10+ Complex Business Frameworks for Startups
Starting a business and launching a startup is a complicated process. A lot has to be taken into consideration, thoroughly thought through, and clearly organized. Certainly, there are many strategic tools and methodologies out there that can facilitate the process of building and growing a startup in a structured way. But how should a founder choose a startup framework for their business?
On this page, we'll overview the most useful business frameworks that can help startup teams and entrepreneurs take a systematic approach regarding different business aspects, from product development and generating revenue to managing the company and beyond. Noteworthy is that a startup framework can fall under different categories according to its specific objectives and addressed focus areas, hence, we've broken the most common ones down into groups.
Which Startup Framework to Use for Product Development
Let's start by outlining the product development frameworks that are commonly used by startups to guide their processes.
Lean Startup Framework
Perhaps one of the most popular options is the lean startup framework. Introduced by Eric Ries back in 2011, the concept revolves around experimentation and continuous improvement to deliver a product that lives up to customer expectations. User pain points and challenges are in the spotlight, therefore, there's an emphasis on hypothesis testing and constantly gathering and analyzing feedback, which serves as a basis for rapid iterative development.
Therefore, many unneeded risks are mitigated. You're in touch with the target audience and keep an eye on the market, and by being alert, you quickly iterate to modify the solution and improve it. This helps deliver a valuable and innovative product that users need and enjoy while minimizing wasted resources.
How does it work? The lean startup framework is closely tied to the Build - Measure - Learn loop. The team first builds a feature or a solution (even if it's minimal), then measures the outcomes (i.e., by tracking metrics and analyzing feedback), and makes conclusions on how to make it better in the consequent cycle, which is then repeated.
Operational Excellence (OpEx) Startup Framework
Introduced by Joseph Juran in the 1970s, the Operational Excellence (OpEx) framework provides a somewhat alternative to the aforementioned lean startup framework. It aims at building a culture of excellence on every level of an organization, including:
- innovative ideas;
- quality as a commitment;
- involved employees;
- flawless processes;
- among others.
The concept differs since its emphasis is on improving operational efficiency and delivering even more value to customers thanks to a focus on quality as you build great products while cutting costs simultaneously.
In essence, OpEx's view on the Build-Measure-Learn feedback loop is a bit different. The method states that there should be utmost focus on quality right from the start during the Build step. Along with that, the Measure step, in this case, refers to measuring quality prior to product release. Whereas the Learn step should not be based on user feedback (which may sometimes be too biased and irrelevant), instead it suggests applying the failure mode and effects assessment tool.
Software Development Frameworks
Certainly, you can overview a startup framework from the perspective of how software creation is approached. As such, here are just a few software development methodologies and models that can be applied to organize the development process:
- Waterfall — a linear development model made up of sequential steps from product discovery to maintenance.
- Agile Development — a flexible model highlighting short iterations (each several weeks) that have a tangible working product version after each iteration release followed by a review; it's all about adaptability, collaboration, and delivering value to customers.
- Scrum — one of the agile framework types emphasizing short sprints, it's often used for making both agile MVPs and full-scale products alike.
A Minimum Viable Product (MVP)-centered approach can also be considered a startup framework. This strategy is all about releasing an early version of the product to test the feasibility of the idea and find out whether it's worth building the full product. Although there are many types of MVPs, the product has to be sufficient enough to solve a user problem. It could be a simple version with core features, yet it should be functioning and of decent quality so that users can realize its value.
The framework also implies moving on to making consequent enhancements to the solution if the decision is made to proceed with the project. In that case, teams can fall back on the minimum viable feature approach that can help determine what to work on next and prioritize.
Business Model, Strategy, and Management Frameworks
Which frameworks can be handy for crafting a consistent business model, identifying an effective strategy, and managing internal processes? Here are a couple of options that may provide entrepreneurs with clarity and guidance.
