During an MBA, whereas many might be all too happy to limit entrepreneurship to an elective for would-be entrepreneurs, since they are a breed that never really fitted into MBA programs anyway, I believe it should be a core focus of the management education experience. Primarily, MBA teaches would-be managers how to minimize risk and maximize profits, whereas entrepreneurship is all about being dynamic and taking (calculated) risks in order to succeed. With such big irony at the fundamental base of the two concepts, can they really go hand in hand? Well, that is what we are going to discuss today.
In order to do so, let’s consider these popular Myths and Facts about MBA and Entrepreneurship.
1) If they sign up for an MBA, they are probably not entrepreneurs- Myth
Let’s face it: MBA programs are primarily positioned as graduate programs for future corporate managers rather than entrepreneurs. Not a single one, even the most acclaimed entrepreneurship program, would ever claim to target “future entrepreneurs”. At best, most programs provide an entrepreneurial gloss over a solid core of managerial skills and abilities. According to the common view, pure entrepreneurs are too busy launching new companies and would never bother to take time off for an academic program.
But this is absolutely rubbish. Most of the (future) entrepreneurs join an MBA program not to learn managerial skills, they do it for networking, for getting insights into how a manager would think and how they would be able to use the resources available with the B-school help them in their venture. I personally have benefited and learned more about using resources, grabbing opportunities through networking and brainstorming on ideas during my MBA than I have learned about Finance, Accounts or Strategy.
2) B-school teaches less, peers teach you more about entrepreneurship- Fact
A former Dean of a well-known business school best described this fact very well. When asked by a journalist how they managed to create such an extraordinary depository of knowledge, his response was stupefyingly simple: “we recruit the best and brightest students, milk them dry of what they know, and then send them off to new horizons, retaining the knowledge….” Most observers have been shocked by the “conformism” drummed into students by typical MBA programs. Most of the MBA schools are still evolving in terms of their curriculums, method of teaching etc. Entrepreneurs have been along building up companies and starting ventures for a much longer time. Most of the things you learn at a b-school are primarily from your classmates, your seniors, the PhD students and the research assistants. They are the people who are working in the industry, doing really entrepreneurial stuff, and they are the ones you spend the most time with. Sharing each other’s experience, guiding, consulting fellow students in their start-ups is an integral part of MBA.
3) Why do MBA to learn entrepreneurship, we can solve case studies sitting home- Myth
Even though case studies are wonderful “reality tests” that allow students to confront the complexity of business situations and decisions. Nonetheless, however rich these teaching cases may be, they cannot come close to the true complexity of the real world. Similarly, cases often fail to capture the dynamic nature of industries, where every decision will generate an immediate and often drastic response from competitors; or where the long-term impact of a decision can significantly reduce the spectrum of future opportunities or even the company’s ability to respond. How do you make sure these critical dimensions are incorporated into the knowledge base? The interaction with professors while solving case studies, the actual industry interactions that primarily help build new case studies are some of the few important aspects which enable MBAs to get the true taste of global competition, problems that might shape the future and technologies that would help solve these problems.
4) Entrepreneurs are born, not made-Myth
Genetic science has never been much help to the field of entrepreneurship – intense research over 30 years has failed to identify a single trait unique to entrepreneurs. They are not “risk lovers”, but instead are as risk averse as the population at large. While they may believe that they can control the risk inherent in entrepreneurial situations more than others, they certainly are not masochists! Once this fallacy is put to rest, the real question becomes: can you really teach entrepreneurship? My response is always the same: we cannot force anyone to become an entrepreneur, but we can certainly make people feel more comfortable with the fact that this is just another career path and that they can learn the skills needed. Entrepreneurship, just like any other field of career, involves skills, knowledge and techniques. All these three virtues, like in any other filed can be taught and hence there is no reason to believe otherwise.
5) Entrepreneurship requires me to understand everything about venture capital-Myth
If one looks through the literature most often assigned to MBA students in entrepreneurship courses, it is dominated by text on the venture funding process. While it is needed, it’s far from the whole picture. There is a need to help students to see the intensity of the people side of a startup, where the psychological ups and downs form a sine wave of high frequency and large amplitude. To quote a columnist in the Financial Times,” 60% of start-up in India particularly are financed through unorganized funds namely money through friends, family, savings or mortgage finance, personal loan etc rather than private equity, venture capital, business loan etc. In order to raise money or to infuse new funds in an already running company, knowledge of VC is helpful but not compulsory.
6) Entrepreneurship as a subject doesn’t really exist. It is just an integration mechanism- Fact
Saying that this belief is true at the end of the article is somewhat contrasting my own ideas at the start. But the fact remains, even though in theory there can be a subject, practically, there can’t be any. For most of its existence, entrepreneurship as an academic discipline carefully avoided having to provide a formal definition of itself. A young field, the reasoning went, needed as much breathing room as possible to find its place in the academic world. A definition, many feared, would somehow restrict a dynamic and emerging discipline. This allowed people to give their own meanings to the word. Interestingly, the best definition of entrepreneurship was also one of the earliest: Joseph Schumpeter, the famed Viennese economist, defined “the entrepreneur” as someone who destroys the existing economic order by introducing new products and services, by creating new forms of organizations, by exploiting new raw materials, or by providing innovative combinations in these areas. For Schumpeter, this was “creative destruction”, which was often accompanied by the formation of new businesses, though not necessarily.
The purpose of this article was to highlight the fact that a MBA from a reputed school can actually help you in your entrepreneurial venture, provided that you make the best use of all the tools and resources at your disposal at the school. If you depend solely on the academic knowledge that you gain, it will probably make you regret your decision to do the MBA. Remember, in the transformation from a manager to entrepreneur, MBA is like a catalyst that will help you in the process of transformation; it is not the product that will transform all by itself.