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NEIL TARALLO: Good afternoon. My name is Neil Tarallo. I am a senior lecturer in entrepreneurship here at the Cornell University School of Hotel Administration. And as part of the Leland and Mary Pillsbury Institute for Hospitality Entrepreneurship's Ambassador Program. I'm here today to deliver a talk, a short talk on the implications for the Business Model Canvas in an entrepreneurship curriculum.
So one of the things that we have already discussed as part of the Ambassador Program is the Business Model Canvas itself and how it works. And today, we're talking a little bit about the implications for it in a curriculum and how we think about that.
I'm not going to be talking about how to use the Business Model Canvas so much as to how to think about it as a tool for both teaching and for starting and growing ventures. So we'll think about it along those lines.
I'm going to start, though, by kind of touching base with some trends we see in entrepreneurship education across the United States and elsewhere, a little bit about the history and the evolution of the Business Model Canvas, and then we'll talk about some applications for it and some curriculum opportunities.
On this particular slide, there is a link for the talk that we did on learning how to use the Business Model Canvas. You can also find that on the Pillsbury Institute's website and also through CornellCast.
So right now, entrepreneurship is a hot topic on college and university campuses and really across the nation and probably globally, although I don't touch base with that so much. When I first became involved in entrepreneurship education back in the 90s there were approximately 1,500 courses being taught in the United States, less than 150 universities offering entrepreneurship as a curriculum based opportunity. Today, there are well over 2,000, probably well over to 2,500 colleges and universities teaching entrepreneurship.
And the problem is that our demand for entrepreneurship on campuses by our students and off campuses, as well, is far outpacing our ability to deliver the curriculum. And what we're seeing is something very similar to this. Demand has moved up very quickly. The supply continues to move slowly behind it. We just don't have enough folks out there who really understand it.
And the issue becomes then, that the quality of the education that we're delivering is slipping a little bit. And I'm going to explain that. What we see happening is this lack of supply is being filled with practitioners or actually I should say entrepreneurs, who really don't have any formal training or academic background in entrepreneurship education. And what we tend to get when this happens is less rigor in the courses that are being taught.
So things are kind of critical when we think about this. Our entrepreneurship teaching is beginning to lack rigor across the board. We see more and more programs in entrepreneurship, courses in entrepreneurship, opportunities to understand and learn about entrepreneurship being driven by people who may have been entrepreneurs, may have started businesses, may have run businesses, but really have not had any formal training in entrepreneurship or the delivery of entrepreneurship.
So war story teaching is becoming more prevalent. And I just want to coach this a little bit. It's not necessarily bad to tell stories as part of teaching. We know that it's a good thing. It's a great way to engage folks. It's a great way to emphasize points that you want to make. But what we're seeing typically is folks who do not have training in the curriculum are just in there talking about war stories. There's no data, there's no research to support what happens.
And it's easy to do. I say it's kind of easy to fake it when you're teaching entrepreneurship and I can say this with a certain amount of expertise because that's how I started. When I first started teaching entrepreneurship as an adjunct at Syracuse University, I was an entrepreneur. Really did not ground the message and the learning objectives that I was delivering in the classroom in any kind of academic knowledge or data or validated research.
And I was fortunate that we had a program that had some really strong researchers within the Department of Entrepreneurship there, who kind of took me aside and took me under their wing and said, listen, if you really want to do this, if you want to be good at this, the research that is happening, the body of knowledge that is being developed in entrepreneurship as a discipline has to become part of your class.
And I slowly started to understand what they were talking about. And over time, I've been teaching entrepreneurship now full-time on a university campus for over 15 years, over time. I've gotten better and better and better at that. And really what I try to do is take that research and deliver it in a way that gives my students an opportunity to understand the application of that knowledge in a real world setting.
So war stories are not bad. They help develop passion. They help our students understand behaviors and the behaviors that entrepreneurs exhibit and the way entrepreneurs think. And we're going to talk about that in just a second. So I don't want to leave you with the impression that it's necessarily bad.
But context is part of what we have to teach here in entrepreneurship and teaching entrepreneurship is difficult. It's not an easy thing. It's not something that you can just come into the classroom and teach because you've been an entrepreneur yourself and you've been running businesses.
Context matters. What I mean by that is every time you're working with a student or a team of students, preferably, about a business that they're interested in launching, it will be on a different subject matter. I've taught students about restaurants. I've taught students about technology, about product development, all different sorts of entrepreneurship going forward.
There are different needs and different skill sets that students need in each one of these contexts. So context matters and it's important for us, as educators, to develop that context across the board, so that we can deliver better in the classroom.
