[Guest article by Sanjay Anandaram, entrepreneur-turned-investor and a passionate advocate of entrepreneurship in India.]
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? My own view conditioned by many years of experience is that a business degree, with or without courses in entrepreneurship, is not material at all. Then are all these courses useless? Well, no they’re not! They’re useful for learning and understanding multiple aspects of entrepreneurs and entrepreneurship but don’t, in any way, make one a better and successful entrepreneur. A small percentage of any population become entrepreneurs while the vast majority become 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.
It is said that entrepreneurship cannot be taught but it can be learned. And what better learning environment than the real world, through interacting with other more or differently experienced entrepreneurs, customers, investors, partners and suppliers?
Entrepreneurship is not a traditional discipline with theoretical constructs unlike say, engineering where one needs to spend many years in a classroom learning the sciences and mathematics. Entrepreneurship is more an art therefore than a science. The study of entrepreneurship offers opportunities for researchers and academics though! One doesn’t, for example, learn swimming from reading books in a classroom but by being in a swimming pool with the help of a coach. But even the best coach in the world will not and indeed cannot prevent the novice swimmer from unintentional and painful swallowing of water the first few times! Without that experience of “drowning”, learning from others and then through rigorous practice, it is impossible to be a quality swimmer.
In countries like India, most students doing their MBA have no or little 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 eco-system.
Yet, why are investors almost always are biased in favour 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 alumni so having a degree leads to membership into alumni networks that can be leveraged by the entrepreneur.
Business schools teach students to analyse situations and excessive analysis leads to paralysis. Business schools teach students to manage risks. Business schools, however, don’t teach students to take risks while solving problems and addressing opportunities because risk-taking cannot be taught. In real life, decisions are taken with incomplete information with imperfect people being involved. Decisions are taken on a “leap of faith” basis and persevering when all analysis suggests otherwise requires self-belief and conviction. These cannot be taught in a class-room situation. They can only be learnt through experience, introspection and with the help of a mentor.
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 “successful” companies, across all sectors of the economy, were founded by MBA entrepreneurs in either country? “Successful” meaning wealth creators and not lifestyle income-substitution businesses like consultancies. I believe that this number would be a very small fraction.
Keep in mind therefore that while there are many attributes of a successful entrepreneur, having a MBA isn’t one! What do you think?
[The article first appeared in FE. Reproduced with author’s permission.]
Also see: Part time MBA vs. Full time MBA? Which one to choose?
I will buy this “Enterprenuer MBA” campaigns and believe all those who join these courses if these schools don’t have a placement cell and don’t court companies to hire their grads . instead they should have pureplay incubation, venture capital cell. I bet once you do that a very few student would even look at them.what they are trying to create is basically “entrepreneurial employee” someone who work as hard as a startup guy but to hedge the risk he /she have comfort of a fixed monthly salary. a Steve Woz working on HP. if only HP can recognize the importance of an idea like Apple.
A friend of mine once told me that most Sr.Level jobs require almost equal amount of hard work compared to what you need to do in your own startup. whats diffrent is that there you don’t get stressed out becase there is a salary at the end of the month.
rest all is marketing gimmick of business schools,a pseudo differentiators. entrepreneurs and revolutionaries are created by system , by the frustration they face from the system,by going against the status Quo and challenging the premise.most of the time it require a slog. till one day you have enough to say ” LEt me show you how it can be done better” .Hard to create such people when first class you have in BSchool teaches you about Boxes and Org charts,process and above all compliance amongst other things. you can’t short cut that path IMHO.
MBA and other elite schools have lot of unsolved issue at hand it will be better if they focus on that. William Deresiewicz wrote a brilliant essay on that
http://www.theamericanscholar.org/the-disadvantages-of-an-elite-education/
“Hard to create such people when first class you have in BSchool teaches you about Boxes and Org charts,process and above all compliance amongst other things. you can’t short cut that path IMHO.”
Lets not make sweeping statements here.
Organization Structure is probably the most important concept in business and its lot more than boxes and charts.
An MBA degree offers understanding and exposure to various functional units – Sales, Marketing, HR, Strategy, etc. Whatever young/inexperienced engineers may think, these make or break companies.
