The influence of information technology on organizational structure in SMEs

(1)

Casadesus

Group Model Building for

Start-up Companies

A method to improve business model development in

an incubator program

Leijte, B.J. (Bram)

S4240855

Supervisor: dr. ir. S.F.J.M. Raaijmakers (Stephan) Second Examiner: Prof. R.E.C.M. van der Heijden (Rob)

Keywords

Group model building - Causal loop diagram - Business model – Start-ups – Business Incubator

(2)

(3)

2

Table of Figures

Figure 1. Top reasons of start-up failure (List provided by CBInsights, 2014) ... 6

Figure 2. Sources of value addressed by the business model construct (Amit & Zott, 2001, p. 514) ... 11

Figure 3. Business Model Canvas (Osterwalder and Pigneur, 2010) ... 14

Figure 4.Elements of a Business model (Casadesus-Masanell and Ricart, 2012) ... 16

Figure 5. Example of causal loop diagram. ... 21

Figure 6. The 10-steps of the IMPROVE program of the Mercator Launch UBI ... 28

Figure 7. Time schedule and steps of the Group Model Building case study ... 35

Figure 8. Preliminary Model Displac3D ... 41

Figure 9. Causal Loop Diagram Displac3D ... 42

Figure 10. Simplified Model Displac3D. ... 44

Figure 11. Preliminary Model Lutto ... 45

Figure 12. Causal Loop Diagram Lutto ... 46

(6)

5

Chapter 1: Introduction

1.1 Start-up failure

Recently, the business research firm CBinsights (2018) performed a large observational study in approximately 1100 start-up companies, in which they analysed the development of new ventures from the moment they gained their first investments. By evaluating these data using their machine intelligence platform, they identified obstacles in the organisational life cycle of the start-ups, and were able to pinpoint when and why new ventures potentially would collapse. Strikingly, they found that 67% of the start-ups does not survive the funding process. These findings indicate that the majority of the start-ups was not able to achieve the point of profitability, and were therefore not capable to operate financially independent. Following the initial investment round, CBinsights reported that 48% of the start-ups did not make it to a successful second investment. As to be expected, the percentage of surviving start-ups dropped every following investment round, and eventually, only a small percentage of the start-ups succeeds to become financially independent. This significant degree of start-up failure is of major concern, as it has many serious implications both in economic and social context.

To avoid the pitfalls of new ventures, incubators organisations aim to stimulate and support entrepreneurship, with providing capital, know-how and facilitations (Grimaldi & Grandi, 2005, p. 111). In addition, incubators offer start-ups a variety of services, such as developing business and marketing plans, organisational structure and the attraction of investors, in order to support the start-up to become a self-sustaining business (Grimaldi & Grandi, 2005, p. 111).

1.2 Causes for start-up failure

To unravel the underlying cause of the high percentage of new ventures failing, CBinsights (2014) thorough analysed 101 start-ups that did not survive the initial development phase. As a result, they established a list of top reasons for start-up failure (see Figure 1). They found that the main reasons for start-up failure are highly variable, and can range from lack of fit with potential customers, severe financial issues or difficulties to enter the market. Of note, it is likely that start-up failure is caused by multiple of the listed reasons. Logically, a start-up focusing on wrong or inefficient channels, or which fails to provide a plausible model to gain profits, will not be able to convince investors. This is likely to contribute to the high number of companies that was not able to raise a second investment. As the CBInsights’ report shows, a misfit in one of the elements listed could be detrimental for a new venture. Interestingly, all of

(7)

6 the reasons in the list are factors which should have been taken into account during development of the business model. Although the rapport (CBinsight, 2014, p.29) describes that most participants of the questionnaire agree that the business model is essential, 17% of them did not have a business model at all, and many of them applied the elements insufficiently resulting in low quality of the model.

To avoid the pitfalls of new ventures, incubator organisations aim to stimulate and support entrepreneurship, with providing capital, know-how and facilitations (Grimaldi & Grandi, 2005, p. 111 incubators provide these resources to support the development of important organisational aspects , such as business and marketing plans, organisational structure and the attraction of investors, in order to support the start-up to become a self-sustaining business (Grimaldi & Grandi, 2005, p. 111).

To prevent failure in the initial stage of venture development, solid and comprehensive (pre-) research in the model that drives the business is key. A business model can be used to help with business planning and development, and is seen as a crucial preliminary step (Morris et al., 2005; Brinckmann et al., 2010). The business model functions as a framework for the new venture, by describing the business idea, market sector, potential competitors, etc. (Cosenz, 2017, p.57). Therefore, it allows to thoroughly evaluate the business concept and helps to predict and avoid future bottlenecks.

(8)

7 Nowadays, there is major interest and a large body of literature in the business model construct (Shaper et al., 2005; Amit & Zott, 2011). However, recent studies predominantly focused on mature, well-established organisations. Insight in the value and application of business models in the start-up phase of organisations is currently lacking. Well-established organisations are mostly able to innovate their business model with adapting existing processes, while start-ups lack this entrepreneurial experiences and financial resources, and start from scratch (Cosenz, 2018, p.129). This in combination with the speed of innovation, and world-wide competition, makes the development of a successful business model extra challenging for start-ups (Cosenz, 2018, p.129). Taken this together, a method that helps new ventures to understand, and adapt to the dynamic environment is highly desired already in the first stages of start-up company development.

1.3 Integration of causal loop modelling within the business model

Causal loop diagramming (CLD) or causal loop modelling is a method to visualise dynamic behaviour within a system (Kim, 1999, p. 12). The end product is a diagram which shows how different variables are interrelated in a system. Therefore, CLD could provide a comprehensive overview of the start-up’s needs and challenges, which enables them to deploy resources adequately and efficiently, and thereby might prevent start-up failure. CLD is designed for its ability to model adaptability in a dynamic environment. Causal loop modelling visualises the dynamics of all elements within a system, and could therefore also be used to provide an overview of a start-ups dynamics. Casadesus-Masanell and Ricart (2011) used this approach, in an expert role, in well-established companies as Ryan Air and Irizar, where it demonstrated to gain new insights which improved the business model radically. For example, the high competition and dynamics of the aviation industry required swift adaptability. To this end, they applied CLD in the organisation successfully,which resulted in drastic costs reduction and stronger profitability for Ryanair (Casadesus-Masanell and Ricart, 2011, p.5). Casadesus-Masanell and Ricart (2011, p. 4) name three criteria an effective business model must comply: it must be aligned with company goals, it must be self-reinforcing, and it must be robust. In contrast to the studies of Casadesus-Masanell and Ricart, this thesis applies the use of CLD in start-up’s, and it maintains a facilitating role in model development.

