New business ideas revolutionize the world. Every great invention, from the printing press to the silicon chip, has altered the shape of industry and the contours of personal life. Many of these inventions have been developed, implemented, or successfully applied to business by entrepreneurs.
In fact, the topic of entrepreneurship has become an increasingly popular one at business schools today, for students who study its fundamentals are well-prepared in all aspects of business: new product development, risk management, and market assessment. They’re also ready to change the world with their new inventions or their new outlooks.
“When you look at how a scientific breakthrough occurs in society, it is always entrepreneurs who have driven that change,” says Doug Johnson, director of the New Business Development Enterprise at the Carlson School of Management, University of Minnesota in Minneapolis. “Old companies and large companies find it extremely difficult to change themselves.”
“All the major economic growth in this country, and maybe worldwide, has occurred in small, high-growth companies,” says Kathryn Simon, director of the Robert H. and Beverly A. Deming Center for Entrepreneurship at the University of Colorado in Boulder. “Because of the widespread presence of entrepreneurial values, large companies have been forced to reevaluate how they work. They’ve had to be quicker and more flexible, and they’ve had to learn to change direction. A company like IBM, which has a tradition of being hierarchical and slow-moving, has made significant changes, partly in response to this entrepreneurial influence.”
This entrepreneurial spirit isn’t just found in inventors and computer geniuses, says Simon. “At the University of Colorado in Boulder, we think entrepreneurship implies a desire for an individual either to start his own business or live within an environment of self-reliance, with low levels of resources in a high-growth business environment. Entrepreneur ship is really a way of developing thinking in an arena with considerable unpredictability and ambiguity.”
No matter how it’s defined, entrepreneurship as a business reality and as a business school staple has skyrocketed in the past two decades. “Over the last ten years, there has been an explosion of academic programs devoted to entrepreneurship,” says Timothy Jones, president of the Louis and Harold Price Foundation and vice president of the Price Institute for Entrepreneurial Studies, headquartered in New York City. “What’s come on the scene in higher education is the creation of dedicated centers devoted to entrepreneurship within schools of business. It’s not just a random class here or there on business plan preparation or venture funding. Now students can take a multitude of classes in these centers and learn all facets of entrepreneurship.”
A variety of factors has fueled the new emphasis on entrepreneurship. The availability of personal computers and the unparalleled resources of the Internet have combined to allow ambitious new business owners to create and promote their enterprises on a shoestring budget. Meanwhile, massive layoffs instituted by major corporations during economic downturns have convinced many unemployed workers to try their luck at liberating their inner entrepreneurs. Business schools with well-developed entrepreneurship programs are poised to serve the next generation of Internet-savvy, IPO-ready venture capitalists.
Emphasis on Entrepreneurship
While schools around the world are founding their own entrepreneurship centers and offering a higher concentration of new business development courses, one of the acknowledged leaders in the field is Babson College in Babson Park, Massachusetts. The school has leaned toward entrepreneurship since its founding, but it completely revamped the curriculum in 1993 to make entrepreneurship its entire focus.
“In essence, Babson bet the farm by saying, ‘We’re going to deliver our MBA and undergraduate program differently from anyone else in the world, and we’re going to model it after the entrepreneurial process.’” —Stephen Spinelli, director, Arthur M. Blank Center for Entrepreneurship, Babson College
“In essence, Babson bet the farm by saying, ‘We’re going to deliver our MBA and undergraduate program differently from anyone else in the world, and we’re going to model it after the entrepreneurial process,’” says Stephen Spinelli, director of Babson’s Arthur M. Blank Center for Entrepreneurship. First-year MBA students go through a “creativity module that reflects the creation, growth, maturity, and renewal of a business,” he says. “The second module is called ‘opportunity recognition.’ And we teach against these modules from different perspectives. What is creativity from an accounting perspective? Or from a finance or entrepreneur perspective?”
Second-year Babson students can choose from a set of 11 entrepreneurship electives, or they can opt to take a whole separate “entrepreneur intensity track,” an integrated program for students who have the specific goal of launching their own businesses.
While few programs offer the full-body immersion plan of Babson, other schools big and small have developed concentrated, specific entrepreneurship programs that prepare students for the world of independent business. At the Carlson School, the New Business Development Enterprise is a yearlong course that allows second-year MBA students to become new business project managers by inspecting startup opportunities at the University of Minnesota, and then seeking financing for viable new technologies. The students evaluate 20 technologies over the year, working with faculty and mentors to conduct market assessments, create business plans, and look for “fatal flaws” in terms of patent infringements, safety concerns, and regulation violations.
