There are a lot of ways to teach business lessons. Stories and real-life experiences are great tools. Mentoring and coaching are also highly effective. Sometimes, though, you just have to give people twenty bucks, let them loose, and see what they learn on their own.
That's exactly what Professor Jason D'Mello does in a popular class he teaches at Loyola Marymount University's nationally ranked Fred Kiesner Center for Entrepreneurship and Institute for Business Ethics and Sustainability. The project he gives his students is called the "The Creating Value Project."
Here's how the project works:
The students are divided into small teams and are given one week to start and stop a business with two constraints. The first is that they can only use two total hours for that business. The second is that each team is given just twenty dollars, and they can't spend any additional money.
They then have to create as much value as they can. They have to show this value in a five-minute presentation to the class at the end of the week and make a case that they created more value than the other groups.
With that, the students are off and running. Sometimes, literally.
Fast forward to a week later, and Professor D'Mello listens to all of the presentations. Some of the strategies the teams have come up with to generate real financial value are pretty creative. Some built businesses based on standing in line for people and holding their places. Some parked cars for people on busy streets in Los Angeles.
One time, a team actually sold their five-minute class presentation time to a Recruiting Firm. That group made a surprising amount of money in very limited time and didn't even make a presentation to the group. The sale of their time was their business strategy.
All of it is in good fun. Most donate the money made to charity or incorporate the charity into the design of their business.
Four Key Lessons
For Professor D'Mello, none of this is really about the business ideas the teams come up with. It is about how to be a successful entrepreneur. And these are things we can all benefit from learning (even if we don't get to be in his class). Here's what D'Mello teaches the students (and all of us as entrepreneur beneficiaries) through this unique assignment:
1. It is possible to make and earn good amounts of money very quickly.
It is about idea generation and execution together. Each without the other doesn't yield anything viable that creates value.
2. You have to think about resources broadly beyond the obvious.
In many ways, the twenty dollars is bait. It is a designed distraction. It is intended to coerce them into constrained thinking about resources that they thought they had. What many of the students come to realize is that they have to think more strategically about resources than the twenty dollars.
This applies to all entrepreneurs and small business owners who often have limited resources if they allow their thinking about resources to be constrained.
In the case of the team who sold their five minutes, they didn't even use their twenty dollars. The teams that run into trouble use their twenty dollars on "product" but ultimately are limited by it. The same applies in small business. Uber doesn't own a single car. Amazon doesn't own a single store.
3. Running a business never goes the way you plan it. You've got to be highly adaptable.
It is all about being nimble and agile instead of being locked into an idea or concept that has not worked either due to predicted or surprising circumstances. Most of us who run small businesses have experienced this in spades. I've been running my consulting business for almost a decade and have had to adjust on the fly several times.
4. A business must always be focused around the customer. Always.
An interesting development happens to at least a few teams every year, Professor D'Mello says. As they work together with limited time, they often design the business around their own needs and personal constraints. Given their imposed two-hour time limit, this internal team focus eats up precious time that they don't get back that should have been outwardly directed to the customer.
It reinforces a critical lesson for any business of any size really: focus on the customer. Easy to say, but when business start to operate, it is surprisingly easy to lose sight of.
So forget about that Angel funding. You might only need twenty bucks (that you don't even spend anyway) to do something pretty cool.