12 Planning and management
12.1 Introduction
For many entrepreneurially minded individuals it is quite a challenge, and for many teachers it is the topic they feel comfortable with in entrepreneurship education: planning and management. To start with management: although entrepreneurship involves management (in the sense of utilising, controlling and optimising), for many entrepreneurs it is about searching, variation, exploring, uncertainty and experimentation. It is no accident that serial entrepreneurs often say that after the first five years of their entrepreneurial project they step out and hand it over to the 'managers' of this world. The fun is then gone. The figure below, based on a figure from the book Value Proposition Design by Alexander Osterwalder, shows the difference in dynamics in a somewhat caricatured way. Entrepreneurship is about the left part. Managing, traditionally seen, is about the right part.
Figure 12.1 The entrepreneurial process: first entrepreneurship, then management. Source: Osterwalder et al. (2014).
However, in reality the left and right hand sides flow into each other and complement each other. Just ideas and exploration are not enough. Then it remains with dreaming and making up ideas. To take steps, you need a planning, which you have to execute and check again, to see if goals are met and if the planning (or goals) should be adjusted. Not only to please the teacher, but also a bank or lender will require, for example, a financial plan, business plan or marketing plan. Many beautiful things are thought up, but never become reality. And just for that planning and management are important. Entrepreneurship, planning and management are therefore more an extension of each other than the outside world sometimes suggests ("my plan can be found on a napkin").
However, in reality the left and right hand sides flow into each other and complement each other. Just ideas and exploration are not enough. Then it remains with dreaming and making up ideas. To take steps, you need a planning, which you have to execute and check again, to see if goals are met and if the planning (or goals) should be adjusted. Not only to please the teacher, but also a bank or lender will require, for example, a financial plan, business plan or marketing plan. Many beautiful things are thought up, but never become reality. And just for that planning and management are important. Entrepreneurship, planning and management are therefore more an extension of each other than the outside world sometimes suggests ("my plan can be found on a napkin").
12.2 Insights
Usefulness of planning
Does planning for entrepreneurial behavior matter or not, and if so, how much does it matter? This is a controversial topic in the entrepreneurship literature and beyond, after all, uncertainty cannot be planned for. However, meta-analyses show that planning, both the planning process itself and its products (think of a business plan) positively influence the performance of start-ups and existing businesses [1]. On a psychological level, planning is a mental stimulus to develop forward thinking. The planning process helps students to become more aware of their own choices. Early planning is an important learning tool in entrepreneurial projects. Planning can provide early warning signs that allow students to discover critical errors in their entrepreneurial behavior more quickly and efficiently. It is a tool that teachers can use under the guise of 'measuring = knowing'.
Graduations of planning
But what is an optimal form of planning, especially when uncertainty increases [see: Coping with ambiguity, uncertainty and risk]? Research shows that all entrepreneurs engage in some form of planning: however, that planning can vary from formal, informal, emergent (spontaneous) to entirely improvisational in nature [2]. Formal planning then is a completely written out business plan with a heavy financial section, which usually takes a longer time to write. Writing a business plan is a comprehensive, fairly linear way of planning where entrepreneurs try to write down a set goal and how it will be achieved.
An alternative, less rigid form of planning is one that concentrates on the most important, difficult and uncertain points: researchers call this critical point planning [2]. Perseverance is all well and good, but incorporating flexibility into the route is essential. There are many roads to the top of the mountain and sometimes it takes longer to get there [see: Coping with ambiguity, uncertainty and risk]. A widely used tool for this critical-point planning is the popular Business Model Canvas (BMC) [see also: Valuing ideas]. Where the business plan is the detailed blueprint of the house you want to build, the business model canvas is the sketch that precedes it in order to examine a number of things: what value do you want to create for the occupant(s) of the house, and what does that mean for the contours of the house (does it perhaps look more like a hut, castle or houseboat)?