This entrepreneurial approach to new product development cuts across all silos of business education and offers students a useful grounding in all phases of business enterprise, says Johnson. “It addresses the fundamental issues of product value and feasibility that are often overlooked by larger firms in the hubbub of daily business details. Consequently, even if our students go to work for larger firms, the things they’ve learned from us can be extremely valuable.”
At the Entrepreneurial Studies program at Clarkson University in Potsdam, New York, business undergraduates are immersed in the real-business world from year one, becoming part of a team that starts and operates a company. “They begin by assessing the market potential for a product or service, preparing a business plan, and convincing a board to fund their ideas,” says Stub Estey, executive director of the school’s Shipley Center for Leadership & Entrepreneurship. “The board, which includes local business professionals and representatives from the college, evaluates the business plans, but the university provides the seed money of up to $2,500.” At year’s end, company profits are invested in a community service project designed by students.
During the next three years, students take on the progressively more difficult challenges of planning more sophisticated businesses. During their second year, students can participate in [email protected] House, a recreated corporate setting that allows students both to work and live together. In their fourth year, students can join the Clarkson Consulting Group, a consulting firm that fulfills fee-based contracts with external business clients.
At the University of Colorado in Boulder, entrepreneurship programs are centered in the Deming Center, a joint program of the Leeds School of Business and the College of Engineering. The curriculum offers entrepreneurial courses to both business and engineering students—as well as out-of-classroom experiences such as internships, mentorships, involvement in the MBA consulting company called Entrepreneurial Solutions LLC, and close involvement with the business community, says Simon. Typical internship assignments include strategic or marketing plan development, market research and analysis, venture capital modeling, investment management, new product development, and researching and evaluating new business opportunities.
While such a grounding certainly prepares students to graduate and start their own businesses, Simon sees the value of an enterpreneurially focused education to be even greater. “Students learn to think like entrepreneurs, so they can evaluate risks and make business decisions,” she says. “New graduates might take positions in entrepreneurial companies as the second or third person in the organization. Or they might go to large corporate environments and bring that entrepreneurial thinking into some of the more innovative departments.”
Not unexpectedly, one of the keys to running a program on entrepreneurship is staffing it. “Not everyone is convinced of the merits of a nontraditional program that adds experiential learning to the traditional mix of classroom teaching,” says Clarkson’s Estey. “Our experience suggests that this approach creates a very beneficial learning environment, and helping faculty members understand this is an important step.”
At the Pontifica Universidad Católica de Chile in Santiago, which offers a set of undergraduate and graduate courses focusing on entrepreneurship, simply finding the right professors is the challenge. “The courses require very special faculty, entrepreneurs,” says Matko Koljatic, director of the Escuela de Administración. “This is a very scarce resource.”
Many schools solve the problem by team-teaching the entrepreneurial classes. Minnesota’s Johnson, who has a background as a venture capitalist, partners with a full professor “who is there to assure me and the class that the academic rigor is upheld.” He also brings in guest lecturers such as lawyers, accountants, service providers, intellectual property experts, large firm divisional managers, and both successful and unsuccessful entrepreneurs. “You can learn a lot from those who have failed and are willing to talk about it,” he says.
At Babson, the faculty is closely split between academics with Ph.D.s and highly successful entrepreneurs who include the founders of Cabletron and Dunkin Donuts. “At some institutions, faculty members have a jaundiced view of the teachers across the aisle, but we have an amazing chemistry among our ‘pracademics,’” says Spinelli. “It is a team of people who are fanatically driven around entrepreneurship, and who respect and like each other. Because the college has made such a commitment to entrepreneurship, we have the density and depth to have true team development.”
CU’s entrepreneurship program also mates tenure-track professors with experienced entrepreneurs who serve as adjunct professors. The key is attracting “great faculty members who are interested in teaching entrepreneurship combined with their home disciplines. So you need a finance person who really believes in entrepreneurial finance, private equity funding, and venture capital—someone who really understands it—to be credible,” says Simon. “One of the future issues entrepreneurship programs will face is the move from pure academic faculty to the use of adjuncts and practical or clinical faculty who are really practitioners.”
It might be hard for business schools to locate the right faculty members for an entrepreneurial program, but the students are easier to identify. Some are students who come from an entrepreneurial background already, suggests Koljatic, noting that students whose parents own their own businesses show the most interest in entrepreneurial coursework.
