Fat startup: Learn the lessons of my failed Lean Startup — Word Sting.by John Finneran, CFA principal of Word Sting
I wanted to comment on the post linked above, because 1) I am working a bit with the “lean startup” model with student project groups, and 2) I am always a bit skeptical of “flavor of the day” business jargon. I found it interesting that this was posted online shortly after the Harvard Business Review published “Why the Lean Start-Up Changes Everything” by Steve Blank. This release, in the May 2013 HBR, heralds the alleged “entry” of the lean startup concept into “mainstream” business concepts. While the two posts aren’t directly relevant, John Finneran’s brief description of his own experience in attempting to “implement” lean startup seems instructive at one level–even if “lean” is the right way to go, it might not be easy to do it “right.” It isn’t clear how much of the story might be due to incorrect implementation of the concepts, or whether the concepts are not broadly applicable to all situations. In my own brief experience, I hesitated to fully embrace the full lean startup methodology due to my own concerns along those very lines.
On the other hand, I chose to use the concepts in exactly the same context that Steve Blank implemented them–working with university students who are engaged with “first time” startup efforts. These students are engaged in learning activities, and not primarily in the startup activity (regardless of the rhetoric around the subject). I found the business model canvas and the very slick exciting MOOC of Lean Launchpad to be useful tools for students with little or no experience in business research. In doing so, I hoped to leverage the fame and popularity of “startup party” mentality, hoping this would be motivating to students. I also found this to be an efficient direction, since I don’t have a burning desire to set up my own “school” of thought on the subject. However, I am nothing if not practical, and for me, this model is just one way to have a standard methodology for asking the right questions.
In our student team projects (exploring real-world application of ideas to develop new products or new businesses) there are fewer of the downsides expressed in the “Fat Startup” article. The “potential clients” who are contacted understand that the “startup” is really part of a class project. The students, no matter how serious they are about moving forward with the new venture, still expect a ‘grade’ for their final efforts. For many of the projects, the effort is being made too early for real “customer” interactions. These students are doing research, and there is no doubt about it. In fact, my expectation is that the majority of the projects will result in “failed” experiments. I try to prepare the students for this by telling them so–but I also tell them they will learn very valuable and practical lessons that they can use when they later find the right path to a startup (or development of a new product).
These projects offer a form of “real world” experience, but maybe not so “real” as that. The reality is in the tasks, but not in the context. The so-called enterprise may be little more than a group composed of college friends and roommates. They generally fit this activity into their overcrowded calendars in the same way they might do for fraternity or sorority functions (whether service or social). I can suggest that they use the Lean Startup methodology for their projects since I find it has some solid elements of logic, but I’m not concerned they will rely on this effort to support themselves (or any dependents). And they aren’t in a position to make promises to customers, just take suggestions and see if they can find a path that looks promising…but they really are planning a future journey. Their project might involve “getting to the station” as their first “step” and they still have the option to take another train (or even consider an entirely different mode of travel, maybe a boat).
Don’t get me wrong–I wouldn’t suggest the model to my students if I didn’t find it valuable. I just want them to use their own judgement, and learn how to THINK before they make decisions. This includes the decision on whether, or not, to rely on something like the “lean startup” concept for taking that leap into the deep (and muddy) waters of entrepreneurship. University faculty are in much the same position as students, and they are being given direction to use the lean startup model in their own new ventures (for example, NSF Innovation Corps (I-Corps)). I feel this might be useful with some faculty, those who can truly put themselves back into “student” mode for the purposes of learning a subject (business or entrepreneurship) of which they can comfortable admit ignorance. It might not be applicable to all new ventures or to all faculty entrepreneurs.
The moral of the story? Just be careful about jumping on passing bandwagons.
Both of these short “editorial” pieces ask an interesting and somewhat philosophical question about the role of the university in student “entrepreneurship.” The linked articles (by Nicholas Thompson, editor at Newyorker. com and Stanford alum) question some of the more “intense” levels of involvement that many universities are embracing, with schools like Stanford as our role models. Now, I’ve always tried to resist using “what Stanford does” as a yardstick–I even included a nice little slide in one of my presentations, showing little lemmings jumping off a cliff with a cartoon balloon from one shouting as it fell “…well, Stanford does it!” But the urge to follow their lead is almost irresistible.
At its heart, this is nothing more than a bit of “peer pressure” since every university is looking to establish a reputation–presumably a “good one” too–showing how their own activity reflects the “best” new practices. In some cases, it may be near impossible to replicate these practices (we’re no Silicon Valley) so at least that provides some protection from following all the yellow brick roads “we” see. It’s easy though, to wish your own institutions of higher education could collect all the accolades that a school like Stanford receives.
After some reflection, I realized that the piece reminds me a bit of the book I’m reading” (audiobook format as usual these days, so “listening to” is more precise) “Antifragile” by Nassim Nicholas Taleb (click here for his website and here for the Amazon link to the book–note I am not an Amazon affiliate, just being helpful). Now, that is a bit of a leap, but I tend to think that way, so it’s not surprising if you know me very well at all!
In the book, which I confess to not having finished as yet, Nassim Taleb refers to a phenomenon he calls “lecturing birds on how to fly” and makes some very disparaging references to Havard Business school faculty (not Stanford faculty, but I’m betting he would do so if he wasn’t more centered on the east coast). In many ways, his argument is also along the lines of a sort of “chicken and egg” situation (even though chickens don’t fly). As I see it, a school like Stanford provides a lot of opportunities that “attract” very entrepreneurial students, very smart ones at that, and then the “university” manages to get those little entrepreneurial birds to fly. Many other universities then follow Stanford’s lead on how to teach their own students the Stanford way of entrepreneurship, since it has such great success.