And finally, it's not about the shiny new object. I'm going to talk about this a little bit throughout the course. But what I do see a tendency for is when new things come out, we tend to move in that direction in a really big way. While new concepts, new ideas, new approaches, to entrepreneurship are important, we should not be bringing them into the classroom until they are validated through research and with data. We'll talk about some specific examples of that in just a little bit.
So for me, behaviors plus the skills that we expose our students to and teach our students is what equals a quality entrepreneurship education. And what I tend to see happening in well-balanced entrepreneurship programs is practitioners and academics are working together to deliver those.
So the behaviors and the way entrepreneurs think tend to come from the practitioning side and the skill sets, the academic research that we bring into the classroom, tend to come from the research tenure track faculty.
When we can work together to create this equation, if you will, we're delivering a quality entrepreneurship program. Sometimes in some programs the pendulum slips one way, where behavior is becoming more and more of what's teaching and that's the war stories that I talk about. Sometimes it slips the other way where you have a predominance of tenured faculty or research faculty in the department and they're not able to deliver the practical component of entrepreneurship because they're focused on research and usually it's on a particular subject area.
One of the folks that-- some of my friends who I work with regularly in research tell me that one of the things, the value that I bring to them as part of their research is that I bring a certain degree of relevancy to what they're doing. So I help them understand what they're studying and how practical it is or not is, how applicable it is or not is.
So I've used some phrases here and I think we need to go back and talk about them a little bit. So what does quality mean? And quality, to me, means that balance that I just talked about. I think a real quality entrepreneurship curriculum is a curriculum that has a balance of practitioners and research or tenure track faculty. One or the other does not equal a quality program. And I think you can see that in the experiences that students get within the educational component of what they do.
And I'm very deliberate about not using the word courses or classes and that's because entrepreneurship education involves so much more than just what happens in the classroom. And that's a little bit about where the context that I talk about comes from. If we were teaching accounting, for instance, we would all be on the same board, on the same place. We would all be thinking about balance sheets and cash flow statements and income statements and we'd be talking about accounting principles, something that's pretty well known.
But when we talk about entrepreneurship, the context changes. It changes for technology. It changes for new product development. It changes for service-based industries like restaurants and hotels. So we need to be aware of those things and we need to think about that but the component, the big picture of entrepreneurship education happens as much if not more outside of the classroom as it does within the classroom.
People ask often and I often get this question, can you teach entrepreneurship? And the truth is that we know that you can teach entrepreneurship. We know that entrepreneurs learn. There is a significant amount of research and data to back this up, that as entrepreneurs go through multiple entrepreneurial ventures, they get better and better and better at it. They learn.
We also know that we can teach that in the classroom because there have been studies and has been research that demonstrates that folks who have any kind of formal entrepreneurship education are more likely to succeed as entrepreneurs. And that could be as little as one class or as much as an entire curriculum. So we know that we can teach it.
But the how is really kind of an interesting thing for me. I came to Cornell from Syracuse University. I was recruited here about five years ago with the understanding that I was going to help the Hotel School develop and move their entrepreneurship program forward. And one of the first things that I did when I got here was separated the skill sets that we could teach in the classroom from the behaviors and the passions that you really can't teach in a classroom.
We moved the behavioral components of it to the Pillsbury Institute and the skill sets to the classrooms. And we developed courses around the skill sets that we needed in the classroom. So we have a cohort of courses for that. And the Pillsbury Institute continues to provide opportunities for students to interface with, to work with, to talk to, to see entrepreneurs who have been successful and how they think and how they behave. And I think that's an important component of it.
The conscious part about separating those two things, I think, was an important step for us and it really gave us a nice move in the right direction as we developed our curriculum and an entrepreneurial educational opportunity for our students here on Cornell's campus.
And by the way, I know some of you are following this along and screaming. If you have a question, don't be afraid to ask it during the talk. Kristen is here to my left and she will write down your questions and I'll answer them as I go along. I actually prefer to answer questions as we go along. So don't hesitate for that.
I think of entrepreneurship and I thought about entrepreneurship when we started working on the curriculum here at the Hotel School in kind of two contexts, as well. First is the medium and smaller enterprises and the higher growth enterprises. And the reason that I started thinking this way about it is because as I talk to students, and in certain terms, students are our customers here when you think about it. So being a good entrepreneur I talked to students.
I found that they had different needs. There were different things that they were thinking about. So I might talk to one student who has already written a business plan and is ready to start a business while they're here in school. I may have talked to another student who is not quite there but knows that they're not going to pursue a job too actively as they exit the University and they are going to start their business when they leave here. And then another cohort of students who just think that sometime in the future, entrepreneurship may be an avenue for them. So they want to expose themselves to it and they want to learn about it.
