A teaching method to validate the market feasibility of a business idea

Professor Timothy Tiemann, Managing Director for Innovation Incubator at the California State University, spoke on practical training and the resources that his institution offers to students to help increase their odds of success in entrepreneurship pursuits. He spoke during a showcase session of the recently concluded EDHE Lekgotla 2022, hosted by Nelson Mandela University in Gqeberha.

Whereas the curricular programmes are credited as part of an overall minor in entrepreneurship subject offerings, the co-curricular programmes are made up of a series of not-for-credit and no-cost offerings that students can take up – that is, should they desire to pursue their ideas outside of the classroom and develop them into fully functioning businesses. According to Professor Tiemann, the significance of these programmes lies in enabling students to understand the principles and pillars of entrepreneurship.

He said initial entrepreneurship education provides a foundation for students. However, those willing to undergo further learning about the market then tap into level-two training. It is at this level that they learn deeply about problem-solving, one that he says he focuses on the most. “It requires discipline and thoughtful construct,” he said.

Afterwards, students move to level three — now providing products and services. The concentration on this level also entails prototyping and executing go-to-market strategies. Professor Tiemann underscored that without the preceding work, the whole process becomes fuzzy and off-topic.

Further explaining what goes into developing student entrepreneurs, Professor Tiemann said that he categorises them into various archetypes, much like entrepreneurship. The first one is a willing learner who wants to be guided — be it with curricular or co-curricular activities. When taken through a process of de-risking their concepts and ideas, this group of students responds rapidly. The second one is a cash-strapped person, one who limits themselves for not having financial capital. “As a former investment banker, I can tell you, there is a lot of money out there for the best ideas — the concepts that get applied thoughtfully or creatively,” he said, adding that he usually advises people not to worry about money, but that it follows if they are willing to put in the work.

The third group of people, he said, were those driven by regret — those who do not want to look back and say they had an idea but did not act on it. He often challenges this group to take the risk as another way of self-discovery. The last category of people comprised those who do not necessarily have ideas but are fascinated by the energy around start-ups. Professor Tiemann highlighted the importance of knowing the kind of students that facilitators train, to understand the level of investment required for each.

As he had mentioned earlier, his focus in the training programme was mainly on level two. He said it began with forming a hypothesis, and it is at that point that people wish to proceed with the idea, thereby skipping forming the hypothesis. However, he said he knew from experience, that that approach never works. “People need to have facts and data; hence, we encourage that they formulate a hypothesis, then go out and test it,” he said.

Professor Tiemann affirmed that if the hypothesis is well-structured and students have engaged at least a hundred potential customers, then the idea is likely to succeed. However, they sometimes face students uncomfortable with the process, lamenting that finding a hundred people is difficult. To this, facilitators respond that if students find talking to a potential customer challenging, then they will never be able to sell a product or a service.

“So, with these facts in your hands, you can get adverse data. The world may not see your concept as you do, or it may already have perfectly acceptable solutions,” he said, adding that this is where others throw in the towel.

However, Professor Tiemann said they always try and encourage resilience — the opposite of giving up. He said it was about pivoting, crafting the idea and tweaking it to a point where it eventually addresses a problem. “This is where I will say 60% of our concepts come in. It is a nice first idea but does not completely address a market need. However, with some tweaking, it could be made to do very well. This iterative cycle becomes the essence of entrepreneurship.”

Professor Tiemann said they often pick up that their students become aware of their backgrounds and social problems which they then wish to address. He called this a uniquely adaptive style of entrepreneurship. He said the goal with such a direction is usually students wanting to create solutions for their communities and better economic opportunities within markets they best understand.

Still, within level two of training, they take students through a series of programmes, including the Innovation Corps (I-Corps), a National Science Foundation programme which he nudged the Lekgotla delegates to look up. He said it is the best methodology — intuitive, focused on outcomes and removed fluff, which helps students use their time efficiently.

Furthermore, Professor Tiemann referred to other student support products, freely available, such as Amazon’s AWS Credits, AutoDesk, and many others that university officials can arrange for their students.  “All this, of course, is to focus on the number one problem that we are trying to eliminate, which is to not build something that nobody wants; therefore, we constantly require market proof,” he said.

“It is not that we doubt them; it is not that we are sceptical. But this is how the world works — on facts and evidence.”

He said that students approach them with a lot of focused problems regarding timing, and more often, they merely need a person they can rely on to answer practical questions. Professor Tiemann said this added a source of comfort and security for students.

“There are a lot of these ideas that simply will not work, but the process is very engaging and provides a wealth of experience,” he said.

Professor Tiemann said even if students would not proceed with starting their own businesses but be employed by other organisations, they gain a broader contextual understanding of that entity, and can support themselves by applying the skills they have acquired.

Question: Does scientific data really help us to navigate our way towards the things that are undeterminable in the foreseeable future? How best can this fact-finding enable our filtering process?

Tiemann’s response: It always begins with solving a particular problem of a very specific person. You cannot say, “Oh I am going to solve all the problems for women out there” because there are just too many different types who do not behave as a cohesive or coherent group. It works the same way for ethnicities or age groups, or even focal points of interest. So, what we encourage, when people say, ‘I want to do this for this person’ is to begin with a very specific customer archetype: ‘I am looking for men aged 18 to 22, with this sort of background and who have this sort of job, this sort of focus.’”

Once you’ve identified a group with a common problem, what we require of the student is to go out and structure this in a quantitative fashion. Instead of questions like, “Would you buy this?” rather ask: “Tell me, what sort of performance are you looking for when you get to this circumstance, whatever it is?”

You can take it from this very esoteric, technical realm to almost any product imaginable. When people are looking to launch new products and services, they also have to understand the context of what is being used today. So, you continue to pull at this thread until you define somebody who is looking for the exact solution you have derived.

Nqobile Tembe is a contracted Communication Consultant for Universities South Africa.