Posts Tagged 'start-up'

Can MBA Programs Teach Entrepreneurs?

Entrepreneurship is a hot buzz word right now.  The idea of working for oneself and creating a successful enterprise from scratch has been a dream of individuals around the world.  In fact, America was founded by frontiersmen and adventurers who embodied the entrepreneurial ideals of creating something out of nothing and building it into a success.  It should be no surprise then that modern-day Americans have brought those same qualities to the business world in the form of successful start-ups and small businesses.

It’s hard to talk about entrepreneurs without thinking of giant tech firms like Google and Facebook.  These companies were once only ideas that their founders grew into gigantic, multinational firms.  But I am more concerned about how entrepreneurship relates to an MBA degree.  Specifically, what are the challenges in teaching entrepreneurship?  What schools have successful conveyed the important start-up lessons to their students?  And how does CSUF’s MBA program stack up with other universities’ when it comes to teaching entrepreneurship?  These questions are important, because students are still going to business schools and earning MBA’s and entrepreneurship is on the rise.  Therefore, it’s worth exploring the challenges is teaching business school students entrepreneurship, and how successful programs have circumvented these challenges.

Managing Start-Ups

The major issue MBA programs face when teaching students about entrepreneurship is the perspective these programs take.  What that means is that an MBA is typically a “corporate” degree.  MBA graduates often aspire to work for Fortune 500 firms, and are taught corresponding lessons like how to calculate weighted average cost of capital (WACC) or develop a marketing plan.  The issues an established multinational corporation must tackle differ greatly from those a start-up faces, and this leads to challenges when trying to teach entrepreneurship to MBA students.

Right of the bat, start-up and established businesses approach success from different perspectives.  New ventures are often more concerned with survival than anything else; established firms worry about their next quarterly earnings report.  These factors require dramatically different skills from leaders from these organizations.  Instead of needing to calculate WACC entrepreneurs must learn how to attract investors and raise start-up capital.  Instead of knowing how to manage employees’ workflow, entrepreneurs often must learn how to constantly pivot their ideas and recalibrate them until they achieve a working product or service.  And instead of developing a new product marketing plan for international customers, entrepreneurs must learn to create buzz around their product and obtain their first few, important customers.  These challenges aren’t always addressed in MBA programs, but some US business schools are doing more than others to help MBA’s become successful entrepreneurs.

The Best Entrepreneurship Program – It’s Not Who You Think

Different schools take different approaches to teaching entrepreneurship.  Some emphasize contests, like Rice University’s annual Business Plan Competition.  Other’s emphasize hands-on experience.  I mentioned in a previous post that Harvard recently revamped its curriculum to emphasize entrepreneurship.  The school went so far as to require students to create a new business and even provided seed funding for the start-ups.

But Forbes recently declared Babson College the reigning king of entrepreneurship programs.  This small school in Massachusetts provides seed funding to students to start their own businesses, requires students to donate any profits they earn to charity, and then forces students to liquidate their firms at the end of each year.  The school wants students to experience entrepreneurship through its entire life-cycle in order for them to gain greater insight into the needs and struggles that go into starting one’s own business.  This program, and others like it that encourage and foster entrepreneurship, have gone a long way towards making some of the school’s graduates extremely successful entrepreneurs.  And the school tried something few business schools do in order to help this program succeed – it split its general business degree from the entrepreneurship degree, so faculty and resources can be devoted to this very different way of thinking about and approaching business.  These steps appear to demonstrate the entrepreneurship and a standard MBA curriculum should be taught using different strategies and techniques.  Perhaps more schools will begin adopting the Babson model in an effort to attract aspiring entrepreneurs.

CSUF and Entrepreneurship

So how does CSUF’s MBA program stack-up with other programs, from an entrepreneurship perspective?  The school offers several entrepreneurship programs, including this year’s first annual business plan contest and its Center for Entrepreneurship.  The course offerings include some entrepreneurship classes as well, including New Venture Leadership and Management which I will be taking this fall.  I was originally concerned CSUF’s entrepreneurship courses would be focused on textbook reading, and I hoped I might get lucky  and the class would involve some case study work.  I feel entrepreneurship learning should be hands-on, and was excited to find out I might get my wish this fall.  The New Venture Leadership and Management course description states the class includes case studies and hands-on work with local businesses.  If this ends up being true, CSUF may have found a way to incorporate some effective entrepreneurship lessons into its MBA program!  I’ll report back later in the fall with my personal opinion on how well the school presents entrepreneurship.

