Teaching Failure Through Currency Testing
Learning from failure is one of the most important skills our entrepreneurial students need to learn. It’s also one of the most difficult to teach.
We can talk all day about running experiments and testing assumptions, but ultimately they’re a waste of time if our students can’t successfully extract learning from failed experiments and invalidated hypotheses.
The trick to teaching failure is that our students have grown up in an environment where they are taught to avoid failure at all costs. They are taught to fear failure.
In fact, many of your students’ previous teachers leveraged a fear of failure to compel your students to behave a certain way: do busy-work, memorize lists, etc.
[bctt tweet=”In entrepreneurship education, we need to change the perception of failure.” via=”no”]
As entrepreneurship educators, we need to create safe places for our students to engage with failures, so they can practice extracting knowledge from them.
As our students develop their failure analysis skills, they will:
- Fear failure less – they will realize on a personal level that they can learn more from failure than from success.
- Increase their confidence – entrepreneurship is less scary when you know even if one experiment fails, you’ll succeed in creating the foundation for the next.
- Take calculated risks – which are prerequisites to thriving in an innovation economy.
Fast Forward Their First Failure
The Currency Testing lesson plan below will guide you through creating a constructive experience for your students to learn from their first entrepreneurship failure.
In our last exercise, your students launched an MVP, without a line of code. (If you haven’t read that exercise, you’ll want to now. Not only is it a blast, you’ll need to know it for this Currency Testing exercise).
Once they’ve learned that they too can launch a product, you’re ready to show them…
Launching the product is easy. It’s selling the product that’s hard.
In fact, it’s so hard, your students will likely fail their first time around, just like most entrepreneurs, which is the point of this exercise.
By fast-forwarding their first failure, you’re going to turn your students from first-time founders, into “serial entrepreneurs” 🙂 After satiating their drive to “build something” your students will realize…
[bctt tweet=”The only thing more fun than building something, is building something people want.” via=”no”]
As your students begin to focus less on what they want to build, and more on what other people want to buy, they’ll be eager for you to teach them problem validation.
The Currency Test
At the heart of this exercise is something called a “Currency Test.” A currency test is simply an experiment where entrepreneurs test if customers are willing to pay some form of currency (e.g. cash, attention, data, etc.) in exchange for a product.
A currency test is a much more powerful experiment than asking customers, “Would you use this?” or “How much would you pay for this?” because it’s forces them to put their money where their mouth is. Where it’s easy for a customer to say, “I’d definitely use that” to a hypothetical product, entrepreneurs will learn how customers really feel, when they’re asked to break out their wallets.
Best of all, the results of a currency test are always helpful.Either the test succeeds and the entrepreneur validates demand for their product, or it fails and the entrepreneur gets to ask what’s preventing their customers from buying, so they can improve their next iteration.
Your students will conduct their currency test using the MVPs they built.
When they struggle to get currency (which they will, because like most first-time entrepreneurs their MVPs were more product-focused than customer- and problem-focused), their experiment will fail. They’ll be wondering why they couldn’t find customers for a product they thought was such a good idea, and at this point they’re primed.
Having experienced their first entrepreneurial failure, they’re now ready to hear:
- Why being problem-focused is essential in entrepreneurship.
- Why talking to customers before building is the key to success.
- The value of identifying marketing channels.
- How important marketing copy is.
And most importantly, they’ll learn from personal experience…
[bctt tweet=”We learn more from our failures than we do our successes.” via=”no”]
The Failure Postmortem
After their failures, the lesson plan will show you how to walk your students through the most powerful part of this exercise: “The Currency Test Postmortem.”
In the postmortem, students answer questions related to what they learned about their customers and problems, and about marketing and selling their product. They’ll also begin to see first-hand the value of problem validation and testing their business model assumptions.
The postmortem also will model an approach to analyzing failures they can use in your class, as well as throughout their careers to overcome failures they and their products, teams, and companies will encounter in the future.
Increase their Grit
If you want to change your students’ relationship toward failure, if you want to instill in them the skills they need to not just recover from failure, but thrive because of it, give the Currency Test Lesson Plan a shot.
And remember the entrepreneurship proverb…
Get the Lesson Plan
We’ve created an experiential, 45-minute, Teaching Failure Lesson Plan to help you prepare your students to learn from failure. It encapsulates everything we’ve talked about above plus a few surprises!
It’s free for any/all entrepreneurship teachers. Please feel free to share it.
All we ask is that you leave us some feedback on it the comments below so we can improve it!
In a future article, we will provide a checklist for you to plan an experiential entrepreneurship class! Please subscribe here to get that post in your inbox.