By Dileep Rao
In the 1970s, entrepreneurship was absent from businessschools. The few schools that offered something in this area called it “small business.” Really glamorous, right?
From this zero start, entrepreneurship has become a must-have in every business school even though it is mostly regarded as a stepchild and is usually a part of the management department, rather than being in its own department. And when it is lodged in management, the other departments treat it with benign neglect, if not outright condescension. Entrepreneurship includes venture marketing, venture financing and venture leadership, i.e., the entire business. But in today’s compartmentalized business schools, there is no good fit for reality.
Anyway, entrepreneurship has become a fixture in all business colleges, primarily because the schools have found that very few of their alums succeed as CEOs. Most are lucky to become high-level managers. More importantly, entrepreneurs are generous to their schools, unlike the penny-pinching executives. But along with this educational expansion have come the attendant incubators, business-plan competitions, small-business consulting, and speakers’ bureaus of successful (and some not-so-successful) entrepreneurs.
Successful entrepreneurs are invited to campus to bring a dose of reality to the increasingly arcane and theoretical world of most business-school education. When students form companies, they are often lauded with congratulatory articles in the college newsletter and local media as a potential Gates, Jobs, or Zuckerberg.
What is often missing from this sometimes festive atmosphere is the agony of failure, or the prospect of years of unrewarded toil. The reality of the entrepreneurial world – that very few of the world’s entrepreneurs reach a significant degree of financial success – is largely glossed over. And the supposed glamour of entrepreneurial success is promoted. This results in highly gifted students in leading-edge institutions dropping out to become the next Gates, Zuckerberg, Jobs, or Dell.
For most, reality is painful. Having dropped out of school, many of the entrepreneurs who don’t reach their goals, find that they do not fit the corporate world because they are used to seeing the world with a 360-degree vision, while most corporate jobs require a one-degree view.
Let me suggest the following.
Business schools should teach every student, not just every entrepreneurship student or even a business-school student, about how to start their own high-growth business. The word “small-business” should be banished from business schools. But students should not be encouraged to start their businesses. That is not a responsibility that universities should assume. Educators and the other cheerleaders have no idea who will, or will not, succeed as an entrepreneur. So let the students decide for themselves – when they think the time is right for them. Here are some reasons why!
• Entrepreneurs need internal motivation – not cheerleaders. There is a high risk of failure, so entrepreneurship should be a self-made choice without students being egged on to chalk up one more hit for the school.
• To succeed, entrepreneurs need two things: Firstly, an emerging industry and the needed skills to succeed in this new industry that business schools mostly don’t know how to provide until after the industry goes mainstream, or, secondly, extraordinary skills to grow in an established industry that not many have.
• Many business school students who become corporate employees can make more money than most entrepreneurs.
Then why teach entrepreneurship?
• Most of our young will need to start their own business at some point in their life because the age of the lifetime job is disappearing.
• Entrepreneurship helps students understand how to evaluate existing businesses from the ground up, i.e. where they don’t have someone saying, “this is the way we have done it,” even if these ways are obsolete in a fast-changing world.
• Students need to understand the links between different aspects of the business. Business schools are organized as functional silos. Entrepreneurship can break down these silos.
• Due to research needs, subject matter experts (most professors) know more and more about less and less. Entrepreneurship can help students link the various disciplines by applying what they are learning in business schools to a business without history.
• Entrepreneurship can help with “bottom up” thinking to help students understand that revenues are generated by each sale, not as a market share point.
• Students will need to know how to go beyond saying “We’ve always done this” to asking “Why are we doing this.”
MY TAKE: Business schools need to be redesigned from the bottom up. They are now designed for the inmates who run the asylum. They should be run for the clients who will shape the world.