Can business schools build entrepreneurs?
Posted on March 21, 2008 | Categorized under entrepreneurship
Can entrepreneurship really be taught inside business schools? Well, every business does need a theoretical knowledge base of accounting, finance, marketing, and public relationships; and a business school precisely provides that through a systematic process, which otherwise would take longer time. One can meet and make connections with other like minded entrepreneurs there and not to forget, one can gain experience of starting a venture, inside a secure cocoon, where failures won’t bring bankruptcy as in real world. So then business school is the way to go, isn’t it? Well, let’s also consider the fact that formal education often builds template based stereotypes and entrepreneurship is all about making difference!
An entrepreneur philosopher Anita Roddick says,
“Actually, potential entrepreneurs are outsiders. They are people who imagine things as they might be, not as they are, and have the drive to change the world. Those are qualities that business schools do not teach”.
Entrepreneurial thinking is, in fact, drastically different than the thinking developed inside business schools. It has been pointed out in a Harvard Business Review paper “What makes entrepreneurs entrepreneurial?” by Saras D. Sarasvathy -
The word effectual is the inverse of causal. In general, in MBA programs across the world, students are taught causal or predictive reasoning in every functional area of business. Causal rationality begins with a pre-determined goal and a given set of means, and seeks to identify the optimal - fastest, cheapest, most efficient, etc. alternative to achieve the given goal. The make-vs.-buy decision in production, or choosing the target market with the highest potential return in marketing, or picking a portfolio with the lowest risk in finance, or even hiring the best person for the job in human resources management, are all examples of problems of causal reasoning. A more interesting variation of causal reasoning involves the creation of additional alternatives to achieve the given goal. This form of creative causal reasoning is often used in strategic thinking. Effectual reasoning, however, does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the varied imagination and diverse aspirations of the founders and the people they interact with. While causal thinkers are like great generals seeking to conquer fertile lands (Genghis Khan conquering two thirds of the known world), effectual thinkers are like explorers setting out on voyages into uncharted waters (Columbus discovering the new world). It is important to point out though that the same person can use both causal and effectual reasoning at different times depending on what the circumstances call for. In fact, the best entrepreneurs are capable of both and do use both modes well. But they prefer effectual reasoning over causal reasoning in the early stages of a new venture, and arguably, most entrepreneurs do not transition well into latter stages requiring more causal reasoning.
I’d say that business school is neither necessary nor sufficient for entrepreneurship. I would not cite examples of Bill Gates and Steve Jobs here, who do not have a business school degree; because an equally inspirational entrepreneur is a business school graduate named Sergey Brin! Attending a business school may help an entrepreneur to acquire relevant theory but it can not be a substitute to a desire of - learning by doing. The lessons learned inside those four walls might help to avoid certain mistakes in a business, but certain mistakes, if happen, do have the ability to teach way too greater lessons. Failures are equally indispensable as the success after it. It is not a good idea to always depend on some well structured tutorials to learn things because it limits ken of knowledge and reach of success to what has already been tried and tested.
We can, at most, help to remove cocoon around a caterpillar to make its struggle easier but then can’t strengthen its wings as much as that struggle would have done otherwise.
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For PTC:
I agree with you … no MBA can make an entrepreneur. But it tends to give you what the least you must have to be one.
You may learn all the capabilities that they teach , in your job itself but that will take a lot of time. Though such a thing (on job people-skills) will give you confidence that you can deal with scenarios similar to your past experiences. Now if there is some different scenario/situation altogether then you may not cope up with that as good as,compared with you would have had if u were an MBA.
Let me compare it with a practical example..
(I think you r an engineer.. )
There is a master worksman who repairs engines of cars… technically speaking he has approximately same (infact more) amount of knowledge about engines as a good engineer have got. Now here is the difference :
1) He would have spent atleast 2-3 years to get kwoledge of engines.. that too only practical no theoretical know-how. Our engineer got the same thing in 10 lectures and 5 practicals( though not much skilled, but can work somehow).
2) suppose a new engine/machine comes up . Worksman would have to go through 2-3 yrs again to get to know it. Engineer would get a hang of it by specifications.
3) suppose worksman is asked to design a new machine with certain characteristics that is to invent… Engineer can always look into the idea.
Also , in MBA you learn more from your peers.. how they handle pressure.. how they innovate rather than books and stuff….
Myself: B.E.(Computers) from NSIT,Delhi. Currently in US. wanted to become an entrepreneur. tried two times when in college.
I have asked this question many a times to myself,answered in in different ways… came to the conclusion .. that doing MBA is good and important but that should not hamper my progress towards being an entreprenuer. .. Infact , if i can be one i would like to do an MBA after that… you constantly need ideas ..what better than MBA institutes.
Yes Gaurav, a formal degree certainly helps to create a strong theoretical knowledge base in the learner. Also it builds a confidence into the learner that now he knows “something” about a field and so can learn related stuff. The workman in your example would lack both of these, and so even if he had same level of intellect as the engineer, would fail to learn quickly.
But there is also a side-effect of formal education, specifically if it’s pursued with incorrect perspective. It can develop a false feeling of competency in a person that he knows “everything” about a field. In such case, the engineer your example would take the task of learning new design casually and could miss some crucial details. Whereas, the workman will take the task as if he doesn’t know anything about the new design and will pay attention to each and every detail.
In short, it’s important to set a right perspective before going for formal education; at least, in a dynamic field like entrepreneurship. Otherwise, losses can overweigh gains :)