Interestingly, Vennix (1996) introduced an specific approach to construct a causal loop diagram by building it within a team. This is called group model building (GMB). With this groupwise method, participants are able to share and discuss multiple perspectives, in order to create a common accepted causal loop diagram (Vennix, 1996, p.5), which could contribute to the alignment of company goals.

(9)

8 Vennix (1996, p. 3) describes that ‘people are tend to think in simple causal chains, rather than networks of related variables’. Hence, one of the primary goals of GMB is to stimulate people to gain a better understanding of a problem’s underlying dynamics, and to uncover feedback loops: ‘a process in which action and information in turn affect each other (Vennix, 1996, p.31)’.

However, as of today, the added value of using GMB in order to create the business model of start-up companies has not been evaluated yet. However, it seems that start-ups, because of their dynamic environment, are likely to benefit from this method. Application of GMB could lead to a better understanding of underlying dynamics, which contributes making the business model self-enforcing. In addition, GMB stimulates to think about how variables react on each other. This could be useful in making the business model resistant over time, which is one of the most challenging factors in complex environments start-ups are in (Cosenz, 2017, p. 60) Therefore, this thesis will anticipate on the aforementioned gap in knowledge by exploring potential added value of group model building within the start-up’s business model development.

1.4 Research Aim and Research Question

The aim of this thesis is to provide insight into the potential added value of group model building, in terms of clarifying and further developing the business model of start-up companies which are participating in an incubator program. This explorative research aims to contribute to the knowledge of business model development within start-up companies, specifically by evaluating whether group model building can be applied in this early stage.

The following primary research question is defined:

What is the potential added value of group model building within business model development of start-up companies participating in an incubator program?

Chapter 2 provides a literature review concerning the main concepts in the research question: business models and group model building. Based on this review, secondary research questions are formed in paragraph 2.4.

(10)

9

1.5 Outline of Thesis

Chapter 2 provides an extensive theoretical overview of literature regarding the business model construct

(paragraph 2.1). Different aspects concerning business modelling will be discussed, including the various definitions and methods commonly used, a historical overview of the development of the business model concept, an operational definition that applies for the case study focusing on start-ups needs, and a detailed background in the group model building approach (paragraph 2.3). Finally, this chapter describes the role of business model development within start-up companies and start-up incubators (paragraph 2.3). Chapter 3 introduces the participating incubator and start-ups (paragraph 3.1 and 3.2), the design of the group model building sessions (paragraph 3.3), and the research methods. The results of the implementation are reported in chapter 4. In this chapter, the causal loop diagrams for both start-up companies are depicted (paragraph 4.2), followed by the analysis of the interviews (paragraph 4.3). In

chapter 5, all findings of this thesis are integrated and conclusions are drawn. Finally, limitations and

(11)

10

Chapter 2. Theoretical background

2.1 Business models

The business model construct contains multiple definitions, perspectives and ways of use. This chapter provides the theory behind the construct, based on several key studies. The literature review starts with the origin of the construct, and guides the construct through time to conclude with the perspective used in this study.

2.1.1 Origin of the Business Model – Path of development

Since the late 1990’s, interest in the business model concept has been rising. The concept simultaneously developed and gained interests with the development of the e-business that arose around that time (Nielsen & Lund, 2014, p.2). The rise of the internet created a new business element, which resulted in a large body of literature on how to combine e-business with their existing offline activities (Nielsen & Lund, 2014, p.2). For this reason, knowledge on business models was confined to the e-business sector in the first period.

A few years later, the business model concept got a more general meaning due to the work of Magretta (2002, p4), who defined a business model as ‘stories that explain how enterprises work’. In contrast to previous studies, which only focused on the internal organisation, Magretta asked questions such as ‘who is the customer?’ and ‘what does the customer value?’. Hereby for the first time addressing external components, such as customers and the market, as fundamental elements of the business model concept (Nielsen & Lund, 2014, p.2). This new perspective gave a boost to (academic) research regarding business models (Nielsen & Lund, 2014, p.2).

2.1.2 Origin of the Business Model – Amit and Zott: E-business

Besides Shafer, Smith and Linder (2005), Amit and Zott are other academics who studied the development of the business model construct. Since the rise of the concept, they published about the construct, its definitions and ways of use. In their first article regarding this topic, they introduced the concept as a way of value creation in the original environment: the e-business. In this paper they present the business

(12)

11 model construct ‘as a unit of analysis’, with the purpose of evaluating the business creation in e-businesses (Amit and Zott, 2001, p. 493). In this paper, they state that a business model:

The fundament of this definition is based on three transactions, with the purpose to create value and business opportunities. Amit and Zott (2001, p. 511) describe the first as transaction content, which is a reference to ‘the goods or information that are being exchanged, and to the resources and capabilities that are required to enable the exchange’. Second, the transaction structure refers to ‘the parties that participate in the exchange and the ways in which these parties are linked’. This includes the sequence order of the exchanges and the adopted exchange process for enabling transactions (Amit & Zott, 2001, p. 511). This illustrates that the choice of transaction structure affects the flexibility, adaptability, and scalability of the actual transactions. Third and lastly, transaction governance refers to ‘the ways in which flows of information, resources, and goods are controlled by the relevant parties (Amit & Zott, 2001, p. 511). This also includes the incentives and the legal form underlying the transactions.

Amit and Zott believed that this definition helps with the explanation and prediction of value creation in the e-business, which was before 2001 not described in literature. Elaborating on this, they note that each business model is specified for a particular organisation. However, they acknowledge the business model as a unit of analyses with a wider scope and more general applicability, hence it can be applied for value creation in various organisations in multiple industries (Amit & Zott, 2001, p. 514). They

Figure 2. Sources of value addressed by the business model construct (Amit & Zott, 2001, p. 514)

Definition of Amit and Zott (2001)

‘depicts the content, structure, and governance of transactions designed so as to create value through the exploitation of business opportunities (Amit and Zott, 2001, p. 511).

(13)

12 state that the business model construct facilitates academics specialising in strategic management and entrepreneurship with a unique set of questions regarding the creation of value (Amit & Zott, 2001, p. 515).

