A lot of (wannabe) entrepreneurs ask or indeed wonder if they should enroll in a business school and get “business expertise” that would be useful to them as entrepreneurs.
Acknowledging this, an increasing number of universities and colleges are offering courses in entrepreneurship as part of their business education. Around the world, business plan competitions are held by academic institutions at regular intervals. The wide publicity given to entrepreneurship in recent times has resulted in entrepreneurs gaining respect and being acknowledged as critical participants in a country’s economy, wealth and job creation.
But does taking a course or two in entrepreneurship while pursuing a business degree make one a better entrepreneur? I don’t think so. While they’re useful in understanding multiple aspects of entrepreneurship, these courses don’t make you a better entrepreneur. Are these courses useless then? Not really.
A small percentage of any population becomes entrepreneurs while the vast majority becomes employees. There’s nothing good or bad or right or wrong about this – it is just the way it is and indeed should be as both entrepreneurs and managers-employees perform complementary activities in the growth of an economy.
A significant number of professional investors are MBAs while an overwhelming majority of entrepreneurs are not! MBAs are trained to assess and attempt to mitigate risk and determine value of an investment in the future, a tricky thing to do in the best of times.
Additionally, there’s the seeming opportunity cost for an MBA – fancy salaries and lifestyles that effectively preclude any entrepreneurial thoughts. On the other hand, an entrepreneur needs to take several leaps of faith at various points (which unfortunately cannot be modeled), needs to be a good judge of people and situations (experience is a great teacher here) and be able to persevere, motivate and excite his team and partners to deliver (no MBA program teaches this). Taking decisions with incomplete information and with imperfect people isn’t what the classroom teaches. Only experience, introspection and a mentor teach you these lessons. Analytical skills alone won’t suffice, there needs to be synthesis as well - an ability to see the forest, the lay of the land and accordingly marshal resources to make a road.
In countries like India, most students doing their MBA have little or no work experience. Their ability therefore to spot opportunities, appreciate scenarios, develop and leverage relationships is limited compared to those with experience. It also doesn’t help that academic institutions in India are insulated from industry, entrepreneurs and the entrepreneur ecosystem.
Yet why are investors almost always biased in favor of entrepreneurs with degrees from well known business schools? The reason is that, all other things being equal, the degree is a filter – demonstrates that the holder has passed other stringent selection criteria. It is obviously not perfect. On the other hand, many professional investors and many senior executives in the corporate sector are usually business school an alumnus so having the MBA degree assures a network that can be leveraged by the entrepreneur.
Now here’s an exercise worth doing. Business school education in the US is about 100 years old and about 45 years old in India. During this time, how many wealth creators (not companies lifestyle or income-substitution businesses like consultancies), across all sectors of the economy, were founded by MBA entrepreneurs in either country? What about economies like Israel, Taiwan, China, Korea, Germany, UK, and Japan? My guess is that this number would be a very tiny fraction. What’s yours?
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