The Path to Lean Startup Risk Management

ABSTRACT This paper aims to demonstrate that many startups are unaware of the potential of strategic opportunity and risk management to gain a competitive advantage. It reveals and analyzes an opportunity and risk management gap between the pre‐startup and early‐startup phases, guiding toward managerial implications. The focus is on defining lean startup risk management as the core for managing and controlling risks, which can be further strengthened by embedding risk management principles into decision‐making and governance structures. The qualitative interview study, conducted with 24 German founders, examines their management of opportunities and risks. It shows which parts of the strategic identification, analysis, and assessment process are worth exploring further. Founders strive to develop their startups with a focus on opportunities; however, they lack a strategic process to identify them. At the same time, founders tend to neglect the need to set up processes for avoiding or monitoring risks strategically. The absence of strategic opportunity and risk management in the early‐startup phase is an interesting finding, as founders already include parts in their business plans or models. Results show they could build on it, especially in product and service development, customer relationships, and financing structures. These areas offer numerous ways to create a lean and strategic concept for opportunity and risk management. A multistage lean startup risk governance concept can help founders improve early risk management implementation. Strategic concepts would not only help founders build their businesses more securely but also help their investors place greater trust in the business's development. An underestimation of opportunity and risk management's potential causes a misjudgment of the balance between the cost of bound resources and their benefits. The founders should understand that benefits primarily arise when startups implement the processes early and adapt them to their needs. This paper is the first empirical analysis highlighting strategic lean startup risk management and its most promising development areas.