And then as I'm talking to those students and understanding that there's a different set of needs for each of those, I start to understand and talk to students who want to start restaurants, who have a technology idea that they want to deliver, who have a new product innovation that they think will make a difference or solve a problem in the world, or maybe want to start hotels. Those specific contexts of entrepreneurship also have specific needs.
So we started to think about how to serve these students and offer courses and opportunities, experiential opportunities in the Pillsbury Institute to support that.
So when I think about small and medium enterprises, I think about regional businesses that are a little bit more customer centric. When I think about high growth, I think about things that are a little more global and they're are more innovation centric.
There's an interesting data point that is fairly recent. There is some research that has recently come out that shows that while entrepreneurial activity is down just slightly in the United States over the last 10 years or so, the startup or the growth or advancement of entrepreneurial businesses to high-growth businesses is down much farther. I think public policy certainly contributes to that a little bit but I think there are also other reasons and we'll talk about those a little bit as we go through our talk here.
But some examples of a small or medium enterprise are restaurants, retail businesses, trucking businesses. Large innovation-driven enterprises, have more of a sustainable advantage, maybe more products or more technology. So I tend to think about those things from that perspective.
The other thing I think about is all the different tools that we need to use as entrepreneurs and all the different tools we need to expose our students to as teachers of entrepreneurship. And I think about those tools in terms of some of the disciplines that happen across our campuses. I have some examples of business disciplines here, but certainly engineering is part of that, agriculture is part of that.
So there are so many different tools that we need to think about and picking the right tools for the job makes the same sense in an educational context as it does in a construction context, if you will. So we need to have the right tools in order to be able to deliver the right value to our students when we're thinking about their particular businesses.
So let's talk about two of these tools, that's what we're here for. Let's talk a bit about the Business Model Canvas and the Value Proposition Design Canvas. And I want to emphasize something, that these are two tools and that's the way I think of them.
I think of them as tools that I use to help my students, to help people I'm mentoring, to help people I'm working with start their businesses. And they're early stage tools for me. They help me answer questions about my customers and about the market and about the industry.
And here's just a little bit of background, a little bit of history of it. The Business Model Canvas was developed by a gentleman named Alexander Osterwalder He was working on his PhD. His PhD was looking at Business Model Canvasses. His dissertation is up there. "The Business Model Ontology, A Proposition in a Design Science Approach." Nice title for a PhD dissertation.
But what he found as he was doing his research is that there was really no common understanding or definition of what a business model was. People couldn't agree on it and when he asked people from all around the world what a business model was, he got different answers every time. And his premise was that we needed a shared language around this concept.
Business models are important. It's important to understand them and understand how they work And that words were really not enough. And then he was looking for a way to create a visual language around this and he came up with the Business Model Canvas.
Spinning off of this are a couple of important things. The first was he wrote his first book called, Business Model Generation, which talks about the Business Model Canvas and how to generate and think about business models.
The second book, Value Proposition Design, is a book that takes two important components of the Business Model Canvas and talks about them specifically and how to understand our customers a little better. And we're going to talk about each one of those individually.
Osterwalder has chosen not to pursue an academic career but has chosen to spin this off into a company and the company is called Strategizer. One of the important things or one of the interesting things, I should say, for me, is as I look at the evolution, if you will, of Strategizer and the Business Model Canvas, when Osterwalder first began talking about it, he was very clear that it was a tool. But as we've started to try to find ways, as he started trying to find ways to monetize it. It's become more central in his mind to starting a business.
To the extent now that he and a few others are kind of putting forward the notion that business plans are not necessary, that business plans are a waste of time and all you need to do is fill out your Business Model Canvas and go through a startup process and you're ready to roll. We're going to look at that and we're going to talk about that a little bit as we go along.
But the Business Model Canvas, I think, is an important tool for entrepreneurs and it's a really important tool for entrepreneurship education. If you look at the Business Model Canvas, which I have on the screen and again, if you're interested in learning how to use the Business Model Canvas, go to the Pillsbury Institute website, look for our bank of videos and you'll see a talk that we give on that.
But if you look at the Business Model Canvas, on the left side of the canvas, or let me back up a little bit. Right down the center is a column called Value Proposition. We call these building blocks, by the way. And to the left of Value Proposition are the back of the house or backstage operations of an organization. These are the things that an organization has to do to support customer outfacing, services, or products.
On the right side is customer relationship segments and channels. Those are things that are the front stage, front-facing operational components that the customers see, touch, and feel as they go along.
Revenue stream and cost structure are on the bottom and they kind of support the expenses, the financial attributes of a business model and we can talk about those.
So what we've accomplished through the Business Model Canvas is we've gotten the key elements of what makes up a business model for a business in front of us and we can work with them and think about them as we go along.
