There is a common problem that I have seen with graduates of entrepreneurial programs at business schools. Many of their business plans are shallow and they don’t see it.
Business plans generated by engineering, science or technology individuals tend to be solving a real problem with quantifiable benefits to the customer and intellectual property which is deep i.e. its patentable and requires a deep understanding of a problem and solution space to see the opportunity and implement it.
On the other hand, many business graduates have plans which are a variation of something that already exists. The business school graduates are be able to generate reams of secondary research data that they use to extoll why the market will like their idea and why they customer will buy. But their rationale for the customer’s buying the product is shallow. Customers’ buy because the solution saves them money, gains them money or alleviates some form of pain such as loss of competitive difference or regulatory compliance requirements or perhaps is an interesting experience, etc. However, the solution’s benefits have to achievable with a known and high level of certainty. Obviously there are occurrences where customers will buy something on the vague chance of results i.e. as per Roger’s Adoption of Innovation theory, or that the entrepreneur knows the customer better than the customer knows themselves i.e. did we know we want to text on our phones before it was available? In the tech industry, it is readily possible that the customer doesn’t know what they want in terms of the next generation of a technology.
Over the recent while, I have seen business plans from engineering or technology individuals and they are able to definitely point to cost savings or revenue enhancement or alleviating regulatory/legal burdens in a simple to grasp opportunity with the benefits clearly defined, proven and achievable.
While I have seen also seen business plans from business graduates with complex ideas supported by reams of market research that suggest customers will flock to a variant of an existing idea for the unproven likelihood that the new product will offer an incremental benefit. In some cases, the plan suggests that the customer will abandon well established existing solutions for this small unquantifiable benefit.
What is scary is that the business school graduates don’t get it, they can’t see past their superficial arguments and realize how shallow their idea is. Why is this? One reason might be the traditional business school entrepreneurship course focuses on secondary research to support business plans i.e. The cell phone market is growing by x% a year and therefore my cellphone app company will also grow at x% a year, a significant leap in logic.
So what can be done?
Business schools need to focus less on business plans that use secondary research data to support an idea and more on plans that can quantifiably provide a measurable benefit to a customer that solves a particular problem that is causing them to lose money, revenue, etc. This benefit should be provable with a high degree of certainty. Students need a deep understanding of both the problem and solution space from having worked in or experienced those spaces not from reading about it from secondary research data.
Admittedly, there are still a category of products/service possibilities where the entrepreneur knows what the market wants before the customer does, but we aren’t all Steve Jobs.
Check out our entrepreneurship simulation for use in university and college environments Traction entrepreneurship simulation