Value Lab: A Tool for Entrepreneurial Strategy

Abstract

To truly create new value, you need a theory. A theory helps you see what others can’t see. Contrarian or unique beliefs provide the underlying raw material of a firm’s theory of value. But beliefs are just rhetoric and cheap talk, unless you identify the specific obstacles and problems that stand in the way of realizing your contrarian beliefs. This puts problem-formulation and problem-solving at the very heart of your theory of value. Identifying the right problems allows you to spot valuable solutions, to find asset bargains and to make the right investments. Importantly, a theory allows you to be more scientific about value creation and to perform the right type of experiments. A theory allows startups and businesses to learn the right lessons from their experimentation and, if needed, to pivot accordingly. Overall, in the context of strategy, you can’t rely on generic approaches or best practices. You need to develop your own theory. It will allow you to see the world differently, to out-think competitors and to create value in unique ways.

Keywords: entrepreneurship, strategy, innovation, organizational economics, lean startup, business model, technology

JEL Classification: D2, D83, D84, L26, L1, L2, M1, M13