Steve Blank The Class That Changed the Way Entrepreneurship is Taught

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Story by: steve blank Steve Blank | Entrepreneurship and Innovation

This article first appeared in Poets and Quants

Revolutions begin with overturning the status quo. By the end of the 20th century, case studies and business plans for entrepreneurs had reached an evolutionary dead end. Here's why and what we did about it.

The Rise of Business Schools – Management as a Profession
The business school was founded in the first decade of the last 20 quarter of the 19th century. The country left the Civil War as a small business nation and ended the century with large national corporations (railroad, steel, oil, food, insurance, etc.). These corporate size and scale explosions created a demand for professional managers. In 1908, Harvard Business School met this need by earning a graduate degree – the Master of Business Administration. Its purpose was to educate management on best practices for running existing businesses.

The MBA Curriculum – From Fieldwork to Case Studies
When Harvard launched the MBA program, there were no college-level economics textbooks. The school used the "problem method," which emphasized field research – leaving the classroom and visiting real businesses – as an important part of the curriculum. The students observed how managers work, interviewed them and wrote down how real managers solve problems. The students then discussed these problems and solutions in class.

First case study – general shoe

In the early 1920s a new dean changed the curriculum – from an industrial orientation (steel, railways, etc.) to a functional one (marketing, operations and employment management (HR), etc.). This focus on a functional curriculum included a switch to the case method; Field work now takes second place. The case method assumes that students learn when they take part in a discussion of a theoretical situation they may face when they are a decision maker, rather than a real situation they see in the field.

By 1923, 2/3 of courses at Harvard were taught by the case method, and the pattern was established for business education for the remainder of the 20th century.

Entrepreneurship becomes a subject in business schools
While MBA programs became widespread in the first half of the 20th century, they focused on teaching the management of existing companies. There were no courses on how to start a business. Until 1947, Myles Mace taught the first entrepreneurship course "Management of New Enterprises" at Harvard Business School. Soon others were created. In 1953 Peter Drucker offered an Entrepreneurship and Innovation Class at New York University, and in 1954 Stanford's Business School "Small Business Management" offered its first Small Business course.

In 1967 the first contemporary MBA entrepreneurship courses were introduced at Stanford and NYU, and a year later Babson offered the first undergraduate entrepreneurship program. In 1970, sixteen schools offered entrepreneurship courses, and in 1971 UCLA offered the first MBA in Entrepreneurship. Entrepreneurship textbooks such as Small Business Management: Essentials of Entrepreneurship and Entrepreneurship: Playing to Win have been published. In 1985 the University of Miami hosted the first national business plan competition. By 1991 there were 57 Bachelor and 22 MBA programs. Textbooks, essays and magazine articles spread.

By the end of the 20th century, entrepreneurship education fell into two categories: 1) starting small businesses and 2) starting high-growth, scalable, high-risk startups. But both types of entrepreneurship courses were taught through case studies and taught the students how to write and execute a business plan. The curriculum for both types of courses was merely an adaptation of what business schools used to train managers to manage and run existing organizations.

The case method and business plans are the opposite of how entrepreneurs set up startups
The case method assumes that students learn when they take part in a discussion about a situation they will one day face could be confronted as a decision-making aid. Manufacturer. But the case method is the opposite of how entrepreneurs start a startup. Cases teaches pattern recognition tools for static patterns – and has limited value as a tool for teaching entrepreneurship. Analyzing a case in the classroom, away from the reality of a new business, does little to prepare an entrepreneur for the chaos, uncertainty, and conflicting customer reactions that all entrepreneurs face.

Business plans assume that building a startup is a series of predictable steps that require executing a plan that assumes a number of known facts: known customers, known characteristics, known prices, known sales channel. As a serial entrepreneur turned educator, that didn't make sense to me. None of this is really known in a new company. The reality is that most business plans do not survive the first customer contact.

