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Constraints don't have to be constraining 

Constraints. A word that strikes terror into the hearts of business people the world over  Entrepreneurs look at constraints, such as for instance limited funding, as a disadvantage. However, that’s where our teaching comes in and turns the usual model on its head. 

In fact, entrepreneurs who use these constraints to think more creatively about their value proposition tend to have far better track records as innovators. To illustrate this, a business school professor, Laura Huang describes how she gives student teams in her classes $5 in seed capital and one week to create a business model around it:

“There’s an exercise that I used to do with students in my entrepreneurship course: I would give each team of students an envelope with $5 inside. I’d tell them that this money was their “seed funding”— money they could use as start‑up capital to create any type of profit-generating venture that they wanted. At the end of one week, they would present their venture to the rest of the class and reveal how much they had earned in profit.

The goal of the session was for students to hone their entrepre­neurial instincts by trying to identify opportunities, limited by the $5 they had been given. And in fact, they were very entrepreneurial. Some of the ideas I have seen over the years: car washes that used the $5 to invest in sponges, soap, car wax; community flea markets and tag sales that spent $5 on advertising in return for banking “table fees” from each vendor; and bake sales built from all the ingredients that $5 can buy. These teams all do fairly well leveraging their $5 in exchange for decent profits.

But which teams made the most in profit? What’s your guess before you read the next line? Those who utilised the money or those who did not?

Those that didn’t use the $5 at all.

It’s a lesson they are all amazed to learn: and that we all have to re-learn often. Those who come back with the highest profits — one year, a team earned more than $4,000 — are typically the ones who never even use the seed money. The teams that seem to generate the greatest profit are those who look at the resources at their disposal through a completely different lens. 

So it really comes down to these financial constraint (in this case the five dollars) in a classroom exercise which proves what so many successful companies know about constraints. Most of these students in Prof Huang’s class scan the opportunity horizon  ONLY for ways that they could possibly provide the perceived value to their clients, and then they hone in on what are only the obvious opportunities on this horizon of theirs, In other words, only the particular ways/chances/leverage that they can then utilise the amount that they were indeed given. 

And there’s the rub folks, what they do create in their thinking about it in this model is so simple, yet so profound that we almost always miss this. This type of thinking gets rid of the most major chance to use the circumstance to its full advantage: what would happen were you to spend only four or even just three measly dollars….or - heaven forbid: nothing.

But…and it’s a big but, this line of reasoning excludes completely the chances where the opposite is needed and used. Thousands of dollars. If you only shine the spotlight on the five dollars (small opportunities) you may miss the huge one.  And you really do not need Steve Jobs to tell you that big situations provide big opportunities and yield larger profits.

This is how most people think. It’s small thinking. That’s constraint thinking. Our course focuses on allowing you to seeing all the opportunities that there may be in your field. Constraints are only that if you see them as that. All of them, big and small because let’s be honest, small thinking at times has it’s place and can in  and of itself, useful and generate profits if it’s done right, but we advocate like the Professor des that one does not get stuck in that type of thinking solely and only.

This Speccon course defines it, clears up misconceptions and leads you and your company in the right direction when it comes to constraints and why they should not be constraining. If your organisation is hamstrung by constraints, this tutorial will change that!

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