startup growth diagnostics

[hyunjimoon]

building on growth diagnostics https://www.ricardohausmann.com/growth-diagnostics, we can improve the tree below by learning differences of startup and developed countries (from startup case studies (> 50) with growth diagnostics report (>10 Algeria, Armenia, Belize, Botswana, Brazil, Dominican Republic, Ecuador, El Salvador, Mexico, Morocco, Pakistan, Peru, South Africa) and adjusting tree accordingly

[hyunjimoon]

Developing Nation	Diagnostics (DIAG)	TOOL
1. Low return to economic activity	1. Low market attractiveness	CEO_ACCULTURATE_B, CMO_SEGMENT_C
1.1 Low social returns	1.1 Insufficient differentiation or cost leadership	CEO_ACCULTURATE_B
1.1.1 Poor geography	1.1.1 Weak competitive positioning	CEO_PROFESSIONALIZE_B
1.1.2 Low human capital	1.1.2 Lack of skilled team or innovation	CEO_PROFESSIONALIZE_B
1.1.3 Bad infrastructure	1.1.3 Inefficient value chain activities	COO_COLLABORATE_A
1.2 Low appropriability	1.2 Weak competitive advantage/IP protection	CTO_REPLICATE_B, CEO_PROFESSIONALIZE_B
1.2.1 Government failures	1.2.1 Regulatory challenges affecting competitive strategy	CEO_PROFESSIONALIZE_B
1.2.1.1 Micro risks: property rights	1.2.1.1 Intellectual property issues and competitive rivalry	CEO_PROFESSIONALIZE_B
1.2.1.2 Macro risks: financial stability	1.2.1.2 Market forces: supplier and buyer power, threat of substitutes	CMO_SEGMENT_C
2. High cost of finance	2. Challenges in securing funding	CFO_CAPITALIZE_E
2.1 Bad international finance	2.1 Barriers to external financing and investor relations	CFO_CAPITALIZE_E
2.2 Bad local finance	2.2 Inadequate internal funding or poor cash flow management	CFO_CAPITALIZE_E

The above table is generated from this chat and further fed into this chat to implement "choices back then". We need more structure such as below:

• mapping startup casestudy with DIAG time series
• analyze each agent (CTO, CMO, COO, CFO)'s chosen TOOL given DIAG time series

Continuing with the reasoning behind the mapping of tools to specific challenges identified in the startup analogy:

• CEO_ACCULTURATE_B for Insufficient differentiation or cost leadership: This tool emphasizes creating a company culture that fosters innovation and agility, crucial for differentiating products or achieving cost leadership in competitive markets.

• CEO_PROFESSIONALIZE_B for Weak competitive positioning and regulatory challenges: It addresses the need for professional skills in navigating market analysis and regulatory environments, enhancing a startup's positioning and compliance.

• CTO_REPLICATE_B for Intellectual property issues and competitive rivalry: By refining and documenting processes for replication, this tool helps protect IP and maintain competitive advantage through scalable and adaptable operations.

• CMO_SEGMENT_C for Market forces: It focuses on identifying and targeting specific market segments, crucial for navigating supplier and buyer power, and the threat of substitutes, aligning with Porter's Five Forces analysis.

• COO_COLLABORATE_A for Inefficient value chain activities: This tool encourages partnerships that enhance scalability and efficiency without compromising competitive advantage, directly addressing inefficiencies in the value chain.

• CFO_CAPITALIZE_E for Challenges in securing funding: It outlines strategies for navigating the complexities of raising capital, crucial for overcoming barriers to external financing and managing internal funding effectively.

• CEO_ACCULTURATE_B: This tool is pivotal for startups aiming to differentiate themselves or achieve cost leadership. A strong, innovation-driven culture is essential for sustaining competitive advantages, making this tool directly relevant for addressing issues of market attractiveness.

• CEO_PROFESSIONALIZE_B: Targeted at improving weak competitive positioning and navigating regulatory landscapes, this tool helps startups professionalize their approach to market analysis and compliance. It's critical for enhancing strategic positioning and ensuring adaptability to regulatory changes.

