Wednesday, June 3, 2009

MBAs or Entrepreneurs

Are B Schools encouraging Entrepreneurs

There is only one way to make a great deal of money.
And that is in a business of your own.

Entrepreneurship has never been everybody’s cup of tea. We have icons like JRD Tata, LN Mittal, Ambani brothers, Bill Gates, Michael Dell and host of others who made it big in the world of business. Every entrepreneur needs a certain minimum amount of internal drive and a forward–thinking perspective. Without this a budding entrepreneur is most likely to remain at the thinking stage and never reach the action stage. But, are there any tools that the B–Schools can teach, to make the new venture as efficient and viable as possible ?

There is a distinction between "being taught" and "learning" ? There are two components to entrepreneurship - creative (imagining an unmet need and being inspired about how to fill that need) and process-driven (methodical techniques of analysis, channel development, marketing plans). Creativity, like inspiration, cannot be taught. All the same, I remember a subject called ‘Management of Creativity & Innovation’ being taught to us, at IIMA, way back in 1983. Many entrepreneurs recognize (probably as a hind-sight) that it would have been helpful to have had education in entrepreneurship, which could have provided a framework to work with, to start a venture.

Entrepreneurship involves both a huge risk and a huge responsibility. B-Schools could help students by giving a platform to take a couple of practice shots with a safety net, before plunging in head–first. Can students do small live projects from which they can draw lessons ? Serious students must be encouraged to develop business plans, networking with practicing entrepreneurs and like–minded peers, so that they learn from their mistakes and be inspired by their success. They must be made to realize that 'O' stands for opportunity as much as opportunity cost.

Top B-Schools have entrepreneurship cells, business plan contests, elective courses and entrepreneurship centres. Question is – how effective are they and how many entrepreneurs do they create ? Wharton tries to "prepare students for careers as autonomous entrepreneurs, family-business entrepreneurs, or entrepreneurs in corporate setting". Indian B Schools have barely started looking at offering entrepreneurship education. It has become a norm for reputed B–Schools, to offer an elective in the second year. Some invest in state-of-the-art incubators "to help entrepreneurs launch their business plans into commercially viable products and services".

The problem is – students do not take such courses seriously, because they come in the fifth or sixth term by which time they are already placed. Harward Business School requires all its semester 1 students to take a course called 'The Entrepreneurial Manager'. The question that needs asking – are the courses / opportunities offered delivering the required skills and insights to be a successful entrepreneur ?
'Laboratory in Entrepreneurial Motivation' (LEM), an elective at IIMA, is a favourite with such students. The course is taught by an alumnus, who is also a successful entrepreneur. The course has no textbook, no readings, no quizzes, no test, no exams, no fundas. Especially the last factor – fundas like making a project report, financial forecasts, applying for loans, etc. A budding entrepreneur will have enough time to figure all these out before actually getting into the venture. LEM targets the 'fear factor' involved in giving up a cushy, well-paying job with good perquisites. The foremost fear is “Can I afford to fail - financially and psychologically ?”. Second fear is “Am I willing to fail ?”. The hard cold fact is most innovators fail (a lot) before succeeding.

Entrepreneurs require not just the 4Ps of marketing, but also the 4Rs of entrepreneurship, namely, Risk taking, Ridicule handling, Revolutionary thinking, Relationship building. These four 'R's not only need to be taught, but also to be developed, encouraged, inculcated, cultivated and internalised. Management Fests seem like a great place to apply the fundas of management. Two things that really help in preparing students for starting a venture are business plan games / competition and business simulation, both of which are conducted in the most amateurish ways.

Almost all students in the fests, talk of a minimum investment of Rs. 50 lakhs. Is it not foolish to even assume that a budding entrepreneur, who has not earned a rupee yet, can start thinking of investing at such a level ? I even saw a prize winning plan which took Rs. 40 lakhs from a ‘friend’ which required no paybacks or interest / dividend !! Banks seem to be desperate to give loans without any collaterals !!!

Another quality, which is needed, is the ability to be able to ‘walk alone’. To realize a dream, one cannot wait for someone else to join. Can this ability be developed ? How ? Most often this is the key to a successful venture. Entrepreneurship cannot be one of the dreams along with several others at the back of our minds. If owning a Mercedes is as important becoming an entrepreneur, look for a corporate job. For an entrepreneur, the only dream would be business, business and business ……”

Are the courses and cells developed by B-Schools doing these ?

2 comments:

  1. Hi Sir,

    Excellent piece. Feels like am back in your class :)

    ReplyDelete