I DEDICATE THIS BOOK TO ALL MY STUDENTS WHO MAKE MY SO-CALLED “JOB”
THE GREATEST ONE IN THE WORLD. YOU GIVE ME ENERGY EVERY DAY. THIS ONE IS FOR YOU.

THE ORIGINAL DISCIPLINED ENTREPRENEURSHIP book laid out a rigorous but practical pedagogy for innovation-driven entrepreneurship. It has fundamentally changed the course of entrepreneurship education from a storytelling approach to a toolbox and systematic framework. But there is only so much that can be accomplished in a single 250-page book. This workbook builds off Disciplined Entrepreneurship to provide a way to more easily engage with the 24 Steps.

Our goal at the Martin Trust Center for MIT Entrepreneurship is to develop high-quality entrepreneurship education and make it accessible, not just to MIT’s full-time students but also to millions of people worldwide. That is why I wrote Disciplined Entrepreneurship, taught several online courses on edX, and with my colleagues write online articles and tools to help clarify key concepts about our methodical approach to entrepreneurship.

The demand from entrepreneurs and instructors for additional materials to help them implement the 24 Steps has been simultaneously rewarding and overwhelming. There needed to be a more scalable solution, and that is the purpose of this workbook.

In this book, I provide templates and additional advice on how to implement each of the 24 Steps. You can use these templates on your own startup or as classroom deliverables to assess your students’ understanding of the topics. This workbook is not a replacement for Disciplined Entrepreneurship but rather a complement to it. It is expected that you will go back and forth between Disciplined Entrepreneurship and this workbook in order to gain a full understanding of each step.

The 24 Steps is an iterative process, so always make sure you are proactively revising your work as you go through the steps. Something that you do in Step 23 is likely to affect Step 11, or Step 9 will affect Step 5, and so on. Also, do not feel confined by these templates if you need to make some modifications to better suit the needs of the industry or specific characteristics of your startup.

The 24 Steps approach is a toolbox of the best methodologies available for entrepreneurs, and I continually evolve it and survey the landscape to take in new and/or better tools to improve the framework. You’ll see two new chapters in this workbook, one on primary market research and another on windows of opportunity and triggers. I hope that many others around the world will continue to test and contribute to the 24 Steps to make the framework even better over time. The collective wisdom of the community is better than any individual—plus many hands make for lighter and faster work.

Since the time I first published Disciplined Entrepreneurship, it has become even more clear that we need high-quality, rigorous entrepreneurship education and training sooner rather than later. The critical need for a serious body of knowledge on innovation-driven entrepreneurship has never been greater—and it will only get more so in the future. Please “lean in,” as Sheryl Sandberg would say, and help us with this cause.

Additional materials, including electronic versions of some of the worksheets herein, will be available at www.disciplinedentrepreneurship.com.

THIS IS NEW MATERIAL that was not covered in Disciplined Entrepreneurship. The Canvas is a tool you will fill out as you go through the 24 Steps.

WHAT IS THE DISCIPLINED ENTREPRENEURSHIP CANVAS, AND WHY IS IT IMPORTANT?

The Disciplined Entrepreneurship Canvas is a one-page overview of the Disciplined Entrepreneurship approach to entrepreneurship. The Canvas functions like a synopsis of your current status so you can see what you have done and what you have not done, across 10 major areas that map to the 24 Steps.

I have seen the value in life of having a concise visual that gives a team feedback on their progress in the midst of the battle. I have also seen entrepreneurs building workarounds for just this function when trying to use the Disciplined Entrepreneurship approach, so there is clearly value in tracking your progress on the long journey through the 24 Steps.

HOW TO APPROACH THE DISCIPLINED ENTREPRENEURSHIP CANVAS

As Disciplined Entrepreneurship has been broadly deployed, a frequent question I get is how to integrate the 24 Steps framework with the Business Model Canvas made popular by Business Model Generation by Alexander Osterwalder and Yves Pigneur. In fact, before I wrote Disciplined Entrepreneurship, I used to use in my classroom the Business Model Canvas and then the Lean Canvas by Ash Maurya, but I did not find an easy, suitable way to integrate them with teaching the 24 Steps.

