Are there flaws in the models that business schools use to teach entrepreneurship? To unpack this question, one needs to go back to the origins of business schools and the MBA.
The first business schools like Wharton were formed in the late 1800’s to teach management. In fact the first MBA degree was offered in 1908. The fundamental challenge they aimed to solve was to train people how to manage a large corporate that needed to implement on a known problem, for example producing more cars.
Entrepreneurship only recently became a topic at business schools, driven by a resurgence in rates of entrepreneurial founding and a surge in technological innovation. Many business schools assumed that entrepreneurial firms were simply microcosms of large firms. That meant that many of the ideas on how to manage large firms formed the basis of the ideas on how to be an entrepreneur and how to run a startup. So for example, strategic planning and the strategy document for large firms morphed into business planning and the business plan document for the small business.
However this is where the model breaks down. Entrepreneurial firms and entrepreneurial problems are very different animals from the management problems in large corporations. Entrepreneurship focuses on tackling unknown problems or solutions, while management’s focus is about tackling known problems. So, instead of managing for incremental execution, startups manage for radical exploration. This means the process to do this and the people to do it are fundamentally different than for managing known problems.
When confronting a problem that is profoundly unknown, you cannot “plan” your way to success. To do so could spell failure, as you’d be slow to seize the opportunity and inaccurate in your projections. At its core entrepreneurship is about agility, identifying and acting quickly on opportunities, and being responsive to changes in market trends. This is the edge that startups have over unwieldy corporates weighed down by bureaucracy. The corporate budgeting process is a classic example. This is a protracted practice that can take months of employees’ time. And once the shiny new budgets have finally been approved, the market has often moved in a completely different direction and more nimble competitors have taken the gap.
This isn’t to say planning isn’t important, but rather that we shouldn’t overplan. In his book “Lose the Business Plan” South African entrepreneurship expert Allon Raiz’s message is about not planning too much. Instead you should bring your product or service to market and let customers determine how you should adapt it to meet their needs.
Bringing this back to business schools, when teaching entrepreneurship their focus shouldn’t be on planning. It should be on how to be agile, and to identify and act on market opportunities. Is this something business schools can teach? As an entrepreneur and MBA graduate, even though I had an excellent entrepreneurship lecturer, I didn’t learn these lessons at business school. I learnt them from my customers, the market and from other entrepreneurs who’d travelled the successes and failures of the entrepreneurial journey.
So the questions are: are business schools the best places to be teaching entrepreneurship? And are business school academics steeped in management theory the best people to be teaching it?
This would be a fascinating topic for an MBA thesis.