Evaluating opportunities : Step 1 Purpose & Values

I finished my last post asking myself  "what are my students buying?". I have been giving that some thought over the past couple of days and would like to focus on answering that question for the undergraduate Entrepreneurship course that I am currently teaching. I know that students are "buying" a degree -  and that is part of what we "sell" as a University. But I like to think that as a university academic I am in the business of opportunity - providing students with opportunities to learn and be challenged so they can then work  in areas that fulfill their potential. So what part does this entrepreneurship course play in that? Well if starting their own business is part of why they decided to do the course, or  if they intend to work for a business that will be innovative and growing, then one of the things  they will need to do is evaluate opportunities. Indeed one of the key outcomes of this Entrepreneurship course is that students will be able to "assess and evaluate new venture opportunities, conceptually and through the preparation of an opportunity assessment".

Up until now the process for doing this in my course has been to come up with an idea and then to develop this into a Venture Summary - a short Business Plan. I have often  felt that the "evaluation" part has been a little bit short circuited in that process and have played around with better ways of doing this. What I am doing now in this course is to run through a 10 step process that I hope provides a more structured and useful process for evaluating opportunities. In the posts over the next few weeks I will run through each of these steps in a little more detail and use it as a way to reflect on what I am providing my students in this course. By the end of that time, I'll have explored what I am "selling" and can then check in with my students to see how far off the mark I am with what they have been "buying".

Step One: Purpose & Values
With any enterprise it is important to reflect on two simple question: First, what is the purpose of your enterprise? The answers are as varied as the people providing the answer. For a purely commercial venture, it could be: to make a profit, provide a living, be my own boss, gain world domination! For a social enterprise it could be:  to provide employment for my community, enable our not for profit venture to be financially sustainable, or to achieve world peace.  For many enterprises the challenge is not in stating what their purpose is, but in remembering that purpose as the enterprise grows. Purpose is like a compass, pointing the direction in which we hope to travel.  It is also an answer to the "why" question ...

So my purpose in teaching Entrepreneurship? To provide students with the opportunity to learn and be challenged, so that they can pursue opportunities to be awesome at whatever fulfills their potential.

The second question then is : what values will guide how you operate your enterprise? These values also enable you to figure out what you say yes and no to - it's not about who is right, rather what is right, according to the values that you have set in place. They give you a place to stand. If  purpose provides the compass, then values are the anchor.

The key values that guide my teaching:
- curiosity, the need to keep questioning, challenging and pushing both my students and myself
- innovation, trying new things so that the learning is relevant and real
- opportunity cost (the next best alternative) - we could all be doing something else, so this course needs to be as good as it can be so that the opportunity cost just doesn't get a look in ! (Well I am an economist after all so opportunity cost had to come in somewhere!!)

So that's Step 1: Purpose and values that set the foundation for the rest of the evaluation framework.

Next post,  Step 2: Value Creation - what value are you creating for the customer or user?

What we are buying ...

Things aren't going well for the company putting in a new heating system in our home. We have nearly finished renovating and well, the heating is just not working - and the service from the company is anything but remarkable!! They do not appear to follow  "it's the putting right that counts" approach. 

Entrepreneurship at its most basic involves having a product or service, customers who want to buy this service or product and a way for you, as the entrepreneur, to get paid. Key to doing this successfully is to remember what the customer is buying, not what you are selling. The company we are dealing with is selling radiators, a hot water cylinder,  a heat pump and installation. I am really not that interested in any of these - how they work, what their spec is, where they are made ... What I am interested in is what I am buying - a warm home. That is all we want and when my children wake up in a very cold room - I am not a happy Mum!! And so when that is happening, the part about 'getting paid' is just not happening. 

Another example - a couple of years ago we got a brand new BBQ. We were at a Home show, saw the BBQ and decided that we would splash out and  get one with a few more 'frills' than our previous one. We paid a bit more than we had intended but were happy with the purchase. Until it arrived - in a box!!! ready to be put together - by me!!! My family laughed and shook their heads. DIY is not my favourite TLA (three letter acronym).  But took their "laughter" as a challenge and spend a whole Saturday morning cursing my way through the (hopeless) instructions. They may as well have been in Chichewa!!  I did manage to build the thing with only three left over pieces  and it does still work. But it was not what I had paid for - I was buying friends round for dinner, glass of wine, steak on the BBQ - you get the picture (or maybe there is a beer in it). Anyway a missed opportunity by the guys selling to ask if perhaps I wanted to pay extra for it to be put together - something that I would have said yes to, provided the extra wasn't too outrageous - and then if it had been, well I would have been saving money that Saturday morning ! 

