Berkeley Method of Entrepreneurship
Berkeley Method of Entrepreneurship
Berkeley Method of Entrepreneurship
PRELIMINARY VERSION (to be used for collecting comments and remarks). Limited circulation.
*,** Center for Entrepreneurship and Technology (CET), University of California Berkeley, CA, USA
(email: [email protected] , email: ken.singer@berkeley )
*** University of Jyväskylä, Finland and Visiting scholar at UC Berkeley
(e-mail: [email protected] , [email protected] )
**** Lund University, Sweden and Visiting scholar at UC Berkeley
(e-mail: edu [email protected] , [email protected])}
However, what is often omitted in traditional courses or “Realize a something new by induction, and then
entrepreneurship courses as well, is an explicit work with learn to communicate the story with a new
mindset (Level 2). The BMoE aims at training students to language.”
become entrepreneurs and therefore exposes the students to
the entrepreneurial mindset. This is done by using an 3 Friend or Foe
inductive game-based teaching approach. “If you can’t tell: Learn to trust others without
expecting anything in return.”
The BMoE is based on a two-folded hypothesis:
1. the mindset of an entrepreneur can be described as a 4 Seek Fairness
list of behavioral patterns, and
“Make deals that seek fairness (in positive sum
2. an inductive game based teaching approach is a transactions), not advantage (in zero sum
successful vehicle to introduce and re-enforce transactions.”
behavioral patterns to students.
A list of ten (10) behavioral patterns has been formulated, 5 Plan to Fail
and current research aims at confirming or rejecting each of “It is necessary to be Wrong sometimes. Plan to
the behavioral patterns. The inductive game-based teaching Experiment. Plan to Fail. (Fail Fast) Analyze,
approach has started to be used at University of California Adapt and repeat. The smarter you think you are,
Berkeley within courses given by the Center for the harder this is going to be.”
Entrepreneurship and Technology. Current research aims at
tuning existing games and/or finding additional games
6 Diversify
reinforcing the behavioral patterns. Research concerning
how to measure the success of using a game-based teaching “Diversify your networks. Connect to people you
approach in entrepreneurial curricula is also in its initial would not normally, then go and listen. Open Up.
stages. The following two chapters describe the ten And connect them to others.”
behavioral patterns characterizing entrepreneurs and the
game-based teaching approach. 7 Role Model
“Be a role model for other entrepreneurs and
5. TEN BEHAVIORAL PATTERNS innovators.”
CHARACTERIZING ENTREPRENEURS
8 Believe
The mindset of successful entrepreneurs has been studied
by various researchers (e.g. (Hwang & Horowitt (2012)) “Believe that you can change the world.”
and a proposal describing their most dominant
characteristics is given through ten (10) behavioral 9 Good Enough
patterns, which are listed in the Table 1. It is important to
note that this is an ongoing research, which implies that the “Perfection is no good but good enough is perfect.”
ten (10) behavioral patterns should be interpreted as best
current status. It cannot be excluded that more patterns will 10 Collaboration
be added, or current patterns modified/removed. “Individual vs team and competitors vs partners”
The ten behavioral patterns describe the typical mindset of
successful entrepreneurs. If everyone in a community acts Table 1: Ten (10) behavioral patterns characterizing and
like this, there will be a vibrant entrepreneurial culture, as entrepreneur.
described by Hwang & Horowitt (Hwang & Horowitt
(2012). 5.1 Pay it Forward
“Agree that you will get help from others, and pay it
forward”
Pay-It-Forward is a term used to describe the concept of
“asking the beneficiary of a good deed to repay it to others
CET Internal report nr 20140326.
