AN INTEGRATED PROGRAM FOR ENTREPRENEURSHIP CLASSES Keramat Poorsoltan, Frostburg State University Guild Center 010 Frostburg State University Frostburg, MD 21532 Telephone: 301-687-7498 Email: [email protected] Abstract A three -part experiential program consisting of an idea-generating activity-the “bugs”-, a networking activity- “Networking”- and a real-life start-up exercise-the “seed money”- was implemented in an undergraduate class of entrepreneurship during spring 2004. The objective of this program was shifting the “burden” of teaching from a conventional lecturing method to a series of hands-on assignments in which students had to generate business ideas, establish contacts with the local entrepreneurs, and actually start a business. These activities initially appeared as disconnected and unrelated efforts. However, as the class progressed, underlying relatedness of these exercises became more and more apparent. Major outcomes of this program were: 1- After three rounds of sifting and refining, a long list of business ideas was compiled 2- A large number of local entrepreneurs- among whom many expressed their willingness to be guest speakers- established links with the students and the University. 3-Many students who had never experienced how a small proprietary business operates realized mechanics of starting and managing an enterprise. INTRODUCTION The program is based on a simple logic: Adding entertainment to conventional teaching enhances learning. The program critically “engages” students in work and at the same time make them think that they are in a playing field. The theoretical basis of “engagement” (Pine and Gilmore, 1999) simply implies that education is absorption and active participation in an experience, as opposed to absorption and passive participation of the target, in our case, students. The process of “learning by doing” is actually conversion of the explicit knowledge (theory) that is transmittable in formal, systematic language into tacit knowledge (practice) that is personal, and context-specific. As stated by Nonaka and Takeuchi (1995), when experiences are internalized in the form of technical know-how, they become valuable assets. The following section explains the theoretical background of the three ingredients of the program the bugs, networking, and the seed money. 1- The “Bugs” constitute the first component of the troika. Its purpose is to produce ideas with the potential of becoming new products and services.

The most successful products are response to problems or needs that someone has. Many entrepreneurs get ideas for new products from needs that they have themselves, or they identify when speaking with someone. For instance, Leo Gerstenzang invented the Q-tip in the 1920’s. His wife had used a toothpick with cotton stuck on the end to clean their baby' s ears, and Leo invented Q-tips to replace her “invention”. Or Velcro was invented by George de Mestral-Swiss engineer- in 1948. While hiking, he had noticed that burdock seeds stuck to his clothing extraordinarily well. The seeds had extensions that attached themselves firmly to clothing. Mestral used this same model to develop Velcro. Inventions do not go all the way from ideas to usage. They go through many phases of refining and filtering, and in a sort of “natural selection”. Some ideas may work well in a laboratory experiment but not in the marketplace. Many good ideas and inventions fail to succeed, even after being financed, because companies don’t have the well-rounded business knowledge to have all areas of their company on solid ground. 2. The second constituent of the program, networking, is in fact the other side of the invention – finding “bugs”. While the latter is the saga of the “hero”, the one who is able to solve problems, the former emphasizes on the power of networking. Here, the hero acts within and with the help of a network of friends, associates, and acquaintances. There is more to success than having a good idea and raising money. Marketing, advertising, accounting, taxes, and networking are just some of the other areas of knowledge necessary to maximize success. The advocates of this line of reasoning propose that the “networks” are the “most significant resource of the firm” (Johannisson, 1990, p. 41), and the contacts with the network are often a source of new venture ideas (Christensen and Peterson, 1990). Another research (Hills, et. al, 1997) indicates that network entrepreneurs recognize significantly more opportunities than “solo” entrepreneurs. In fact, in reference to the concept of “bounded rationality” (Simon, 1976), entrepreneurs can use their social networks to expand boundaries of rationality. By taking this approach, our proverbial hero turns into a creature of his environment and networks. 3-The seed money activity initiates from a fact that people have different approaches to learning. Students in a seminar might be all thumbs in a lab or studio; students rich in hands-on experience may not do so well with theory. Students need opportunities to show their talents and learn in ways that work for them. This hands-on activity provides an outlet for practical students and acts as an additional tool of leaning. DESCRIPTION OF THE PROGRAM The program of integrated experiential exercises, discussed in this paper, was formed to engage students in learning and turn theories into practices. The three components of this experiment are a brainstorming track -“bugs”, a networking track-“networking”, and an actual business operations-“seed money”. In developing this program, three ideas merged: The idea of brain storming activity, creatively labeled “bugs” – things that aggravate you came from Marcie Sonneborn (Syracuse University). The networking idea flowed from David Newton (Westmont College, Santa Barbara, California).

