Awesome presentation from Steve Blank, a professor at UC Berkley. Invest 5 minutes and flips through these slides:

My thoughts–

I’m passionate about education, and this set of slides really captures some issues I’ve voiced about formal business education around the idea of entrepreneurship. To sum it up, you can’t use traditional pedagogy and expect to get entrepreneurs. While they need to know 80% of the material that a traditional business person knows, the other 20% is the “secret sauce” that doesn’t necessarily apply to big business.  This presentation captures this critique, hitting a home run around slide 38. While managerial accounting and operational strategy are key to success as an entrepreneur, that isn’t the “secret sauce” that drives entrepreneurial success. As I’ve come to understand, while traditional business acumen is necessary for entrepreneurship, it isn’t sufficient without the other 20%–the secret sauce.

I once heard a Dale Carnegie trainer describe successful leadership as a pyramid, with attitude, skills, and knowledge as the three sides. While attitude tends to be the base of the pyramid–after all, nobody cares what you know until they know you care–the sides are interconnected and rely on one another for support. I don’t believe that business schools can teach attitude, although they can encourage the right attitudes and discourage the wrong ones. They can manage expectations, assisting students with identifying their passion and lifestyle preference. Ultimately, those individual have to pull the trigger on a career. It has to be their passion, their idea, and their attitude that drives the business, particularly in the earlier stages of entrepreneurship, although I’d argue that is true for any business career.

The other two pieces of the pyramid are knowledge and skills. I consider knowledge to be the collected acumen for business and skill to be the ability to sift through that acumen and derive the relevant model/practice/content for making and implementing a decision. Business schools can expose students to this material around an entrepreneurial framework, but they need to do more. While big business may revolve around a relatively consistent set of best practices, almost every start-up is unique and requires unique skills. You need hypothesis testing, customer development, operational scaling, and an understanding of the appropriate and accurate performance metrics. All of these are, to some extent, unique to the start-up opportunity. Start-ups don’t have years of retained earnings to rely upon. There is no writing off bad and costly decisions as learning experiences. The loss of time and capital from bad decision making can forever alter the future of a start-up company, potentially causing it to cease operations. In my observations, successful entrepreneurs have an instinct for survival and paranoia that drives them to avoid those costly learning experiences. In contrast, those same entrepreneurs rely on data to understand the risk and appropriate approach for major business decisions. They see under-served markets, and if the opportunity is risk-reward appropriate, they develop a plan for attacking that market. The key is understanding if the risk-reward is appropriate and if a capital appropriate model can be developed. When you’re neck deep in accounting, logistics, etc, it’s difficult to step back and look at the big picture and get perspective around those types of questions. But, you have to know the accounting, logistics, etc to be able to address those types of issues.

To use a sports analogy, business schools make great athletes, but athletes need to find the sport that fits their talent and the position. Not all athletes are football players, let alone quarterbacks. Not all business school graduates are entrepreneurs, let alone high growth entrepreneurs.

Their are lots of folks in the East Tennessee area that are wrestling with this idea right now. The University of Tennessee has innovation/entrepreneurship programs in its business college for both undergraduates and graduate students. Out of the Garage is a blogging and learning platform under development by the guys at the Center for Entrepreneurial Growth.