Others just seem to have a gene for it. “I think our students involve themselves in uncertainty with a greater glee than most,” says Spinelli. “They almost seek it out. Because if you’ve been trained to be, or like to be, in an environment that is opportunity-focused and revolves around problem solving, there have to be problems for you to solve. I think these students tend to be more comfortable in an uncertain environment than the traditional MBA student.”
“The courses require very special faculty, who are academically qualified and who are also seasoned entrepreneurs. This is a very scarce resource.” —Matko Koljatic, director, Escuela de Administración, Pontifica Universidad Católica de Chile, Santiago
They also have to be imbued with entrepreneurial passion, says Simon. “If they’re not passionate, they’re going to hate it. They have to be good thinkers, and they have to have the ability to make opportunities happen. They have to be comfortable with ambiguity, and I believe they have to be driven to live their dreams.”
These dreams don’t just include going into business for themselves. “We think the market really breaks down into five big chunks,” Spinelli says. “The first chunk is students involved in new venture creation, who are going to start their own businesses. Then there are students who specifically seek out small, rapidly growing companies in market areas they think have great potential. Then there’s the set of students who want to be in entrepreneurship from a finance perspective. They want to be equity investors in some way—involved in venture capital, investment banking, small business lending, or some other aspect of entrepreneurial finance.
“The fourth group of students is drawn to the growing phenomenon of corporate entrepreneurship, where people get special projects for a new venture division within the corporation, or where they’ve involved in new product design and launch. The fifth big piece is students who end up in a more traditional career after attending Babson. But we hold that an entrepreneurial education gives them an advantage, too,” Spinelli says.
Jones of the Price Institute agrees. Even if the economy limits the number of business startups that can be successful, graduates with an entrepreneurial bent “are equally valuable within large companies,” he says. “There’s this concept of the intrapreneur, the person within a large organization who is allowed to act entrepreneurially, to pursue new opportunities with the capital support of a big company. This is a growing area that’s useful across a wide spectrum of business activity.”
Focus on the Future
All these experts expect the entrepreneurial spirit to continue to shape both the world of education and the world of business. “I think the slope of the curve of growth in entrepreneurship will be less steep than we saw in the mid to late ’90s, but we’re prepared for that to happen,” says Spinelli. “The old way of teaching an entrepreneur class—of taking you from idea to harvest and sending you off into the world to make your fortune—is going to change to courses with significantly more depth, because the students themselves are coming in with more knowledge.”
He adds, “When I first came here, if I used the term IPO to a class of first-year MBAs, they’d ask me what I was talking about. Now, if I say ‘IPO’ to a group of high school seniors who are considering coming to Babson, they’ll say, ‘Well, I invested in this company, and I got a good return.’ They understand. That allows for the explosion of education.”
While Jones foresees a slowdown in the rate of entrepreneurial programs that are added to university campuses, he’s expecting to see growth in those programs at the community college and junior college levels. He also predicts more entrepreneurship programs will be launched in the K–12 arena to supplement programs like Junior Achievement and the National Foundation for Teaching Entre preneurship. That’s a New York-based program for teaching entrepreneurship to inner city kids, which the Price Institute supports. In addition, he expects that the Price Institute will also start focusing on underdeveloped areas like Native American colleges and historically black colleges and universities.
Business schools that do add entrepreneurial programs will need to have the support of their faculty—as well as the business community locally—to succeed. “You can’t have a real entrepreneurship program without having executives in the community, and we’re very blessed with them in this area of Colorado,” says Simon. “But entrepreneurs are everywhere— in agriculture, in small businesses, in consumer products.”
She’s hopeful that entrepreneurship will become so pervasive that it no longer will be singled out and taught as a standalone concept. “Entrepreneurship is not a course or a business entity—it’s a way of thinking,” she says. “It should become so much a part of how we deliver business education that everybody will be exposed to entrepreneurial ways to approach business. It has to be integral to the other mechanics of business, such as finance, accounting, marketing, and operations.”
She also encourages directors of entrepreneurial programs to keep up with what’s happening in the business world. “Stay on the leading edge of program offerings. Watch what’s happening to entrepreneurship and entrepreneurial ventures in the real world. At Colorado, the students are a great source of information, because our MBAs must have three to five years of work experience before they apply. I also have a terrific advisory board made up of entrepreneurs and venture capitalists, and we meet quite regularly. They’re eager to make sure we get the current spin on things.”
That spin may be rotating faster every year as the business climate continues to speed up and change. As Internet marketing becomes even more refined and local business owners learn to sell on a global scale, the incentives and paybacks for founding a new business become even more irresistible for would-be entrepreneurs. Business schools can help prepare them for life on their own—armed with all the tools they need to make that new venture a success.