If you look at it that way, it seems that some of the things critiqued may be simply circumstantial, and Stanford isn’t really “doing” anything except meeting some expectations of the students already there. Is this “harmful” to Stanford in some way, as Mr. Thompson is pointing out? Perhaps, but it may be more true to say that Stanford is being given credit for ‘causal’ influence that isn’t there. In some cases, maybe there is also a negative impact on students (or more precisely, on their education). Certainly, I think it’s a good idea to ask the questions…but is someone going to try to find an answer? Regardless, it serves as one more example for me to use when people try to propose the next “me too” model for my own programs or projects.
This is hard to resist–who among us doesn’t feel the need for validation that takes the form “well, I found out that X is doing things this way”? As happened regularly, I was once contacted by a colleague at another university (no names), who was engaged in a contract negotiation with a company. The company had cited my own university as an example of a peer who had “agreed to these terms” so she called me to confirm. One of the reasons she did so was that the terms seemed to be “less desirable” and she seemed to suspect the company was not telling the entire truth. Now, at this point, I didn’t want to get into exactly what my organization had (or had not) agreed to, since there were too many complicating issues to explain. But I did give her one piece of advice that seemed to help. I told her, “Just go back with–even if “University X” agreed to those terms, that’s not a good reason for us to agree.” As I explained, there might BE good reasons for her to accept those terms, but the company needed to work through those specific reasons with her–not just “by reference” insist that since another university agreed, it was OK.
Otherwise, I am continuing to “read” the Taleb book, and I hope that there are some more interesting issues raised. As I understand, Nassim Taleb is nothing if not interesting, and I’m looking forward to learning more about some of his insights on innovation.
This article argues that perhaps “we” (as in, the administrations of universities, and the government) are trying too hard to push research commercialization.The argument is primarily against special spending for programs and financial incentives to faculty encouraging them to pursue technology transfer. It is an interesting take on the question of university technology transfer…and I admit, I’m more than a little sympathetic to the views expressed. Which is unfortunate for me, since there are some who feel that my current role within the university is to find ways to “increase” commercialization levels on our campus.
Granted, I don’t consider this to be the essential role I play in this regard, but others would consider it a “failure” on my part if some metrics related to commercialization don’t “increase.” I tend to take a more balanced approach. I don’t want to “increase” commercialization, per se. I am working to reduce or remove roadblocks to commercialization when there is a good opportunity to take some research findings to market. There may be unnecessary difficulties–generally caused by either lack of experience on the part of faculty or administrative or financial issues that limit the perceived upside to pursuit of commercialization. The article does a good job outlining the failure of “additional” incentives, and points out that the natural incentives exist for those cases where there is a big payoff–and as I often point out to faculty, those tend to be commercialized in spite of so-called barriers to the process. Most faculty aren’t overly influenced by the money argument anyway, although it falls under the category of “great if it happens.”
I’m not sure the article does justice to another aspect of the problem however. There are instances where there is a clear benefit to taking the research outcomes and making them available in the “real world” but there is not a clear “profit motive” to do so. Faculty may be very interested in seeing the results of their work applied and in being part of the effort to make this happen. They are doing research ostensibly to help “solve” problems in many cases. Often, this leads to a lot of confusion as to how the university might proceed. There a quite a few options to consider, such as:
- Publish the results and make them “freely available.”
- Pursue some kind of “open innovation” strategy that includes a level of intellectual property protection (such as open source licenses for software).
- Try to pursue commercialization through entrepreneurship, which may not include licensing of intellectual property.
- Pretty much do nothing but sometimes think about it, etc.
All of the options while somewhat straightforward can lead to paralysis by analysis and other common forms of deadlock. Especially if the people involved (the research team) are inexperienced and unfamiliar with the process. The researchers have a goal that is consistent with technology transfer and licensing, but without all of the pieces coming together properly.
For example, their response may be to publish, but this winds up being unsatisfactory because there is no clear transfer of an idea into use. If there is a decision to hold off publishing, it may be that there is a naive belief that they will be able to enter into a commercialization relationship, and if they can’t it wouldn’t be fair if “someone else” got to make money off of the “idea” from the university. Conversely, potential partners may be confused as well, if there is not a clear IP position that can be evaluated so they can make a decision to “license or not license.” There may be some strategies that the faculty can pursue in these cases, but as the article in Business Week points out, adding incentives doesn’t solve them.
The article further references an earlier publication, by Richard Jensen of Notre Dame and Marie and Jerry Thursby of Georgia Tech titled “Disclosure and licensing of university inventions: ‘The best we can do with the s**t we get to work with.’” (click here for this paper). The Businessweek article notes the following (emphasis added):
The title, taken from a comment made by one of the licensing officers, sums up what happens when you give universities an incentive to commercialize additional faculty inventions but you can’t do anything to improve the quality of the inventions themselves.
Now, you can perhaps characterize those situations that I refer to above in this way–the “inventions” are not of proper “quality” to license. As a licensing manager, I can help faculty work through the problems and see if there really is a diamond in the rough, but we can’t make a diamond out of a piece of coal. But notice, a piece of coal can still be worth something. And it can still be important to someone, even if there is no clear-cut way to “commercialization” for that.
There are incentives for most licensing offices to work ONLY with faculty who have the “quality inventions” and no incentives for those same licensing officers to find a way to “work with” the so-call “s**t” as it were (note, I don’t approve of a licensing office using that attitude when referring to an invention disclosure–although I can feel a bit of empathy). So perhaps there is some room for universities to take some steps to encourage efforts at commercialization, and some of this may be in the form of incentives (although perhaps changes to incentives for licensing staff, not the faculty).
The moral of the story is that incentives aren’t necessarily the best answer in all situations, and as they say…be careful what you ask for because you just might get it.