(Also appeared in …Abridged version the Cleveland Plain Dealer (3/23/03) Entrepreneurship professor introduces real-life case study)
Written by: Andi Esposito (03/02/03) Worcester Telegram & Gazette Inc.



Armed with notebooks and coffee, 100 or so students settled into auditorium seats, stowing backpacks at their feet.

James M. Theroux, Flavin Family professor of entrepreneurship at the University Of Massachusetts Isenberg School Of Management, eased them in to his 8 a.m. lecture with the upbeat vocal innovations of a Bobby McFerrin CD, then launched into stories of people whose passion is business building.

Along the way he showed a TV clip of Roseanne’s entrepreneurial epiphany, in which she tells Dan she wants to open a sandwich shop and become a “loose meat queen,” her arguments and anxieties an echo of the classic hopes and fears of the entrepreneur, MR. Theroux told students.

His own face appeared on the screen, too, a much younger man in a C-Span video, testifying before a Senate committee.

Mr. Theroux knows of what he teaches. Calling himself “the most over-educated businessman in Ohio” with a bachelor’s degree from the University of Wisconsin, a UMass doctorate and an MBA from Harvard Business School, Mr. Theroux founded a wireless cable company in 1984. The scrappy Cleveland business landed $20 million in venture capital, built equipment and fought through courtrooms and Congress to sign up programmers.

Mr. Theroux sold the company in 1990. Spending some of the money from his stakes on a career change, he returned to UMass and began teaching entrepreneurship. In January, Mr. Theroux won top honors for Innovation Pedagogy in Entrepreneurship Education from the U.S. Association for Small Business and Entrepreneurship, a national group of educators.

He was recognized for a course that took five years to develop, was launched in the fall of 2001 and used a live case study of a Worcester company – the first live case ever offered by a business school. Taught in small groups (not like his lecture taught last week) the course will be offered next in the fall of 2004, and he hopes 15 schools will participate.

A staple of management education, the traditional case study, often several years old or more, walks students through the story of a company and the problems it faces. Students become the decision markers.

“But it’s an academic exercise – a game,” said Mr. Theroux.

Taught repeatedly, cases become intimately familiar to faculty, leading students to spend more time trying to figure out what their teacher thinks is the right answer than risking their own untested approach, he said.

A fan of MTV’s “The Real World,” Mr. Theroux wondered whether the case study could be transformed from cadaver to living patient, and studied real time. Instead of analyzing problems in which outcomes were known, and a company had either long since survived or fallen on its sword, and live case study would give urgency and importance to student solutions.

Naysayers said no company would want to be a guinea pig, said Mr. Theroux, and that even if no one were willing, it was doubtful quality material could be pulled together to meet a weekly deadline for class.

And wouldn’t students get bored with one company?

Mr. Theroux pushed on, eventually winning grant funding for the real-time case study concept of $50,000 from the Coleman foundation, $30,000 from the Alfred P. Sloan Foundation, $25,000 from the Kauffman Foundation, $15,000 from Inc. Magazine and $10,000 from the Harold Grinspoon Charitable Foundation. Other support came from the four schools that initially offered the 14-week course – Umass, WPI, Florida Atlantic University and the University of New Brunswick.

Optasite Inc., a Worcester company founded in November 2000 to provide facilities management services for wireless telecommunications providers, was selected as the first live case study. It fit two requirements Mr. Theroux devised: It was a startup funded by a first round of venture capital. Funding included a $1 million investment from The Worcester Capital Partners, an affiliate of Williamstown-based Village Ventures Inc.

“Our thought was that having additional input from a group of smart MBAs led by a smart professor is always valuable,” said Sean M. Marsh, an Optasite board member and managing director of Village Ventures.

“Many larger companies will hire expensive consulting firms to analyze their business and give them suggestions. We saw this as an opportunity to do that with capable folks and it didn’t cost us anything.”