Neither cases nor business plans replicate the actual startup experience. Events and plans are useful for teaching process managers, not founders. Founders of startups (and startups within existing companies) are looking for a product / market fit and a repeatable and scalable business model. Unlike execution, searching is not a predictable pattern. An entrepreneur must begin with the conviction that all of his assumptions are mere hypotheses that will undoubtedly be challenged by what he learns from customers.

But until 10 years ago, schools still taught entrepreneurs how to set up startups on the premise that they were simply smaller versions of large companies. Entrepreneurship education was trapped in the 20th century.

Entrepreneurship Curriculum for the 21st Century
At the beginning of the 21st century, after two decades and 8 startups, I retired and had time to think about how VCs are helping their startups align of business plans. I started formulating the key ideas that became a lean startup – that startups and existing companies are vastly different – companies implement business models while startups look for them. As a result, the methods for introducing products in startups were different from those in existing companies.

A decade later, I began teaching the basics of Lean, first at UC Berkeley (customer development) and then at Stanford using cases and business plans. After a few years of trying out in front of many students, I realized that the substitute for the case method wasn't better cases for startups and that the substitute for business plans wasn't writing better business plans and pitch decks to write. (I did both!). Instead, we needed a new management stack for the company formation.

I postulated that teaching "how to write a business plan" could be obsolete.

With Lean LaunchPad, we wanted to put the business plan aside and try to teach students a completely new, hands-on approach to starting a business – one that combines customer development, agile development, business models, and pivots.

Let's Teach Lean Through Experiential Learning
First, I scoured the scientific literature to find out which methods would best convey information that entrepreneurship students could understand, retain and apply in practice. There were five parts to consider:

What is the degree of ambiguity, realism and complexity of the course content?
How structured are the tasks within the class?
What experience-based techniques were used to deliver the content?
What were the educational components of the class?
How will we give feedback to the students?

For each of these parts of the course design, we had to consider where on the spectrum of directed versus experiential each of the five parts of the class would fall.

Direct guidance versus experiential teaching
I concluded that the best way to teach entrepreneurs (as opposed to managers) is to create an experiential and research-based course that has the mindset, reflexes, agility and resilience designed for those looking for a business model security in a chaotic world.

Experiential learning (also called "active learning" or "learning by doing") is designed for a high degree of complexity and realism. It's not about reading and remembering, it's about exploring problems, designing, and inventing and iterating solutions. This differs from traditional directed learning classes in which students are taught to remember facts, understand concepts, and possibly apply procedures, but not discover them on their own.

In contrast, experiential classes are designed with the theory that people learn best in an unguided or minimally guided environment in which, rather than receiving all of the essential information, students must quickly discover or construct this information themselves.

This seemed like the best way to teach entrepreneurship to me. Experience-based learning is the core of our teaching in the Lean LaunchPad / I-Corps / Hacking for X classes. The Lean LaunchPad Capstone Entrepreneurship Class, launched in 2011, was unique in that it was:

team based
according to experience
Lean-driven (hypothesis test / business model / customer development / agile engineering).

The course aimed to mimic the uncertainty all startups face when looking for a business model, while also providing an understanding of all the components of a business model, not just how to hold a pitch or demo.

The following figure illustrates the spectrum of teaching techniques and shows where our class belongs on the right.

The curriculum
We wanted to teach entrepreneurship the way you teach artists – combine theory with intensive practical practice.

This Lean LaunchPad is based on the solution stack from business model / customer development / agile development. The students start by mapping their initial assumptions (their business model). Each week they test these hypotheses with customers and partners outside of the classroom (using customer development) and then use iterative and incremental development (agile development) to create Minimal Viable Products.

The goal is to get the students out of the building to test each of the 9 parts of their business model (or mission model for Hacking for Defense students), understand which of their assumptions were wrong, and find out what they were do need to do to find product / market fit and then a validated business model.