Robert Peterson, from University of Portland, presented the third activity in a paper at USASBE 2004 in Dallas, Texas. /

The author is not aware of execution of the first two works, but the seed money project had been practiced before. These activities were totally separate and unrelated works developed by different persons. The idea of integration and expansion, however, was developed later. In this paper particulars of the program are presented so that repeat of the exercise becomes an easy task. It is evident that any reproduction of the experiment has to be modified to echo the local conditions and preferred objectives. For instance, universities have different calendars and the length of terms vary. Some schools, particularly those located in large urban areas, have access to more resources and entrepreneurs, which allows a slightly different approach. In instances, the instructor may desire to invite entrepreneurs as guest speakers to her or his class. Still, the class size may influence the arrangement of groups. ACTIVITIES 1- “What does bug you” Report: This is an individual work: For this assignment each student is asked to list 70 or more things that really annoys her/him. In this exercise students must reflect on their own life, their personal needs, activities in which they are involved, things they like to do, relationships that they have, things that they observe in their everyday world, and so forth. As such, they compose a laundry list of particular things that bug them. This assignment is completed in four phases: In the first phase students are asked to come up with 70 “bugs”. In the second phase students are required to classify their bugs into various categories such as social, personal, environmental, and legal. Here they are told that the purpose is to find a reasonable solution that may lead to creating a certain product or service. In the third phase students need to filter their bugs and select the 10 best promising concepts for future business enterprises. The result of this phase is a table that specifies some key business concepts. The project is completed in the fourth phase and here we have a list of the 10 best bugs that reflects market deficiencies suggesting various business opportunities. Table one demonstrates a sample of irritating things that students presented as “Bugs”. In the same table, we also note suggested solutions –a potential product- for them. Table 1 about here As the sample table demonstrates some of the suggested solutions are directed at immediate and local concerns. Others have been proposed to solve universal problems. 2- Networking Report: This is a group work: This assignment requires a group of students to progressively fill up a binder with specific information. The entries include business cards, clipped articles about intriguing entrepreneurs, telephone numbers for great referrals, web URLs or email addresses for related products or services, brochures picked up at trade fairs or exhibits, firm owners cited in various publications in the state and cold call referrals secured during the