• CTO_REPLICATE_B: This tool aids in safeguarding intellectual property and sustaining competitive advantage by promoting process refinement and documentation. It's crucial for startups facing intellectual property challenges and competitive rivalry, offering a pathway to scalability and market differentiation.

• CMO_SEGMENT_C: Essential for startups dealing with market forces like supplier and buyer power or threats of substitutes. By focusing on market segmentation, this tool helps startups identify and exploit niche markets, aligning with Porter’s Five Forces by mitigating competitive pressures and identifying unique value propositions.

• COO_COLLABORATE_A: Addresses inefficient value chain activities by fostering strategic partnerships. This collaboration enhances operational efficiency and scalability, vital for startups seeking to improve their value chain activities without sacrificing competitive advantage.

• CFO_CAPITALIZE_E: Tailored for startups facing financing challenges, whether from internal funding shortages or barriers to external investment. This tool guides startups through capitalization strategies, ensuring they can secure the necessary funding to scale while considering the strategic implications of external investment.

Each mapping is designed to leverage specific startup growth tools to address challenges analogous to those faced by developing nations, informed by a strategic understanding of competitive dynamics and operational efficiencies.

[hyunjimoon]

#STARTUP GROWTH STRUCTURE
Execution revolves around two pairs of relations (CTO and CMO, COO and CFO) and CEO who evaluates the outcome of the two relations.

GOAL

CTO and CMO

two agent's adversarial collaborate to implement solution and need pair by first listing candidates of its embodiment (technology and customer) then choose top three by evaluating the implemented pairs. From ## TOOL, CTO uses CTO_PROCESSIFY_A, CTO_REPLICATE_B tool, CMO uses CMO_SEGMENT_C tool to reach this goal.

COO and CFO

two agent's adversarial collaborate to implement business model given a desirable and technologically feasible implemented need and solution pair. From ## TOOL, COO uses COO_COLLABORATE_A, COO_AUTOMATE_A tool, COO_PLATFORMIZE_A, CFO uses CFO_Capitalize_E tool to reach this goal.

CEO

CEO's goal is to maintain stability in supply and demand uncertainty by overseeing the development process from (need, solution) pair to (product-market) pair. Designing, developing, launching, producing, distributing, selling solutions are supply process and design and developing needs are demand process. Given need and solution pairs, CTO-CMO implements the pairs using candidates of technology and customer. From ## TOOL, CEO evaluates the implementation using CEO_Evaluate_CTO_CMO. Outcome passed the evaluation is shared with COO-CFO who collaborate to implement business model. CEO evaluates the implementation using CEO_Evaluate_COO_CFO. Other tools are CEO_ACCULTURATE_B, CEO_PROFESSIONALIZE_B.

TOOL

CEO_ACCULTURATE_B

1. Do you have a defined company culture that supports Product-Market Fit with a big enough TAM?
   • Yes: Move to step 2.
   • No: Define and communicate culture focusing on customer development and agile product development principles.
2. Is the culture, emphasizing lean startup practices and continuous customer feedback, being maintained during scaling?
   • Yes: Continue scaling, ensuring processes align with market needs and financial metrics.
   • No: Reinforce culture through regular communication, emphasizing the importance of LTV/CAC ratio and cash flow management.

CEO_PROFESSIONALIZE_B

1. Observe organizational performance. Any failures or shortcomings in achieving a scalable business model?
   • Yes: Move to step 2.
   • No: Continue with the current team, focusing on execution speed and efficient market entry.
2. Diagnose the organizational deficiency. Does it relate to professional skills in market analysis, product development, or financial management?
   • Identified: Move to step 3.
   • Not Identified: Further investigate the issue with a focus on customer and market insights.
3. Hire a professional to address the deficiency, ensuring the new hire aligns with the startup's culture and market ambitions.
   • Successful: Return to step 1 to observe new performance.
   • Unsuccessful: Reevaluate the diagnosis and potential hires, considering the founding team's composition and diversity.

