The Great Debate: Can You Teach Entrepreneurship?
Ascend founder Rob Ryan offers six easy steps.
As a society, we hold ardent (and conflicting) opinions on entrepreneurship: 1. It can’t be taught; 2. It can be taught, but only in advanced education; or 3. It can only be learned in the school of experience and hard knocks, a notion often accompanied by the opion that earning an MBA is a waste.
Think for a moment about the way you view MBAs. Confident. Maybe even cocky. They are probably well-dressed and poised for a career in management, finance or equipped to climb the slippery pole of Fortune 500 success. Now think about your opinion of entrepreneurs. Many will envision college dropouts -- perhaps in hoodies -- who are invariably opportunistic, confident, charismatic and unafraid to take risks. Who could ever teach these abilities? And does anybody really need an MBA?
Shoshana Stewart, the storied chief executive of Turquoise Mountain, a crafts business that started in Afghanistan, earned her own MBA at the London Business School (LBS). She’s said in an interview with The Economist that "an MBA gives you three things: a network of people, confidence and exposure and an array of skills." Good points.
In contrast, entrepreneurial wunderkind Rob Ryan grew his startup Ascend to $2B in revenue and sold it to Lucent Technologies for approximately $20B in 1999. He’s invested in and mentored multiple companies (including Right Now Technologies and Silicon Spice) to $1B valuations in the years since.
Ryan doesn’t have an MBA. He obtained a Bachelor of Arts degree from Cornell University on a scholarship in 1969. Later, he earned a master’s degree in Mathematics from the University of Wisconsin-Madison. He’s worked with Burroughs, the Lawrence Livermore Lab (on Arpanet) and Digital Equipment Corp. He founded his first company, Softcom, Inc., in early 1985 and sold it to Hayes Microcomputer Products after two years.
But he will proudly maintain to anyone that entrepreneurship can be taught and successfully learned by people of all ages, beginning with elementary school.
Success in Six Steps: The Sunflower Model
According to Ryan, whom I had a chance to speak with recently, the secret to entrepreneurial education can be found in his Sunflower Model for innovation, which he created during a pivotal investment meeting for Ascend and later refined for use in education worldwide and to advise the thousands of companies he’s been mentoring since. We can summarize the concept as follows: If you imagine the shape of a sunflower, think of the large center and seeds as the core competencies of your company. The petals are the revenue channels that span out from the center. The stem represents the driving forces upon the business such as the influences you feel from the market.
Here's a distillation of Ryan's roadmap for how to achieve success in six steps.
1. Find your core competencies.
A hint: They may not be what you think. For example, a famous analysis of Honda in Harvard Business Review compelled Ryan’s thinking when the company hit an a-ha moment of discovery in the realization they weren't a car company or a motorcycle company or even a lawnmower firm. Their core competency was precision motors, the thing they do uniquely and better than pretty much anyone else. All else, then, involves pursuit of the ideal revenue petals that emanate out from the unique company core.
That discovery has been central to Ryan’s own best outcomes and could fuel your greatest business discoveries, too. What do you do best? Routers that connect anything to anything? (This was the brilliant surprise that fueled Ryan’s $20B Ascend and Lucent success.) Strategic communications? (That one’s mine.) Fast and reliable connections to Blockchain? A secret recipe for tomatillo salsa? Testing technology for new results from natural ingredients or pharmacology drugs? You get the idea. When the core competency is clear, myriad possibilities will suddenly emerge and align. This is where the process gets fun.
2. Build your revenue petals.
Do critical decision-making about the various revenue petals you find. Ryan calls the process matrix modeling. In simpler terms, you identify the relative strength of market need, market size, availability of the resources you need and the cost of goods that determines the profitability potential for each of the things you create and provide.
3. Do a revenue-petal walkabout.
It may sound complicated, but the walkabout is the vital step of really proving the desire for your product with actual customers. The strongest and most direct of all would be to obtain the actual purchase order of a significant client or two that verifies the quantity and price they would pay for a product of the particular specification. Imagine the power of walking into an investor meeting with a few of these orders in hand. In fact, at that point you’ve covered your risks to an extent you potentially don’t need an investor. Maybe you just need a manufacturing loan or a loan against invoice to cover the cost of manufacturing and delivering the products to keep you afloat until the customer’s final payment is made.
Several Shark Tank pitches have used this strategy with success on national TV. When the investor asks how interested you expect the potential market to be, imagine the power of pulling a purchase order out of your pocket for a giant order from Walgreens. The power of having a customer in your pocket is hard to ignore.
4. Refine your decision matrix.
Of course, not everything you hear in the walkabout will be adulation and praise. Listen clearly for your customers’s concerns and objections. Does your solution work better for some markets than others? Better for some categories of customer than others? This intel could influence your strategy greatly. In the case of objections, are you discovering things you could change that are worth fixing? Better to make the right decisions early, before you end up with a warehouse full of hard-to-sell goods.
5. Build a suffocation strategy.
This is not for the suffocation of your own company, of course, but defines the ways you can quickly and pervasively snuff out the competition in a category to achieve market dominance. This could involve patents, trademarks, the buying up of smaller, competing companies or potentially all of the above. You need a strategy to win the lion’s share of the market before bigger and bolder competitors can dominate you.
6. Design goals and steps for a successful, transformational company.
Now (and only now) do you have strategy and goals in place to lay the foundation for tactical execution of the business you desire. The Sunflower Model is a winning recipe for innovation and strategy. It informs an entrepreneur at every age and stage on how to create a winning product and dominate in the market. It’s as effective for a billion-dollar prospect as for a lemonade stand and equally useful for a student-run or first-time venture as for an enterprise of a billion dollars or more.
To Ryan’s credit, the model suggests that entrepreneurship can not only be taught, it can be learned and embodied at any stage of life. With or without a traditional MBA, the secret may be in the Sunflower steps.
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