Startups are often seen as risky, requiring significant time and monetary investment to get going. While that’s not an entirely false perception, we at ELI have found that there is much more we, as educators and entrepreneurial support workers, can do to prepare someone for the trials of starting a fledgling business.
In this piece from CB Insights, we see the top 12 reasons (by their metrics) that startups fail. The insights are useful in their own right, but in aggregate, they also tell us something about the continuing trends of startup culture. The presupposition of essentially all of these points is that the founders received or sought capital investment from venture capitalists.
For those who have followed ELI for a while, you know that we do not focus on helping entrepreneurs get funded by VCs. Instead, we support a client-funded approach to building a venture. This is partly because of the very failings this CB Insights article points out. When a founder can get their startup off the ground, only to find that there is no market need (note that this is the #2 reason for failure, according to the article), they weren’t practicing enough of what we call entrepreneurial discovery.
As some have said, fall in love with the problem you’re working on, not your solution. Said another way, kill your darlings. This maxim is especially true if you want to start a business or other venture serving others. If the end user isn’t your first concern, the deck has now been stacked against you. Spending more time in the discovery and testing phase while engaging with real possible stakeholders is a surefire way to guard yourself against the type of failure highlighted in this article. From the research you do here, you’ll be able to develop a truly minimally viable product and get honest feedback and engagement from your stakeholders.
Hat tip to ELI facilitator Tom Ledbetter for sharing this insightful piece with us.
In a recent piece published by Yale, we see an interesting pattern emerging. While employers report a need for entrepreneurial skills, they are not very likely to hire startup founders who are applying, “according to a new study by Tristan Botelho, assistant professor of organizational behavior at Yale SOM.”
Interestingly, of the profiles Botelho reviewed, successful startup founders fared the worst in a job search study. But why? Entrepreneurs are adaptable, innovative, and resilient, but they also can appear to be flight risks. As the recruiters and hiring managers see it, not much is keeping an entrepreneur at the firm who has made a significant investment in hiring a former founder. So, how can a founder looking to join an established organization avoid this bias? Finally, and perhaps more importantly, what are we teaching potential founders about being entrepreneurial, and how can they translate those skills to the job market?
One place to start is communicating a commitment to growth within the company. Just like successful entrepreneurs fall in love with a problem worth solving, the best employees make it clear that they see a path to success within an organization.
In research conducted around the ideas of good teaching, we learn that developing some skills can come at the cost of student engagement. For example, in this piece from the Hechinger Report, researchers found that those teachers who better prepare their students for tests often fall short when it comes to creating an engaging classroom.
Interestingly, among the teachers who engage their students and improve outcomes, researchers found that those “who incorporated a lot of hands-on, active learning received high marks from students and raised test scores. These teachers often had students working together collaboratively in pairs or groups, using tactile objects to solve problems or play games.” The teachers studied all taught elementary school math, but this practice of collaboration and tactile, sensory, and problem-based learning has merits in most other subjects.
So, what does this have to do with teaching entrepreneurial skills? Well, by focusing on problems and solutions related to the class subject rather than rote memorization, punishment, and rewards, teachers can improve their students’ outcomes. And teachers that embrace entrepreneurship, not as a singular discipline but as a teaching method, tend to be the kinds of teachers that engage their students and improve outcomes.
How can we influence ourselves and others to overcome the most basic human barrier; fear? Fear is indeed the biggest barrier to innovation, with good reason. Innovation is by definition associated with ambiguity; even with a well-defined goal, innovators simply cannot know all outcomes of their efforts. So, as we close this month’s Top of Mind, let us reflect on how we are preparing our society to be more innovative and entrepreneurial.
One step in this process is creating conditions for us to practice the skills associated with innovation early. Learning from failure and critical thinking, these sorts of things are necessary. And what’s more, prioritizing these skills and conditions can help create a space where people feel safer engaging in innovative behavior. While you might start an innovative initiative feeling like you are in the driver’s seat, it becomes quickly apparent that you do not control the situation. This feeling of a lack of control is one of the most anxiety-inducing sensations. But it can therefore be a source of great learning, too.
This piece from McKinsey is full of sources of fear but also outlines the fundamentals of an innovative culture. As we at ELI are fond of saying, culture is a collective mindset. So if you want to be more innovative in your own life, see how these fundamentals can apply to yourself, too.
