Yimin Lai, GMBA Class of 2018

How might entrepreneurs use strategy? Professor Scott Stern, MIT’s Professor of Management of Technology, set out to give his answer to this question to a group of some sixty Tsinghua GMBA Class of 2018 students. We were starry eyed with expectations, lugging our laptops in tow, as this was the flagship course of our semester, a program spanning five months with not only over seventy hours in the classroom, but also allowing students to venture out to the neighboring boroughs of Beijing, interviewing local startups, touring their facilities, and solving their strategic challenges.

To Professor Scott, startups are faced with what he deems the paradox of entrepreneurship, what he aptly deems in a 2016 article as a dilemma on “choosing between equally viable alternative strategic commitments requires knowledge that can only be gained through experimentation and learning of the type that inevitably results in (at least some level) of commitment that forecloses particular strategic options.” It is this predicament that drives Professor Stern’s core thesis: that the entrepreneur must make proactive choices, and learn from low-level commitment learnings and analyses. On one hand, Professor Scott emphasizes the need to choose, on the other hand, he also notes that at many stages of the startup, many choices are potentially viable and one must keep an open mind, especially in the early stages of a startup.

Through lively cases on Lytro, Avatech, Ministry of Supply, and RapidSOS, Professor Stern asked the Tsinghua students to consider different startups’ core strengths, to choose its competition, customers, technology, and identity. The key takeaway: choices not only matter for a startup, but that they “matter together.” Companies can pursue different sets of strategies such as a “disruptive” strategy, where they focus on an identity of creative destruction and seek to render existing value chains obsolete, or a “value chain” strategy where they collaborate with existing firms to enhance the value received by end users.

Armed with the theoretical bag of tricks, the students formed their own groups, venturing out to meet with Beijing startups, many of which were founded by GMBA alumni. For the next four months, the students sought to understand not only the problems that the companies faced on a day to day basis, but the key strategic issues that laid underneath.

May brought about the second phase of the class, and the students were joined by Professor Pierre Azoulay from MIT and Professor Xudong Gao. The pair of professors were long-term friends obviously have much chemistry, as they bantered throughout the week. But through their jokes were key lessons of strategy for students to pick up on. One of the interactive exercises was to transport the students back in time to 1963, when Robert Kearns, the inventor of the intermittent windshield wiper, approached Ford, trying to commercialize his freshly minted patent. The students were asked to take on the roles of both Kearns and Ford, and negotiate a solution that might be win-win for both parties.

Our classmates took this role-playing seriously, “We will go to a little new company called Honda!’ Exclaimed one group, perhaps under the influence of their Japanese group member. “You guys came in with bad faith and we will never get this deal done!” Proclaimed another group. But some groups nevertheless found success in their negotiations, and both parties walked away happy, leaving their classmates wondering if the “winning groups” had sneakily peeked into the ending of A Flash of Genius (2008), the tragic biopic on the real-life events this case was based on.

The end of the course turned into a frantic finish for all groups. Each team struggled to synthesize what they have learned from their client companies and construct a strategic recommendation. The strategy compass framework from the earlier segment of the course proved helpful, and each group decided on how to best choose anew their startup’s identity, customer, competition, and technology. My group had been assigned to work with Tongxingzhe, an edu-tourism company that was looking to expand their business operations across China. Having interviewed the company in-depth for the past two months, we decided to pivot the company’s identity from a tourist focused brand to one that is more aligned with education, which takes advantage of the company’s core identity and work force. Moreover, this allows the company to compete in a less crowded industry where others are more focused on test-prep than alternative education.

By the end of the course, the students emerged exhausted but happy, having had the opportunity to blend theory with practice, and the sleepless nights seemed worth it. If choices do matter, certainly choosing this course seemed a fruitful strategy. We would like to thank Professors Stern, Gao, and Azoulay, as well as the MBA office, for putting together a wonderful experience for the GMBA class.