So just a reminder - buying the heat not the radiator, the steak not the BBQ, the hole not the drill ! 

And if I now turn the tables - what are the students I am teaching 'buying'?  Will have to come back to you on that one ...

Continuing to be relevant

I have continued to think about the concept of remarkable - what we encounter by way of products or services in our day to day lives that causes us to think "wow". And it's not always the "newest" that is remarkable. Take the RSA or the Royal Society for the Encouragement of Arts, Manufactures and Commerce (www.thersa.org). This society is over 250 years old and is perhaps even more relevant today than when it was founded by William Shipley in a coffee house in Covent Garden. He believed that social progress could be achieved through excellence and innovation across the sciences, arts, manufacturing and commerce. Today it's purpose is " 21st Century enlightenment: enriching society through ideas and action". It does this through a number of initiatives; I particularly like the RSA animates (one of which I talked about in a previous post, 19th August: Where do good ideas come from?). The RSA Animate series is a way of sharing innovative and challenging ideas through thought provoking illustrations and commentary. A wonderful example of this is on 21st Century Enlightenment that beautifully connects the original intent of the society with its purpose today: https://www.thersa.org/discover/videos/rsa-animate/2010/09/rsa-animate---21st-century-enlightenment/.

It finishes with a quote from Margaret Mead: " Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever has". I wonder what those small group of citizens meeting together at Rawthmell’s Coffee House in 1754 to found the RSA would think today if they could sit down and watch this video, in an office or home half way around the world, in a country that as yet, did not appear on their globe? Now that's when you need the Dr and his Tardis, to enjoy a bit of time travel ...

The "remarkable" Tardis and the 10th Dr (my favourite) 

Exploring the random variable and the space in between ...

One of my students provided a link to another great TED talk last week. This time it was a presentation by Shawn Achor. He talks about the "cult of the average" and shows a graph with a perfect trend line and one outlier above the curve. He then goes on to say that in courses, such as economics, we teach "how in a statistically valid way, to eliminate the weirdos, eliminate the outliers, to find the line of best fit". http://www.ted.com/talks/shawn_achor_the_happy_secret_to_better_work?And suddenly, I was back in my home discipline of economics, justifying the fact that in my PhD I wasn't dealing with a line of best fit, or indeed with equations or numbers of any sort (except of course the page!).  Rather, I was interested in the random variable at the end of the equation, where I think this most interesting area of entrepreneurship often occurs - where there has been an  "escape" from the cult of the average.

I think that entrepreneurs are able to "escape", to move beyond the normal because they see "the space in between". I discussed this in a book chapter I wrote a couple of years ago with a colleague that opened with a quote from a wonderful book by Lloyd Jones called "The Book of Fame" (2000, p.75). It is a fictionalised account of the 1905 All Black rugby tour of Great Britain where he describes the innovative style of play of the All Blacks (known as the Originals) as follows:

"how we think

The [opposition] saw a thing
we saw the space in-between
The [opposition] saw a tackler
we saw space either side
The [opposition] saw an obstacle
We saw an opportunity. " 

I think this is a wonderful way of describing entrepreneurship, of being able to see opportunities by seeing the space in-between and the space either side, of making connections and patterns that do not conform to the "line of best fit", a way of moving beyond the normal.

                                              

Audible, Seabiscuit and remarkable!

