The craft of entrepreneurship.

Entrepreneurship as Management Science.

Entrepreneurship, at it's basic level, is filling an unmet demand in the market place. Most people at some point have had an idea for a service or product that fills an unmet need. Yet having the idea, researching the idea, or even writing about the idea in the form of a business plan does not actually move the entreprenuer closer to physically filling this unment need. At best, it reinforces that the idea may have merit. At worst, it is simply confirmation bias - a false positive. No amount of thinking and writing converts to knowing.

Thankfully science has defined a method for organizing one's action as a means of converting thoughts into knowledge: the scientific method. Think about it: a business idea is a set of unproven hypotheses about the existence of demand in the market and that your solution fills it.

Current startup methods lack experimental design

Hypothesis testing is nothing new in StartupLand. Eric Ries and Steve Blank have made the term nearly ubiquitous. But if everyone is talking about hypothesis testing, why are startups failing at an alarming rate? The reason: calling it an experiment doesn't make it scientific. In order to be successful, an entrepreneuer must be able to command the relationship between independent variables and dependent variables, the common methods for controlling variance, and be able run experiments cheaply. In other words, they have to know the basic building blocks of science as a means of organizing their actions.

If the science of entrepeneurship is designing experiments, the art is adapting it to real life - in the maelstrom of uncertainty and resource-scarcity. It takes discipline to slow down and know whether a metric should be classified as independent, dependent, control or vanity.

Teaching experimental design to entrepreneurs

How difficult is it to teach experimental design? Not hard.

Evidence suggests that undergraduates can pick it up in 6 weeks or less. Experimental Design cannot be taught with high fidelity in the vacuum of a lecture hall - its principles must be lived by the students. By analogy, drawing a car on a whiteboard does not make someone a qualified driver. The same is true for entrepreneurship: in order to create entrepreneurs, they must be engaging in entrepreneurship.

Creating and managing the low-risk conditions to train entrepreneurs is also not difficult. StartupLand has produced a replicable mechanism for creating these conditions at will: the incubator/accelerator model. Unfortunately, research comparing incubated/accelerated firms to their "normal" counterparts shows that despite a boost in revenues and employees, long-term survival rates for graduates are actually lower.

The design flaw in current accelerator models

Despite their command of the conditions and the best of intentions, incubator/accelerator programs are not designed to train life-long entrepreneurial leaders. They are designed to profit from them. Not maliciously, but if the core goal was to create principled, life-long entrepreneurial leaders then they'd be structured differently. Given the data, the great tragedy of the accelerator boom over the last 5 years is that so many founders have been through the crucible and were heavily incentivized to produce results before learning the underlying mechanisms. After thousands of companies, we as an industry do not have a better understanding of the entrepreneurial process.

We can (and should) do better

There's a huge opportunity to train the next generation of entrepreneurs, cheaply and at scale. This goes beyond the existing startup conversation because it's not creating a framework for thinking like an entrepreneur. It is a crucible for forging entrepreneurial leaders using the experience of starting a company - engaging with people with the unsolved problem - as the context by which the principles of entrepreneurship and experimental design are taught. These are part of the things that I am working on at Frequency Group as this also pertains to corporate innovation.

A word on failure

My experience is that entrepreneurs really start coming into their own on their third idea. That means they need to fail cheaply enough on the first two, in order to get to the idea that really makes an impact. Imagine the impact we are missing out on from individuals that went all-in on their first idea and couldn't recover - financially and emotionally - to try again. Given that half of the adult population attempts self-employment at least once in their lives, the volume of missed impact is staggering. Training entrepreneurship as management science is our hope for benefitting from society-shifting impact by keeping more people engaged after their first idea inevitably crashes.

We have a moral - and fiduciary - responsibility to the generations that will follow to bring as many principled, disciplined leaders to the table as possible. The problems themselves are hard enough to solve, let's not keep the problem-solving methods unnecessarily so.