If change and uncertainty are considerable, there is sometimes no time or space to draw or sketch in advance, and the entrepreneur is planning and building at the same time (building the plane while flying), for example by immediately starting on a prototype and presenting it to various customers as quickly as possible. This does not mean that the idea of planning is thrown overboard, but that the focus is more on action and learning fast and less on thinking things through and structuring them.
There is also research showing that lessons from improvisation theory and theatre can serve budding entrepreneurs well [4]. By studying the theory and the underlying principles for performing improvisation and by practicing a lot, students can also develop their own improvisational skills. In doing so, it supports pivot-based approaches: allowing students to take a deep dive and quickly take appropriate action when the situation demands it.
Managing: working in teams and enterprising project management
As planning becomes more emergent and free, the planning, execution, checking and adjustment of the plans, and thus the management of them, will also become different. At the individual level, this different way of managing will mainly translate into the use of alternative thinking models for taking decisions [see the discussion of effectuation under Dealing with ambiguity, uncertainty and risk] and in 'learning from mistakes' during execution [see: Learning through experience]. However, entrepreneurial behaviour increasingly takes place in a team context [see: Working with others]. In educational practice, the management of plans will quickly translate into the management of an entrepreneurial project by a group of students. This management is not easy. The team must be flexible (learn and prioritise), must be able to adapt quickly to changing insights, and must at some point also show progress (perform, achieve objectives). It becomes even more complicated when entrepreneurial teams become larger, interdisciplinary or even intercultural [5].
Research into entrepreneurial projects in (higher) education shows that entrepreneurial management mainly involves managing group processes and entrepreneurial leadership [5]. The management of group processes involves creating a group feeling (team spirit) around the idea and ensuring sufficient communication between the group members about the group objectives, intentions and progress of the team members [see: Working with others]. Entrepreneurial leadership is about leadership from within the group (who has what role, and are they all headed in the same direction?), as well as the personal leadership of the group members to take action for the team, collect information, share, network and learn quickly. In practice, lean management methods such as Kanban, Agile and Scrum (digitally supported by Trello or Slack for example) - all developed in the business world - are often used as a support framework. The preference for these methods is not surprising, as they are grafted on speed, continuous improvement and value creation for customers: processes that fit well with entrepreneurship. Research into the effect of such management methods in start-ups is already available: it appears that the success of these methods is linked to the intelligence of the entrepreneur [3]. The ability to systematically validate assumptions and to think in systems are important additional skills. However, the extent to which these methods lead to more 'successful' entrepreneurial teams in education has not yet been researched.
Does planning for entrepreneurial behavior matter or not, and if so, how much does it matter? This is a controversial topic in the entrepreneurship literature and beyond, after all, uncertainty cannot be planned for. However, meta-analyses show that planning, both the planning process itself and its products (think of a business plan) positively influence the performance of start-ups and existing businesses [1]. On a psychological level, planning is a mental stimulus to develop forward thinking. The planning process helps students to become more aware of their own choices. Early planning is an important learning tool in entrepreneurial projects. Planning can provide early warning signs that allow students to discover critical errors in their entrepreneurial behavior more quickly and efficiently. It is a tool that teachers can use under the guise of 'measuring = knowing'.
Graduations of planning
But what is an optimal form of planning, especially when uncertainty increases [see: Coping with ambiguity, uncertainty and risk]? Research shows that all entrepreneurs engage in some form of planning: however, that planning can vary from formal, informal, emergent (spontaneous) to entirely improvisational in nature [2]. Formal planning then is a completely written out business plan with a heavy financial section, which usually takes a longer time to write. Writing a business plan is a comprehensive, fairly linear way of planning where entrepreneurs try to write down a set goal and how it will be achieved.
