Instructor Resource
Neck, Neck, & Murray, Entrepreneurship: The Practice and Mindset
SAGE Publications, 2018
1
Experiential Exercises
Chapter 7: Testing and Experimenting in Markets
Exercise: $5, $50, AND $500 EXPERIMENTS
Description
This exercise challenges students to get out into the field and conduct creative “experiments” to
explore entrepreneurial opportunities. Students are pushed to design and then run three
sequential market experiments—first $5, then $50, and then $500 (or some other ascending scale
of investment)—which broaden and shape understanding of an entrepreneurial opportunity.
Learning Objectives
• Apply the logic of affordable loss to an entrepreneurial action and learning challenge.
• Develop increased comfort acting in the face of high uncertainty.
Materials List
Instructor Resource
Neck, Neck, & Murray, Entrepreneurship: The Practice and Mindset
SAGE Publications, 2018
2
An “Experiment Worksheet” (included at the end of the exercise) offers students a format for
summarizing each market experiment, including its rationale, methodology, outcomes, and most
Pre-Work Required by Students
As noted, to run the exercise, students should have at least a loosely formed idea for an
entrepreneurial opportunity which they are looking to develop or evaluate. This idea establishes
the context for critical questions such as:
• Who are the key stakeholders we are looking to engage and understand—and why?
Theoretical Foundations
Sarasvathy, S. (2001). Causation and effectuation: Towards a theoretical shift from economic
inevitability to entrepreneurial contingency. Academy of Management Journal, 2, 243–
263.
Time Plan (1-2 weeks)
Generally, students require one to two weeks to run and document a single, thoughtful
Step 1 (broad framing)
Challenge students to design and conduct three sequential market experiments (first $5, then $50,
and then $500) to better understand the needs and wants of their target customers and, most
Step 2 ($5 experiments)
Next, instruct the student teams to design and execute a simple experiment requiring no more
than $5 to test their ideas or assumptions about an opportunity or space. Ask them: “What is a
small creative investment, or type of untraditional market research, you might make to explore or
test your concept? What can you explore, confirm, or challenge with only $5?” Experiments may
Instructor Resource
Neck, Neck, & Murray, Entrepreneurship: The Practice and Mindset
SAGE Publications, 2018
3
Step 3 ($50 experiments)
Only after students have completed their first experiments and submitted a complete
worksheet—which you might grade—ask them to design and run a $50 experiment to test their
Step 4 ($500 experiments)
Only after students have completed and again submitted a complete worksheet handout drawing
out implications from their $50 experiments—which you might grade—ask them to design and
Key Takeaways
• Experimentation and specifically taking creative action helps drive learning about
entrepreneurial opportunities.
Teaching Tips
This exercise works best when students are asked to investigate very specific questions or
assumptions about their opportunities—a narrow and deliberate focus for experimentation (see
experiment worksheet). Moreover, the exercise is most effective when each experiment is run
Attribution
Instructor Resource
Neck, Neck, & Murray, Entrepreneurship: The Practice and Mindset
SAGE Publications, 2018
4
Instructor Resource
Neck, Neck, & Murray, Entrepreneurship: The Practice and Mindset
SAGE Publications, 2018
5
Experiment Worksheet
Team member names:
Abstract
Provide a one-paragraph abstract that captures the rationale, methodology, and results of your
Introduction
What is the broader context of this experiment? When and where did the experiment take place
and why? What did you set out to do?
Rationale
What core question(s) or assumption(s) did your experiment aim to address? What parts of your
opportunity are you clarifying? What opportunity-shaping decisions will this experiment allow
Methodology
How was the experiment conducted and evaluated? What were the planning, setup, and detail to
run the particular experiment? Briefly, what other types of experiments were considered?
Outcomes
Discussion
Reflect on the outcomes in the context of the decisions that you need to make to shape your
entrepreneurial opportunity. What do the results reveal to you about the choices your team faces
Appendix