Over the past three decades, as the idea of entrepreneurship as the primary source of innovation and job creation has taken hold, efforts related to entrepreneurship education have exploded into a full-blown industry. Public and private incubators have sprung up everywhere; courses, degree programs, and training centers have proliferated across the entire spectrum of higher education, from community colleges to research universities. Government efforts to boost new business formation, small business growth, and financing have gone in and out of fashion and effectiveness. Most recently, accelerators for start-ups have expanded rapidly across the country.
Everyone, it seems, has their own idea of how entrepreneurs can be trained and assisted—if, that is, they can even agree on whether entrepreneurs are “born or made.” In the interest of full disclosure, the Kauffman Foundation has supported many of these efforts, including the expansion of entrepreneurship education on university campuses. Yet, at the same as we have all been pursuing learning for entrepreneurs, it isn’t clear that we have reaped much learning as to what exactly constitutes good or effective entrepreneurship education. Part of the reason for the continued proliferation of different methods is that no one really knows what works or doesn’t.
Now, in some ways this stems from the nature of entrepreneurship itself—it is a slippery phenomenon and each entrepreneurial story differs one to the next. One would expect, however, that there are some common elements or practices that might be generalizable.
This, in fact, is precisely what entrepreneur Eric Ries argues in his outstanding new book, The Lean Startup. Ries, who is now an Entrepreneur-in-Residence at Harvard Business School and authors the blog, “Startup Lessons Learned,” makes the case that everything we thought we knew about teaching entrepreneurship and advising start-ups is mostly incorrect because the management models we use are inadequate.
Entrepreneurship, Ries argues, is absolutely a form of management, but it is dramatically different from the management practiced in large companies. Startups operate under conditions of extreme uncertainty—they don’t know who their customers are, what their customers want, what the correct product-market fit might be, or what their “engine of growth” looks like. All of this must be learned, and because such learning is what characterizes a start-up, traditional tools such as business plans and what Ries calls “vanity metrics” are wholly inapplicable to building a successful startup. The basic problem with how we currently approach entrepreneurship education is “the allure of a good plan, a solid strategy, and thorough market research.”
Readers may recognize parallels with the ideas of entrepreneurship guru Steve Blank, who describes start-ups as temporary vehicles designed to search for a scalable business model. Ries’ premise about uncertainty as the defining influence on entrepreneurs also echoes the work of Amar Bhide and his foundational book, The Origin and Evolution of New Businesses.
But the unique contribution of Ries is the blending of his start-up experience with the “lean manufacturing” model pioneered by Toyota. Hence, the lean start-up, in which learning is the ultimate goal: learning about your customer, your product, your sector, and what business model will allow your company to scale.
The essence of the lean start-up idea is the Build-Measure-Learn feedback loop. The idea is for a start-up to build a “minimum viable product” as quickly as possible, test it with potential customers, rigorously measure the results, learn from the experience, and return to building the product. Iteration and experimentation are the methods, learning is the goal, and speed is the essential attribute: “What matters is how fast we can get through the entire loop.”
Ries even devotes a good chunk of the book to explaining how the Lean Startup is applicable to the pursuit of innovation within large, established organizations. New product innovation inside these companies is also characterized by extreme uncertainty and so needs to be treated as such, making it amenable to the methods Ries discusses.
Will the Lean Startup endure? Or is it destined to enjoy its 15 minutes of fame and fall into the dustbin of entrepreneurship education? It is, obviously, impossible to know, and it remains to be seen how well the Lean Startup applies outside software development and new companies. But my money says this is far more than a fad. The reason is not necessarily the specific regimen that Ries outlines—it’s hard to argue with the idea that learning is the essential mission of a start-up effort in any setting. The Lean Startup will endure because of the premise from which Ries is starting—our existing models of management are wholly inapplicable to what our economy desperately needs, which is innovation, new ideas and scalable businesses.
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