Good education also means that the founder can face stiff competition, stay focused for a couple of years and achieve objective (JEE, CAT, etc) that he/she started with.
Ravi,
your argument is such an old chestnut. alright for the benifit of the readers lets dissect it one more time.
“Organization Structure is probably the most important concept in business and its lot more than boxes and charts. ”
Yup thats why most of the high growth startup are flat. thats why all the six sigma black belt in supply chain management from Top consulting firms goes to study mumbai dabbhawalla .still no one has yet achived a PPM fault rate equal to them.
“Good education also means that the founder can face stiff competition, stay focused for a couple of years and achieve objective (JEE, CAT, etc) that he/she started with.”
You said it . based on my understanding a good education is supposed to mean that you understand the subject, apply logical thinking and creative problem solving . getting in to 2 year Cramp camp in kota and clearing JEE is one thing but understanding Electrical Engg and being passionate about it is totally different thing.
True meaning of education is to teach you “How to think Not what to think ” but sadly most of the time education tells you What to think (MBA or otherwise, Elite of Tier C college whatever).
that is precisely one of the reason why no one Questioned all those elite educated fund manager who bought this sub prime crisis upon the world. they were following herd mentality. and since they were MOST OF THE TIME tought to “what to think” they never Questioned.
some Elite Educated Consultant advice Bajaj Auto that they shouldn’t venture in to Motorcycle market and shelve there plan of “Bajaj Pulsar” .someone threw the report on his face . rest is history .
there is value in MBA , but lets take it for what it is .good at something doesn’t mean good in everything. My $0.02.
I can’t teach you the value of org-structure in this comment. I can hope you get it at some stage in your career.
“getting in to 2 year Cramp camp in kota and clearing JEE” says a lot about the person. As I said – It means he can set objectives, take risks and do whatever it takes to meet his goals irrespective of very high competition. What he does after that doesn’t matter much. Its not difficult to be an expert in a subject but, its very difficult to get this competitive spirit.
You are again making sweeping statements about Fund managers and Bajaj Auto. That doesn’t mean anything in larger context. Everybody makes mistakes.
“he can set objectives, take risks and do whatever it takes to meet his goals irrespective of very high competition.”
ya so you are saying Victory is justified at ANY COSt? you should (re)read Ethics 01 course from some university. Half of the corporate scandals have genesis in the “Whatever it takes…” to keep stock price stable mentality. from Keneth Lay to Raju they were doing whatever it take only. how many whatever it takes you are prepared to defend.
“What he does after that doesn’t matter much”
that’s precisely the problem. no liability. student study 4 year of Electrical engg work two years in IT , study two year of marketing and join Finance function in some MNC Banks. with no actually exp of job at and what they do?? go with the herd? the latest FAD of the day .
ya it doesn’t really matter because he will be having a hefty severance deal negotiated with the board .
“ts not difficult to be an expert in a subject but, its very difficult to get this competitive spirit.”
Take it from me its not easy to be Expert. I hope you understand it at some stage in your life.Expert compete against himself Ravi,and keeps on competing that’s the best benchmark. that’s the thing which bought all the progress in world. tell me who is competing with the likes of theoretical Comp Sc. hereos like djikstra,Knuth,Tanebaum and Rivest. no one stll they do great work.
“Everybody makes mistakes”
ya sure but it take bunch of elite Biz school grads to have the audacity to ask Govt to bail them out with tax payer’s money and than they go on to reward themself with hefty bonus. Sweeping statement you say ? they have swept carpet under the economy and you are still defending them ?
I sincerely request you to read the article from William Deresiewicz. you will see the long term consequence of this tendency.BTW He is a yale grad ( if that make it worthy of your elite eyes and elite time).
Dude – Do you even think before you write and/or read it before posting.
Ethics – Are you saying joining a coaching institute to crack JEE is unethical?
Do you need to be djikstra,Knuth,Tanebaum and Rivest to build a great business? I don’t think so. You need people with experience in various functions – few years in product development, sales, marketing, finance,etc
You are missing the point. Making jingoist statements about MBAs or bailouts doesn’t add any value to the discussion at hand.
Take a deep breath ravi and when your Knee has stopped jerking re read the comment .
