The only thing that interferes with my learning is my education.
Albert Einstein
Entrepreneurship As A Management Science
Those of you who have been reading my blog already know that I have been talking about a new approach to entrepreneurship education called “E-School” or the Durant School of Entrepreneurship. I believe that we have now learned enough about entrepreneurship as its own management science, to rethink our approach on how to teach it.
A place to start would be by recognizing the fundamental difference between an existing company and a startup: existing companies executebusiness models, while startups searchfor a business model. (Or more accurately, startups are a temporary organization designed to search for a scalable and repeatable businessmodel.) Therefore the very foundations of teaching entrepreneurship should start with how to search for a business model.
This startup search process is the business model / customer development / agile development solution stack. This solution stack proposes that entrepreneurs should first map their assumptions (their business model) and then test whether these hypotheses are accurate, outside in the field (customer development) and then use an iterative and incremental development methodology (agile development) to build the product. When founders discover their assumptions are wrong, as they inevitably will, the result isn’t a crisis, it’s a learning event called a pivot — and an opportunity to update the business model.
Business Model Design meets Customer Development
Lean Launchpad
So how do we teach this approach? Both Stanford and Berkeley have been extremely generous in letting me test these ideas in their engineering and business schools. In fact, starting in January, Stanford will offer Engineering 245, a.k.a the Lean Launchpad, the first hands-on class utilizing the entire business model/customer development / agile development stack. I’ll be teaching this class with two world-class VC’s: Ann Miura-Ko of Floodgate, and Jon Feiber of MDV.
In this class students get real world, hands-on learning on what it’s like to actually start a high-tech company. This class is not about how to write a business plan. The end result is not a PowerPoint slide deck for a VC presentation. Instead students get their hands dirty talking to customers, partners and competitors as they encounter the chaos and uncertainty of how a startup actually works. They’ll work in teams learning how to turn a great idea into a great company. They’ll learn how to use a business model to brainstorm each part of a company and customer development to get out of the classroom to see whether anyone would want/use their product. Finally, they’ll use agile development to rapidly iterate the product in class to build something customers will use and buy. Each week will be a new adventure as they test each part of their business model and then share the hard earned knowledge with the rest of the class.
But what if you’re not a Stanford student and want to learn how to build a startup with the “get out of the building” experience as taught in the Lean Launchpad class?
You can.
International Business Model Competition
One of the things I have suggested is that instead of business plan competitions (which tend to focus on a static plan which is often just a series of guesses about a customer problem and the product solution), entrepreneurship educators should think about holding competitions that emulate what entrepreneurs encounter – chaos, uncertainty and unknowns. A business model competition would emulate the “out of the building” experience of the Stanford E-245 class and the customer development / business model / agile stack.
Nathan Furr, a professor at Brigham Young University, is launching the firstinternational business model competition.
The competition will be held on January 24th 2011 (submission deadline Jan 10th) and is open to university students enrolled at least half-time anywhere in the world (more about the competition here and information packet is here). While Professor Furr’s vision is to make this the Moot Corp (the championship of business plan competitions) of the business model world, the broader goal is to kick start change in the way students and educators think about how to train the next generation of entrepreneurs—Durant entrepreneurs.
Not only is this an exciting event planting a flag for the future of e-schools, but Alexander Osterwalder, who wrote the definitive book on business model design, and I will be doing the judging along with Professor Nathan Furr.
Oh yes, and by the way, the prize money is $50,000.
See you there.
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Filed under: Business Model versus Business Plan, Customer Development, Teaching |
This is great news. I was wondering when a business model competition like this would happen. Hopefully these will replace traditional business plan competitions in a few years.
We hosted a business model competition in miniature this weekend in Chicago with the Lean Startup Machine Chicago (http://chicago.theleanstartupmachine.com/). One head of an incubator that participated will now be basing their summer program on the customer development approach.
Hope I can audit that class.
Looking through the information packet this seems painfully similar to a business plan contest. Writeups in word have been replaced by presentations in powerpoint. How is this forcing students to get out of the building? How is it different from simply a slide deck about a business plan?
Great initiative! I hope you get tons of proof that both Universities (and orgs alike) and entrepreneurs shouldn’t be wasting time with pitch contests.
Regarding Alex’s model, what do you think of Ash Maurya’s adaptation of the Canvas?
I do agree with him that the model needs some adaptation to better suit the needs of Web-based Startups.
Eric,
To be honest I don’t see much of any difference between the two.
Osterwalder’s canvas works for the web just fine. All it requires is reading his book and understanding his process.
His slideshare page has plenty of examples.
steve
The need for the adaptation is actually illustrated in Steve’s example canvas above. The two green sections (Key Activities and Key Resources) are always the same for any Lean Startup which to me is an awful waste of space.
I’d much rather substitute those for elements of the plan that matter – like Key Metrics and Unfair Advantages. Thoughts?
I guess this works for a business course.
My guess is that people who are just starting out don’t see themselves as searching for a business model. They see themselves as looking for an opportunity.
But in a business course I guess people are already past this stage.
Great stuff as always Steve. I am using your blog and Alex’s book in my class this fall, and will encourage our students to enter the BYU competition.
Best,
Paul
Rita McGrath and Ian MacMillan have also written about a “discovery-driven” planning process: http://en.wikipedia.org/wiki/Discovery_driven_planning
Chuck,
Completely agree. I used their book as an inspiration for customer discovery.
I reference their work in the books section.
Steve
Steve- as a part of your course, you should require that each team (or person) use a FlipVideo to capture the salient interactions, challenges, guesses, Pivots, and chasm crossing moments of the event. It will make for a great dvd.
Your’s and Alex’s books are going to obviate traditional MBAs…! Thanks for your generosity in helping the next generation more agile in business…customers first…who’d have thought.
Cheers
Keith
Great Post as always Steve. Combination of both Canvas and Customer Development looks agile framework to search distinctive & repeatable business model to me.
Thanks for sharing.
Chandran
I am incredibly thrilled to submit a model for the BMC in January. In fact, this competition could not coincide better with my own plans and ambitions, and will act as an excellent goal/milestone in my personal quest to launch a new venture.
More important than me, however, is that you make your class materials for E-245 available for the public, hopefully including lectures. I believe that it would be an incredibly valuable resource and would have the potential to truly kick-start the Durant School of Entrepreneurship.
Lesson Learned:
– You can create a business model in education and it can come to light.
– Passion and persistence pays off
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