semester. Students have to keep adding value to their binders. Which means that in each round, they must submit a progress report to the instructor and the class. They have to add more items to the folder (more business cards, more brochures, etc.), and have to have a follow-up with the business card owners. This implies that during the semester, students will increase their professional contacts, and thereby amplifies their awareness. There are four rounds of this work: First, students are asked to collect business cards, brochures, newspaper clips, fliers, etc, from the local businesses. They can be from any type of business. In the second phase, in addition to adding more items collected in the previous phase, students are required to interview local entrepreneurs. Since this is a group project, students are expected to conduct at least ten interviews during this phase. In the third phase a table must be completed. Certain information about five of the entrepreneurs who have been interviewed are to be placed in part of this table. At last the previous phase has to be completed and the final project is to be submitted to the instructor for grading. Despite the clear merits of experiential exercises, a textbook was used during the semester for two reasons: Not all students know or are able to remember business concepts previously learned in other classes. It happened quite a few times that nobody in the class could recall even the simplest business terms. Thus, the textbook could be used as a reference. Additionally, the textbook would exert discipline in the class. The experienced instructor is aware that certain topics and chapters in any textbook are more helpful than others, and those sections must be emphasized. Week-by-week activities: Week One through Week Six First two weeks: A general discussion of entrepreneurial characteristics, as well as discussion of identifying opportunities and entry strategies The assumption is that after covering these subjects, students are ready for completion of the first round of the “bugs” and “network”. In addition, instructors can assign other exercises to their students. Third week through sixth week: Discussion of business valuation and buying an existing business, management teams, legal forms of organization, and intellectual property. Again, additional homework activities that are related to these topics may be assigned. Here students are prepared for the second round of both experiential exercises. A third exercise, the “seed money” project is to be initiated at this time. In other words, when the seed money project starts, the semester is about six weeks old. 3. Seed Money Project- For this two-month long activity, each student is given $ 20.00 to start a service or produce a product. They knew that as long as the business was legal and ethical, its type did not matter. When the seed money was distributed the instructor and student- signed a contract. Students were free to form a partnership if their project required more money to start. If a partnership was formed a contract must be signed and kept in the portfolio. The reason for the rather late start for this project was to pass the course withdrawal period. Also by this time students have become acquainted with the basic concepts of doing business and have had an opportunity to evaluate the pros and cons of selecting the test or seed money options.

The grades given to students are for the quality of the reports only. There is a chance that a certain enterprise loses its initial fund. This itself is an exercise in entrepreneurship and student’s responsibility to face the risks of starting a business. The seed money would be collected regardless of the outcomes. A big bonus can be awarded to each project where the owner(s) were able to entice local entrepreneurs to finance their expansion and growth. Bonus can be extra points or just certificates of appreciation awarded to the individual founders or their enterprises. Each group has to prepare a collective resume for itself. The instructor forms these groups and they are composed of students with different overall grade averages (GPA). The importance of this collective resume is multi-fold. It enhances group cohesiveness. It reveals to them that no single individual has all the necessary talents and skills. In addition, the seed money project requires having the professional resume of the entrepreneur. Thus, if a partnership has been formed, the said resume would be a collective one. A part of network assignment, too, demands inclusion of a collective resume. A short report about this project, as was implemented in the class, is presented bellow: Out of 28 students in this class, 22 decided to take the seed money path. The remaining 6 selected to take the tests. Five of these six were graduating seniors. Their final grades were about the same level of some other students who did not take the tests. Each student received $20.00. However, some of them formed companies. As the result, we ended up having 11 enterprises. Some students acted alone, but in one case, the “company” had 5 partners. The initial investment of $440.00 generated net revenue of $ 826.00. Considering the life span of this exercise (just two months), this return on investment (87.7%) is to be regarded as a huge success by a group of students who had very little or no business experience. Students paid a 10% “tax”. Some “donated” extra funds. In total, $88.90 was collected that was deposited in a special account for our CEO Club. Types of the businesses that these students founded included: One-person enterprises: A car detailing, a car washing (at your residence), a web designing, a candy making, a jewelry making, a woodcutting, and a decorating business. Businesses that consisted of more than one investor: two T-shirt companies and one massaging enterprise (with one female and two male students). None of these enterprises lost any money. But, the majority of the students lost points due to bad preparation of their reports. In most cases, mistakes were more prominent on balance sheets and income statements. Week-by-week activities: Week Seven through Week Fourteen Week seven through week ten: During this phase, the following topics are discussed: Contracts and leases, how to protect business interests, government regulations, and analyzing the market. After these discussions, students should turn in their third round of “bugs’ and “network” assignments. They should also demonstrate substantially improved knowledge of market and

