— Forget Ideas; Focus on Competence —
A Near-Death Experience
Last year a local college asked me to teach a weeklong workshop on the fundamentals of entrepreneurship. The college, which does not offer business courses, recognized that in today’s job market all students must become more entrepreneurial, so it was starting an extracurricular entrepreneurship education program. As a long-time believer that entrepreneurship instruction should be open to students in every discipline, I was delighted to accept the offer.
Nine successful entrepreneurs, all alumni of the college, joined our workshop as guest speakers. They told wonderful stories of starting and growing diverse businesses, including an onion farm, a manufacturer of cosmetics for women of color, a music store specializing in drums and imported rhythm instruments, a GPS-related smartphone application developer, a biotechnology firm, and a financial services company, among others.
Listening to their stories, I was struck by two common themes — themes that directly contradict the philosophy that underpins most college entrepreneurship education programs. At that moment, I became convinced that the traditional approach to entrepreneurship education is dead.
Two Entrepreneurship Myths
Of all the ventures the alumni described, not a single one was based on a startlingly clever or original idea. Rather, the founders started their businesses based on strong competencies, such as agricultural experience, chemical formulation, computer programming, musicianship, and accounting. In short, the bedrocks of their ventures were not ideas per se — they were competencies.
Second, with the exception of the biotechnology firm, none of these ventures used professional investors at the outset. All were built with sweat equity and funding from the “3Fs” — founders, friends, and family.
In short, the founders’ experiences contradicted two pervasive myths of entrepreneurship: that new ventures are based primarily on clever ideas, and that new ventures require professional investment.
Business Plan Contests: The Nail in the Coffin of Entrepreneurship Education
Yet the college’s new entrepreneurship program followed the workshop with a business plan contest whereby participants would 1) come up with venture ideas, and 2) compete for investment funds. Somehow I was unable to imagine participants dazzling contest judges by shouting, “We’re going to start an onion farm!”
Granted, the business plan contest offers certain advantages. It’s a series of discrete, teachable activities. It contains elements of excitement and suspense that some students find attractive. And as a PR bonus to the hosting institution, it can be promoted to alumni and the surrounding community.
But in terms of real learning, such contests serve students poorly. First, they propagate three myths of entrepreneurship: 1) new ventures are based on clever ideas, 2) new ventures require professional investment, and 3) competence is secondary as long as the “idea” is brilliant.
Second, entrepreneurship demands taking risks. Yet business plan contest participants assume little real risk, other than enduring pre-presentation nerves and possibly suffering a bit of ego-bruising from straight-talking judges.
Venture Capitalists Agree, College Students Don’t
Some months after my workshop, the college’s entrepreneurship director returned from an out-of-state tour with contest participants. His group had presented business plans to a number of venture capitalists. He seemed puzzled by their reactions, which boiled down to: “Ideas and plans are secondary. What are you and your team good at? What can you do really well?” In short, even the venture capitalists agreed that competence, not ideas, underpins new ventures.
Where do college students — and the institutions that teach them — get the notion that entrepreneurship is based on ideas rather than competence? Maybe it’s the technological cleverness of social media applications (that serve trivial or manufactured customer needs). Maybe it’s from viewing the apparent ease with which twenty-something whiz kids start ventures (while failing to recognize that the average technology venture founder is around 40 years old, and that even Mark Zuckerberg accumulated thousands of hours of computer programming experience before launching Facebook).
Three Horrible Truths About Entrepreneurship
Horrible Truth #1 is that entrepreneurship is underpinned by competence rather than ideas. Horrible Truth #2 is that competence generally requires thousands of hours (or more) of practice and experience. Accordingly, Horrible Truth #3 is that the best training for aspiring entrepreneurs is simply to gain competence in a specific area: engineering, design, accounting, teaching, medical research, or whatever interests the student.
This suggests that entrepreneurship training should move directly into subject fields — and away from business schools. To be sure, most business schools have little to teach students about entrepreneurship. Their curriculums are designed for managers working in large, established firms with proven business models. This is the opposite of entrepreneurship, where tiny, fragile teams struggle to find viable business models, as Steve Blank has eloquently pointed out.
How Can Entrepreneurship Be Taught?
If sector-specific competency is the main requirement for entrepreneurship, what’s left to teach? Let me suggest three areas outside the scope of traditional curriculums, but deeply intertwined with starting new enterprises:
1. Design Thinking
Design thinking is an approach to defining and solving problems on behalf of users or customers. Though traditionally associated with art, architecture, industrial design, and similar fields, it is eminently applicable to enterprise-starting. Anyone who works for a living can benefit from mastering design thinking basics.
2. Business Modeling
Call it “organizational modeling” or “enterprise modeling” if you like — it applies equally to for-profit, non-profit, and government organizations. It simply means describing the logic of how organizations create and deliver value to their customers. It’s like Business 101 and Finance 101 combined for liberal arts majors, but way more fun and interesting.
3. Presentation Skills
By this, I don’t mean formal pitches and speeches — most professionals give few of these during a lifetime of work. Rather, I mean the fundamental competence of speaking clearly, logically, and extemporaneously in meetings and interactions with employees, partners, vendors, prospects, and customers. These situations account for 99% of work-related “presentations.”
4. Professional Writing
Again, I don’t mean business plans, press releases, or blog posts. Far more basic is the ability to write clear, concise correspondence, instructions, guidelines, and reports addressed to employees, partners, vendors, prospects, and customers. Such communications account for the overwhelming majority of work-related writing tasks.
The good news is that training in these four areas will benefit every student, regardless of whether they start a new venture. Traditional entrepreneurship education may be dead. But a more enlightened path toward a more enlightened model of entrepreneurship is clear: Forget ideas; focus on competence.
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Tim Clark spent thousands of hours learning to read, write, and speak Japanese. After growing and selling a venture based on that competency, he spent several thousand hours on Business Model You, his latest enterprise. He is a former professor of business and an entrepreneurship instructor certified under Steve Blank’s NEXT program.