Business Model Canvas (or Lean Startup Canvas)
The Business Model Canvas is a widespread startup strategy framework for lining out the fundamental elements of the company's offering. It was originally developed by Alexander Osterwalder and Yves Pigneur but has modified adaptations like the Lean Startup Canvas.
One of the strengths of this model is that it lets you visualize the business strategy in a concise way. As such, it includes descriptions of aspects like the:
- problem (your target audience's pain points);
- solution (the minimum feature set of your offering that solves the problem);
- key metrics (which indicators you're aiming at);
- value proposition (why people should buy the product);
- advantage (your unique selling point);
- distribution channels (customer touchpoints);
- customer segments (target audience groups);
- cost structure (your resources, startup budget allocation, what costs you most, etc.);
- revenue streams (pricing strategy, how and what clients pay for).
McKinsey 7S Startup Framework for Management
The McKinsey 7S framework is a management model that was created by the consulting firm McKinsey & Company in the 1980s. The framework concentrates on evaluating seven interconnected aspects of an organization to determine whether the company is reaching its primary strategic goals. These seven elements that start with the letter "S" give a holistic view of the:
- Strategy (a clear plan on what you're planning to achieve and how);
- Structure (how a startup team structure is organized in terms of hierarchy);
- Systems (optimally organized workflows, processes, and routines);
- Staff (the workforce of the startup in terms of size, composition, diversity, and other points);
- Style (the work environment, behavior, and leadership style);
- Skills (the skill sets and competence levels of employees);
- All tied by the central Shared Values (the company's values, principles, and beliefs, forming the basis of a strong startup culture).
A team should strive for coherence between the elements and have everything well-aligned. If any of the aspects has flaws or gaps, is misbalanced or underperforming, this sheds light on what to put effort into. Startups may find this method handy to enhance performance and achieve desired objectives.
Operational and Planning Frameworks
Both early-stage and scaling startups can definitely benefit from detailed planning and operations that run like clockwork. Below, we'll go over several frameworks that might be helpful.
Objectives and Key Results (OKR)
Utilizing OKRs, a goal-setting startup framework suggested by Andrew Grove, could help you align both team and individual employee objectives with overall goals. Such an approach makes it possible to drive focus and accountability.
The secret lies in deciding on an objective, coming up with ways to get where you want (key results), and then selecting the relevant metrics that can help you measure how well you're progressing toward the set goal. Importantly, the objective has to be achievable and must be measurable. And what's for the scale, the objective could be huge and challenging, like getting a 40% sales increase in the next year, but may be broken down into smaller milestones or initiatives with time frames.
Likewise, it makes sense to analyze where you stand. This startup framework may be a handy tool for evaluating your own product when you conduct market research or competitor analysis. This simple method provides a visual representation of your strengths, weaknesses, opportunities, and threats. Importantly, it assesses both internal and external factors that may affect the startup's success and provides ground for a comprehensive understanding of the current situation.
The strengths regard internal business advantages, unique selling points, and what helps a product stand out from the competition. Weaknesses, on the contrary, show in which areas you are currently outperformed and what needs improvement. Opportunities signal what else you can accomplish (e.g., a new market trend or target audience segment to conquer due to lack of competition). Finally, threats note which external circumstances can stand in your way. Hence, you get to identify your competitive advantage, areas for improvement, and potential risks.
Product-Market Fit (PMF)
Mentioning another startup framework that can be of help to entrepreneurs, aiming toward reaching product-market fit is a crucial milestone. It lets you find out whether your offering meets the needs of the targeted market, the demand for your product is strong, and the revenue stream is consistent.
This entails that you're solving the target audience's problem with your solution (i.e., that you're addressing an underserved need). To reach this, you must:
- have a cutting-edge value proposition;
- deliver a great product in terms of the feature set and UX;
- use the right channels to reach your customers;
- ensure that they are willing to pay for the product.
How do you determine product-market fit? One of the ways to measure it is by running a PMF survey and asking your target audience. Other methods include gathering and analyzing data like metrics, studying feedback, and holding interviews. Certainly, this is an ongoing process, meaning that you have to always keep your hand on the pulse for changing customer needs and be able to adapt your strategy and refine the product.