I do think but our line of thoughts are different. i never said that Joining Coaching is unethical. What i said wrong is that getting in to a job/line of study not for the purpose of seeking knowledge but to use it as a stepping stone to a totally unrelated industry/job. only connection between the two is escalating paycheck. those are the very ppl who are not equipped to analysis good from bad and pron to fall for FADs. This tendency finally morph in to your “Whatever it takes..” mindset.
example of djikstra,Knuth,Tanebaum and Rivest were quoted as expert , their names were quoted to show that external competition is not a MUST to be expert. i don’t know in which parallel univ you read and interpret my comment .
and lastly about your assertion of me being a jingoist .
Dude if I am a jingoist than you are nothing short of a Nhilist who holds no value and create Adhoc values and principal to serve his argument. No wonder you adequately described yourself ” Whatever it takes…”
Mr Prashant,
How about this, when you learn to cook it says ‘salt as per taste’
Your education specially MBA should be able to quantify that and help on the path towards making a good meal. (costing, serving, taste, scaling etc)
I belive entrepreneurships schools should do that.
But you should want to cook yourself, what you want to cook or copy or start is upto you.
Are the MBA schools in India anywhere close to that…i doubt it!
Deepesh
@Deepesh : Interesting Analogy.But Its not the right one.if you work on this a little more you will see that you are implicitly assuming that ingredient of recipe is static and well known . someone has figured them out but its not the case with the startup . That’s why many founder can’t replicate the success . Think of Saber bhatia and all his venture after Hotmail. No doubt that ddds are high but is it a guarantee? No.
than speaking of my point about passion and genuine interest have you ever noticed how most of the Chef in 5 star hotel’s are Men , i always fnd this fact intriguing that when most of the time its women who do cooking why top 10 Chef are men ? this is not to say that Women can’t be good chef its just that when someone do it out of passion not out of social stereotype the guy/gal excel. replace social stereo type with academic stereotype and you know why MBA is no guarantee for any success whatsoever .
I will stress once more that I am not saying that women can’t be good cook ( My Mom is best cook ) but i am saying that propensity of
excellence is more when you get in to something for the love of pursuit not because you are supposed to do “whatever it takes”
Prashant,
You actually answered me here, perhaps i left in unsaid when i said that a person should want to cook a good meal (product like satellite phones) in first place, which means figure out ingredients (yahoo search / google search) and things like should i make this receipe public. (Google v/s micrsoft)
I agree with you on Passion, it is no.1 for me, followed by perservance and competance.
Education can teach you manage the other variables, like scaling, staffing, packaging to make sure you reach there.
Deepesh
You are missing the point.
Point of discussion was – “why are investors almost always are biased in favour of entrepreneurs with degrees from well known business schools?”
I said – “Good education also means that the founder can face stiff competition, stay focused for a couple of years and achieve objective (JEE, CAT, etc) that he/she started with.”
Ability to face competition is a very strong value. I see founders pissing in pants when they see one, two or three competitors entering the market. That competition is nothing compared to JEE or CAT were lakhs compete for a few thousand positions
As an investor – I would invest in a person who has seen this level of competition at such a young age (16-18) and then stayed with the winners and competed again for 4 (or 2 for CAT) more years
Mr Ravi,
One important point here, when you are studying you have a question and answer. More importantly there is a right anwer.
In life can you give me one RIGHT anwer?
Deepesh
@Deepesh – Sure. I never said they have answers to everything in life… I just said they have experience of facing stiff competition…
@Ravi,
I am not sure if this would be the right forum but i would like to give this a try, who would you call an entrepreneur?
- A person who has simply found a means to his daily bread like, i bought a new taxi, or started a new shop. Not cutting edge, new generation stuff simply well oiled machinery.
Or, someone who aims to build something radically different either from existing or ground up, invent something wierd and try to see if there is market for it.
Question is who does the B-School call as entrepreneurship? and the help they both require may be different.
For point A i would choose top school alumini, for point B i think we cant judge by any of their qualifications or history.
I was referring Point B all this while, any thoughts?
Deepesh
I think both are examples of entrepreneurship….
We need to understand the difference between an inventor and an entrepreneur. Not every entrepreneur needs to be an inventor.