Entrepreneurship will continue to be an important part of MBA programs and the American economy, especially if jobs continue to be scarce and unemployment remains high.  MBA programs may have had difficulty in the past teaching a subject like entrepreneurship, which requires hands-on learning and a different perspective for creating and developing a business.  But several schools have made tremendous strides in developing exciting entrepreneurship programs, and I hope CSUF continues to make progress in order to position itself as a leader in West Coast (or at least Southern California) entrepreneurship.

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Failing Your Way into a Top-Tier MBA Program

What if you failed at something, and yet that failure opened doors you had previously only dreamed of walking through?  Seems counterintuitive, right?  However, some top-tier MBA programs admit these “failures” in growing numbers.  And what exactly are these students failing at?  They fail at starting their own businesses.

Fortune reported last week that an increasing number of top-tier MBA programs are admitting entrepreneurs, and often it’s not important whether the business they created succeeded or failed.  Changing attitudes and trends towards entrepreneurship have opened more universities to the idea of accepting these students.  Greater numbers of universities are adding entrepreneurship degrees and concentrations to their program offerings.  Additionally, studies have shown Generation Y is extremely entrepreneurial.  A May USA Today article cited a 2012 report by the Kauffman Foundation which said 29.4% of entrepreneurs are 20-34 years old.  These trends highlight why greater numbers of entrepreneurs are likely applying to MBA programs, but the skills they bring demonstrate why programs are eager to accept them.

Universities view entrepreneurs positively for a variety of reasons, whether they succeeded in their endeavor or not.  There are a few key qualities entrepreneurs tend to exhibit that MBA programs find especially valuable:

  • Long-term, strategic view.  Successful entrepreneurs must develop a business plan and execute it. Often, this means they need to view things from strategic perspectives other people might not consider.  Entrepreneurs are often either ahead of curve when it comes to developing a new product, or they find ways to fill market needs others have overlooked.  This strategic view is heavily emphasized in MBA programs – students are being taught to become future managers and executives, and universities find this skill set translates extremely well from start-ups to corporate leadership.
  • Ability to sell.  Entrepreneurs, in order to be successful, need to successfully sell their product or service.  And all corporations are in the business of selling – Google sells ads, Wal-Mart sells consumer goods, and Amazon sells everything.  So selling skills are important both for individuals creating a start-up and those working corporate jobs.  Entrepreneurs who already possess selling skills would be more well-developed business school candidates, and thus more attractive to top-tier MBA programs.
  • Soft skills.  Communicating effectively, solving disputes, managing and motivating employees – these are all important soft skills for any business leader.  And sadly, these skills are not often explicitly taught and practiced in MBA programs.  Entrepreneurs often have (successfully or unsuccessfully) put these skills to work in their businesses, and have a leg-up on their fellow classmates who may not yet have been exposed to these vital skills.
  • Network.  Businesses are run through relationships.  Owners need excellent relationships with their suppliers, employees, financial backers, and even their customers.  Thus, entrepreneurs tend to develop valuable networking skills while running their businesses and schools find this skill valuable.  These entrepreneurs can develop relationships with their fellow classmates which could potentially lead to even greater endeavors and business successes in the future.

There are several prominent business schools working to attract entrepreneurs to their programs, most notably Harvard and Stanford.  Other MBA programs across the country are getting in on the act, too.  UC Davis just invested $5 million in an innovation and entrepreneurship institute, and CSUF just completed the school’s first annual business plan competition.  Start-ups are obviously an important element of the economy, and business schools are realizing how attractive entrepreneurs can be as MBA candidates.   So if you’ve wanted to earn your degree but were concerned about that start-up you founded after graduation that didn’t succeed, don’t worry – you could potentially be a very attractive candidate for today’s business schools.