Customer Acquisition and Growth Frameworks
What else may help founders make high-quality decisions? Monitoring data and using suitable frameworks can facilitate startup growth and win over new customers. Let's take a look at a few of them.
AARRR Pirate Startup Framework for Analytics
As you know, monitoring startup analytics is vital to have fact-based decision-making processes. Hence, to not drown in the treacherous sea of all the incoming data, entrepreneurs and teams can use the AARRR method, also known as the Pirate framework, suggested by seasoned investor Dave McClure.
Essentially, it closely considers the quality of the metrics and data that's being gathered, tracked, and analyzed, as it has to be actionable and reflect the actual state in order to be valuable. According to the framework, the important product performance metrics that should receive attention are:
- Acquisition/Awareness — how people found out about you and became customers;
- Activation — shows at what point people recognize the value of your offering and start using it;
- Retention — reflects your returning and regular clients, how often they use the product;
- Referral — shows how often existing customers recommend you to others;
- Revenue — how much money you're making and how you can maximize profit.
Put simply, collecting metrics just for the sake of it is not good for business. Similarly, it is not wise to pay attention to vanity metrics (that may look impressive yet aren't meaningful). So, ahoy, mates, as with the right data at hand, teams can optimize the funnel, gain valuable insights, and enhance their startup marketing strategy, sales, and processes in general.
An often-used term in startup vocabulary, growth hacking refers to the process of experimentation. At times, this involves applying low-cost or unconventional strategies with the aim of achieving rapid growth.
The major focus of this startup framework is paced on the growth funnel, which is made up of the core indicators mentioned above (awareness, acquisition, activation, retention, referral, revenue). The growth hacking team is often made up of various specialists like product engineers, marketers, and data analysts who work in tandem to accomplish a common goal, which is quick growth. To do so, they follow a cycle that includes Idiation - Prioritization - Testing - Analysis - Implementation.
This startup framework is applied for identifying growth opportunities and is more applicable for startups that are ready to scale than those at the early stages of startup development. This strategic planning tool was introduced by Igor Ansoff in the 1950s and is centered around analyzing both existing products and new ones that emerged on the market.
The matrix places Products (existing and new products that a company offers) and Markets (existing and new markets that a company can target) on the grid. Then, you analyze:
- Market Penetration — using tactics to sell more to existing customers and markets, such as by luring more new buyers or urging acquired ones to buy more;
- Market Development — attempting to sell an existing product to a new market, like another country or customer segment;
- Product Development — building a new product for the existing market to cater to the changing needs of the acquired customers;
- Diversification — attempting to enter a new market with a new product, yet such a startup pivot is considered drastic.
Concluding Thoughts on Startup Models
We've become acquainted with actionable frameworks that can be applied to enhance a startup's strategic planning and decision-making. Some are aimed at helping businesses identify areas for improvement, and others are used for planning and capitalizing on opportunities for growth. Of course, there exist many additional ones like:
- innovation and ideation frameworks (e.g., Six Thinking Hats or Scamper);
- differentiation frameworks (like the Blue Ocean Strategy or the Value Proposition Canvas);
- marketing frameworks (for instance, the Viral Loop or Bullseye);
- risk management and decision-making frameworks;
- leadership and team development frameworks;
- and plenty of others.
Notably, most of them mentioned above are not standalone solutions, in fact, they can be a starting point for you to select a combination that works best for your business. The choice of what to use, be it the lean startup framework or something else, depends on your product, current organizational goals, and priorities. However, each startup framework can prove to be valuable if you're willing to continue learning and enhancing your offering.
If your startup is in search of a trustworthy and experienced team to assist you with building or improving a product, Upsilon offers MVP development services for startups and team augmentation services for growth-stage businesses. We've helped various-sized teams create and scale their products and will be glad to lend you a hand, too, so feel free to reach out to discuss your project!