“I would invest in a person who has seen this level of competition at such a young age (16-18) and then stayed with the winners and competed again for 4 (or 2 for CAT) more years”
Well Thats your Money sir you can do whatever you want . But Might i suggest a better way to invest? Fund the Tution fee of Next batch of any elite school of your choice in exchange of 5% Equity in there would be startup and earn a windfall of ROI from their “destined to be success”. if the hit ratio is good enough as traditional VC I m confident we will see your name in Forbes list of Midas VC. Good Luck.
Sure. 5% of lifetime earnings in lieu of tuition fee will be an awesome investment, if you leave aside the operational issues of enforcing it.
But I don’t understand why you think someone who goes to top school isn’t worthy of credit they get.
I am NOT saying people who don’t make it are going to be any less successful. Just that they need to prove that they are good enough.
“5% of lifetime earnings in lieu of tuition fee will be an awesome investment, if you leave aside the operational issues of enforcing it.”
Why would you need to enforce any thing . specially when your “elite Grads ” are involved party?? I thought you believed that Elite school grads are better in every standard including business ethics so I assumed they would hunt you down to give you your share of RoI . or you doubt that they will ? it seems to me that you are contradicting your self here
@Prashant – Where did I say they are better in every standard. I just said they’ve experience of facing stiff competition.. You’ve taken the discussion to new lows.
“You’ve taken the discussion to new lows.”
Well where should the the discussion be on your HIGH horse ?
I failed to understand what the author was trying to say. Are Enterpreneurial MBA courses helpful? I would say yes. But do we require one to be an enterpreneur? May not!
It has often become a routine for blogs/media to pitch MBA’s against successful enterpreneurs and many authors often lament how MBA degree holders have not been successful wealth creators.
It is like saying how educated people have not been able to fight and transform the Indian democracy and how rowdysheeters/illiterate people still rule the country. Does it mean that we are having better leaders?
The same applies here.
A person going through a standard higher education(not only MBA) had already invested certain time and effort to gain knowledge. At this stage he becomes wary of his time and actions. His options become limited (unless he has access to family’s fortune). He would not think of starting a tea stall and slowly building a chain. There are various constraints within which he will have to start working. (Will post more as a next comment)
Have any one of you read MEN OF STEEL? Some of the famous personalities in his book would not want to delve in to the past and how they made their initial fortunes. Does it tell you something?
@Prashant Singh hats off man. This line takes the cake “getting in to 2 year Cramp camp in kota and clearing JEE is one thing but understanding Electrical Engg and being passionate about it is totally different thing” Well said.
@Ravi: “As an investor – I would invest in a person who has seen this level of competition at such a young age (16-18) and then stayed with the winners and competed again for 4 (or 2 for CAT) more years”
Entrepreneurs and Persons who have faced competition and cleared JEE, CAT, etc has no co-relation. Passion as Prashant Singh describes does have a direct relation. In fact a person without the IIT/IIM degrees would have a better chance of becomming a successful Entrepreneur as he/she doesnt have the IIT/IIM degrees to fall back on to.
Recommended reading Business World 22 December 2008
http://www.businessworld.in/index.php/Corporate/The-Real-Nation-Builders.html
@ravi How about reading Stay Hungry Stay Foolish: Rashmi Bansal…By IIM and For IIM
@Vishal – Yeah…..whatever makes you feel good about yourself.
@Vishal – “Stay Hungry Stay Foolish: Rashmi Bansal” – Probably one of the crappiest book on entrepreneurship. It would have been a better if she had written those as blog posts!
Vishal,
I do agree that Passion is what is required to become an enterpreneur. But there is a huge difference between Passion coming out of compulsion vs passion that comes with knowledge.
An IIT/IIM guy would have lost some real time in pursuit of knowledge and he would have to play a catch up game in terms of real world experience. He really would need to filter out options to stay ahead and create some real innovative solutions to be successful.
I have not read Stay Hungry Stay Foolish – But if you mean to counter the view point on initial wealth creation process of our highly successful enterpreneurs I would rather not read it.
I would rather be hungry and foolish than a successful wealth creator. May be I am wrong and I might turn around and create lots of wealth and talk about hard-work, integrity and ethics after putting lots of cash in my swiss bank account.
