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The real essence of entrepreneurship education
Avoiding "entrepreneurship theater" by focusing on collaborative innovation
Lean startup evangelist Steve Blank uses the term “innovation theater” to describe why many corporate innovation efforts flop. The theaters have all the decorations of an innovative environment without any real innovation. The myth is that activities such as design thinking courses, innovation workshops, hackathons, and the like, will allow innovation to appear magically. Blank concludes it is just a theater act.
Like it or not, there is a similar process happening with entrepreneurship education. Perhaps the high failure rate of startups, often touted at 75%, should serve as a warning sign that what is done does not work. Further, a study in 2017 analyzed over 3,500 startups across four countries and found that none of the commonly prescribed “essential activities” of incubators, including those nested in universities, were necessary for the successful emergence of new ventures. Walk into any university startup incubator, and one of the prominent parts of the space will be a special place to do “pitches” to venture capital investors. Seems like we have entrepreneurship theater, doesn’t it? So why does this theater persist?
First, entrepreneurship education in higher education is a big business. By the turn of the 21st Century, one study reported in the U.S., there were more than 1,600 colleges and universities offering 2,200 courses in entrepreneurship. By 2013, a Bloomberg article estimated 400,000 students had taken classes in entrepreneurship. Getting a donor to fund an “entrepreneurship” program is a natural sell, even if the program is just theater.
Second, large corporations are disrupting the historic “business education” with internal learning and development or certificate programs. The gravy train of historic university business programs is under threat. Something new and cool beyond the tired disciplines of traditional business education is emerging.
Last, there is a bit of chasing a shiny object. Business programs can often look like the cat chasing a laser pointer on the floor. If you doubt this, do a quick search on “digitalization strategy” among business schools. Sure looks a lot like a rebadging of business process re-engineering of the 1990s!
So, what’s a better approach? To start with, entrepreneurship should be seen more broadly.
A broader view of Entrepreneurship
Always the sage, Steve Blank again provides some ideas here. He defines six types of startups, or essentially six forms of innovation. Those are briefly described below, with some added perspective beyond Steve’s deep roots in the tech sector.
Lifestyle entrepreneurs. Folks that want to enjoy life and not be tied to working for someone. In my part of the world, Colorado, these folks might be freelance ski instructors or white water rafting guides. They have a passion for what they do, not for an employer.
Small business entrepreneurs. These hard-working souls start and run local restaurants or dry cleaners, ply skilled trades, or provide personal services. The goal is to feed the family, not conquer the world with some hyper-growth business to be cashed out with VC millions. We find these businesses everywhere, not just in the money-fueled innovation clusters. They are also the true backbone of our economies.
Scalers. Some business models have the potential, often driven by technology with rapidly declining unit costs, to make it big and even globally. One could even believe that a startup such as Substack (the platform used for this newsletter) fits that description. These firms often enjoy the benefit of venture capital investment. But, they are a distinct minority of innovative organizations.
Innovation farms. These companies exist to develop a product and service and later sell out to a larger, cash-rich company in need of innovation. The goal is not to build a sustainable company enduring for decades but to find a pathway toward a rich cash-out.
Large company innovators. Some larger companies do innovate and do so quite well. Economic sectors with large up-front innovation challenges, e.g. chemicals, pharma, advanced manufacturing, etc., are logical places for such innovation. A descriptor often used for such efforts is “intrapreneurship.”
Social entrepreneurs. For these organizations, the idea is to make an impact, both with the area of focus and how the enterprise is organized. Some of the very interesting developments in this area revolve around the use of cooperative forms of organizing. For example, limited cooperative associations, allowed by Colorado and California, provide an innovative structure to attract investment and allow cooperative ventures to scale beyond the limitations inherent in traditional customer or worker cooperatives.
This breadth of entrepreneurial models clearly spotlights how many entrepreneurship programs at universities are misguided.
The ritualistic and almost religious focus on “pitching” for venture capital focuses only on very few entrepreneurial types. Such misguided focus neglects the clear majority of entrepreneurial organizations. We should do better!
Chasing shiny objects in entrepreneurship theater
An interesting aside about an entrepreneurial journey came from a recent founder session hosted by the IMD Alumni Community for Entrepreneurship. The entrepreneur described the adrenaline rush from the hyped VC process of moving from seed stage to early stage, funding rounds, and the excitement of cap tables and term sheets. All of this is the stuff of very few entrepreneurial companies. Ultimately, this entrepreneur joined the majority of startups by going through the pain of being the last person who had to turn out the lights when leaving.
One could argue that focusing entrepreneurship education on VC-fueled adrenaline rushes is, at best, chasing shiny objects. At its worst, it causes the destruction of value for many aspiring and potentially successful entrepreneurs. Moving beyond this trap requires coming back to what is the core of entrepreneurship. That core should not be confused with funding. It is something far more important and profound.
The “red thread” of entrepreneurship
The “red thread” is often considered the key unifying theme of activities. In the broader entrepreneurial space, such a thread involves combining innovation with collaboration. This can be termed collaborative innovation.
“Collaborative innovation” combines the ability to innovate with capability to involve others.
Innovation without the support of others goes nowhere. Collaborating for the sake of itself is often frustrating and described as being on a sailboat without a rudder. Both are needed.
Innovation is the spark that can light a flame of advancement. Collaboration allows the spark to consistently set things aflame and harness the power of an innovative fire. Both are needed and must work synergistically.
Following the rituals of pitching as the core of entrepreneurship education will not deliver this unique synergy. Entrepreneurship education needs to move beyond just learning to grovel and pitch for scraps from the king’s table. A much more innovative and involved entrepreneurship educational approach is needed.
Changing what and how we teach in entrepreneurship
It should be clear that cap tables and term sheets are not at the core of entrepreneurship. Nor are all the activities of writing business plans, populating business model diagrams, or human resource management.
Collaboration and innovation brought together are the real core or the red thread of success. How can entrepreneurship education programs deliver on this key need?
There are some guiding lights on how to combine collaboration and innovation in entrepreneurship.
The best choice seems to be combining experiential learning with a healthy dose of metacognition (i.e., knowing how we know what we know). Two examples that stand out are the approach taken by the Team Academy, first started in Jyväskylä, Finland, in the early 1990s and since spread to multiple locations across the globe, and Kaospilots, which started in Aarhus, Denmark, over 30 years ago, and since has been replicated in several locations.
Both will be described in depth in future installments of the companion newsletter, Student360.Report. To round out the current discussion, however, a brief mention of how the key elements of each program support collaborative innovation follows.
The approach taken by Team Academy relies heavily on sharing and reflection. Dialogues called “fertilizations” take place twice a week. The sessions support students in creating their own enterprises based on shared experiences and knowledge. Rather than a sage on-the-stage lecture approach to entrepreneurship, students are tasked with self-organizing and reflection as they build their businesses. This one key aspect of Team Academy demonstrates bringing collaboration to the core of learning and building strong metacognition.
Kaospilots demonstrates a highly evolved approach to driving innovation through learning space design for collaboration. The space, called the “HIVE,” was a co-working space before co-working was known to the world. What differentiates the HIVE from most co-working ideas is that the space is designed and used in “frames” built to foster innovation. Innovation is supported by the built environment and the often unplanned interactions in an open innovation space.
The short description of these two guiding lights should lead to reconsidering how most entrepreneurship education occurs. Both programs can serve all types of the six entrepreneurial patterns described above. Their reach and benefit extend far beyond teaching students to pitch for capital when most will never be in that position.
Upcoming eductions of the Student360.Report will take a deeper dive into the components of these programs.
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