how to convert ideas into products. If a seed money project is assigned, its first report is due at this time. Week eleven through week fourteen: In preparation for the fourth and last reports of the “bugs” and “network” assignments, students will have studied subjects such as pricing, market penetration, developing financial statements, and sources of capital. Since this is about the end of the semester, a final (in fact the second) report of seed money project is also due at this time. Similar to the preceding phases, the instructor may require students to complete other assignments. These homework assignments are the type that will further assist students to acquire knowledge about the complex task of business management. CONCLUSION By following the step-by-step activities, the program achieved several objectives: We reviewed the most important subjects of how to manage an enterprise. We made the class an exciting place of learning and playing, and allowing students to actually implement a business concept. And at last, these exercises created opportunities for students to approach a network of experts, supporting group, and potential investors. Buckingham and Coffman (1999) point out “through Gallup’s studies of great accountants, we have discovered that one of their most important talents is an innate love of precision.” As this experiment progressed, a fact started to reveal itself to both students and the author. We discovered that certain students while completing phases of activities were demonstrating very clear signs of having such entrepreneurial talents as courage, determination, and tolerance for ambiguity, and accepting risks without much anxiety. The three exercises demonstrated to students that when the subject of entrepreneurship is taken seriously, it is not a course for everybody. All participants in the class learned skills necessary to manage an enterprise. They also acquired awareness of rules of the game. One needs a kind of brain wiring to practice a meaningful profession. As we moved on, we discovered the less talented fellows. Some were missing the deadlines. Some were shy in interviewing the local entrepreneurs. Still others couldn’t identify “bugs”, those irritating life experiences, demonstrating their lack of recognizing opportunities. Almost the same individuals were expressing their inability to start a businessseed money activity- and were begging others to accept them as partners. A direct result of this kind of experiential exercise is “discovering” talents. While it is much easier to teach skills (how-tos) and knowledge (awareness), it is far more crucial and difficult to find hidden talents, conducive to successful future business path. These exercises have the power of digging into the potential pool of human talents and expose the ones that are important in carrying out a business venture. The author would like to hear from colleagues if they decided to implement this system of experiential exercises in their classes. This work has the potential of further refinement and improvement.

REFRENCES Buckingham, M. and C. Coffman. (1999). First, break all the rules. New York, NY: Simon and Schuster. Christensen, P. S. and Peterson, R. (1990). “Opportunity Identification: Mapping the Sources of New Venture Ideas”. Paper presented at Annual Babson Entrepreneurship Research Conference. Denmark: Aarhus University Institute of Management. Hill, G. E., Lumpkin, G. T., and Sigh, R. (1997). “Opportunity Recognition: Perceptions and Behaviors of Entrepreneurs”. Frontiers of Entrepreneurship Research, 17: 168-182. Johannisson, B. (1990). “Economics of Overview-Guiding External Growth of Small Firms.” International Small Business Journal, 9:32-44. Newton, D. (2003). Networking Referral Stories: Undergraduate Forging of Strategic Alliances in Just 15 Weeks. http://www.colemanfoundation.org/index1.html Nonaka, I. And H. Takeuchi. (1995). The Knowledge-creating Company. New York: Oxford University Press. Peterson, R. M. (2004). What would you do for $20?Qualitative and quantitative outcomes. Paper presented at USASBE, Dallas, TX. Pine II, B. J. and J. H. Gilmore. (1999). The Experience Economy. Boston, MA: Harvard University Business Press. Simon, H. A. (1976). Administrative Behavior (3rd edition). New York: Free Press. Sonneborn, M. Bug Report. (2003). http://www.colemanfoundation.org/index1.html Table 1. A Sample of Bugs and Suggested Solutions What does bug you Solution I frequently lose my keys Attaching a beeping device to the key chain to be activated when a button is pressed on the base I don’t like to add liquid detergent any Developing an automatic dispenser that will release time that I load a washer detergent from a large container inside the machine It is very hard to level pool tables Developing an electronic device that is attached to a mechanical adjuster on each leg of the pool table. This device would adjust each leg automatically.