Our goal is to get them to use the tools that help startups test their hypotheses and adjust when they learn that their original assumptions are wrong. We want them to experience erroneous assumptions not as a crisis, but as a learning event known as a pivot – an opportunity to change the model. (These problem-solving skills are not only required for use in start-ups, but are becoming increasingly important in today's increasingly complex world.)

Every week each team presents the teaching team: "We thought that, we did that, we learned that, we will do that next week."

Designing the Lean LaunchPad / I-Corps class – the "pedagogy"
While the Lean LaunchPad / I-Corps / H4X students experience what appears to them to be a practice-oriented, experiential class, it is a carefully designed illusion. In fact, it's very structured. The curriculum has been designed to provide continuous implicit guidance, structure, and repetition. This is a crucial difference between our class and an open experience class.

Guidance, Leadership and Structure
For example, students start the lesson with their own initial guidance – they believe they have an idea for a product or service (Lean LaunchPad / I-Corps) or a clear real one -World Problem (Hacking for Defense). When they come into class, students believe their goal is to validate their commercialization or deployment hypotheses. (The teaching team knows that in the course of the class, students will find that most of their original hypotheses are wrong.)

Next, the Business / Mission Model Canvas provides students with guidance, explicit guidance, and structure. First, the canvas provides a complete visual roadmap of all the hypotheses you need to test across the class. Second, the canvas aids students in targeting by visualizing what an optimal endpoint – product / market fit / mission success – would look like. Finally, the canvas provides students with a map of what they learn week in and week out through their customer discovery work.

(Can't emphasize the important role of the canvas enough. Unlike an unframed incubator or accelerator, the canvas acts as the connective tissue – the frame – that students can fall back on when they get lost or confused. It enables teaches us the theory of how to translate an idea, a need or a problem into commercial practice, piece by piece, week after week.)

Third, the customer discovery tools (videos, sample experiments, etc.) provide guidance and structure for students to work outside of the classroom. The explicit goal of 10-15 customer interviews per week, along with the requirement to create a continuous set of minimally workable products, provides metrics that track the team's progress. The obligatory consultation hours with the lecturers and the support from mentors offer additional orientation and structure.

Working memory and reflection
One of the challenges that we wanted to avoid is the overloading of the students' short-term memory. If you give minimal feedback to students and provide no structure or guidance, most of the student's experience will be forgotten. To counteract this, we have incorporated three techniques to reduce the cognitive load: regular summing up, repeating and reflecting. This enables the students to transfer their weekly experiences into long-term memory and knowledge.

Through design, we get students each week to pause, reflect, and summarize their learning (here's what we thought, what we did, what we found, and what we will do next week.) The teams present these considerations along with the specific services required for each week. These weekly presentations also provide reinforcement – students need to remember their learning from each of the previous components in the Business / Mission Model Canvas to provide context for the current week.

In addition to the weekly summaries, we give the students a week of reflection at the end of the lesson in order to synthesize, process and integrate these weekly learning outcomes. And we teach them how to turn this learning into a compelling story of their learning journey.

Ambiguity, Realism and Complexity
Ambiguity in a class means that the subject can have several correct answers. Or no correct answer at all. Finding answers to the business and mission problems, i. H. Product / Market Fit, is maximally ambiguous – there is not always a correct answer, nor does the same path lead to the same answer under different circumstances.

Realism in the classroom means how well does the classroom content fit with an actual problem in practice? Learning bookkeeping in a classroom is likely similar to doing bookkeeping in an office. However, reading case studies about startup problems in a classroom has little real-world reference and little realism.

Complexity refers to the number of things that can change and that can affect the outcome of a decision. The complexity of the learning process increases with the number of things that change.

New ventures are ambiguous, real and complex. Teaching "writing a business plan" as a method of building a startup implies low ambiguity, low realism, and low complexity when the opposite is the case. So we structured the class to model a startup; extremely ambiguous with multiple possible answers (or sometimes none at all), realism about the pressure, chaos and uncertainty of a startup, and complex in trying to understand all parts of a business model.

