Entrepreneurship & Organization Management

Organizational learning, a broad and diverse field that draws on influences from multiple disciplines, embodies varied definitions, ranging from cognition to process. It represents a dynamic process in which a firm acquires, embeds, transfers, and exploits knowledge. This paper explores three provocative questions specific to organizational learning and entrepreneurial ventures(1) what areas of organization learning provides an underlying foundation for entrepreneurial ventures in exploring and advancing their innovations; (2) what areas within entrepreneurship embrace organizational learning concepts; and (3) how does organizational learning support the hypothesis-driven methodology seen with the lean startup. Multiple organizational learning concepts apply to the entrepreneurial venture. Notable are the concepts of ambidexterity involving exploration versus exploitation; the practices of experimentation, distant search, learning from failure, and adaptation; the influence of behavioral theory and psychology; and the 4Is learning framework that fosters a “feed-forward”/”feedback” tension leading the advancement of innovations within a firm and beyond. The opportunity recognition process and the lean startup methodologies represent two entrepreneurship areas to which organizational learning applies. Specific interest relates to the lean startup, which draws on multiple organizational learning concepts, including Argyris and Schon’s theory-in-use and double-loop learning processes, experimentation, learning from failure, and adaptation. The methodology’s impact on the firm to advance its innovative products and business models within the firm and its external venture ecosystem is of further interest. This paper posits that one can use an organizational learning lens vis-a-vis Crossan’s 4Is framework and “feed-forward”/” feedback” dynamic. Such offers a fascinating opportunity to explore questions concerning the lean startup’s impact within the organization and its local venture ecosystem, its journey (vis-à-vis the “feed-forward”/” feedback” process, and associated outcomes. Further, it proposes a model that integrates lean startup practices situated within the 4I’s model that considers the “feed-forward” and “feedback” processes and the influence of endogenous and exogenous influences.

Purpose: This paper aims to address three core questions: (1) What are the limitations of this methodology and its use as an entrepreneurial strategy?; (2) What are the outcomes associated with using this approach?; and (3) What learnings should practitioners consider when utilizing this approach? Methodology: A review of available peer and non-peer review literature relevant to the lean startup methodology, its limitations (pitfalls, fallacies, problems), and outcomes to address the core questions.

Findings: This review identifies limitations with the methodology in several areas−business sector fit, issues associated with customer discovery, experimentation, iterating/pivoting, and the minimum viable products. Limitations may be related to the methodology, the incomplete understanding of its fundamental components, inconsistent (and non-rigorous) use of the methodology, and the inability to address risks (e.g., technological) beyond resolving market uncertainty. Also, experience related to outcomes associated with the use of the lean startup reveals mixed findings due to the diverse methods, populations, and endpoints used underly the mix of experiences seen in both the peer and non-peer review literature. This review does identify that rigorous implementation does lead to statistically significant outcome differences (e.g., discarding poor ideas, number of pivots, and realization of revenue). Practical Implications: Practitioners and educators should consider considerations around education, implementation, business sector, outside influences, outcomes, and investor preferences.

Originality: This paper provides one of the first extensive literature reviews to examine what limits exist, where, and whether these are associated with the methodology or due to user, cultural, or business sector considerations. It also provides several relevant learnings for practitioners and educators to consider when using the methodology.

Conclusions: Current evidence indicates that multiple issues do exist; however, the limits are not necessarily directly related to the inherent structure of the methodology, but also due to user, sector, and external influences. Further, outcomes vary based on study methods, variables, populations, business verticals, and implementation. Practitioners should consider some of the recommendations offered when utilizing this methodology to optimize their experience and outcomes from this method.