Day 1 for EW/FTMBAs. Days 1-2 for Undergraduates

Learning Objectives:

  1. Prepare learners for the shock of what is to come in Entrepreneurship
  2. Set expectations from them for the short duration of this course
  3. Familiarize them with the Rapid Innovation Cycle (RIC)
  4. Familiarize learners with interactive class format
  5. Show them the power of a prototype via the RIC process, to generate insightful market feedback–executed in class

Key Results:

  1. Everyone is familiar with RIC process
  2. Students are empowered to submit a wide array of prototypes with varying fidelity based on their perceived value
  3. End class on time

Teaching Team Perspective:

The first day of class is a lot of fun, because we get to meet the future leaders of tomorrow and challenge them to take the plunge into entrepreneurship via Hands-on Rapid Prototyping. However, for a vast set of students, many are attracted to the “appeal” of entrepreneurship, made “sexy” by popular Silicon Valley media yet aren’t truly prepared to embark on that path. University settings can be wonderful and low-risk settings to decide if you truly want to become an entrepreneur. Therefore, I see it as the job of the teaching team to set expectations up front, establish there’s a lot of work to do in this class, yet to fully persuade them that the work is not busy work. Rather, it is truly entrepreneurial activities which will differentiate them from other students who attempt to learn about entrepreneurship through a book or case study.

Once expectations are set and they get a taste of what type of work we do in this class, we immediately get them executing the Rapid Innovation Cycle (RIC).

The RIC is composed of four steps / phases and is an iterative process of experimentation via the use of prototypes. The four phases include:

  1. Opportunity Recognition
  2. Solution Selection
  3. Market Experimentation
  4. Experimental Results

Not unlike many other popular innovation methods:

  1. Lean Startup: “Build Test Learn” – Eric Ries (2011)
  2. Innovation as a Learning Process – Beckman & Barry (2007)
  3. Business Model Canvas – Osterwalder (2012?)

The RIC was aimed at pushing business students out of the classroom, building tech prototypes without the perceived need of “technical co-founders” to help them build out their businesses.

Rather, empower them to build their own prototypes, mockups and “test out” the business potential and have a much more compelling story to tell potential technical co-founders (as every software entrepreneur we know gets bombarded with requests from “idea people” asking them to build the “next big thing”).

But the stretching of the business student mind outside of case-study land and into “hands-on” is a little intimidating on one’s own. Thus we hold an in-class activity where students form teams (typically whomever they’re sitting next to at their tables) and we walk them through the RIC process using nothing else except their brains and some basic prototyping materials we have at the back of the classroom in the Innovation Lab at U.C. Berkeley.

OPPORTUNITY RECOGNITION

We help illustrate that idea generation is not hard. That “problems are opportunities” and that whomever “complains in their life” is now going to be their best friend as a “source of new ideas and problems to solve”.

Thus in teams, they brainstorm the problems within a particular industry. At the time of this writing, the students are exploring the problems with the “Job Search Process” and as many of you who are reading this can likely attest, finding a job can be a terrible sh&$ show and an unbalanced waste of time for many stakeholders. We’ve also explored many other relevant topics:

  1. Privacy
  2. Transportation
  3. Education
  4. Health
  5. Social Media
  6. Consumer goods
  7. Sustainability / Energy
  8. etc.

Thus, to the best of our ability, we coach the teams to focus “just on the problems in this domain” and use “brainstorming best practices” during their brainstorming phases. In general they are:

  1. Quantity over quality.
  2. No criticism at this stage. “Yes and…” phrases
  3. Elect a scribe / note taker
  4. Elect a facilitator – someone who can prompt the group with questions and other ways to think about the challenge at hand, encourage shy folks to speak up.
  5. Time constrain your brainstorming
  6. Be creative, wacky and fun. You want this to be an engaging process and a safe space for the sharing of often vulnerable ideas coming from people fearful of looking “dumb”. The only “dumb idea” is the one not stated during the brainstorming phase.

Here are some other references for you to review best practices brainstorming (short, long)

We push the teams to have at least 20x problems…or 5-10x problems / teammate present for the exercise. This is for several reasons, but to keep this short, you want to have a lot of problems to choose from as you’ll be filtering later down in the RIC process based on many constraints.

SOLUTION SELECTION

Now that the teams have a bunch of problems…now they need to filter down based on their ability to craft a solution to the chosen problem. Obviously, it’s likely good to filter down to the biggest opportunity problems out there that were uncovered…but there’s a whole host of reasons why someone might choose one problem to solve over another. From a business perspective, we believe this typically boils down to the market size: # of people who have this problem that can be reached AND / OR # of dollars to be captured by solving the problem. In less time constrained activities, we encourage the use of Analytic Hierarchy Processes or other weighted decision trees to help narrow down choices methodically and meritocratic-ally.