2.1.3 Origin of the Business Model – Shafer, Smith and Linder: ontology

As a result of the increasing number of studies, multiple different definitions of the concept arose, and the business model construct expanded with multiple, sometimes confusing, meanings and perspectives. Therefore, Shafer et al. (2005) described common elements in the business model concept of twelve frequently used definitions, so that the concept would be more standardized and could be transferred to companies outside the e-commerce businesses.

In their work, they report an affinity diagram with four main categories: strategic choices, creating value, capturing value, and the value network (Shafer et al., 2005, p. 202). With these categories as fundamental elements of the business model concept, the following definition is formed:

This formulation contains four key elements. The first element, core logic, characterizes that a well-designed business model helps to communicate and emphasizes key assumptions about cause-and-effect relationships within the organisation. As a result, the business model mirrors the strategic choices (the next element) that have been made. Creating and capturing value characterizes the fundamental objective that all organisations need to perform to remain viable over an extended period of time. Viable organisations could create value when they outperform their competition. For example, they could expand unique competencies, capabilities and/or positional advantages. There are multiple ways to differentiate from the competition, but in the end, profit based companies need to make money to contain viable. Therefore, their viability is the result of value creation and capture. The last element in the definition is the value network. This element includes suppliers, partners, distribution channels, resources, customers or any other party that is involved with the value creation. An organisation could develop unique relationships with any kind of party, which could contribute to their competitive advantage. Thus, the role and position an organisation chooses to fulfil within its value network is a crucial element of the business model. Finally, Shafer et al. (2005, p.203), emphasize that a business model is not the same as a

Definition of Shafer, et al. (2005):

‘a business model is a representation of a firm’s underlying core logic and strategic choices for creating and capturing value within a value network (Shafer et al., 2005, p. 202)’

(14)

13 business strategy. A business model is a tool that can be used for facilitating analysis, testing, and validation of organisations strategic choices, and the cause-and-effect relationships that arise from these choices.

Compared with the Amit and Zott’s (2001) definition, the perspective of Shafer et al., is focusing more on the activity of value creation and capture, instead of the transactions which facilitates this activity. Therefore, this approach contains a more dynamic view.

2.1.4 The Business Model Canvas

One of the most frequently applied designs is the Business Model Canvas (BMC), introduced by Osterwalder and Pigneur (2010). In their handbook they define the business model as:

The intention behind the development of the BMC was to create a concept that everybody could understand, therefore it needed to be simple, practical and relevant (Osterwalder and Pigneur, 2010, p.15). The framework is developed as a universal language that helps to describe and shape a business in an easy way.

The BMC is structured in nine building blocks that show how a company intends to create revenues. These blocks cover the four main areas of a business: customers, offer, infrastructure, and financial viability (Osterwalder and Pigneur, 2010, p.15).

Osterwalder and Pigneur (2010, p. 16-18) propose the nine blocks as follows:

1. Customer Segments: defines the different groups of people or organisations an enterprise aims to reach and serve

2. Value Propositions: describes the bundle of products and services that create value for a specific customer segment

3. Channels: describes how a company communicates with and reaches its customer segments to deliver a value proposition

Osterwalder and Pigneur (2010):

‘A business model describes the rationale of how an organisation creates, delivers, and captures’ value’.

(15)

14 4. Customer Relationships: describes the types of relationships a company establishes with specific

customer segments

5. Revenue Streams: represents the cash a company generates from each customer segment 6. Key resources: describes the most important assets required to make a business model work 7. Key activities: describes the most important things a company must do to make its business model

work

8. Key partnerships: describes the network of suppliers and partners that make the business model work

9. Cost Structure: describes all costs incurred to operate a business model

Because the Business Model Canvas is one of the most effective formats for communicating over business strategies, this framework is often recommended by academic incubators and venture capital associations around the world (Cosenz 2017, p. 59). The simple design (see Figure 2) would provide an easy and understandable tool of reporting the businesses focuses and strengths. Also, the selected blocks in the format stimulate organisations to prioritize and focus on the fundamental elements of the business plan,

(16)

15 in contrast to formal planning activities (Cosenz 2017, p. 60). This way, the framework facilitates entrepreneurs to discuss and consider all business elements independently, but also to evaluate them cooperatively.

However, the business model canvas also has several limitations. Cosenz (2017, p.60) states that the BMC is not effective for evaluating complex strategies, which contain a high matter of uncertainty and unpredictability. The framework does not stimulate the entrepreneur to consider scenarios concerning expected performances and outcomes. Furthermore, the BMC lacks to include competitors and external forces that could influence the business plan. These are fundamental elements regarding the sustainability of a business (Cosenz, 2017, p.60). These elements can delineate which uncertain aspects and dynamic complexity a company could face in the future, and are therefore pivotal aspects of the business plan. A high uncertain and unpredictable environment requires a fast and reactive way of visualisation, to explore business opportunities (Cosenz, 2017, p.60). Regarding this disadvantages, Cosenz states that the BMC is too static and cannot be applied in a situation that is dynamic complex .

Another limitation Cosenz (2017, p.60) brings to mind is the lack of systemic perspective within the BMC. The framework does not provide information about the mutual interaction of the aforementioned nine building blocks. Compared with previous perspectives, this approach lacks the connection of different organisational elements. Also, the framework does not display the effects in case a volume change occurs in one of the elements (Cosenz, 2017, p.60). For example, what will be the consequence of a lack of resources? Does it affect other elements, and if so, how does it affects those elements? By not taking this into account, it will become very difficult to deal with trade-offs and the dynamic character of a changing business.

2.1.5 The Dynamic Business Model

The business model construct has been subject to multiple interpretations and perspectives over the years. Shafer, Smith and Linder (2005), and Amit and Zott (2011) analysed several of these definitions and perspectives, and have made an attempt to acknowledge common elements of the construct. This paragraph introduces the dynamic business model, which is the business model perspective that is used in this thesis.

(17)

16 In contrast to other approaches, the dynamic business model is not focusing on specific established elements that a business model must consists of, but it focuses on how the elements within a business model are interrelated. Based on Shafer, Smith and Linder’s (2005) affinity diagram, Casadesus-Masanell and Ricart (2012, p.2) conclude that a business model is defined by strategic choices that explain value creation and value capture. The choices made by the organisation are the ‘way the company operates’. However, these choices made in the business model also come with consequences. Casadesus-Masanell and Ricart (2012, p.3), use the following definition:

Within this perspective, the choices refer to how a business is organised, and the consequences refer to how the different elements work together (Casadesus-Masanell and Ricart, 2012, p.3). With identifying different types of choices (see Figure 4), expectations about the consequences that follow can be made. The choices are categorized into three different types: policies, assets and governance. The consequences have two classifications: flexible and rigid (Casadesus-Masanell and Ricart, 2012, p. 3).

