We’ve Got This Brilliant Idea – What Could Go Wrong?
Entrepreneurship Education has a Blind Spot
It is hardly news that entrepreneurship and the innovation economy have become a major force in the US and the global economy. GDP growth, job creation, and personal income all rise with the level of entrepreneurial activity. It’s little wonder states and countries are scrambling to replicate their own “Silicon Valley” ecosystems.
Unsurprisingly, the academic world has responded with more - more comprehensive, and more specialized programs focused on entrepreneurship. Since the University of Michigan offered the first course for aspiring entrepreneurs in 1927, this area has become big business: almost 50 business schools in the US now offer an entrepreneurship studies concentration or program. Not to miss the party, almost 300 universities around the globe – and even some high schools – now operate entrepreneurship programs.
Yet our experience tells us there is something missing between what these programs teach and the complete package that entrepreneurs need to know to build successful businesses. Both of us are active with entrepreneurship programs at Cornell, Harvard, and The University of California, Davis. Through our work at Sage Partners we have collaborated with well over 75 startup companies at various stages of maturity, giving us hands-on experience helping entrepreneurs to accelerate the growth of their businesses.
Through interviews with business school faculty, recent MBA grads who are in early-stage companies, and in talking with our own clients, it’s clear that academic entrepreneurship programs are very good at teaching the valuable early-stage lessons of entrepreneurship – identifying the need, the big idea that addresses the need, and the ways to finance a company that will address and scale a solution to the need. What’s not addressed is the simple reality that not every idea can become the newest Unicorn and attract hundreds of millions of venture capital investment to buy market attention, hire top-notch talent, and wait for the economics to pivot once you have huge scale. For every Unicorn there are thousands of great companies that can make a solid contribution to the economy and provide good returns for their investors. But only if they make it past the idea into a self-sustaining company.
We have noticed that aspiring entrepreneurs at times struggle with the realities of how to actually create and stand up a real company that can execute against the identified need. From our client work, two examples come to mind. The first is fundamental market naïveté. The entrepreneur had an idea, tested with end customers, created an MVP – all on a shoestring budget. But lack of familiarity about how their customers preferred to interact with the end-customer and the resulting pivots caused a mortal delay. The second example is not knowing what’s needed to open and operate a business aside from the incorporation documents. They won a benchmark deal – high-fives were exchanged, and investors celebrated. But when the new customer asked to be added to the general liability insurance policy – none existed. The delay obtaining coverage almost scuttled the deal and could have stopped this promising company cold on its growth trajectory.
Stated another way, it’s one thing to win the pitch competition and quite another to build and scale a company that can actually deliver that idea to the marketplace. We are not unsympathetic that the things required to start and build a company are very hard to pull together and manage while staying focused on “the big idea.” Basic items such as how to secure appropriate office/lab space, permits and licenses, simple bookkeeping, how to hire people and stay compliant with employment law, and how to find and use mentors and trusted advisors are rarely top of mind for fast-moving aspiring entrepreneurs.
It appears that formal academic programs simply assume that most of this “nuts and bolts” stuff will somehow be sorted out and acquired along the way – and that certainly is the case in much of what we have observed. Even though many have prior business experience, founders and early joiners are typically on their own to find or create networks of peers, get advice through YPO (Young Presidents Organization) and other local small business organizations, and if they are lucky, being accepted into programs such as Y Combinator or being able to find credible consulting/venture firms that focus on helping companies with these issues. The mere fact that this “aftermarket ”network of individuals and firms exists suggests that the academic world is not fully addressing this need.
This is a blind spot in entrepreneurship education. Our observation is that the realities of the hard parts of running and growing early-stage businesses in a limited resource environment are not always easily acquired in these programs. They can and should educate entrepreneurs about the “nuts and bolts” to stand up and scale a business. It is true that business schools provide broad business education around all business management topics and it can be argued that entrepreneurially-minded students should be expected to pick up everything they need to start and run a business via the typical business school curriculum. But we think that the realities of standing up and running an early-stage company present unique challenges that can and should be addressed more forthrightly in academic programs. Entrepreneurial management is a discipline every bit as demanding as running a traditional business and should be recognized as such.
It is easy for business schools to fall back on the conviction that they should focus on “the things that can kill you” and worry later about “the things that can slow you down”. However, the difference between theory and practice is that the things that slow you down can kill you – sometimes sooner than you think.
Have you been through an Entrepreneurship program? Do you agree that this is a blind spot? We'd love to hear your point of view.