CTO_PROCESSIFY_A

1. Execute the process. Does it work well enough, ensuring efficiency and repeatability as per Fine's processification tool?
   • Yes: Move to step 2.
   • No: Tweak the process considering task standardization and return to step 1.
2. Standardize the process. Is it documented and capable of being automated, aligning with automation principles?
   • Done: Continue to monitor for efficiency, considering the importance of flexibility in early-stage scaling.
   • Not Done: Identify issues, focusing on developing a predictable and debugged process.

CTO_REPLICATE_B

1. Is your process refined, documented, and does it incorporate considerations for replication across different locations or settings as suggested by Fine?
   • Yes: Move to step 2.
   • No: Refine and document the process, ensuring it's adaptable to varied market needs.
2. Can the process be replicated in different locations or settings without losing its core efficiency and effectiveness?
   • Yes: Move to step 3.
   • No: Make necessary modifications considering local market dynamics and customer segments.
3. Replicate the process and measure outcomes, ensuring the replication aligns with the scalability and market expansion goals.
   • Successful: Continue replication, monitoring financial metrics and market response.
   • Unsuccessful: Reevaluate and modify, focusing on agile development and customer feedback.

CMO_SEGMENT_C

1. Are you selling into a beachhead market that aligns with Eisenmann's emphasis on TAM and Product-Market Fit?
   • Yes: Move to step 2.
   • No: Identify and target a beachhead market, leveraging customer development practices.
2. Is the beachhead market saturated, or are there opportunities for segmentation as suggested by Fine?
   • Yes: Move to step 3.
   • No: Continue to sell into the beachhead market, focusing on optimizing the LTV/CAC ratio.
3. Expand to an adjacent market, considering the scalability and market expansion strategies. Is the expansion successful?
   • Successful: Return to step 2 for the new market, with an emphasis on continuous market analysis and customer engagement.
   • Unsuccessful: Reevaluate market selection and strategy, considering lean startup principles and market factors.

CEO_Evaluate_CTO_CMO

1. Has CTO and CMO listed three pairs of implemented need-solution that align with Eisenmann's criteria for Product-Market Fit and technology feasibility?
   • Yes: Move to step 2.
   • No: Instruct CTO-CMO to search for more technology and customer candidates to implement need and solution, emphasizing agile product development.
2. Has any of the three pairs satisfy FEASIBILITY_TECHNOLOGY and DESIRABILITY, ensuring a fit with market demands and financial sustainability?
   • Yes: Share the implemented pair with COO and CFO who further implement a business model to produce the pair at scale, considering capitalization and platformization strategies.
   • No: Reject the three implemented need-solution pairs. Move to step 1, focusing on refining the product-market fit and exploring new market segments.

COO_COLLABORATE_A

1. Do you have potential partners in the value chain that can enhance your scalability without compromising competitive advantage, as per Fine's collaboration tool?
   • Yes: Move to step 2.
   • No: Build internal capabilities, focusing on automation and process efficiency.
2. Can you share value without losing competitive advantage, ensuring a win-win partnership that supports scaling efforts?
   • Yes: Establish a collaboration, considering the impact on the business model and market expansion.
   • No: Reevaluate potential partners, focusing on how collaboration aligns with the company's strategic goals and market positioning.

COO_AUTOMATE_A

1. Do you have a well-defined process for a task that aligns with automation principles, ensuring repeatability and efficiency at scale?
   • Yes: Move to step 2.
   • No: Work on task standardization, focusing on creating a foundation for future automation.
2. Is the process predictable and debugged, ready for automation without compromising flexibility for innovation and adaptation to market changes?
   • Yes: Move to step 3.
   • No: Refine and debug the process, ensuring it aligns with scaling objectives and market needs.
3. Do you have metrics to measure the process, aligning with Fine's evaluation tool to manage performance and effectiveness?
   • Yes: Move to step 4.
   • No: Establish relevant metrics, focusing on operational and financial performance.
4. Is there a process owner who can oversee the automation, ensuring alignment with strategic goals and market dynamics?
   • Yes: Automate the process, considering the impact on scalability and market responsiveness.
   • No: Assign a process owner and then automate, ensuring the process supports business model evolution and market expansion.