The policy choices are the actions that an organisation takes in its operation. Asset choices are the decisions about the tangible resources the organisation deploys, and governance choices assign to the structure of contractual arrangement that confer decision rights over policies or assets (Casadesus-Masanell and Ricart, 2012, p. 4).

The two classifications of consequences are based on their reaction sensitivity. A flexible consequence reacts quickly when the underlying choice changes (Casadesus-Masanell and Ricart, 2012, p.

Casadesus-Masanell and Ricart (2012)

‘a business model consist of: (1) a set of choices and (2) the set of consequences arising from those choices’

(18)

17 4). For example, an increase in a product’s price will have a quick response in customer demand, and therefore, the sales volumes are flexible. On the other side, a rigid consequence does not change quickly in response to a specific choice that affects it (Casadesus-Masanell and Ricart, 2012, p. 4). An example of this is an organisation’s culture. And even when it reacts, it occurs most probably with a delay. Casadesus-Masanell and Ricart note that no consequence is purely flexible or purely rigid, it is relative to other consequences, and thereby a matter of degree.

According Casadesus-Masanell and Ricart (2011, p. 4), an effective business model fulfils three criteria. First of all, a business model needs to be aligned with the company goals. This means that the choices made in the design of the business model should produce consequences that contribute to the company objectives. Secondly, an effective business model needs to be self-reinforcing. Casadesus-Masanell and Ricart (2011, p.4) state that: ‘the choices that are made during the business model design should complement on another; there must be internal consistency’. And finally, ‘a good business model should be able to sustain its effectiveness over time’.

Casadesus-Masanell and Ricart’s (2012, p.6) approach focuses on intrinsic dynamics, and therefore, ‘the understanding and evaluation of business models requires explicit consideration of the dynamics between choices and consequences’. An important characteristic is that these dynamics generate feedback loops, which occurs when the consequence of a choice, affects the original choice after implementation. As described above, one of the three criteria of an effective business model is being self-enforcing. Casadesus-Masanell and Ricart (2011, p.6) state that successful organisations generate feedback loops, which is one of the most powerful and neglected aspects of the business model. Feedback loops within a business model can be virtuous or vicious. ‘Virtuous cycles are feedback loops that, with every iteration, strengthen the value of components of the model’ (Casadesus-Masanell and Ricart, 2012, p.8). In contrast, vicious cycles are feedback loops that, with every iteration, weaken the value of components of the model. Casadesus-Masanell and Ricart (2011, p.4) state that: ‘good business models create virtuous cycles, that, over time, result in competitive advantage’. The presence of a virtuous loop within a business model helps the organisation strengthen over time, and fulfilling its objectives.

Casadesus-Masanell and Ricart (2011), use a causal loop diagram to visualise a company’s business model. The CLD creates a systemic view, and provides a simple and clear visualisation of the choices and consequences within a business model. This way, entrepreneurs are able to identify their value creation and value capture with visualising the intrinsic dynamics. Paragraph 2.2 provides further explanation regarding the CLD and its construction process.

(19)

18

2.2 Group Model Building

Group model building (GMB)(Vennix, 1996) refers to a process were a group of stakeholders is guided through model construction during one or more sessions. This method facilitates development of a causal loop diagram (CLD), which is used for visualizing the dynamic business model, described in previous chapter. The goal of the GMB approach is to increase insight in the problem and create alignment between stakeholders in order to develop adequate strategies. However, GMB is not a standardized procedure, and it has many application possibilities. This chapter describes the theoretical background regarding the result, process and the contextual fit of group model building.

2.2.1 Causal Loop Diagrams

To deal with the dynamic environment of a start-up, and to facilitate business model development, causal loop modelling can be used (Casadesus-Masanell and Ricart, 2012; Cosenz, 2017; Cosenz and Noto, 2018). These causal loop diagrams enable entrepreneurs to evaluate the choices they consider, by providing insight in possible consequences that follow upon these choices (Cosenz and Noto, 2018, p.129). Moreover, entrepreneurs can evaluate several strategies, and make informed decisions by comparing predicted consequences of each strategy. In the studies of Casadesus-Masanell and Ricart (2010), and Cosenz (2017), the causal loop diagram (CLD) is suggested as an effective tool to represent a business model in the systemic perspective. This chapter provides a literature review concerning the potential added value, the expectations and the limitations of CLD.

Origin

The use of the CLD originated in the systems dynamics methodology, which is developed in the second half of the 1950s by Jay Forrester (Vennix, 1996, p.43). Forrester developed an approach to study and simulate social systems as information feedback systems, which originally was used for corporate problems. Through the years, the method advanced and broadened which resulted in the fact that it can be used in a high variety of problems nowadays.

Forrester describes system dynamics as a theory that visualises the structure and behaviour of complex systems (Vennix, 1996, p.44). It is an approach for capturing the dynamic aspects of complex social and managerial systems. Systems dynamics is a broad, holistic perspective with its own vocabulary, and it offers a range of techniques and tools for visualizing and communicating systems.

(20)

19 To understand the full potential of this ‘systems thinking’, we first have to address the question: what is a system? Kim (1999, p.2) defines a system, in its simplest form, as follows:

The key characteristic of this definition are the acknowledgement that all the different parts within the system are in some way interrelated and interdependent. When this is not the case, it is just a collection of parts instead of a system (Kim, 1999, p.2). Kim (1999 p.2) states that every system has a specific purpose that defines the different parts as an entity. However, this purpose belongs to the system as a whole, and not to the different parts separately.