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instead of the original benefactor” (Pay-It-Forward, 2013). 5.3 Friend or Foe
The first known use of the term dates back to 1916 when it
was used in the phrase “You don’t pay love back; you pay “If you can’t tell: learn to trust others without expecting
it forward” (Hammond, 1916). anything in return”
In areas strong in entrepreneurship, such as Silicon Valley Trust, generalized trust and particularized trust, are
in California, US, a Pay-It-Forward culture has been important concepts strongly related to a person’s judgment
identified (Blank, 2011). Entrepreneurs in these areas build of friend or foe. Trust means to believe in someone’s word,
support networks outside of existing companies. These it is often towards a known person. Research has validated
networks can be around any area of interest. The networks the importance of social cohesion based on trust, support,
are mutually beneficial, i.e. as a participant you both learn and altruism in driving behavioral outcomes. It has been
from others and contribute to help others. Over time shown that trust is mainly created through real-life
experienced executives “pay back” the help they got by collaborations, working together, and/or sharing
mentoring others. A Pay-It-Forward culture makes an information (Bieling, McCabe & Anthony, 2013; Hwang
entrepreneurship ecosystem smarter. (Blank, 2011). and Horowitt, 2012). In social networks trust can be
multiplied.
The Pay-It-Forward concept is the motivation behind
seasoned managers or entrepreneurs getting involved in Generalized trust is trust towards strangers arising when “a
coaching and/or mentoring (Allen, Eby, Poteet, Lentz & community shares a set of moral values in such a way as to
Lima, 2004). Mentoring has been identified as an exchange create regular expectations of regular and honest behavior”
relationship whereby both the mentor and the protégé gain (Fukuyama, 1995). Generalized trust differs fundamentally
several benefits from each other. For example, compared from particularized trust by being extended to people on
with non-mentored individuals, mentored employees whom the trusting part has no direct information
demonstrate higher levels of objective and subjective (Bjornskov, 2007).
positive outcomes such as career development, job
satisfaction, socialization, organizational commitment, and 5.4 Seek Fairness
career advancements (Richard, Ismail, Bhuian & Taylor,
2009). “Make deals that seek fairness (in positive sum
transactions), not advantage (in zero sum transactions)”
5.2 Story Telling Covey (1989) coined the idea of abundance mentality or
abundance mindset, a concept in which a person believes
“Realize something new by induction, and then learn to there are enough resources and successes to share with
communicate the story with a new language” others. It can be contrasted with the scarcity mindset (i.e.,
This behavioral pattern refers to Christensen’s influential destructive and unnecessary competition), which is
work on the innovator’s dilemma (Christensen, 1997) and founded on the idea that, if someone else wins or is
Moore’s work on crossing the chasm (Moore, 2006). successful in a situation, that means you lose; not
Especially in high-tech markets, an entrepreneur’s product considering the possibility of all parties winning (in some
idea or business model can be radically new, or disruptive, way or another) in a given situation. Individuals with an
it can be a “new to the world” type of innovation. Often abundance mentality reject the notion of zero sum
even the terminology used to describe the concept might be transactions and instead believe in positive sum
missing. Exploring a new, possibly disruptive, market thus transactions. They are able to celebrate the success of
requires major changes in patterns of behavior related to others rather than feel threatened by it. Genuine strive for
how entrepreneurs communicate. The entrepreneurs need mutually beneficial solutions or agreements, as supported
to learn how to “cross the communication chasm” so that by a positive sum transactions attitude, is the key in
potential investors, and later on customers, understand the (entrepreneurial) relationships. A "win" for all is ultimately
added value in the new offering. The entrepreneurs need to a better long-term solution than if only one person in the
learn to communicate their story with a new language; they situation had got his way.
need to be storytellers and to do story telling.
5.5 Plan to Fail
To be able to adopt new innovations, consumers need to be
aware of an innovation and understand the additional value “It is necessary to be wrong sometimes. Plan to
provided by the innovation (Rogers, 1996). Narrative, or experiment. Plan to fail (and fail fast). Analyze, adapt and
story telling, is central tool in addressing many of today's repeat. The smarter you think you are, the harder this is
key leadership challenges, for example, articulating the going to be.“
risks and opportunities identified by strategic management
tools like strategic plans, scenario analysis, and dilemma Important concepts related to this rule are effectual logic,
resolution (Denning, 2006). Story telling can be one way to failure acceptance and pivoting. Research on successful
overcome the communication chasm. It can be used entrepreneurs revealed that they used non-predictive or
effectively for several purposes of communication; effectual logic. This means that you begin with who you
sparking action, transmitting values, explore alternative are, what you know, whom you know and begin doing the
future scenarios or sharing knowledge. doable with as few resources invested as possible
(Sarasvathy, 2001; Read, Saraswathy, Song & Wiltbank,
CET Internal report nr 20140326.