An alternative, less rigid form of planning is one that concentrates on the most important, difficult and uncertain points: researchers call this critical point planning [2]. Perseverance is all well and good, but incorporating flexibility into the route is essential. There are many roads to the top of the mountain and sometimes it takes longer to get there [see: Coping with ambiguity, uncertainty and risk]. A widely used tool for this critical-point planning is the popular Business Model Canvas (BMC) [see also: Valuing ideas]. Where the business plan is the detailed blueprint of the house you want to build, the business model canvas is the sketch that precedes it in order to examine a number of things: what value do you want to create for the occupant(s) of the house, and what does that mean for the contours of the house (does it perhaps look more like a hut, castle or houseboat)?
If change and uncertainty are considerable, there is sometimes no time or space to draw or sketch in advance, and the entrepreneur is planning and building at the same time (building the plane while flying), for example by immediately starting on a prototype and presenting it to various customers as quickly as possible. This does not mean that the idea of planning is thrown overboard, but that the focus is more on action and learning fast and less on thinking things through and structuring them.
There is also research showing that lessons from improvisation theory and theatre can serve budding entrepreneurs well [4]. By studying the theory and the underlying principles for performing improvisation and by practicing a lot, students can also develop their own improvisational skills. In doing so, it supports pivot-based approaches: allowing students to take a deep dive and quickly take appropriate action when the situation demands it.
Managing: working in teams and enterprising project management
As planning becomes more emergent and free, the planning, execution, checking and adjustment of the plans, and thus the management of them, will also become different. At the individual level, this different way of managing will mainly translate into the use of alternative thinking models for taking decisions [see the discussion of effectuation under Dealing with ambiguity, uncertainty and risk] and in 'learning from mistakes' during execution [see: Learning through experience]. However, entrepreneurial behaviour increasingly takes place in a team context [see: Working with others]. In educational practice, the management of plans will quickly translate into the management of an entrepreneurial project by a group of students. This management is not easy. The team must be flexible (learn and prioritise), must be able to adapt quickly to changing insights, and must at some point also show progress (perform, achieve objectives). It becomes even more complicated when entrepreneurial teams become larger, interdisciplinary or even intercultural [5].
Research into entrepreneurial projects in (higher) education shows that entrepreneurial management mainly involves managing group processes and entrepreneurial leadership [5]. The management of group processes involves creating a group feeling (team spirit) around the idea and ensuring sufficient communication between the group members about the group objectives, intentions and progress of the team members [see: Working with others]. Entrepreneurial leadership is about leadership from within the group (who has what role, and are they all headed in the same direction?), as well as the personal leadership of the group members to take action for the team, collect information, share, network and learn quickly. In practice, lean management methods such as Kanban, Agile and Scrum (digitally supported by Trello or Slack for example) - all developed in the business world - are often used as a support framework. The preference for these methods is not surprising, as they are grafted on speed, continuous improvement and value creation for customers: processes that fit well with entrepreneurship. Research into the effect of such management methods in start-ups is already available: it appears that the success of these methods is linked to the intelligence of the entrepreneur [3]. The ability to systematically validate assumptions and to think in systems are important additional skills. However, the extent to which these methods lead to more 'successful' entrepreneurial teams in education has not yet been researched.
12.3 Further reading
[1] This meta-analysis by Jan Brinckmann and colleagues answers the question of whether business planning is of value or not. Planning is of value, but its value does depend on contextual factors, such as how new a company is and in what cultural environment it operates. Brinckmann, J., Grichnik, D., & Kapsa, D. (2010). Should entrepreneurs plan or just storm the castle? A meta-analysis on contextual factors impacting the business planning-performance relationship in small firms. Journal of Business Venturing, 25(1), 24-40.
[2] In this study, Michael Frese and colleagues distinguish between different forms of planning, from detailed to reactive. Data from 80 small start-ups show that a combination of critical-point planning and opportunistic planning leads to the best results. Frese, M., Van Gelderen, M., & Ombach, M. (2000). How to plan as a small scale business owner: Psychological process characteristics of action strategies and success. Journal of Small Business Management, 38(2), 1-18.