Structure

To build a CLD, Kim (1999) formed the following steps, which guides through the model development. o Step A: Creating variable names

The first action in the process of causal loop diagramming is the identification of variables. A variable is defined as an element or factor that is subject to change over time.

o Step B: Draw the links

The next step is linking the variables and determining the effects the variables will have on each other. When variable A changes in the same direction as variable B (when A increases, B increases), the causal relationship is positive and will be labelled with a plus sign (+). When variable A moves in the opposite direction as variable B (when A increases, B decreases), the causal relationship is negative, and the link is labeled with a minus sign (-).

o Step C: Label the loop

When all the variables are linked, interaction loops within the system could appear. These interaction loops are also called feedback loops. The following step is to identify and name the feedback loops. A simple way to determine whether the behaviour of a loop is reinforcing or balancing, is counting the number of negative relations (-). If there are no negative relations (-) at all, or an even number of negative relations, the loop is reinforcing. And if there is an odd number of negative relations (-), the loop is balancing (Kim, 1999, p. 9). However to be sure, when labelling

Kim (1999)

‘A system is: any group of interacting, interrelated, or interdependent parts that form a complex and unified whole that has a specific purpose’

(21)

20 the loop, it is advised to carefully walk through the it and follow its behaviour step-by-step, and draw (or imagine) its behaviour over time.

o Step D: Talk through the loop

When the causal loop diagram is finished, you could talk through the diagram and ‘tell the story of the system’. This is the final check to make sure that the diagram reflects the actual behaviour of the system.

Feedback Loops

One of the fundamental aspects of systems thinking is the emphasis on feedback. Feedback is defined as the transmission and return of flows, which consists for example of information, goods or finance (Kim, 1999, p. 5). Especially the return of information makes the difference with a more common perspective: the linear cause-effect way. The linear perspective has a focus on series of unidirectional cause-and-effect relationships, while the feedback perspective sees the world as an interconnected set of circular relationships (Kim, 1999, p.5). In the systems thinking perspective, a researcher or practitioner would continually wonder how the consequences of their actions feed back into the system. The insights gained by this matter of perspective provide a much better position to understand the problem, and therefore it improves the actions and decisions made (Kim, 1999, p.8).

Feedback that results in a change in the same direction, with even more change in this direction is called ‘positive feedback’ (Kim, 1999). A positive feedback loop within a system is called a ‘reinforcing loop’. When a reinforcing loop results in desirable behaviour, it’s a ‘virtuous circle’. However, a negative feedback loop could result in behaviour that is not desired: a ‘vicious cycle’ (Kim, 1999). A virtuous loop can change in a vicious cycle, and otherwise around, when the input changes direction. As described in paragraph 2.1.5, these cycles are central elements in the dynamic business model.

Another fundamental element of systems thinking is the counterpart of the reinforcing loop which is the balancing loop. The balancing loop is continually trying to keep the system at the same level of performance (Kim, 1999). This kind of feedback has a balancing effect, which means it counters change in one direction by producing change in the opposite direction (Kim, 1999). The goal of a balancing loop is to stabilise, or to decrease the gap between the desired level and the actual level. Therefore, when the gap becomes too big, the system operates self-corrective.

(22)

21 Figure 5 provides a simple example of a CLD. This CLD contains both types of feedback loops (reinforcing and balancing) to represent chicken population. The reinforcing loop at the left side shows that ‘eggs’ have a positive relationship with ‘chickens’. This means that an increase in eggs will lead to an increase in chickens, and vice versa. The feedback loop on the right side shows that ‘chickens’ and ‘road crossings’ keep each other in balance. An increase in chicken will lead to an increase in road crossings, which is followed by a decrease in chicken.

Conditions and Objectives

Vennix (1996, p. 45) uses the four important hierarchical elements, described by Forrester, as a basis for his model, the elements are:

1. Closed boundaries

2. The feedback loop as the basic system component 3. Levels and rates

4. Goals, observed conditions, discrepancy between goals and observed conditions, and observed actions

This means that the starting step of building a CLD, involves defining the boundaries of the interest of a system. What should be taken into account and what could be left out of the model? The approach only provides discussing and evaluating elements within the boundaries, which means that all the relationships between elements in the system that are considered important for explaining the dynamic behaviour should be included in the model (Vennix, 1996, p.45).

The system dynamics approach is based on the believe that a system behaves the way it does as a result of their internal structure, instead of external factors (Vennix, 1996, p.45). This implies that decisions within the system are embedded in feedback loops.

(23)

22 The current state or condition of the variables that are involved in the model is called level. This means that the level of the variable is an objective and concrete number which represents the current situation. The rate represents the rapidity and the amount the level changes over time (Vennix, 1996, p.46).

The last hierarchical element refers to user goals of the approach. To develop a model, a clear target is necessary for focussing on the problem instead of the system itself. This means that a clear problem definition is necessary to decide what to include, and what to exclude from the model. Thereby, it is of added value to create a reference mode of behaviour (Vennix, 1996, p.50). This is a simple graph that represents the current state of the problem and depicts how the situation evolves without intervention. The problem definition and the reference behaviour provide information about the current situation and therefore are the starting point of model development (Vennix, 1996, p.48). The model itself visualises the conditions of the system under particular circumstances which allows the user to compare these with their goals and desired outcomes. When they do not match, the model provides insights in the discrepancy between the observed conditions and the desired conditions (Vennix, 1996, p. 48). This facilitates evaluation and adjustment of actions.

Taking previous literature as a basis, this research explores the application of causal loop modelling in a new context. The potential added value of visualizing a start-ups business model in a CLD, and whether or not Forrester’s hierarchical elements are appliable in this context will be addressed.

2.2.2 Group Model Building Approach

Group model building (Vennix, 1996) is an approach where a group of people gather together in one or more sessions to analyse a problem, and construct a CLD. As described in the previous section, it generally starts with identifying the problem of the participants. The dynamic characteristic of a CLD ensures that the creation of a reference mode of behaviour supports clarifying and formulating the problem situation (Vennix, 1996, p. 50). This contains of one (or more) graphs, that visualizes the behaviour of the problem variable over time. How did the variable move in the past and what will it do in the future without intervention? The problem identification can be either very straightforward, or when there are multiple stakeholders with a own view on the situation, can be a difficult stage. In the more complex situations, problem identification can be a separate goal (Vennix, 1996, p. 5).

After identifying the problem, the next stage involves systematically elicit knowledge from the participants, with the steps formed by Kim (1999) in paragraph 2.2.1, in order construct the model. This

(24)

23 knowledge can consist of both hard data as well as mental models (Vennix, 1996, p. 19). Model building is an iterative process and the group is allowed to go through the various steps multiple times. With every step the model improves and the problem will be understood better.

Conditions

GMB can serve a variety of goals, depending on the problem type and objectives. Mainly, the approach is used to increase the understanding of the situation and gain insights in the behaviour of the system, with the purpose to create robust policies. Group model building approach is quite time consuming, to prevent wasting time and resources, it is important to apply the approach with a fitting problem situation. Vennix (1996, p.9) states that the suited problems for GMB application are the so called messy problems.