I think one of the great attributes of the Business Model Canvas is that value proposition is in the center of it. And we're going to talk about that here in just one second.
So why is this useful? Why is the Business Model Canvas useful? It's useful because it's a graphical representation of organizational components that make up a business model, as I've already said. So we can see everything right in front of us and it's all there and very focused on it.
It applies to existing organizations as well as new ventures and it's something that I learned as I started using it, that there's actually more of an application for me, in my mind, particularly as I'm teaching and talking about corporate entrepreneurship for growth strategy, for understanding our business model, and creating new business models that give us the opportunity to be competitive and to have competitive advantages in our industries.
It works equally as well for new ventures and existing for profit organizations as it does for social enterprises and nonprofits. As a matter of fact, when I talk about revenues or sales in this discussion, you could just replace those with grants, donations, and the number of people that you help. Those are the contexts of the kind of ways I think about nonprofits and social enterprises.
And it's interesting that you can use this as components of other disciplines. So here at the Hotel School, we have now three different areas-- and for us here at Cornell, departments and areas mean the same thing approximately-- three different areas who are using the Business Model Canvas as part of what they're delivering in the classroom.
We're using it in our communications, some of our communications courses. We're actually developing, or one of our faculty are developing a course, specific to entrepreneurial communications. Our marketing department has a class that it's, for the first time it is using it. And we're seeing it come through in a few other different ways.
So it can be used in other contexts. And the Business Model Canvas if we go back to it and look at a little bit, one or two or some of these building blocks may apply specifically to a discipline outside of entrepreneurship. And I'm going to talk about how this might apply, this concept may apply within your curriculum.
One of the really important things about the Business Model Canvas, though, are these two building blocks that I've outlined in red here, value propositions and customer segments.
And those two building blocks make up the value proposition design canvas. This tool came about just after the Business Model Canvas but I find that I'm using it more and more apart from the Business Model Canvas for some of the courses that I teach, particularly opportunity recognition and ideation and thinking about that.
What the Value Proposition Design Canvas does is it really lines up for us the things that our customers are trying to accomplish in their lives. Osterwalder calls them customer jobs. I tend to think of them as customer tasks. They can be something as simple as I need to mix a protein shake in the morning for breakfast before I go out the door. And the pains before these shake bottles came out, the pains that I experienced was having to use a blender, having to mix it up, having a lot of dishes to clean, just not being convenient in how I went about that. The gains are things that I expect.
So the right side of the Value Proposition Canvas, customer jobs, gains, and pains are what we should be thinking about from the customer's perspective. And the way I coach this is, this is the lens that the customer sees the world through. We want to look through that lens, too. We want to experience what the customer is experiencing so that we can clearly understand what problems or pains they're encountering.
The left side of the Value Proposition Design Canvas is about what our solution to the problems that they're experiencing or the pain they're experiencing is or are. So we think about how we can alleviate those pains, how we can create gains for them, and we develop products, services, or technology to be able to do that.
When we can align these things, so when the gains and the gain creators align, when the pains and the pain relievers align, and when our customer tasks or jobs and the product or service that we're delivering align, then we know we have a good fit in our market and we know we have something that has some potential.
And I say it has potential because we really don't have things validated until sales start happening. So the true validation of a concept, the true validation of any business is sales. If nobody is buying your product or service, then you don't have a business that's the cold hard truth of it. So we do validation and validation is part of this and part of the process but we don't really validate the business until we have sales.
So it's useful, I think, because it places emphasis or focuses attention directly on customers and customer value. Traditionally, and my experience going back into the 90s as a venture capitalist and as an entrepreneur has been that we focused on products and technology before we thought about what the needs of the customers were. This really reverses that for us and it really puts the customers in front of us and makes us think about what problems they're facing, what pains they're feeling, much more so than if I'm delivering this in a lecture.
So by having this graphical representation, the students or the folks that I'm mentoring, clearly see, or corporations that I'm working with, clearly see and can understand what the components are that the customers are struggling with that we need to address in order to have a viable concept or an opportunity.
And it really emphasizes the importance of solving problems as part of our ideation process. So we're thinking more in terms of the problems that we solve. My engineering students get a little frustrated with me when they come to me with apps and I ask them what problem does it solve? And they can't tell me about it and I tell them, then you really aren't on track for a sustainable business.
Yes, you can develop apps that you can sell for $0.99 and make a lot of money but an app is only a tool that helps us deliver the value proposition to our customers. So we want to be focusing on these problems. If we're now, we're not going to be creating markets. We're not going to be creating opportunities for our business.
And this is important and I want to re-emphasize this, products and services do not create markets. There are many instances of these really interesting products or really interesting services or technologies that we have that really never get any sales behind them. And as a result of that, we don't have a business for it.