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2009). Research also concludes that an entrepreneur An important concept related to belief is self-efficacy. The
should “repeat, continue after failure and pivot until the construct of self-efficacy was introduced by Bandura
chain of stakeholders and commitments converge to a (1977) and represents one core aspect of his social-
viable new venture” (Ries, 2011). In particular, begin cognitive theory (Bandura, 2001). Perceived self-efficacy
interacting with a wide variety of potential stakeholders is concerned with people's beliefs in their ability to
and negotiating actual commitments. Let the actual influence events that affect their lives. This core belief is
commitments reshape the specific goals of the venture. An the foundation of human motivation, performance
entrepreneur has to accept that the reshaping is an accomplishments, and emotional well-being. A meta-
important part, aiming to improve; it is not to be thought of analysis concerning the relationship between self-efficacy
as a defeat. and work-related performance indicates that there is a
significant weighted average correlation (Stajkovic and
5.6 Diversify Luthans, 1988), i.e. persons with high belief in their ability
to influence events demonstrates higher work-performance
“Diversify your networks. Connect to people you would than those that had a low belief.
not normally, then go and listen. Open Up. And connect
them to others.” It has also been found that a strong sense of personal
efficacy is related to better health, higher achievement, and
According to Dubini and Aldrich (1991) the diversity of more social integration. If people believe that they can take
entrepreneurs’ networks is crucial to the scope of action to solve a problem instrumentally they become more
opportunities open to them. Information about new inclined to do so and feel more committed to this decision
business locations, potential markets for goods and (Schwartzer et al., 1997).
services, sources of capital or potential investors, and
innovations, is likely to be spread widely among 5.9 Perfection vs Good Enough
individuals. This implies that, someone with a small set of
overlapping relationships is at a disadvantage when “Perfection is not good but good enough is perfect.”
competing for information with someone with a large set of
As an entrepreneur it is important to understand that
divergent ties. However, it is not easy to diversify, there
perfection can be harmful, not because of the perfect result
are social barriers to stifle human connections. Although
but because perfection usually requires time, and timing
the geographical distances, due to the technology, are
can be more important than a perfect result. An idea can
shrinking the social distances caused by culture, language
always be changed or altered to make improvements. In the
and distrust are still there (Hwang & Horowitt, 2012).
book “The art of the start”, author Kawasaki (2004)
5.7 Role model explains that entrepreneurs should “fix, ship, fix, ship”
rather than “fix, fix, fix, ship”. The idea will constantly be
“Be a role model for other entrepreneurs and innovators.” improved. Bird Dunn states “Perfection is the enemy of
completion”. Reid Hoffman, founder of LinkedIn says:
It has been demonstrated that a first step in approaching a “One of the metaphors that I use for startups is you throw
new role or a new behavior is to be able to associate yourself off a cliff and assemble an airplane on the way
oneself with a role model possessing this behavior. Culture down”. This implies that you cannot wait for the plane to
can be learned by imitating people similar to us or be perfect; it has to be assembled quick and with an aim to
imitating people that are admired as socially dominant be good enough for flying.
(Hwang & Horowitt, 2012; Freeman, 2009). Role models
are therefore powerful tools for learning new behaviors and 5.10 Collaboration
one of the most powerful ways to change the behavior of
someone is to have them spend time and listen to someone “Individual vs team and competitors vs partners”
else whom they want to emulate (Hwang and Horowitt,
Collaboration can be performed in different flavors; there
2012).
can be collaborations between individuals, who build the
In a good mentoring relationship, the mentor can be a role teams in businesses. Financial and human resources often
model through both words and actions. Assuming the seem to be the most critical for a successful launch of the
mentor is an entrepreneur with experience and the mentee venture and these resources tend to be closely interrelated.
is a newer entrepreneur. An entrepreneur is constantly When new ventures apply for early stage venture capital
breaking rules and making mistakes in an effort to drive its funds, the question of a well-balanced team with sufficient
businesses forward. As a new entrepreneur, this is a business experience is often raised by the potential
challenging part, having a mentor in this process can be investors to evaluate a project (Vanaelst, Clarysse, Wright,
invaluable. Entrepreneurs are a role model for how other Lockett, Moray & S'Jegers, 2006).
entrepreneurs should see, and deal with, ethics in
And there can be collaborations between competing
entrepreneurship.
companies, so called co-opetition which is defined as a
5.8 Believe strategy embodying simultaneous cooperation and
competition between firms (Gnyawali, He & Madhavan,
“Believe that you can change the world” 2008). Collaboration in business today is more of a
survival trait than a buzzword. Because competing firms
CET Internal report nr 20140326.
