11. November 2021

It’s time for a new entrepreneurial honesty

“Fake it ‘til you make it” has become common sense in the start-up scene.

It’s a strategy to launch products and services before they actually have been produced. It was fueled, among others, by Eric Ries’ concept of a “Minimum viable product”(MVP) in his legendary book “The Lean Startup”. It’s meant to be a fast learning strategy to prototype and test it directly with clients in closed feedback loops, before taking big investments to produce it.

Today this strategy seems to take its toll.

More and more start-ups are using this strategy to pre-finance their business. Preorders of books where only the cover exists, prototypes of AI apps that still work with a human being sitting behind the curtain, promoting a prototype in a sales video without having sorted out the mass production yet, or faking an immense client request. The creativity seems to have no limits when it comes to smart “pretending.” However, some start-up managers do not sense the ethical line they seemingly cross to manipulate clients and investors for their own advantage. That’s why, for example, Theranos, WeWork and Nikola are now accused in court.

When do we cross the line from being a smart entrepreneur to being an evil one?

I welcome that Eric Ries himself has now clarified in a NYT interview how an honest version of his idea of an MVP strategy would look like. And the key here is transparency. Whenever we make it transparent to those who buy or invest where we exactly stand in our product development, this will make the difference between smart versus evil. You declare in a pre-order that you don’t have the books in stock yet, or when selling a software not yet finished you say “we are still working on some features,” etc. He admits that it is a fine line of sensing these ethics. However, what’s clear though is that his MVP strategy entails the word “viable” – which gives a clear indication that services should definitely exist before selling them.

I would even go further and say: It’s time for some courageous new entrepreneurial honesty. Why not simply be honest about what you can and what you can’t do, who you are and who you aren’t? What is in the service, and what is not? We all know that honesty has always been the most successful strategy in the long run – in organizations as well as in personal lives. And today it might even turn out as a strategic advantage, a refreshing differentiator in a more and more “pretend” world.

Imagine how would we act as clients, consumers, users, investors or entrepreneurs if we could 100% rely on pure honesty without any tricks?

Dr. Eva Bilhuber
Dr. Eva Bilhuber
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