[3] Rainer Harms and Mario Schwery recently investigated the relationship between the use of the lean start-up method by start-ups and the performance of these companies. Harm, R. & Schwery, M. (2020). Lean Startup: Operationalizing Lean Startup Capability and testing its performance implications, Journal of Small Business Management, 58:1, 200-223, DOI: 10.1080/00472778.2019.1659677.
[4] In this special issue on entrepreneurship education, Lakshmi Balachandra shows in a qualitative study that 'learning to improvise' can help create a team environment with a creative, collaborative culture in which constructive conflict can thrive. Lakshmi Balachandra (2019). The improvisational entrepreneur: improvisation training in entrepreneurship education. Journal of Small Business Management, 57:sup1, 60-77, DOI: 10.1111/jsbm.12486
[5] Thomas Lans and colleagues investigated how international, interdisciplinary student teams in a summer school develop from idea to prototype in two weeks. Team dynamics in particular were the focus of this research. Lans, T., Oganisjana, K., Täks, M., & Popov, V. (2013). Learning for entrepreneurship in heterogeneous groups: Experiences from an international, interdisciplinary higher education student program. Trames: A Journal of the Humanities and Social Sciences, 17(4), 383.
[6] Alexandre Joyce and Raymond Paquin and colleagues developed the triple layer business model canvas. Using Osterwalder's canvas as a basis, they added two new 'layers' to be able to design sustainable business models as well. Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.
[2] In this study, Michael Frese and colleagues distinguish between different forms of planning, from detailed to reactive. Data from 80 small start-ups show that a combination of critical-point planning and opportunistic planning leads to the best results. Frese, M., Van Gelderen, M., & Ombach, M. (2000). How to plan as a small scale business owner: Psychological process characteristics of action strategies and success. Journal of Small Business Management, 38(2), 1-18.
[3] Rainer Harms and Mario Schwery recently investigated the relationship between the use of the lean start-up method by start-ups and the performance of these companies. Harm, R. & Schwery, M. (2020). Lean Startup: Operationalizing Lean Startup Capability and testing its performance implications, Journal of Small Business Management, 58:1, 200-223, DOI: 10.1080/00472778.2019.1659677.
[4] In this special issue on entrepreneurship education, Lakshmi Balachandra shows in a qualitative study that 'learning to improvise' can help create a team environment with a creative, collaborative culture in which constructive conflict can thrive. Lakshmi Balachandra (2019). The improvisational entrepreneur: improvisation training in entrepreneurship education. Journal of Small Business Management, 57:sup1, 60-77, DOI: 10.1111/jsbm.12486
[5] Thomas Lans and colleagues investigated how international, interdisciplinary student teams in a summer school develop from idea to prototype in two weeks. Team dynamics in particular were the focus of this research. Lans, T., Oganisjana, K., Täks, M., & Popov, V. (2013). Learning for entrepreneurship in heterogeneous groups: Experiences from an international, interdisciplinary higher education student program. Trames: A Journal of the Humanities and Social Sciences, 17(4), 383.
[6] Alexandre Joyce and Raymond Paquin and colleagues developed the triple layer business model canvas. Using Osterwalder's canvas as a basis, they added two new 'layers' to be able to design sustainable business models as well. Joyce, A., & Paquin, R. L. (2016). The triple layered business model canvas: A tool to design more sustainable business models. Journal of Cleaner Production, 135, 1474-1486.
12.4 Exercises for students
1) What's in a plan?
On the internet you can find many formats for (parts of) a business plan, for example on the sites of Rabobank, Qredits and Intemarketing. A good exercise is to have students study, compare and discuss both the formats and existing plans.
Clarification: This exercise gives a good picture of what is required from the market in terms of planning. How much detail is required, and to what extent is uncertainty taken into account?
2) Making flying hours: Business Model Canvas
The Business Model Canvas (BMC) is a perfect tool to introduce students to this form of planning and sketching. It is not about filling in the 9 boxes, but getting acquainted with a way of working in which assumptions are identified and tested. Speed and overview are more important than a discussion about what is or should be in each box. Practice, practice, practice, always with different examples, so that students can learn this way of working and thinking.
