if
they are explicitly
indicated in the business
plan.
Disregard signals to
change that distract
developmental efforts.
Allow for frequent changes
if necessary.
Rigorously evaluate and
communicate the results of
customer interactions
(use analytical tools to facilitate the
dissemination of the results within
the organisation and among team
members).
Important insights that were barely
known to the entrepreneurs,
large number of changes during short
periods of time,
difficulty to maintain focus.
Accounting for
different aspects of
business
development
Technology is the most
important component of
the product.
Try to perfect the
technology.
Do not focus only on your
technology.
Let customers decide what you
offer them
(gather all the relevant information
about potential and existing
customers).
A new process to set priorities based
on the insights from interactions with
customers,
introduction of new activities.
Maintaining a
learning-oriented
mindset
Every interaction is an
opportunity to sell.
Customers do not know
what they want.
Take every opportunity to
sell to customers from
day one.
Focus on learning from
customers rather than
selling to them.
Employ the results from customer
interactions in making informed
decisions
(treat your customers as
information sources rather than
income sources, design your
interactions with your customers in
ways that learning is maximised).
Informed decisions made through
rigorous processes,
easier to come to agreement amongst
founding teams in regard to future
courses of action.
Embracing the
experimental nature
of the process
Focus on your business
plan as it covers all the
relevant aspects that need
consideration.
Organise to implement
the business plan as the
guiding manual.
Focus on searching for a
business model rather than
executing a business plan.
Validate the hypotheses before
proceeding with developmental
efforts
(set up hypotheses about the
different elements of your business
idea, design processes that provide
information about the viability of
the business model).
Internal problems in regard to the
assimilation of the method instructions
within the organisation,
interference of the method with
already established processes,
conflicts with board members and
investors.
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Figure 3 – Schematic of an instance of single-loop learning resulting from adherence to instructions
drawn from the lean startup methodology
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Figure 4 – Schematic of an instance of double-loop learning resulting from adherence to instructions
drawn from the lean startup methodology
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Figure 5 – Grounded theoretical model of the entrepreneurs’ theory of action formation process in the
context of the studied prescriptive accelerator
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