PRELIMINARY VERSION (to be used for collecting comments and remarks). Limited circulation.
possess relevant resources and face similar pressures, were given a problem to solve related to marketing
collaboration with competitors enables firms to acquire and communications and PR of a local technology SME. The
create new technological knowledge and use the students teams competed against each other and in the end
knowledge in pursuit of innovations (Gnyawali & Park, best solution would win. The collaboration between
2011). Increased popularity of co-opetition is evident by students and the firm was initiated by a faculty member but
the fact that over 50% of collaborative relations (strategic after the first introduction students were on their own to
alliances) are between firms within the same industry, that build a relationship to the firm representatives. Students
is, among competitors (Harbison and Pekar, 1998). first task was to negotiate the team building, how to select
Recently, scholars have suggested that especially small members to a team. Ideally teams should have been truly
businesses in an industry need to collaborate with multidisciplinary, so that the members bring to a team a
competitors so that they can create economies of scale, wide variety of experiences and expertise. Next step was to
mitigate risk, and leverage resources together (Morris, identify further what was the exact problem with firm’s
Kocak & Özer 2007). marketing communication. Altogether 5 teams each having
4-5 students team continued to work for three weeks and in
a final seminar presented their solutions to the panel of
6. BMoE’s GAME-BASED TEACHING APPROACH judges consisting of the founder/CEO and marketing
manager of the firm and faculty members. The first prize
The BMoE includes behavioral training and reflections
was actually given to two teams which had also
around mindset. An inductive game-based teaching
collaborated between themselves, co-opetited, e.g. they had
approach is used. Various games, referred to as the BMoE
shared their memos from initial meetings with the CEO
games, have been develop. A game can be defined as a
which made them able to identify the problem faster, and
structured playing, usually undertaken for enjoyment and
then proceed to analyze the alternative courses of actions,
sometimes used as an educational tool (Game, 2014). Or a formulate strategy and implement.
game may be described as an “artificial situation” in which
players engage in an artificial conflict against one another BMoE behavior-1 “Pay-It-Forward”: The behavior of
or all together against other forces. Games are regulated by “asking the beneficiary of a good deed to repay it to others
rules, which may take the form of procedures, controls, instead of the original benefactor” has been used in an
obstacles, or penalties (Verzat et al., 2009). Furthermore, educational activity at Lund University, Sweden. In the
four key components of games are; goals, rules, challenges, Technology Management program (Johnsson, Nilsson,
and interaction. For the BMoE games this implies: Elingsdottir, Nilsson & Alsen, 2013), the students were
asked to “assemble as much money as possible within 6
• Goals: a preset objective, aligned with the hours, and donate everything to charity”. The students were
teaching objective free to come up with whatever (non-violent, fair, honest)
• Rules: limitations on how to achieve the goals idea of how this should be accomplished, but they only had
6 hours. The students were split into two teams of 20
• Challenge: possibly competition, use of skills, etc students in each, and the two teams were competing against
to reinforce behavior each other. Most money wins. When the activity was over,
• Interaction: a setting for players to interact and the students were asked to reflect about how they felt
communicate and even enjoy the process. before, during and after the activity. This forced them to
think about their attitude to the Pay-It-Forward behavior
The idea is to let the games invoke a certain behavior or and their attitude of doing something that does not
attitude of the student, e.g. Story Telling (BMoE behavior- immediately give them any rewards or pay offs.
