culled from:articlebase.com
A Stanford professor (Dr. Tina Sellig, who is executive director of the Technology Ventures Program at the university) has regularly given her students the same problem to solve as follows:
“What would you do to earn money if all you had was five dollars and two hours?”
Several teams receive an envelope with five dollars of “seed funding” and are told they can spend several days planning what to best to with it (within the fixed 2-hour period) to get the best possible return. Teams have just 4 days to come up with their plan and present to the whole class in 3 minutes each on the project they had chosen.
Each team inevitably takes a different approach, of course, but in general most finally decide not to use the five dollars at all (realizing that buying and selling a few goods, investing the $5 in a bank account or even gambling the money were never going to making much difference) and come to appreciate that by focusing on only the money they actually frame the challenge too tightly. Instead, the better approach is to take the view “what if we start with nothing”?
Although teams in the past have varied in their relative success the most successful teams brought in over $400, $500 and even $600. So what did they do? Well, for the most part it came down to as much inventiveness as they could muster and there was no end to possibilities, which in all cases came down to finding some market pain and frustration and then coming up with a way of reducing or eliminating it. Ideas that teams came up with ranged from helping people to efficiently buy tickets in cinemas with more customers than seats, filling empty tables in restaurants on a weekend, and even selling sponsorships to local companies at the post exercise presentation session (which was valuable to them given that all the people in the audience were at Stanford).
The core lesson from these exercises is not the particular idea that a team identified but a very different mind-set to the one we typically see in business. Most businesses think about return-on-investment in very narrow terms, setting what they see to be achievable targets. Unfortunately this often means quite limiting goals such as a specific percentage return (like 5% or 10%) or enough net revenue to pay back the investment in a 2, 3, 4, 5 year time-frame or even longer. These approaches set the bar very low and prevent much greater returns being achieved. Perhaps even worse, when comparing the approach taken by Sellig’s entrepreneurship students, leaders in mature organizations tend to think about returns in cash terms only, and in the traditional ways they have made returns on in the past. In other words, these leaders do not think “outside-the-box” about how value can be created in a variety of different ways by solving customer issues and challenges in the ways that matter to them most. Quite simply, if more organizations could therefore think about future return on investment in this broader way, then much greater overall success could be achieved.