The upturned classroom
In the classroom we consciously forego the lecture time for interaction between students and teachers. Classes are held in an "upside down classroom". Instead of teaching basic lectures during the lecture period, we assign the core lectures, recorded as video clips, as homework.

The lecturers then supplement the video presentations with their own short lecture in the classroom on the subject of this week's business model. This enables lecturers to use the class time to review the concepts or for short presentations tailored to specific domains (e.g. hardware, life sciences, etc.).

Emotional Investment
In an experiential classroom, students need to be fully immersed in the experience and not just do what the curriculum tells them to do. Project-based learning binds and motivates students. Each team's weekly presentation in front of their peers increases student engagement (and heart rate). Nobody wants to be shown by another team.

Speed ​​and pace outside of your comfort zone
One of the goals of the course is to speak to 100 customers and partners. This may seem like an absurdly unreasonable goal, but all teams get it. Most case-based or project classes do not have time or resource constraints. Our course is purposely designed to provide maximum ambiguity while driving students to achieve exceptional results under relentless pressures and time pressures. We emphasize relentless pace and pace because we believe that learning is improved when students are given the opportunity to act outside their own perceived comfort zone.

It is our aim that the students experience what it is like to work in a real startup. Outside the classroom walls, conditions will change so quickly that your originally well-thought-out plans will become obsolete. If you can't deal with chaos and uncertainty, if you can't be inclined to act, and if you wait for someone else to tell you what to do, then your investors and competitors will make their decisions for you and you will run without Money and your company will die.

Therefore, every successful founder needs a decisive mindset that can quickly separate the decisive from the unimportant, synthesize the output and use this intelligence to create islands of order in the chaos of a startup. The course is intended to imitate this chaos and teach a bias to action.

Relentlessly direct feedback
There is one last part of our pedagogy that may seem out of place in experiential teaching – and that is the relentlessly direct model of feedback.

The class moves at breakneck speed and is designed to provide instant action in time, resource, and money constrained environments. The teaching team practices Radical Candor – personal support and direct challenge. At its core, Radical Candor is guidance and feedback that is both friendly and clear, specific and sincere, and aimed at helping the other grow.

We give the students weekly public feedback on the quality and quantity of their work in front of their fellow students. For some it is the first time that they hear “not well enough”.

Class design – summary
The design of the class was a balance between ambiguity, complexity and uncertainty with structure and learning strategies.

While this process is extremely effective, it can be painful to watch. Our natural inclination (mine, at least) is to offer specific guides and solutions. (There are a few times in class when the team may need explicit instructions, such as “It's time to spin” or “Your team needs to restart.” These should be exceptions, however.)

The genius of class design was to make the class look like it hadn't been designed.

Results
During the first decade of the Lean LaunchPad course, we trained hundreds of other teachers around the world to teach the course at their universities. Hundreds of thousands of students have now taken some form of the class and hundreds of businesses have been started.

In addition, two government funded programs have taken over the class on a large scale. The first was the I-Corps of the National Science Foundation. Errol Arkilic, then Head of Commercialization at National Science, took over the class with the words: “You developed the scientific method for startups and you use the Business Model Canvas as a laboratory notebook.” I-Corps, which is now offered at 100 universities and trained around 2,500 teams / 7,500 scientists in 100 cohorts. The National Institute of Health also teaches a version, I-Corps @ NIH, at the National Cancer Institute.

Today, this Lean LaunchPad / I-Corps curriculum is also the foundation for a number of task-oriented entrepreneurship courses – Hacking for Diplomacy, Defense, Oceans, Non-Profits, and Cities. Hacking for Defense is now taught at over 55 universities in the US, with versions of the course being offered in the UK and Australia.

The Lean LaunchPad / I-Corps curriculum was a revolutionary break with the past, but it is not the end. Countless variations have emerged over the past decade. The class we teach at Stanford has always evolved. Better versions of others will appear. And one day another revolutionary break will take us to the next level.

So:

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Source References: Steve Blank | Entrepreneurship and Innovation