In the previous post I asked the question "what product or service have you encountered recently that is remarkable?". A clear favourite to answer that question, for me at least,  is Audible.com. I love Audible - "talking books" are a wonderful way for me to be able to "read" while doing something else - exercising at the gym, walking our dog or commuting to work. Being stuck in traffic is such a waste of time. Yet when I am listening to a good book, I have been known to look out of my office window and see the traffic building on the motorway on ramp. I then figure if I stay at work for an extra 10 minutes I will get an extra 20 minutes in the car to listen to the next "installment". I recently did this with "The Boys in the Boat" by Daniel James Brown - the story of a rowing eight from Washington State University who make it to the 1936 Olympics. Listening to the narrative of the final was so exciting - then I went straight onto youtube to watch actual footage of the race. I then did the same listening to Seabiscuit by Laura Hillenrand - this time staying in the University Car park to listen to a horse race commentary from the book and then race up to my office to watch the actual race, from the 1930s, on youtube. And if you don't know much about Laura Hillenbrand,  check out this article from the NY Times magazine - http://www.nytimes.com/2014/12/21/magazine/the-unbreakable-laura-hillenbrand.html?_r=0. Hillenbrand has written the NY times best sellers Seabiscuit and Unbroken, with Chronic Fatigue Syndrome which means she barely leaves her home.  Her journey is both life affirming and remarkable! 

Follow your dreams ...

Last week a student recommended a book for me to have a look at - pay back perhaps for my constant suggestions to the class to add to their "optional" reading list of entrepreneurship/business books! It is called "The $100 Startup:reinvent the way you make a living, do what you love and create a new future" by Chris Guillebeau (http://100startup.com/).  I downloaded it from Audible.com (of which I am a raving fan) and  began listening to it earlier today when I was walking our dog Cheywa.  The focus of the book is to provide examples of microenterprises - businesses that fulfill at least 4 of the following criteria: 1. People followed their passion (typically a hobby or interest), 2. low start up costs - less than $1000, 3. at least $50k net income pa, 4. no special skills - anyone can operate  (e.g. coffee roaster rather than a dentist), 5. full financial disclosure for approx 3 years  6. Less than 5 employees. The idea is that these businesses have enabled people to follow their dream, not through a large business but on a scale that enables them to keep their independence and freedom. Of course this is nothing new, as the author points out; rather today there is an ability to reach customers and  make connections on a scale that is unprecedented because of the internet.


Which brings me to the second book that I am listening to "Tribes: we need you to lead us" by Seth Godin. He argues that mass marketing is over and businesses should now look to developing a "a tribe" - a group of people with shared ideas, interests and values.  http://www.sethgodin.com/sg/). Growing that "tribe" contributes to the success of the $100 Startup.

One of the things that Godin remarks on is the fact that "the market is looking for remarkable". That has me asking myself - how many times do I experience  "remarkable" ? What product or service  have you come across recently has been "remarkable?

        And the thought for the day ...

What do these have in common?

Over the weekend I was reading the Herald, Auckland's daily newspaper - telling my children that I wasn't playing on the ipad, I was actually reading the paper! I came across an article by Dr Michelle Dickinson, an Auckland University nanatechnologist (aka Nanogirl http://www.nzherald.co.nz/technology/news/article.cfm?c_id=5&objectid=11500936). Michelle was writing about Powerbyproxi, a company developing wireless charging technology that  "could help turn our static furniture into functional charging stations .. [This] mobile-device wireless-charging market predicted to be worth $5 billion globally by 2020".  A few days before that I had been presenting to the finalists of the EY Entrepreneur of the Year competition and a fellow presenter was Greg Cross, the CEO of Powerbyproxi ( http://powerbyproxi.com/). And one of the EY finalists in the room was John Wikstom, from Magic Memories  (http://www.magicmemories.com/ ), a company with the wonderful tag line of "we make people smile"!  

And the thing these all had in common? Spark - the University of Auckland's Entrepreneurship Challenge ( http://www.spark.auckland.ac.nz/).  Both Michelle and John were guest speakers at some of the Spark events held earlier in the year and PowerbyProxi was a previous spark winner, cofounded by Fady Mishriki ( http://www.spark.auckland.ac.nz/alumni/alumni-profiles/hi-tech-products/artmid/10733/articleid/4/fady-mishriki ).

And to round off my Spark week, a student in my undergraduate Entrepreneurship class was part of one of the teams that qualified for the 2015 Spark $100k Challenge. Would be great in a few years time to be writing a blog entry about how well a company that he founded is now doing :)