COO_PLATFORMIZE_A

1. Does your business model allow for a platform structure that can leverage cross economies of scale and serve multiple customer segments, as suggested by Fine?
   • Yes: Move to step 2.
   • No: Focus on product excellence, considering lean startup practices and continuous iteration based on market feedback.
2. Can you serve multiple customer segments, ensuring the platform's scalability and alignment with diverse market needs?
   • Yes: Build a platform to cross economies of scale, focusing on leveraging network effects and enhancing market reach.
   • No: Reevaluate the business model, considering potential adjustments to better align with market opportunities and scalability requirements.

CFO_Capitalize_E

1. Do you need significant capital to scale, and are you prepared to navigate the complexities of capitalization as outlined by Fine?
   • Yes: Move to step 2.
   • No: Use existing resources to scale, focusing on lean operations and maximizing the LTV/CAC ratio.
2. Are you willing to give up control for capital, considering the strategic implications of external investment on scaling and market positioning?
   • Yes: Seek external investment, ensuring alignment with strategic growth objectives and market expansion plans.
   • No: Explore bootstrapping or slower growth options, maintaining control while focusing on sustainable scaling strategies.

CEO_Evaluate_COO_CFO

1. Has COO and CFO listed three business models that produce implemented need-solution pair at scale, considering market viability and operational feasibility?
   • Yes: Move to step 2.
   • No: Instruct COO-CFO to explore more scalable business models, emphasizing the importance of market factors and financial metrics.
2. Has any of the three business models demonstrated feasibility in operations and financial viability, ensuring alignment with Eisenmann's determinants for startup performance?
   • Yes: Proceed with implementation and scaling, focusing on continuous evaluation and adjustment based on market feedback and performance metrics.
   • No: Reject the models and return to ideation, focusing on lean startup principles to ensure financial metrics and market factors are addressed effectively, while considering the scalability tools outlined by Charles Fine.

ChatGPT

[hyunjimoon]

charlie commented: Cost structure maybe should also reflect that which is made internally and that which is procured externally.

[hyunjimoon]

GOAL: three contributions

1. define resource rationality ratio (RRR) and explain the investment decision for Operations capability VS Market understanding

RRR = Value / Resources = (Revenue - Cost) / Investment

• Operations action reduces denominator by lowering costs and market action increases numerator by increasing revenue

2. argue A's importance (+context of too much focus on C) in two ways:

• 🧢Can't monetize market understanding without operational capacity (A caps C)
• less noisier observation from A ($\sigma_0 < \sigma_1$)

3. explain how observed behavior of each industry can be decomposed to operations and market effect's size ($\mu1,\mu2$) and uncertainty ($\sigma1, \sigma2$).

• $\mu_0, \mu_1$ may differ by each industry
• entrepreneurs may start in different states

4. future work

• current work assumes no competition, non-stochastic environment which can be extended to market share = f( price, knowledge)
• compare two parameterization: 1) continuous model with four random variables on coefficients VS 2) compared with markov chain with three state in O and M each, with probability of updating from state 1 to 2, how inference setting direct utility differ

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learning scott's 👍 on A vs C action, I'm simiplifying the tradeoff between degree of belief rationality (how well) and action rationality (given capability, how well can i assemble them to present a hyperplane that has lowest average distance to each data (revealed preference)?)

• segment: continue to sell into beachhead market; observe degree of saturation of that market; if saturated, expand to an adjacent market; repeat as needed.
• processify: execute process; see if it works well enough. If so, standardize process. If not, tweak it, then see if that works well enough. processify Continue until convergence to satisfactory outcome.

[hyunjimoon]

#250 's TA (josh's phd 1st) jack dewey gave feedback graph grammar is the keyword to initiate "structural form to process"