So when we teach entrepreneurship here at the Hotel School, we're always thinking about developing sustainable businesses. We're not thinking about one-off opportunities like pet rocks that you could sell for $3.00 or $4.00 and make a lot of money on. We're thinking about sustainable businesses.
Products or services by themselves do not create markets. Solving problems and creating value does create new markets but that's not all there is to it. In order for us to really be successful as entrepreneurs, we have to build sustainable organizations to help solve real world problems and provide value to customers and that's the key component.
And the last sentence on that slide is about sales and how sales are the ultimate validation of our idea and of our concept. Until we have sales, we really can't be sure we have something that is worth investing in or worth making or creating a business around.
So it's important that we think about this, and there's a reason why I'm emphasizing that it's not about your product, it's not about your cool technology, it's not about how great the food is, it's not even about how great your service is. It's about how you capture and create value for your customers.
And that's what the Business Model Canvas helps us understand, how we're creating value and capturing that value for our customers. Because at the end of the day, that's what matters, that's what we can sell. The more value we create, the more we're going to be able to sell and the higher prices we'll be able to charge and still have happy customers.
So ways that the Business Model Canvas is not useful and the Value Proposition Design are not useful is they are not an effective shortcut to starting or growing a business. There is this feeling, there is this movement, I'm going to call it out there, that we just need to create and use our Business Model Canvas and our Value Proposition Design Canvas and then we're off and running and ready to start our business but that's not the facts.
As a matter of fact, we're seeing research that demonstrates that you need to do more than just introduce your product or technology into the marketplace through a business model in order to be successful. And I'll talk about that in some of the later slides here.
Neither of these tools replace a business, strategic, or marketing plan. You still need to do those. And what the folks get wrong who say that you don't need to do a business plan, is they think that we do a business plan from the perspective of just having a written business plan at the end of the day. Or they're entrenched in the thought process that was put into business plans back in the 1980s, which was that business planning and writing a business plan was an academic exercise. That's not how I was taught to teach business planning and nobody that I know of who teaches entrepreneurship teaches business planning from that perspective.
This whole notion of getting students and getting people out of the classroom and into the marketplace talking to customers is not new. It's something that we've been doing for well over 25 years.
So these things are still necessary and there is value in strategy and there is value in reflection as we start our business. Again, I'll talk about that a little bit more. Neither of these tools, neither the Business Model Canvas or the Value Proposition Design Canvas addresses some critical elements that we need our entrepreneurs who are learning from us to understand.
Top of my list in this is leadership and teams, team development, human resources because entrepreneurship at its core is really about teams as well as about delivering value. You can't do this alone and teams are really kind of the trick for it. So it doesn't address human resources, does not address organizational structure, and how our organizations are being created to keep an entrepreneurial behavior and mindset prevalent throughout the organization.
And just be careful of these shiny new objects. It's easy to see a new book on the New York Times bestseller list and we run out and we grab it and we read it. And boy, it's written in a really nice, attractive way and we bring that information into the classroom. It's challenging and you're not delivering true entrepreneurship curriculum when you do that. Remember that before something gets taught to our students, it should be validated through data and research.
So some tips about using these tools. First is that remember that they're not a means to an end. That's kind of what I just talked about a second ago. We can use them. They're part of the process of starting a business. They're part of the process of growing a business but they are not the only method that we should be using to do that. Other things should be coming into play.
It's not about how many Post-It notes you have on the canvas but it's about what the meaning is behind each of the Post-It notes that you have. And that's something that I run into with students on a regular basis. I'll see folks who put these Business Model Canvases up and they are so covered with Post-It notes that we can't see the paper behind them.
It's not about how many we have and if you see students doing that, it's likely they're not really getting to the core of what it is. And there's really like three levels of understanding of the business model that we want to be thinking about.
The first is just understanding what those Post-It notes are and getting them up there. The second is being able to connect the building blocks together. So does one Post-It note lead to a story about the next Post-It note and so on, so that we can talk somebody through our entire business model?
When we can do that, we're really starting to get on our way and understand what it is that we're trying to accomplish. And really being able to deliver the value verbally to our customers and explain what it is that we're accomplishing for them.
The third level is where I think about using the Business Model Canvas as an instrument for growth and I think it's an important tool for this. By looking at and thinking about and plotting out the business models using a Business Model Canvas of our competitors, we can develop business models that give us a competitive advantage, give us an opportunity to grow, possibly into new markets, but certainly to think about other ways of doing things and delivering them.
And as we look at and think about the Business Model Canvas, many times I think people make the mistake of just looking on the front stage or forward-facing components of the Business Model Canvas. Be careful about that because there are also great opportunities to change and rethink your business model through your backstage operations.