One of the characteristics of these kind of problems is the matter of dynamics. Senge and Roth (1996, p.9) define this dynamic complexity as: ‘the extent to which cause and effect are instant in time and space’. With high dynamic complexity, it is difficult to detect the origin of a problem, and the way it develops over time. Senge and Roth (1996, p.9) provides several reasons for this difficulty, for example, it is hard to notice the dynamics when there is a delay between action and consequence. Secondly, the dynamic complexity increases when a problem contains multiple feedback loops, or when the relations between variables are non-linear. As described in paragraph 2.2.1, a CLD aims at visualizing feedback loops and other relations between variables, and therefore, it can contribute to the understanding of these dynamics.

Another characteristic of a messy problem is that individuals could have different perspectives on (a) whether there is a problem, and (b), what the problem is (Vennix, 1996, p.19). This can be caused by the fact that individuals interpreted the situation in different ways, because of the different information they have. Everybody looks at a situation from their own perspective, based on the information available. This means that there are multiple realities in the minds of the stakeholders. Basically, individuals build ‘mental models’ of their own environment and perspectives, and adapt their behaviour to this (Vennix, 1996, p.19). With multiple views, the problem definition will be a difficult task. Senge and Roth (1996, p.8.) define this as behavioural complexity, which they describe as: ‘the diversity in aspirations, mental models, and even values and basic assumptions of decision makers’. With low behavioural complexity, a collective perspective and decision commitment is easily created by sharing assumptions and values. In contrast, high behavioural complexity occurs when there is much disagreement in assumptions, beliefs, and perspectives (Senge and Roth, 1996, p.9), which makes it hard to create consensus. A GMB session could

(25)

24 help with this. The approach facilitates a structured setting to discuss these mental models and to create an objective and collective model regarding the current situation with visualizing a holistic view.

Goals and Expectations

In order to contribute to the behavioural complexity, the usage of GMB can be applied to fulfil multiple purposes. Vennix (1996, p. 6) identifies the following three objectives:

1. Create a climate in which team learning can take place 2. Foster consensus

3. Create acceptance of the decision, and commitment to its implementation

Vennix (1996, p.5) states that the ultimate goal of GMB is not the CLD itself. The ultimate purpose is to put people together, and help them learn about the problem together. This supports team learning, instead of individual learning. This process should lead to a shared understanding of the problem and more insights in the consequences of possible policies.

The second purpose is to foster consensus within the team based on sufficient deliberation and discussion of the perspectives. As a result, a unanimous agreement about a decision is more likely to be made. GMB strives for consensus between team members, rather than compromises (Vennix, 1996 p.5). The final purpose of GMB is the creation of acceptance of a decision, and commitment for its implementations. A decision made without unanimity might result in a situation where not all stakeholders are motivated and do not have the same commitment regarding the implementation. This could have a negative impact on the effectiveness of the decision. Therefore, the GMB approach tries to increase the decision acceptance and commitment to its implementations.

Concluding, Vennix (1996, p3) introduces GMB as a tool that can contribute to the behavioural and dynamic complexity within messy problems. GMB ‘can be used as a method to systematically elicit and share mental models in teams. Whereby the model building process starts, from the different perceptions of the participants (Vennix, 1996, p.3)’. Furthermore, Vennix (1996, p.3) describes that ‘people are tend to disregard interconnections between different elements of a system’. The use of CLD and GMB can expose these interconnections, by eliciting the hidden causal assumptions, and create a more complete problem representation. The next paragraph describes how this can contribute to a start-ups business model development.

(26)

25

2.3 Start-ups and Business Model development

The previous paragraphs describe the literature, the goals and the expectations concerning the business model construct and the group model building approach. Subsequently the creation of a clear and defined image of the approaches used in this research, it is important to define the contextual situation it is applied in.

This chapter describes the contextual situation of the participating start-ups, and provide literature concerning important elements, such as business incubators and start-up development. Finally, the participating start-up incubator and incubator program is discussed.

2.3.1 Business Models for Start-ups

This paragraph explains why business models are important for new business creation.

Reymen et al. (2015, p. 351), state that the process of new venture creation is symbolized with the requirement to take decisions and actions with high uncertainty. While established companies are often able to base their new strategies and market entrees to knowledge and experiences they gained through the years, start-ups lack this kind of information. Unexperienced entrepreneurs need to design their start-up with high uncertainty, with the entrepreneurial risks that come with it (Reymen et al., 2015, 352). This uncertainty causes that entrepreneurs have a difficult task in understanding the dynamic complexity of their situation, and in structuring and developing their starting business. As described in chapter 2.1, designing a business model provides a structured way of new venture creation that contributes to the uncertainty. The Osterwalder and Pigneur’s (2010) Business Model Canvas, supports entrepreneurs to think of the key elements that are involved in value creation. However, Cosenz (2017, p.58) argues that a business model approach that mainly focuses on the identification of elements is too static for this kind of environment. Therefore, the approach of Casadesus-Masanell and Ricart’s (2012) helps the entrepreneur uncover intrinsic dynamics, by visualizing organisational choices and the consequences that follow, in order to contribute to a start-ups dynamic complexity.

In addition, Wrigley and Straker (2016, p.11), state that the product and process development is crucial for a new venture in uncertain and fast-moving environments. These developments benefit from new insights, experimentation and quick organisational learning. Therefore, entrepreneurs need to use an approach that supports this, and creates new perspectives by looking beyond known assumptions, barriers and constraints (Wrigley and Straker,2016, p.11). Wrigley and Straker conclude that it is crucial for new ventures to find a way to practice business model experimentation.

(27)

26 Furthermore, the attraction of investors is another crucial activity for start-ups entrepreneurs. As alluded to in the introduction, a large number of start-ups was not able to be successful in the second investment round. A business model which carries out a clear business idea is essential in the search for investments (Cosenz, 2017, p. 57). Start-ups could use their business model to summarize and communicate their business ideas and strategies, products and market sectors with potential investors and other stakeholders (Cosenz, 2017, p. 57). These elements visualized in a clear business model could contribute to an investor’s decision whether or not to invest in the new venture.