Have you ever started your own business?  How did it go?  Was it a success?  If not, what lessons did you learn from the experience?  Share your story in the comments section below.

Here’s an article I read this week that I found interesting:

“Foxconn Working Conditions Slammed by Workers Rights Group”I wrote a post several months ago about Apple’s Foxconn factory in China, highlighting potential conflicts between shareholders’ interests and employees’ well-being.  This article showed that the issues at Apple’s Foxconn factory still haven’t been resolved and why it’s important to consider employees’ well-being when running a business.

A Brave, New MBA World

Every year, employers receive surveys from various organizations asking questions about the companies’ MBA employees they have and those they will be recruiting.  And I am always fascinated to read what skills employers feel their MBA new hires are lacking.  In 2011, the University of North Carolina partnered with the Graduate Management Admission Council (GMAC) and conducted one of these surveys.  One section of the survey listed skills employers had identified as most valuable in MBA’s, but the firms were reporting the lowest satisfaction with these same skills in their MBA’s.  Those skills included:

  • Ability to adapt/change to new situations
  • Creative problem-solving skills
  • Oral communication skills
  • Written communication skills
  • Ability to think strategically
  • Ability to make decisions with imperfect information
  • Interpersonal skills
  • Leadership skills

Business schools have a difficult challenge finding ways to teach these skills to their MBA students.  But Harvard Business School is attempting to implement a new graduate business curriculum that could do exactly that.

Harvard Business School recently undertook a bold revamp of its MBA curriculum.  Instead of focusing the majority of its course-work on case studies, the school has developed a program titled FIELD (Field Immersion Experiences for Leadership Development) for first year MBA students which exposes them to the trials and tribulations of creating a start-up.  First-years formed approximately 150 teams that were provided impressive resources to launch their start-ups: $5,000 in seed money and help from lawyers (for drafting legal documents) and professional programmers (for app and software development).  Students created their company and pitched their idea to fellow classmates.  Then, those classmates were provided with $100,000 in “monopoly money” to buy and sell shares in the start-ups using a software program developed for the course.  The idea behind this being that the market (in this case, the students) will determine whether a team’s business has the chops to succeed based on how well it is trader by the market.  After the initial trading occurs, teams then revamped their pitches or repositioned their start-ups before presenting one last time to their classmates.

Some of the ideas were hits, and could potentially spin-off into brand new businesses.  Others start-ups that weren’t so successful were relegated to the “failed business track” and their teams analyzed why their ideas didn’t completely pan out.  Everything in the program is a learning experience, according to Professor Alan MacCormack: “The going-to-market track is about selling and going to customers and proving your idea.  And the other is understanding that failure is a very natural outcome of entrepreneurship.”

So how does this course relate to the employer survey mentioned earlier?  This bold revamp of Harvard’s curriculum dramatically addresses the skills employers feel MBA graduates lack when they enter the workforce.  The students must leverage their creative problem-solving abilities and work together as a team to create a business from scratch.  They have little time to waste, and must act using limited information and their experiences each brings to their team.  Interpersonal skills and leadership become extremely important if the students wish to develop an effective team that can implement the group’s vision and business strategy.  Oral and written presentation skills are honed in the pitches to the student “investors.”  And the teams must adjust on the fly to the reactions of the market to ensure their start-up remains viable and competitive.

I personally find this new approach to the MBA curriculum extremely exciting!  I love the idea of taking the information learned in the classroom (P&L statements, marketing strategies, production scheduling, etc.) and augmenting it with the communication and soft skills needed to sell an idea to an investor.  This program gives students the opportunity to fully utilize the skills and knowledge they’ve been taught in their MBA program in order to better experience what the business world is really like.  Now, I realize this program cannot be implemented by every last MBA program – the cost alone is a huge roadblock for most schools.  But the skills these students learn and develop in a program like this will go a long way towards helping them grow into effective MBA graduates.  Creative MBA program modifications like Harvard’s start-up course should dramatically help bring MBA programs graduate students who are skilled and experienced in 21st century business strategies.

What do you think of Harvard’s new start-up course?  Do you think it will help mold MBA graduates into employees that firms will want to hire?  Share your thoughts in the comments section below or tweet me at @orangecountymba.