As nature abhors a vacuum, numerous people have constructed their own canvases for the Disciplined Entrepreneurship framework, led by Laurie Stach (MIT Launch), Floriano Bonfigli (Istituto Adriano Olivetti Business School—ISTAO Startup Lab), Patrick Kirby (Michelin—vice president of innovation and entrepreneurship), Johannes Mutzke (Michelin—Global Innovation Council), Mateo Nakach and Jorge Sanchez (Build-Your-Business Consulting Group), and Michael McCausland (Leadership Institute for Entrepreneurs).

They have pushed and inspired me to see the value of a one-page canvas that shows how you are doing. In sports, a coach often tracks progress in the game in a summary fashion and then conveys key information to his team on what they are doing well and what they need to focus more on if they are to win the game. A basketball coach’s synopsis, for instance, will not only have the score but also the time left in the game, how many fouls each team and each player has, and other key indicators. Likewise, an entrepreneurship canvas gives you the big picture in one snapshot and allows you to see what you need to work on.

The simple summary does not capture the full richness of your situation, and as such it is not a perfect indicator of your success. Nor does the simple summary tell you why things have happened and how to fix things. So while it is limited in its usefulness, it does have the benefit of simplicity.

I have based the Disciplined Entrepreneurship Canvas off the Six Themes of the 24 Steps from Disciplined Entrepreneurship, expanding two of the themes and adding two more sections. The resulting Canvas maintains the specificity, logic, and rigor of the 24 Steps.

More so than other canvases, this canvas has a suggested initial sequential nature to it. You should start with Section 1 and then follow the arrows to move through the canvas. There should also be iteration, but providing a general prescriptive initial flow is helpful and an important part of the Disciplined Entrepreneurship approach.

Turn to page xviii to see the Canvas. Each section maps quite well to specific steps:

• Section 1, Raison d’Être (aka Reason for Existing): Step 0
• Section 2, Initial Market: Steps 1, 2, 3, 4, 5, and 9
• Section 3, Value Creation: Steps 6, 7, and 8
• Section 4, Competitive Advantage: Steps 10 and 11
• Section 5, Customer Acquisition: Step 12, 13, and Windows of Opportunity/Triggers
• Section 6, Product Unit Economics: Steps 15, 16, 17, and 19
• Section 7, Sales: Step 18
• Section 8, Overall Economics: Step 19 (parts)
• Section 9, Design and Build: Steps 20, 21, 22, and 23
• Section 10, Scaling: Steps 14 and 24

The fit between the steps and the Canvas is not perfect, but it still produces a framework that is useful and ties into the worksheets and additional information in this workbook.

When I used other canvases in my classroom, the frameworks were helpful, but they often needed to be customized. I would likewise encourage you to think of the Disciplined Entrepreneurship Canvas below not as a fixed edict, but rather as a framework that can be customized as appropriate. If it does not quite fit, that is okay. Go ahead and customize it, but it should at least give you a good start.

EXAMPLE OF USING THE DISCIPLINED ENTREPRENEURSHIP CANVAS WITH FEEDBACK

Old friend and master illustrator of this book, Marius Ursache, offered to test-drive the Canvas for his project, the Disciplined Entrepreneurship Toolbox (www.detoolbox.com). I should note that the 24 Steps framework has been used not just for startups but for projects/product design and development in large corporations, government organizations, investment situations, community organizations, educational institutions, religious groups, student clubs, and even creative arts groups. Once it was used for a piano concert. (Thanks for letting us know, Amanda von Goetz!)

Turn to page xix to see his first draft of his Canvas. Below are my comments on it so that you can see what you should be considering when you fill out your Canvas. Marius’s draft is quite good, so I will focus my comments on where it could be improved, as well as how the Canvas will help Marius discover where he should focus his attention next:

1. Raison d’Etre: The founder passions, values, initial assets, and initial idea are good and can be refined, but the real area I would focus on is the mission. It is too general and is not really unique or inspiring. Having a clear mission is valuable for two reasons—it shows why the world will be a better place thanks to your venture, and equally important, it tells you what you will not be doing. This guidance on what you will be not doing will help you to get the right people on your team. To build a successful team you need three things: a common vision, shared values, and complementary skills. As you can see, it starts with common vision, so clarity on why you are in business is fundamental to your success in an environment that will be fraught with failure and other discouraging moments. That common vision keeps you marching on.
2. Initial Market: Again, there is lots to like in the End User Profile, TAM, and Next 10 Customers. The Beachhead Market and Persona draw my attention and concern. First, I worry that the Beachhead Market is two different markets. There cannot be a plural of Beachhead Market. Second, I worry even more that there is no Persona. I know picking a Persona can be a bit uncomfortable and you will not find the perfect one to start, but Marius should pick the best one he has and then execute the process with it and look to upgrade the Persona over time.