Grant money was used to hire a case writer who resided at Optasite, had access to company documents and interviewed officers and employees about agreed upon subjects. She posted the material by 6 p.m. Saturdays on an intranet Web site available to all students. The grant money – none went to Mr. Theroux – additionally bought students video conferencing time with and toll-free telephone access to Optasite officers and others.

They also had weekly online chats with Optasite managers.

“It was so radical to be able to ask a question in real time – and we could do that,” said Mr. Theroux.

Over the weeks, the students and teachers evaluated Optasite’s business plan, products, pricing, operations, competitors, human resources and financing. They were asked how they would solve problems and why. They also interviewed customers, competitors, and industry experts.

More than 100 undergraduates and graduate students participated. Solutions were summarized weekly by a student in each class and funneled to Optasite through Mr. Theroux. He hopes next time to have teaching assistants sharpen up student papers more quickly and deliver them directly to the company.

The student solutions “got blended into the company thinking,” said Mr. Theroux. “Most decisions aren’t ‘on’ or ‘off’ but a blend, and it is harder to see the response to our input. They didn’t salute and implement, but that’s the nature of consulting. I would not expect this to be different.”

While the live case study was not meant to be chronological, students were swept up in the drama of the day-to-day. They were especially startled when Optasite founder Michael K. Matthews stepped down as chief executive officer. “They liked the founder. He was friendly and energetic. The board replaced him with a straight-laced guy. The kids freaked out,” said Mr. Theroux.

Mr. Marsh said the new CEO, who had expertise in raising capital and with mergers and acquisitions, was recruited with the help of Mr. Matthews, who remained a director and president. (He didn’t return calls seeking comment.)

After the case study, Mr. Matthews left Optasite to become president of Pinnacle Site Development Inc. in Glastonbury, Conn., a development and communications construction services company. Within a month of his leaving, he approached Mr. Marsh and merging Pinnacle and Optasite.

An agreement was finalized in October, the Worcester company moved to Glastonbury, and the merged business kept the Optasite name, said Mr. Marsh.

“The customers that Pinnacle serves – large, wireless communications services providers in New England, as well as other companies involved in the deployment of wireless network infrastructure – are the exact kind of customer Optasite was focused on selling to. It was felt there were significant product and customer synergies,” said Mr. Marsh.

In the blending of yeast and flour, there is little mistaking the source of ferment: The dough bubbles up with it and the sweet smell fills the kitchen as the oven works its transformation. What got stirred into Optasite’s thinking was the students’ challenge of the economics of its business model.

“Clients didn’t need the service at that price,” said Mr. Theroux. Students thought Optasite “should have figured that out before getting venture capital and wondered why the venture capitalists didn’t figure it out.”

Mr. Marsh said he talked with Mr. Theroux about the company’s challenges, opportunities and strategies. The students; suggestion was that “how the company positioned its solution to certain types of customers could be refocused,” said Mr. Marsh. “They were correct in suggesting that… pricing was too expensive for the customer (the company) was focusing on.”

“Over time, and including this merger, the result has been to a large degree that their thoughts on positioning the company have come to fruition.”

Mr. Theroux doubts the students will ever forget Optasite. “They got a more realistic view of business – things you would not see in textbooks – and a better understanding of the interrelationship of business principles and functions.” Such lessons helped clinch the prize for Mr. Theroux.

“The students can drive much of the questioning and analysis process and this is a unique pedagogical tool,” said William C. Schulz, vice president for entrepreneurship education at the U.S. Association for Small Business and Entrepreneurship, which recognized Mr. Theroux.

“This approach encourages the asking of appropriate and shows whether they are fruitful,” said Mr. Schulz, who is vice president of academic affairs at Albertus Magnus College in New haven, Conn. It also puts students and faculty on more even ground, wrestling together “with live, complex decision making.” Professors don’t know the answers “and the answers may not be knowable at any particular time during the case,” he said.

“The recommendation that came back to the company was pretty radical – that they needed to rethink things from top to bottom. You are into politics, perception and the ownership of ideas. It’s a very important lesson to teach.”

 

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