2.3.2 Business Incubators

In the last three decades, the importance of business incubators increased (Grimaldi & Grandi, 2005, p. 112). Incubators are identified as instruments that promote and support entrepreneurial ideas, with the purpose to support new ventures in their growth. To accommodate this, many (local) governments, organisations and other public institutions facilitate incubators as a tool to increase the success rate of new businesses, and to make the process of business creation more efficient (Grimaldi & Grandi, 2005, p. 112). Grimaldi and Grandi (2005, p.111.) identify four types of incubators: Business Innovation Centres (BIC), University Business Incubators (UBI), Independent Private Incubators (IPI) and Corporate Private Incubators (CPI).

The BIC originated around 1985, after an initiative of the European Commission (Grimaldi & Grandi, 2005, p. 112). The activities of a BIC involve providing a set basic services, such as the provision of workspace, the provision of a platform, organisational knowledge, social network, etc.

Policy-makers see science as an engine for the stimulant of national and regional economies (Grimaldi & Grandi, 2005, p. 112), therefore, they cooperate with universities, so that they could provide in resources, infrastructure and talent development. This resulted in UBIs, which are quite similar to the BICs, although they focus more on the translation of scientific and technological knowledge from the university to businesses (Grimaldi & Grandi, 2005, p. 112). Within the UBIs, technology, capital and know-how are brought together to develop entrepreneurial talent and encourage the commercialization of new ventures. Mian (1996, p.327) identifies two categories of services a UBI could provide; (a) the typical incubator services which provides workplace, organisational support, capital, and networks; and (b) incubators with university-related services which include faculty consultants, labs and testing facilities, workshops and educational programs, R&D activity etc.

(28)

27 Since the upcoming of the internet, and the e-business that arose with it, the number of private incubators increased (Grimaldi & Grandi, 2005, p. 113). The objective of these incubators is to create new businesses which the goal of making profit. There are multiple ways to achieve this, for example; charging service fees, receiving a percentage of a ventures future earnings or shares and other liquidity events. These incubators provide early investments to help entrepreneurs. Other key elements they offer are for example; business model development, provision of experiences staff, recruiting structure, technology to validate and develop and the concept, strategic partners and more (Grimaldi & Grandi, 2005, p. 113).

These private incubators can be divided into two types: IPIs and CPIs. IPIs are founded by individuals without the intend of a different company. These individuals invest in the new ventures with own resources (Grimaldi & Grandi, 2005, p. 113). The CPIs are facilitated by big companies, with the purpose to develop new independent business units.

Mercator Launch

Mercator Launch is an UBI allied to the Radboud University in Nijmegen. This incubator focusses on early phase entrepreneurship and is therefore called a pre-incubator. On their website, Mercator Launch states that their mission is ‘to help develop and showcase your innovative business ideas and support the start-ups that emerge from these ideas’. Mercator Launch helps students and researchers ‘to realise and validate their business ideas by empowering them, give them room to fail, and bringing ideas together’.

Mercator launch offer entrepreneurs a program which supports them to start their own business. This program is called the IMPROVE Program and is a 10-step program (Figure 6), based on the Lean Start-up method which guides you through the most fundamental steps of company development. The program provides the entrepreneurs with space to work, strategy planning, tools, help with attracting investments, etc.

(29)

28 On the Mercator Launch’ website, they give a further explanation of the program, and how the steps contributing to the start-up development (‘IMPROVE Program’, n.d.).

Step 1: Start with why

The entrepreneurs are introduced to the Golden Circle of Simon Sinek to help them determine the reason why their start-up needs to exist. Without a clear ‘why’ success will be difficult.

Step 2: Understand the problem

The entrepreneurs use the Value Proposition Canvas to find a better understanding of their customer’s problem, which results in a better understanding of the product’s added value.

Step 3: Create a Business Model

For every start-up, it is essential to have a repeatable and scalable business model. It describes the rationale of how an organisation creates, delivers and captures value, according to Mercator launch. In this step, the start-ups are using the Business Model Canvas as a tool to create their business model.

(30)

29

Step 4: Start Customer Validation

In the previous steps, the entrepreneurs made several assumptions regarding their customer segment. In this step they interact with potential customers to validate and test these assumptions.

Step 5: Design your first product

With the help of the lean start-up method, the entrepreneurs create their minimal viable product based on previous steps. A prototype is developed.

Step 6: Create competitive advantage

The entrepreneurs use a tool which helps them discover their market. In this stage, they gain information about which market they should target, how to enter this market, size of the market, and market trends. Additionally, education is provided about intellectual property rights, strategy and management.

Step 7: Crunch the numbers

This step focuses on the financial aspect of business creation. Financial forecasting, investment needs and funding sources are key elements of this phase.

Step 8: Learn to pitch perfectly

A good and clear pitch is import to sell a new business idea to customers and potential investors. The entrepreneurs learn to write and present a solid pitch. After which the entrepreneurs can pitch their business idea to multiple potential investors.

Step 9: Get your first customer

Education is provided about how to create a Go-2-Market strategy. This is an action plan that focuses on bringing the prototype to the real market, as a product, service or process.

Step 10: Get funded and grow!

In this final step of the IMPROVE program, the business coaches support the start-ups with attracting their first investments which help them with the further realization of their business idea.

(31)

30

2.4 Secondary Research Questions

This thesis explores the potential added value of group model building in a new context, which is the development of a start-up’s business model. To this end, the added value of GMB will be evaluated on three different aspects regarding to business modelling which are the result of the modelling, the model building process and the contextual fit within the incubator program. These three aspects will be evaluated separately by addressing the following secondary research questions:

1. What is, according to the participants, the added value of visually representing the business model using a causal loop diagram? (result)

2. What is, according to the participants, the added value of the group model building session in order to facilitate team learning, foster consensus, and create decision commitment (process)? The potential added value of GMB lies in the causal loop diagram, and the process of model construction. In addition, for effective use, the approach needs to fit the organisational context and problem definition. Therefore, the third research question focuses on the fit between the approach and the start-ups within an incubator program.

3. What is, according to the participants, the best phase within an incubator program to apply group model building? (fit)

(32)

31

2.5 Operationalization

Over the years, the concept of GMB is researched extensively and a large body of literature is available to support the evaluation of the primary and secondary research questions proposed in this thesis. Therefore, a deductive research approach is chosen to be the best methodological approach to evaluate the value of GMB in the new context of start-up companies. The hypothesis of this thesis is that the beneficial effects of GMB that were observed in established companies can be translated to the setting of start-ups.