   

   

3. Value Creation: There is a great deal of information to be summarized in this box and it is a real challenge. I worry that the very important use case is so truncated that it is not clear how well this has been developed. Likewise, the other three items have to be summarized in such a compact way, so while they seem encouraging I have a lot of questions. I definitely want to see the product brochure. But all in all, good. At this point, I am starting to see that the two Beachhead Markets defined in the Initial Market section may be intractably linked, and rather than two separate markets, they could possibly be seen as a two sided-market. This would be an area I would ask a lot of questions about.
4. Competitive Advantage: In the moats section, Marius lists “network effect,” but I think that is actually the Core. What Marius lists for the Core definitely is not a Core, but rather is the benefit that customers will get. A Core is an internal capability you will have that is unique or much stronger than anyone else. I worry when I see network effect as a Core because while it can be a great one, it is rarely achieved. And if is not achieved, then the company has no defensible advantage over others, who will be able to follow you into the market at a lower cost by learning from the first mover’s mistakes.
5. Customer Acquisition: The Decision-Making Unit (DMU) seems to be to be too simplistic (although I like that he has identified the chief product officer). Who are the DMU’s primary influencers? The Decision-Making Process is too simplistic and does not address creating awareness with the target market enough. The windows of opportunity are a good start, but the possible triggers section is not developed in any creative way. This section, like much of the Canvas (and like what I’d expect for a first pass on any canvas), is too general and lacking in specifics to this situation.
6. Product Unit Economics: I like that these are general estimates and that they do not try to convey a level of precision that is not attainable at this point. The short-term Cost of Customer Acquisition (COCA) of $10 seems absurdly low to me and I am confident that upon closer evaluation, Marius will find this number to be much higher, which is expected in the short term. It would be extremely unusual to see a short-term Lifetime Value (LTV) of $200 with only a short-term COCA of $10, or a short-term LTV of $15,000 with a short term COCA of only $2,000. This immediately makes me discount the medium term and long term where I am confident that the COCA is still too low. But if the LTVs are to be believed, the business will be able to handle the actual COCA. Notice how easy it is to get a sense of the business from just a few numbers!
7. Sales: Oh my goodness! With the very low COCA from the previous section, I expected to see no direct sales channel utilization in this section (forgoing direct sales is risky in the short term), but there it is as the second option. He’ll really need to think about how to minimize use and cost of direct sales (likely use inside sales instead of field sales, for starters) and to use other sales methods to keep COCA down. Maybe he can do online chat sales early on so that inside sales is more affordable. I think “robo-sales” using big data analysis and preference engines is probably the way to go. I am feeling even less confident about the COCA calculations now, and I would dig deeper to make sure the unit economics model gets refined. The mentality of the organization needs to be more focused on designing the sales process to have no human interaction from the company’s side in the near future, so that the COCA does not grow out of control.
8. Overall Economics: The R&D expense and the G&A expense items seem reasonable since the work is being done in Romania, not the United States, but the LTV/COCA ratio still bothers me because I think the actual COCA is higher. However, this part of the Canvas shows me that if the LTV is accurate, there is room for the COCA to be higher and still have an economically sustainable and attractive business entity.
9. Design & Build: The key assumptions are too few and too general. The assumption tests do not yet line up with the key assumptions. The Minimum Viable Business Product (MVBP) is already up and running, so there is valuable information that can be gained from this investment so far. The tracking metrics are generally correct, but are also more general than I would like to see; for example, they do not have a time frame indicated.
10. Scaling: What Marius put here is very general, but that is not as much a problem as it would be in the other sections, because you won’t have much clarity this early on. That being said, Marius should keep an eye on this section going forward and update it quarterly based on new information, which will be coming in as he engages in the market and learns from iterations on earlier steps.