I think passion in entrepreneurship is highly over valued. There is no dearth of passionate entrepreneurs… in fact, i am yet to meet an entrepreneur who is not passionate about what he is doing….
Some idiot here said non-IIT/IIM are more passionate about what they do… wishful thinking.
@ Abinash agree with you..When I mentioned about that book i meant it sarcastly…
@ ravi no point in reading Men of Steel or Stay Hungry Stay Foolish.both are not worth the time..more readable would be Business Maharajas by Gita Piramal….
@ Ravi seems Prashant touched your nerve somewhere..maybe not feeling good yourself?..”non-IIT/IIM are more passionate about what they do..wishful thinking” As I mentioned before….a person without the IIT/IIM degrees would have a better chance of becomming a successful Entrepreneur as he/she doesnt have the IIT/IIM degrees to fall back on to.
In short a non-IIT/IIM would put more passion/hard work to make his Entrepreneurial venture a success as compared to a IIT/IIM as it wont be easy for non IIT/IIM people to find jobs on basis of their degrees in case they plan to give up Entrepreneurship as compared to a IIT/IIM degree holder who can always get a job via thier Alumni/Recruitment network.
Case in point…Centre for Innovation, Incubation, Entrepreneurship by IIMA….give Entrepreneurship a shot for 2 years and if that doesnt work out come back to us. we would place you back..Right form the start there is a backup placement plan in place….doesnt help to create successful Entrepreneurs
@Vishal – Like Rashmi I did little research before throwing up my comments. Anyway it is useless book. I did read Business Maharajas though.
Anyway coming to the point against IIT/IIM or for that matter any other educated intelligent person vs people who did not have a chance to go through the formal education.
The comment on IIT/IIM person having a backup so he has little chance of becoming successful enterpreneur is foolish. Any educated/intelligent person shall think through and work reasonable alternatives, because he has a choice. A person who does not have a choice will have to slog through and can become lucky. It does not mean anything.
It is like saying, we do not need social security/health infrastructure and by having so we would screw up our earnings/health. (I have to admit at this point of time US is a bad example). Only an evolved individual (at whatever level) can think of creating a safety net/backup strategy. Otherwise we all just need to work foolishly and become lucky.
@ravi I guess i need to work foolishly and become lucky..Steve Jobs got lucky..
@vishal Or you can plan like Jeff Bezos or Warren Buffet and be successful.
Anyway coming to the point, we need to make two distinctions
1. Learned vs Unlearned
2. MBA vs Non-MBA
Coming to the topic on MBA, we need to remember MBA helps one learn a set of principles/theories on how businesses run. For a person who does not have exposure of running a business, MBA helps learn the accounting/marketing/ob. But to be successful in business one needs to have a core skill whether it is technical/operational/scheming/trading/deal-fixing etc. MBA is not going to teach an individual those skills.
But once you have a certain skill in that area MBA will help you to think big and draw plans aggressively to move forward.
For example, a person having experience in tea-stall business, after enrolling into MBA program can quickly put plans on expansion with an intimate knowledge of how it works. Even otherwise, he can keep running tea-stall and at some point of time after acquiring certain amount of cash can hire an MBA to expand.
I believe we all have been looking for a magical pill in MBA to make us successful which is wrong.
Interesting article. Having an MBA is definitely not mandatory for being an entrepreneur. If you have a team with the requisite skills or are really good at execution in the critical aspects of your business. Where the MBA comes in handy is to learn from the mistakes of others (case-studies), learn about what are the success and failure reasons of entrepreneurs (a course or two in entrepreneurship) and of course build your network with people from a range of geographies, sectors and cultural backgrounds.
Interestingly, one of the first things mentioned in my class on entrepreneurship was that people who study entrepreneurship have a much higher success rate – backed by some strong statistics. I can look it up and share it with you if you like.
Investors look at schools only when there is no major history of successful entrepreneurship in the founder. And what other factors can they look at in India where cracking CAT is like the truest test of all and going through 2 years of IIM giving you a demi-god status
. After all, it’s their money and they have every right to be use whatever criteria they want to.
your posting was good and providing helpful information on entrepreneurship program. I recently joined executive entrepreneurship programs in european management institute – http://www.emiindia.edu.in/ please suggest me its help me or not?