To determine the effect of GMB on business model understanding and development in start-ups in the current thesis, the operationalization structure that is presented in Table 1 will be used as guidance. This structure will separately evaluate the result, process and conceptual fit of GMB. The indicators that are assigned to these dimensions are based on the theoretical background in chapter 2.

Table 1: Operationalization structure of thesis

Abstract concept & Working Definition Dimensions Indicators

Abstract concept:

The added value of Group Model Building

Working Definition:

The added value of GMB is the way it can contribute to the understanding and development of a business model.

1. Result

Working definition:

The causal loop diagram that is constructed during the GMB session

1. Closed Boundary 2. Feedback Loops 3. Levels and Rates

4. Goals and Observed Conditions

2. Process

Working definition:

The process of CLD construction by use of the GMB method 1. Team Learning 2. Consensus 3. Decision Commitment 3. Contextual Fit Working definition:

The usability of the GMB method, within the current phase of the start-ups

1. Problem Fit 2. IMPROVE Program 3. Usage

(33)

32

Chapter 3: Methods

This research aims to explore the added value of the causal loop diagram and group model building during the development stage of a start-up’s business model. GMB will be applied in the real context of two different start-up companies, in order to contribute to the business model development. This, together with the expectation that the boundaries between the business model construct and the start-up context are not clearly evident, fits the use of a case study (Yin, 1994, p.13). The implementation of a case study is often used for preliminary and exploratory researches, in order to gain first insights, and more structure that is necessary for further research of the concept (Rowley, 2002, p. 16). Using this approach, the researcher has few control over the studied variables, and the behaviour of the participants within the GMB session will not be manipulated. In contrast with other approaches, the case study enables to collect multiple kinds of data sources, such as interviews, observations, documents and artefacts (Rowley, 2002, p.17), which will be evaluated with a qualitative approach, described in paragraph 3.5.

In the current chapter, the methodological aspects of the implementation are detailed, including an introduction the companies which participate in the case study, the structure of the GMB-sessions and the interviews, and details regarding data collection and analysis.

3.1 Mercator incubator program and selection of start-ups

In order to select companies suitable for the case study, Mercator Launch, an incubator connected with the Radboud University in Nijmegen was approached. As described in chapter 2, the Mercator Launch incubator provides an environment in which start-ups are guided during their first stages of development. In an introduction of the current study to the Mercator Launch staff, they were enthusiastic about the research, and helped screening for companies within their incubator pool. The aim was to select companies which could be suitable for the case study and could also benefit from the project. The start-ups participating in this study, complied the following selection criteria: company consisting of multiple entrepreneurs, approximately one year old (one year of experience), and intention to participate in all 10 steps of the incubator program (e.g. coaching, prior experience with Canvas and business model development). After screening potential candidates, two companies were selected and approached.

(34)

33

3.2 Selected start-up companies

Displac3D (Nijmegen, www.displac3d.com)

Displac3D was founded in the end of 2018 by two young entrepreneurs with a background in artificial intelligence and music. Their goal is to develop software to record music in a new format for the music business.

The first music format was mono music, which is sound from one audio channel. Many years later, stereo music was introduced, which is a method of sound reproduction between two audio channels in order to increase the multi-directional audible perspective. In the near future, however, Displac3D aims to introduce the next audio experience: 3D music. With this novel audio format, it will become possible to record and adjust audio in such a way that the client experiences the music three-dimensionally, resulting in a very natural and spatial sound.

The entrepreneurs of Displac3D are technically skilled and capable to develop the software themselves. At this moment, the underlying software and techniques are developed and extensively tested by the start-up. The dream of Displac3D is to make this 3D-format the new music standard. To achieve their objectives, they have to convince artists and producers to use their software. The entrepreneurs of Displace3D could use some help with the market introduction.

At moment the GMB sessions of this thesis took place, Displac3D just completed the Mercator Launch Program.

The potential added value of GMB for Displac3D: Displac3D currently has a working product. Their

current challenge is to figure out what would be the most suited approach to brand their product, and convince people to use their software. There are several potential strategies regarding this objective, and their main goal is to explore which option would fit their organisation best.

Therefore, the expectation is that GMB could be of potential value to Displac3D. By modelling their business, the entrepreneurs could share mental models, and gain insights in the multiple options they have, combined with the consequences which may occur after implementation. With these insights, the entrepreneurs could structure their start-up, and create a shared perspective regarding their future strategies, and plan the organizational steps that are most likely to succeed and fit their vision best.

(35)

34

Lutto (Nijmegen, https://www.getlutto.app/)

Lutto started in the beginning of 2019 by two entrepreneurs, and aims to support clients during the grieving process. Lutto developed a concept application which supports people with grieving in various ways. The application will help the client gain insight in their emotions, and educates about the grieving process. In addition, Lutto also creates a platform to facilitate clients find support of people in the close environment. It has been shown that asking for help when in a process of grief can be very difficult, and therefore, the Lutto application aims at lowering the threshold for asking advice and support. Besides contact with people that had the same experience, the app also facilitates contact with healthcare professionals. The threshold of visiting a mourning coach or psychologist can be high as it is emotionally heavy and hard to fit in the busy schedule. Using the Lutto application, a short line with your own

psychologist or coach can be achieved. With the use of a messaging service, a shared diary or video calls, contact is possible at any moment needed for the client.

At the moment of the GMB session, the entrepreneurs of Lutto are still participating in the Mercator Launch Program. At this point they are focusing on the step 7 of the program: crunch the numbers. They started a market research, to gain more information about customers demand and behaviour, in order to develop their business plan. This way, they attempt to attract investors and partners, which is crucial for their next phase: app development. To complete their business plan, they are exploring multiple potential revenues structures, order to select the most fitting one for the start-up. The entrepreneurs identified three potential revenue flows: members, psychologists and advertisers. With the help of GMB they attempt to find out which revenue strategy would be most profitable.

The potential added value of GMB for Lutto: the entrepreneurs of Lutto have a clear vision on how their

start-up should operate and function. Their current constraint is the lack of ability to develop the application themselves. For this fundamental step, help from outside the start-up is essential, which means that an app developer needs to be hired. To fund the developer, Lutto needs to find investors.

Therefore, the current goal of Lutto is to create a clear business plan to convince investors. The expectation is that GMB could contribute. With the construction of a CLD, the entrepreneurs structure and visualize their start-up, which provides a clear overview of their actions and consequences. Hopefully this lead to insights regarding the choice of revenue strategy and can help in convincing investors.