Explanation: By learning to work systematically with the BMC - including testing and evaluating with users - students are trained to carry out an entrepreneurial project in a lean way. By using short cycles (today this step, tomorrow this step) the simultaneous thinking, executing and learning is stimulated.
Useful websites for this are: Strategyzer | Corporate Innovation Strategy, Tools & Training.
An example of this way of working is the Owlet-Case (available on Youtube IBMC 2013: Owlet - 1st Place). If students want to go a step further, and also add social and environmental elements, the triple layer business model canvas by Alexandre Joyce is a nice extension [6].
3) Improvisation: presentation roulette and participating in simple cases/scripts
A fun way to start improvisation is the presentation roulette. Each participant gets 3 minutes, 12 PowerPoint slides and a subject to talk about. The catch: The participant does not know the subject and has not seen the slides before, and the slides automatically change every 15 seconds. Just try to hold your ground.
Another exercise is to use situations, which students are given a few minutes to read beforehand. The point is that as a student you react to what is happening and describe how you are going to handle the situation. Because these are often interpersonal situations, you can simulate the situation with the teacher, a fellow student, and even better with a training actor. An example of such a situation:
You are planning a big youth/student festival. You are having lunch with a good friend of yours. He tells you that the [lady/lord] down the road might be interested in your project. However, your friend has to leave before he has a chance to introduce [him/her] to you. At some point you see [him/her] sitting alone at a table and you approach... you have a maximum of 5 minutes for this conversation. Try to get the most out of it!
Explanation: These two exercises can be used to teach students to be open to a new situation, and to adapt to it immediately.
On the internet you can find many formats for (parts of) a business plan, for example on the sites of Rabobank, Qredits and Intemarketing. A good exercise is to have students study, compare and discuss both the formats and existing plans.
Clarification: This exercise gives a good picture of what is required from the market in terms of planning. How much detail is required, and to what extent is uncertainty taken into account?
2) Making flying hours: Business Model Canvas
The Business Model Canvas (BMC) is a perfect tool to introduce students to this form of planning and sketching. It is not about filling in the 9 boxes, but getting acquainted with a way of working in which assumptions are identified and tested. Speed and overview are more important than a discussion about what is or should be in each box. Practice, practice, practice, always with different examples, so that students can learn this way of working and thinking.
Explanation: By learning to work systematically with the BMC - including testing and evaluating with users - students are trained to carry out an entrepreneurial project in a lean way. By using short cycles (today this step, tomorrow this step) the simultaneous thinking, executing and learning is stimulated.
Useful websites for this are: Strategyzer | Corporate Innovation Strategy, Tools & Training.
An example of this way of working is the Owlet-Case (available on Youtube IBMC 2013: Owlet - 1st Place). If students want to go a step further, and also add social and environmental elements, the triple layer business model canvas by Alexandre Joyce is a nice extension [6].
3) Improvisation: presentation roulette and participating in simple cases/scripts
A fun way to start improvisation is the presentation roulette. Each participant gets 3 minutes, 12 PowerPoint slides and a subject to talk about. The catch: The participant does not know the subject and has not seen the slides before, and the slides automatically change every 15 seconds. Just try to hold your ground.
Another exercise is to use situations, which students are given a few minutes to read beforehand. The point is that as a student you react to what is happening and describe how you are going to handle the situation. Because these are often interpersonal situations, you can simulate the situation with the teacher, a fellow student, and even better with a training actor. An example of such a situation:
You are planning a big youth/student festival. You are having lunch with a good friend of yours. He tells you that the [lady/lord] down the road might be interested in your project. However, your friend has to leave before he has a chance to introduce [him/her] to you. At some point you see [him/her] sitting alone at a table and you approach... you have a maximum of 5 minutes for this conversation. Try to get the most out of it!
Explanation: These two exercises can be used to teach students to be open to a new situation, and to adapt to it immediately.