This is how Wal-Mart really got to be Wal-Mart, right? You know the story of Wal-Mart, how they devised a way for distribution to happen, the logistics of it without trucking back and forth across the country or across most of the country. They created smaller distribution centers that were regionally based close to their stores that brought down their logistics, the cost of delivery logistics dramatically, so they could offer lower cost to their customers. Later, they got so large, that they were able to develop enormous economies of scale but it really started with their distribution system and how they thought about distribution.
As you think about the Value Proposition Canvas and lining up the gain creators and the gains and the pain relievers and the pains and the products and services and your customer tasks or jobs, there is often confusion with the students about what gains and gain creators are and what pains and pain relievers are. Typically what I'll see is students are just doing the opposite for each one of those and that's not always the case or shouldn't be the case.
Remember, we should be looking through different lenses as we think about each side of the Value Proposition Canvas. So the right side we should be looking through our customer's lenses. We should be seeing the world through our customer's eyes. I like to say, if you really want to be an entrepreneur, you really want to understand what it means to start something that has true value to customers, you know, live in their world for a day or two or a week.
You know, the old adage, walk in somebody else's shoes. I think this is absolutely true. Observationally, we can learn an enormous amount about the pains and the problems that our customers are experiencing.
The left side of the Business Model Canvas should be the lens that we're looking through from our perspective. What our solution is to the problem, how we're relieving the pains. And if you do that and if you push in that direction, you'll see differences in how that comes to be.
If you think about the example that I used earlier with protein shakes, so if you think not too long ago, protein shakes we were doing them in a blender, right. So you get up in the morning, you put your powder in, you put your stuff in, put your milk or juice or whatever. You put it in and you hit the button and you mix it up. And you were left with a mess. You had to put everything away. You couldn't transport it very easily.
So the evolution there, as we started to understand the problems and pains the customers were experiencing was that we wanted to have more time. We didn't want to be wasting time working on a blender. We wanted to have clean up be easier. And we started to look at different things that we could create. And we have these shake bottles now that have the little balls inside of them.
And some of the shake bottles have containers that you can put the protein powder in. You can buy your juices away from home, put them in the container, add your powder, shake it up, and it all disassembles into small pieces for easy cleanup.
When you think about that, you can clearly see the tasks that our customers are trying to accomplish. The task is I need to mix a protein drink that I may not necessarily be drinking right at that moment. So how do I take care of it? How do I keep it fresh if I don't have refrigeration and whatnot to go along with it?
So they're experiencing those pains. They're looking for some simple approaches to doing this, something that they can take away, that they can mix on the go, and they can be anywhere with it.
So our left side of the canvas then tells us, look, if we want to relieve some of those pains, we need to have a bottle that is easily easy to clean, that we can disassemble totally and it comes totally apart, that we can create gains for our customers through time savings, through diversity in the types of juices they use. So they don't have to buy large jugs of juices. They can buy smaller quantities of juices on the go and they can use them and have a higher factor of convenience as they go along.
So the product we develop is a shake bottle that we can take apart and we can just shake up as we go along. So that's the example that I use and the way I think about it for classes that I'm teaching.
So be careful. There's often confusion, be prepared for that. When you put the Value Proposition Canvas up and you start talking about gains and gain creators and pains and pain relievers, more often than not, there's going to be some confusion between that. So have some prepared examples and kind of think through that a little bit.
Diverse teams are really a best practice for this. Business Model Canvases and Value Proposition Canvases should not be completed by a single person, just like entrepreneurs shouldn't be starting businesses by themselves. You need a team to really be effective. So create teams in your classrooms, create teams in your mentorship that you can work with in the Business Model Canvas.
And even when I'm working with organizations, corporations, I'm using teams and I'm creating teams within those organizations to work on the canvases together.
And think beyond new value creation. I can't emphasize this enough. There's so much attention right now being focused on the Business Model Canvas and the Value Proposition Canvas as a new venture creation tool that we're missing some really wonderful opportunities for ways to apply them and use them in an efficient way. So those are just some tips that I've experienced as we go along,
Remember though, that as we're putting these Post-It notes up, these are guesses, right? Nothing is accurate until we move into the marketplace and we validate our guesses through interactions with our customer base.
There's a whole lecture I could give just on how to do that but it's not just about asking questions. And there's a real component here that a lot of people get wrong when they think about the Business Model Canvas, particularly if they've already got a product or a technology that they think is solving a problem for a group of people.
