Teaching Entrepreneurship in Business Schools

A very good post from Vivek Wadhwa, influential commentator on “things entrepreneurship-related,” Why I No Longer Advise Startups to Hire M.B.A.s. Not all his points are fair ones but, as with any good post, he’s just rational enough to spark some good conversations.For example, I agree there’s a “mismatch between the skills that business schools teach and what fast-paced startups require.” But the data still show that most entrepreneurs are coming from fields in which they’ve worked for 10–15 years. Only the world of internet startups is populated heavily with people without any prior work experience.

Similarly, he says:

The majority of these schools, however, still teach students how to write old-fashioned business plans to be pitched to venture capitalists. These plans are based on market research and make lofty financial projections based on five-year product plans. This is how tech companies were started in the past, when technologies changed slowly and business models stayed constant. Today, it is all about starting small and experimenting. Business plans get outdated rapidly and market research is no substitute for prototype and user testing. The focus on venture capital is also misguided. VCs rarely fund infant startups—it is angel investors, friends and family who provide the outside seed funding. So even when trying to teach entrepreneurship, business schools get the basics wrong.

Intel's 1968 business plan

This straw-man argument seems long in tooth. These days, most schools I know (and certainly our classes) no longer teach to the business plan. Market research is not better than talking to customers and experimentation and validation are the core activities we teach (and have been for the past decade). Of course, to be fair, the plan wasn’t always that critical in practice, either. Note Intel’s famous one-page plan…

That said, it’s easier to build and test a mobile social media app than a wasterwater treatment plant or bio-pesticide, where large capital investments and long lead times to even a bench top “minimum viable product” are necessary. In these cases, a little bit of planning can go a long way. So this comment again borders on Internet-centric.

And as for pitching to VC’s, certainly in our entrepreneurship academies, business development clinic and managing innovation class, we teach that the entrepreneur is the first investor in. Thus the process is geared as much towards teaching the due diligence process (whether to launch a business) as it is to teaching how to launch a business.

Finally, Vivek says something we must all take to heart:

My M.B.A. allowed me to transition from being a programmer to a project leader and then a vice president. I found that I could communicate effectively with user departments and my bosses; I could deliver projects on time; I knew how to manage and motivate employees; and I had the confidence to present business proposals to managing directors and board members. When I became an entrepreneur, I had the knowledge to develop and manage budgets, market products and review legal contracts.

Are we teaching our MBAs the vocational skills involved in their work: the ability to manage projects on time and within budget; to lead, motivate, and critique others; to close a sale? Personally, I would add a course in business history — if only to show that business is older than the past 15 years, that we’ve been here before (including this love affair with the entrepreneur) and that we’ll be here again.

In all, Vivek offers a great commentary and reason to reflect on whether MBA programs are providing the right skills for entrepreneurs.

What he doesn’t say, but that also supports his point, is that corporate jobs are increasingly demanding entrepreneurial skills — the ability to assess and adapt to changing environments, to contribute value beyond your training, to manage the uncertainties of both your work and your job.