2) or Good Enough (BMoE behavior-9). After the game,
the students should reflect about his/her own behavior and BMoE multi-behavior game “Scavenger game”: The
compare it with that of successful entrepreneurs. The result Scavenger game has been used in educational activities
of the reflection can be either an ignition for the student given by UC Berkeley, US (Singer, 2013). In this game,
(confirming that he/she wants to become an entrepreneur), each team had 5 members, two of them were placed in a
an extinguisher (confirming that the student does not want control room and 3 of them were part of the field-group.
to be an entrepreneur) or a wake-up call (ok, I need to learn The field-group and group in the control room could only
more about this attitude). communicate via voice using a simple phone (no sms,
texts, emails, videos etc). The group in the control room
Examples of games that can be used for invoking a specific had no access to Internet. A five-liner instruction was given
behavior, and games invoking a set of behaviors, are given to the group in the control room, these instructions had to
below. be communicated to the field team whose task was to find
BMoE behavior-10 “Collaboration”: Group-dynamics, a location and take a picture of it. The field group that
win-win games emphasize the importance of cooperation, provided the group in the control room with a correct
fun, sharing, caring and over-all group success in contrast picture first, was the winning team. The task seems easy, if
to domination, egoistic behavior and personal gain. A game it was not for the fact that the 5 lines of instructions were
invoking this behavior was used in a marketing course in given in a different language (e.g. Chinese, Russian,
illustrations, Korean and Finnish). In this game an
the Technology Business program at University of
important behavior for the group in the control room was to
Jyvaskyla, Finland (Hytonen and Makinen, 2011). Students
CET Internal report nr 20140326.
PRELIMINARY VERSION (to be used for collecting comments and remarks). Limited circulation.
be a Story Teller (able to communicate the shapes of the an entrepreneur), an extinguisher for the student (no,
letters in the instructions), and for the field group to be able entrepreneurship is not for me) or a wake-up call (ok, I
to demonstrate Collaboration skills, e.g. each student need to learn more about this attitude).
working on the translation of one instruction. Furthermore,
The pedagogy of BMoE is inductive in its nature and
the teams had to appreciate Diversity in the people they
thereby focused around learning rather than teaching. The
encounter in order to have someone to help them with
students are pushed to proactively develop their own
translation. As soon as they thought they knew a location
understanding rather than waiting for someone to teach
that fulfills the instructions, they should go there and take a
them what they need to know. The students are trained to
picture of it. A picture that is Good Enough to present the
frame problems and find ways to solve them and then
location. After completing the game, the students were
reflect on what they've learned from the process, e.g. the
asked to reflect about their own contributions, what
outcome of a game.
behavior they felt comfortable with, and which they needed
to practice more. The students also reflected about the BMoE has already been used successfully in engineering
strategies used by the different teams and their respective entrepreneurship education at Center for Entrepreneurship
advantages and disadvantages. and Technology, Fung Institute for Egineering Leadership,
UC Berkeley, US. Nevertheless, even though the first
results are positive, the underlying hypotheses have to be
7. FUTURE RESEARCH further investigated and validated. Current research
therefore aims at; confirming or rejecting each of the set of
Empirical research is currently ongoing with the aim of
behavioral patterns, tuning existing games and/or finding
confirming or rejecting each of the ten (10) behavioral
additional games that reinforces the behavioral patterns,
patterns characterizing a successful entrepreneur. Research
and finding ways of how to measure the success of using
is also being conducted in the area of tuning existing games
the game-based teaching approach in entrepreneurial
and/or finding additional games reinforcing the behavioral
curricula.
patterns. It is also possible to envision games that stress the
whole process of innovation and entrepreneurship. We are
also pondering how can pedagogical outcomes of using a
ACKNOWLEDGEMENT
game-based teaching approach in entrepreneurial curricula
be assessed, that is, whether it produces the desired This work was carried out in cooperation between Center
changes in participants’ knowledge or skills. The research for Entrepreneurship and Technology (CET) at Fung
project is partly performed within the Global Venture Lab Institute, UC Berlekey, USA, Jyväskulä University,
Network at UC Berkeley which has approximately 25 Finland, and Lund University, Sweden. The authors would
universities from all continents (Global Venture Lab, like to thank the Vinnova-funded research environment
2014). LCCC and the SSF-funded project PIC-opic at Lund
University Sweden, as well as Tekes (the Finnish funding
agency for technology and innovation) at Jyväskulä
8. CONCLUSION university, Finland.
The Berkeley Method of Entrepreneurship is a holistic
teaching and learning approach that enables engineers to be
more entrepreneurial. It is currently under development. It REFERENCES
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