They tend to ask questions without meaning to that will give answers that validate their concept even if that's not what the customer thinks. So we want to be careful about that. I try to start my students and my corporations more in an ethnographic position where they're observing potential customers or they're observing behavior in a market to understand where customers are struggling, to get them to tell stories about what their experience is like without asking questions. Because through those two interactions, I really start to get to a market validation that makes a little bit more sense and I can be more open to change and that's a critical component of this.
We have to be open to change. We have to know that what we built because we think it solves a problem is almost never the right answer. It needs to be in a market and we need to get that validation.
Once we do that and we move through that, we create building blocks as part of our Business Model Canvas that we can start to bring together. Remember the three levels. Putting the Post-It notes on and validating them is one. Connecting them all together by telling a story about your business model is two. And the third is using this tool to understand your competitors. And you need to understand your competitors.
Another word of caution is there are folks out there using the Business Model Canvas who claim that competitors are of no concern to them, that they turn their competitors into partners. And if you just think about that for a minute, it really doesn't make a whole lot of sense because your competitors are not always going to be willing to be your partner. There's always going to be a competitor out there or one coming on the horizon. So we need to be prepared for that and we need to be thinking about that.
So I think about this as the first layer being the business model layer. The second layer being the hypotheses that we create and the third layer, the bottom layer, being the testing that we do in the marketplace. And this is cyclical. We go back and we do this over and over again until we feel like we've got something that has value and has some traction. I never say until we get it right because it's continually evolving. It's constantly evolving because our market is changing, our customers value proposition changes, and it's something we should continue to work on over and over and over.
This is just some examples of our veterans program here, the Entrepreneurship Bootcamp for Disabled Veterans that we run at Cornell University. We're part of the EBV consortium nationally. And we use the Business Model Canvas as a foundational tool for teaching our disabled veterans about entrepreneurship. And you see the classroom here that we're working in has the Business Model Canvas taped up all around the perimeter of the class.
As the faculty are giving lectures, our veterans, or are our students in this case, are up and down, in and out of their seats, changing and rethinking their business model as they're getting new information from the faculty. Prior to this, they spent some time with me online and were doing research in the marketplace, understanding what it is our customers are looking for so that when we get here, we're a little bit prepared to do that.
Our veterans in those pictures if you can see them on your computer screens, anybody with a short sleeve black shirt on is a veteran, everybody else there is a student. And here's where I talk about the value of diverse teams.
This program starts in the fall for us. So our students have not been exposed to the Business Model Canvas for more than two or three weeks at the most, three weeks at the most. So they're fairly new with it. But one of the things that was really interesting to me is how much farther along the veterans moved on their Business Model Canvas in a short period of time by having interaction with the students.
So every evening for the week that the veterans were with us, the students came up into the classroom and helped work on the Business Model Canvas and really acted as sounding boards for the veterans, rethinking things, giving them different opinions. We had folks from the Ag School here, we had folks from the Engineering School, students from the Hotel School, graduate students, undergraduate students, without regard to where their student standing was on campus. So freshman were welcome, sophomores, juniors, seniors and everybody participated and offered interesting points of view that helped move the Business Model Canvases further, faster. So teams are an important part of what we do.
So a little about the curriculum and how I think about it. The Business Model Canvas here at the Hotel School is part of every single class in entrepreneurship that we teach. Maybe there's one or two that that isn't true for. But the students get exposed to it, at least in some part, maybe it's just for one class, maybe it's for a week.
Our business plan class, which I teach is foundationally created around the Business Model Canvas and the Value Proposition Design Canvas. So our students spend 15 weeks working on the Business Model Canvas and creating a business plan around that.
And what I've done is I've aligned the building blocks of the Business Model Canvas with the components of the business plan. And then added some of the things that are missing, talking about organizational issues, talking about human resource issues, those kinds of things, logistics, those kinds of things. So we created a class around that.
We expose our students early and often to it and I think the earlier that our students can start to see the Business Model Canvas, the more proficient they'll be at it as they get ready to enter an entrepreneurial path. The interesting thing is you need practice on the Business Model Canvas. You have to learn it. There is a learning curve with it, I think. So the more that we expose our students to it, the better and more proficient they become at it, and the more useful of a tool it is for it.
The other interesting thing for us in our curriculum is the individual components of the Business Model Canvas can be used to bring coursework together. And while I haven't done that here at the Hotel School, I do consult and help other institutions to develop entrepreneurship programs.
And one of the things that the Business Model Canvas is really interesting as an application for is thinking about individual classes that are taught and how they align with the building blocks of the canvas and how you can bring that together. Just by talking to one element of the building block at some point in time in a class really helps students understand this process that we have to go through, and it's the process that's important.
