The start-up scene all over the world is still flourishing. In the Philippines, there are currently more than 300 start-ups in the country and over 200 of them are actively operating, according to the first study profiling the Philippine start-up ecosystem by PwC Philippines and the Department of Trade and Industry (DTI).
While globally we are seeing the strongest resurgence of the start-up craze since the dot-com era, we will not see them all succeed commercially. A Fortune survey among founders of failed business ventures indicate the stark reality that 9 out of 10 start-ups fail. In the Philippines, probably it’s higher to the tune of 19 out of 20.
Why do they fail despite the plethora of business incubators, accelerators, venture capitalist funds, mentors, and courses on entrepreneurship? The answer is not straightforward, but a combination of three factors — the teacher, content, and the learner.
First is the teacher. Aristotle said, “Those that know, do. Those that understand, teach.” We often rely on successful entrepreneurs and start-up builders to teach entrepreneurship informally or formally in school, but they are usually not the best teachers. “As you get better and better at what you do, your ability to communicate your understanding or to help others learn that skill often gets worse and worse,” as cited by Adam Grant in a New York Times article. Social scientists call it the curse of knowledge.
Entrepreneurs are not necessarily good teachers. When they teach would-be entrepreneurs, they usually tell stories of how they started their venture, the challenges they faced and how they overcame them. While all of these are inspiring, it doesn’t give the learner the guideposts or what Peter Senge calls “mental models”, i.e. an explanation of how something works in the real world.
A great teacher of entrepreneurship is someone “who communicates the material as well as on how well the teacher knows the material”, as Grant avers. They are the teachers that study effective methods of teaching entrepreneurship, rather than experts only in running a business.
Content is the second component. I’ve seen the content of many entrepreneurship courses in the undergraduate and graduate level, as well as those offered by NGOs. They talk about having an entrepreneurial mind-set, building a business plan, and registering the company. Then the next topic suddenly jumps to operating the business, doing marketing, and so on, leaving the learners clueless on how to scale the business, or what Geoffrey Moore calls “crossing the chasm”.
The lack of a framework, preparation, and training for a newbie entrepreneur to scale the business to sustainable level, and this is the main reason why startups fail. Since the resources of a startup are limited, it needs to spend wisely on what matters most in acquiring customers. I’ve developed this framework, have written extensively about it, and currently teach start-ups and business managers.
Entrepreneurship is also best learned while applying the concepts. Sprints of short learning modules and then applying the learned principles will ensure effective learning in the field, instead of studying for months and even years.
The last component is the learner. Would-be entrepreneurs jump into setting up a business because of a great idea or a passion on doing things. This is all laudable along with other traits as determination, creativity, competitiveness, decisiveness, and so on. But the most important characteristic of successful entrepreneurs is resilience, i.e. the ability to move through hardship and become better.
Because entrepreneurs choose a life of hardship alongside achievement, joy, and satisfaction, they have to go through a life of chaos, confusion, change, fear, and disappointment. That’s why not all are cut out to become entrepreneurs.
So, can entrepreneurship be taught and learned? The answer is yes. But to enable aspiring entrepreneurs and startup founders, there has to be a program that takes into account these there components. The best the best is to teach them young…starting in grade school.
Reynaldo C. Lugtu, Jr. is President & CEO of Hungry Workhorse Consultancy Inc, a digital and culture transformation firm. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University.