The Discovery Competition is based on the principles of effectuation, and requires students to demonstrate that they have taken steps to “de-risk” their idea, beginning with figuring out whether a customer wants their product or service. Effectuation is a problem solving process that expert entrepreneurs undertake after they have conceived their idea (Stage I: Concept), but before they invest significant time and money into the venture (Stage III: Launch!). The Discovery Competition focuses students on the most critical phase of the start-up process.
Competition submissions should address the questions below.
1. What is your expertise? Who do you know? What do you know about this business? What can you do today? (based upon the Bird-in-Hand (Means) Principle of Effectuation)
Examples: Do you have experience in these markets, do you understand the production and sales/distribution of the product? Have you been able to get experts in the field who know the markets intimately to commit to supporting you as advisors (specifically what time, resources have they committed), thereby confirming your vision for the business and avoiding the problems only people intimately familiar with the sector can anticipate. Has an advisor or customer interview helped point you in a new direction? Have you begun the outreach to build a board of advisers.
2. Co-creation and customer discovery: what evidence do you have that a customer wants your product? Have you been able to get people (customers, vendors, suppliers) to commit something to helping you succeed, aka “Skin-in-the-game”? (based upon the Crazy Quilt Principle of Effectuation: Co-creation Partnerships)
Examples: Specifically what have customers committed to you indicating that they truly want your product: Following or “Likes, Connections, or Friends” on social media platforms? Have you been able to get customers to help you create/simulate your prototype or product? Commitments to use the prototype or beta? Money in the form of a pre-purchase or purchase order? Or vendors to agree to hold inventory for you, agree to give you advantageous payment terms, commit resources to design/manufacture your product in exchange for equity, etc.
3. How have you incorporated new information/feedback/events into the concept through testing your hypothesis? What new hypothesis do you need to test? If the feedback has not confirmed your hypothesis, how have you adjusted? Have you had to a major or minor “pivot”?
(Lemonade Principle of Effectuation; Leveraging Contingencies)
Examples: Describe the original idea and how/why it has evolved. What did you learn that you didn’t know? Have you demonstrated your ability to take an unexpected and possibly negative event (i.e. a technical problem; delay in delivering MVP; a big competitor announcing a similar product) and turn it into an asset? Explain how that happened.
4. How do you know if you are on the right track? Are you focused on creating the future you want to see rather than predicting the future everyone else expects? (Pilot-in-the-Plane/Worldview Principle of Effectuation: Create the future)
Examples: What is your vision? How do you find someone who shares your sense of purpose? How do you test your hypothesis with your target customers? ABT: Always Be Testing.
5. Managing risk like a seasoned entrepreneur means making decisions based on acceptable downside (worst-case-scenario) rather than guesses about upside potential (best-case-scenario). (Affordable Loss Principle of Effectuation.) Note: Managing “Affordable Loss” will not be judged based on a person’s financial situation (e.g. ability to pay back student loans). Although, in reality, that should be part of a student’s planning for start-up success.
Examples: How have you creatively leveraged what you have and taken advantage of free or slack resources? How long will it take you to reach key milestones? How much time can you dedicate while you are a student? During the summer? After you graduate? While you work a part- or full-time job? How much do you need to start your business? (HINT: the less you need, the less you need to worry about losing). Have you made the cost of initial failure and iteration as low as possible?
You may uncover new de-risking strategies as you go through the customer discovery and testing process. If you do, articulate them in your submission.