It's also, I think, an excellent tool to help a department or an area kind of coordinate the course work and understand what they're delivering. So if we're understanding that we're teaching entrepreneurship here and our goal is to help students start either small or medium entrepreneurial firms or high-growth entrepreneurial firms, and those have two, remember, two different needs, set of needs. But what's uniform for them and what, I think, is common for them is the need to understand your business model.
So we can start with that and we can use it within our entrepreneurship programs to make sure that we're on track and that we're following the right path and that everybody is all together as we teach. And it's been a useful tool for me as I've worked with other schools and colleges, universities and colleges to create curriculum in their entrepreneurship program.
And also. I think, it's a great foundational element for new practitioners when you're bringing adjuncts in, when you're bringing entrepreneurs in, to start teaching the very first thing that my recommendation is you hand them is a Business Model Canvas and you get them to go through the process of understanding what that is.
It really helps them focus on the important elements of what's going on and it gives them a way to start to get comfortable with understanding the research and the data that is being built around the entrepreneurship discipline. It's important that we bring that into the curriculum.
So it's a great way and it's a great foundational element for new practitioners as you come in and it's a way to start them, I think, on the process of understanding what's going on there.
Look, remember, it's not a replacement for a business plan, it's not a replacement for a strategic plan, and it's not a replacement for a marketing plan. It's a tool. It's a tool amongst tools that we use to help us start and grow businesses and certainly to help us teach entrepreneurship and to mentor entrepreneurs. I think there's value in it for that.
Be careful of shiny new objects. There is this big movement around the lean principles of starting a business. And what's really interesting for me is there is some new, new, new research that is showing that strategy and taking time to strategize correlates to more successes in entrepreneurial startups, that there is value in doing that. And I think we're going to see more data, more research, that's going to confirm this.
So while the Business Model Canvas is a great tool, you still need to think about what you're doing. Everything, can't be reactive. We need to be working through this and there is an important role for strategy and reflection to play as we start businesses.
So be careful of these shiny new objects that are out. there. They're very attractive but I'll be honest with you, I get the shivers when I hear a student say something like MVP or pivot. You know, what do these things mean? There isn't even a common understanding among the lean principles about what they mean.
We started out MVP meaning the first prototype that you could deliver into a customer's hands and that's since been rethought over and over and over again to be something as simple as a drawing on a piece of paper.
So often, I find my students don't understand what these principles mean. I get concerned because there is no research that demonstrates that this is a valid process for starting a business and until that happens, I won't be an advocate of it in my classroom.
Remember, you can't create, you cannot create a sustainable business with just a business model. There is so much more that happens. And if you think about the Business Model Canvas as part of the curriculum, there is so much more that we need to teach.
Startup is not what entrepreneurship is all about. Yes, that's the basis for entrepreneurship as a discipline, but we're starting to understand more and more about how entrepreneurs behave and how they think and that should be finding its way into your curriculum. It augments the use of the Business Model Canvas and it helps us think about that and understand that.
My concern, one of my other concerns about how we're teaching entrepreneurship as you look around, is we're becoming a country that's really good at introducing new products and new technology into the marketplace but not really good at developing sustainable businesses.
And I think the research that I talked about earlier in the conversation here, where we're seeing entrepreneurial activity just slightly declining over the last 10 years but seeing high-growth startup business is declining at a substantial rate, at a much higher rate is certainly part of this discussion.
Yes, public policy, I think, comes into play, but also how we're training people to be entrepreneurs also makes a difference here. And this is really important stuff. It's the high-growth businesses that really provide the jobs for our country. It's not the big conglomerate corporations.
The small and medium sized businesses are right behind the high-growth jobs in the number of jobs that are created-- I'm sorry the high-growth companies in the number of jobs created. These are important components for us and something we should be keeping our eye on as we continue to teach and deliver entrepreneurship curriculum.
So again, it's an effective tool, both of these canvases are an effective tool for the discovery and value proposition alignment in either new venture creation or in existing organizations. Don't miss that existing organization component of it.
And it's part of a process and that's what's important. I can't emphasize it enough. There is a process that we go through that helps us understand our customers, so that we can align our solutions and our solutions could be a product, could be a service, could be a technology, to the problems that our customers in our marketplace is having. So the better we get at that, the more we're going to be able to deliver value and the more sustainable our business is going to be going forward, which is the key for us.
Kristen, do we have more questions? I think that's all for today then. Thank you very much.
Alexander Osterwalder's Business Model Canvas is fast becoming a staple in all courses relative to new venture creation. Less talked about are the implications for entrepreneurship curriculum and applications beyond new business creation.
Join Neil Tarallo, senior lecturer and Pillsbury Institute Faculty Ambassador at the Cornell University School of Hotel Administration, for a discussion regarding the pedagogy behind the Business Model Canvas.