But often times the biggest constraint is the team…their lacking of skillsets, knowhow, connections, etc. and thus many solutions go out the window in this class because their solutions need to be buildable / executable by the teammates that day. Therefore, the glorious solution that looks and feels like “Lyft” probably won’t be built in 15 minutes…however, a rough prototype or a mockup of the experience of using such an app IS possible…thus it’s simply how open-minded the team is at defining a prototype. In this exercise, we want them to intrinsically discover “prototype fidelity” through this process…recognizing that the needed fidelity is relative to the time, money and other resources available. And sometimes, high fidelity is not needed to answer the questions at hand and is wasted time, money and resources making the prototype of the highest fidelity. We also push a concept called Return on Experiment (RoE) in their homeworks whereby the fidelity built in is a strong influencer on their RoE. Whether it shows up in the numerator / denominator of that equation is largely based on the cleverness and experience of the prototype strategist. Making good assumptions about the market, the question(s) being asked by the prototype and so forth.

So after all this discussion about the selected problem…now the teams are required to generate solutions. Using the same brainstorming methods as above…creating 5-10x potential solutions / teammate to the problem being tackled. This is because not all solutions are created equal. Some truly solve the problem. Others are a band aid. Others simply are not feasible. Thus using Analytic Hierarchy Processes or Weighted Decision Trees / Matrices can help the best solutions rise to the top of a highly constrained team.

Keep in mind that the students only have approximately 1 hour in total to go through this entire process.

MARKET EXPERIMENT

Once the problem has been chosen and a potential solution has been identified (one which strategically leverages or considers the massive constraints being placed on the teams), it’s time to roll up their sleeves and build the darn prototype. No more powerpoint decks to talk about “what we would build is…”. No more “oh we’re going to find someone in the Engineering school to build this for us”. No. You…yes you…the business school student will be building the prototypes yourself / yourselves. It will be up to you to figure out what you can build with the resources at your disposal. And you’ll have to find a way to contain–or better, eliminate–that ego and fear of failure as you go through the prototyping process as you are bound to “fail”. And this is a good point to simply say, that we define failure in this class as “lack of execution” or “inability to attempt”. You fail in our class when you DO NOT build prototypes that fail, when you DO NOT share your low-fidelity prototype to a target customer / stakeholder. You fail when you simply believe “oh, this is just a prototype, I can’t show this to someone…it’s just not ready yet”. With this attitude it will never be ready and you’ll miss out on one of the most fun–although sometimes challenging–aspects of life…building things that are new that real people might use. You have to get beyond this place because the best ideas come only AFTER you’ve failed a few hundred times and by that point, you’re also getting pretty darn good at executing. And your next challenge will be, “which ideas do I pursue next because I can build anything…but I don’t have infinite amount of time…so I still have to choose”.

In this class, we ask students to execute “office hacking”. Basically build their prototype with what they might find in a supplies closet at a modern company. Tape, pencils, staplers, paper, etc. Luckily the Innovation Lab has a virtual “office supplies cabinet” in the back of the room and all is at play…at least, all that the students can dream up. In this class we’ve seen many prototypes of the following flavors:

  1. Skits
  2. Web-app prototypes
  3. Service experiences
  4. Cardboard hardware prototypes and
  5. Many others.

Their market experiments are really a “prototype” which is implicitly asking a question to their target “audience” which is their fellow classmates (which arguably is not likely their target audience…but they are individuals with agency and we give them “investment rights” by handing out post-its which represent $10K investment in the concept they believe is most likely to succeed).

Then we move on to Experimental Results

EXPERIMENTAL RESULTS

The goal here is to ideally get data-driven insights based on the audience feedback. Which concept won? Which concept lost? Why? Can they suss out why one solution won over the others? Was the individual or team performance what sold the audience? What is the product itself? These are all good questions which students need to understand as they’ll be left with the same questions in the entrepreneurial / business world.

  1. Was our prototype of sufficient fidelity?
  2. Did the customer understand our solution?
  3. Did the customer “pay” for our solution? If so, how much and in what form of currency?
  4. What is our next move?

At this point, the class is wrapping up, students are placing their $10K bets on various student teams / product names and it’s very insightful to see how various concepts play out. Sometimes, students run with these project themes throughout the rest of the class because they’re so excited with the results and the engagement provided by the exercise. Fine by the teaching team…but as they later discover is that your first idea is typically never your best idea. And thus, betting the farm on the first horse you ever race is probably not going to be your best.

Sussing out the right business opportunities is a hard process. If we had the perfect answer for students…we probably wouldn’t be writing blog posts like this and rather, sitting at the top of some tall sky rise in some glorious city contemplating what we’d do with our billions of dollars.

However, many billionaires and others who engage in the world of startup ventures agree with the above methodology described. Brad Feld, Sara Blakely and other successful folks describe very similar processes in their roads to success. Experimental, iterative, customer-focused and a relentless pursuit of success AND truth of their market opportunity.

Most don’t like to admit that “luck” is part of the process but it is. That being said, we do agree with experts in this field that “we do make our own luck”. One person sees an opportunity that another doesn’t. Two folks might see an opportunity at the same time, but one is more prepared and the other loses out. This is life and we’re preparing Haas students to deal with the ambiguity and challenges of making tough business decisions and to deal maturely with the often times, unfortunate consequences of reality. Doing that in the classroom is far better than in the real world.