I had the opportunity to chat with Steve Blank about the Business Model Canvas and his Stanford class. I suggested that there is much work to be accomplished even before embarking on the Lean Launchpad Class. When I taught at the University of Southern California (USC), the cornerstone class before the Business Plan class was the Feasibility study. In fact, there were two tracks for entrepreneurs: one for technology and another for other businesses, and each had separate feasibility and business plan classes. (Disclaimer: I am not a believer in the traditional business plan, but rather focus on the operational and business-building sides of startups.)

I adopted many of the topics in both courses as a precursor to the Lean Launchpad class for mechanical engineers at Cal State Los Angeles, which I developed. When I taught at USC, the feasibility class was part of the MBA program. Therefore, many of the entrepreneurial and business concepts were already familiar to many of the students. However, the engineers at Cal State had no experience with business and entrepreneurial terminology and concepts.

I found the key to starting a new feasibility class for engineers was to introduce a few creativity concepts and exercises as a way of enriching their way of thinking. Engineers tend to think in a very linear fashion, and are sometimes uncomfortable with ambiguity in business. They weren’t as interested in variations in valuations or marketing—they just wanted the formula.

At some point in any business process, the research stops and the marketing begins. I am also a big subscriber to effectuation – the concept that entrepreneurs must think differently than ongoing businesses; using evolving means to reach new goals. Startups that are resource poor can’t throw money at a problem in order to make it sellable. A large business may be able to afford such a play, but not a startup. Entrepreneurs must use a different toolkit and a different way of thinking in order to succeed. Both effectuation and the business model canvas provide those tools.

In my entrepreneurship class at USC, students were required to meet 25 strangers. Steve Blank’s classic line is “to get entrepreneurs out of the building.” Entrepreneurial knowledge can only be gained through meeting people in their industry, advisors, and anyone else who can help budding entrepreneurs think through the parts of their business, how they compete, what niche does their competitor target, and just about everything required to be known before thinking about spending a dime.

So what kind of research could an entrepreneur do before starting on their entrepreneurial journey? This is secondary research to be completed before getting out the door. This needs to be done before to make the primary research (getting out the door) more valuable and shorter in duration. After all, having better hypotheses will yield more confirmations:

1. Know thyself. What are you good at, who do you know that can advance the concept, and why is this an important undertaking? Can you articulate the value and benefits? Is the opportunity clear?
2. Know the industry. Every aspect of the industry, every competitor and their niche, how would you find the pattern of change in the industry to become the leader of the pack, who are the major suppliers, can you successfully target the underserved market?
3. Know the value chain – who gets paid and how, can you gain access to critical supplies on good terms? Do you know every step of your business process from order taking to fulfillment and post sale customer service? Where is the most value added?
4. What is the best way to reach the customer? What effects their buying decisions?
5. Who are your target customers and their demographic data? Are they big enough to constitute a market? What color underwear do they wear? Yes, you need to know everything about the client down to their undergarments.
6. Financials – Don’t even think of continuing if you can’t do a spreadsheet forecast called a pro-forma. We all know the spreadsheet is a work of fiction, but how can you guestimate the entrepreneur’s bet? What are the premises underlying the data on your targeted financials? What is the delivered cost of the product? What are the multiple streams of revenue? Get the premises right and be convincing to yourself.

Possibly the most important skill to teach engineers and principle investigators is a little marketing and a whole lot of sales. Let’s face it; with few exceptions scientists are not famous for being extroverts. We need to impart to them that sales is not a shady profession, but rather an exercise in building relationships and helping potential clients solve problems. Good sales and marketing skills help build relationships allowing engineers to fix the world and its problems. Sales and engineering make for a good match.

However, relationship building is sometimes difficult for engineers and principle investigators. Social engagement must be built into all classes. In my class, everyone had to do a one-minute sales pitch that you could give someone in an elevator—a classic elevator pitch. After the first three or four intrepid students made their pitches, the whole class understood the key elements. Not everyone ended up being comfortable with selling, but then again not everyone will become a CEO.

So remember that before jumping into the Business Model Canvas, there is still much thought and research to put into your plan. If you are able to do the homework before embarking on validation tests in the canvas, my hypothesis is that you may have better information through good secondary research techniques before embarking on validation testing in each of the nine building blocks.