Graduating Entrepreneurs: A Fresh Look at Biz Ed
Guest Post by Dane Stangler
Editor’s note: The following article is excerpted from the November/December 2016 issue of the CIMS Innovation Management Report. The author, Dane Stangler, is vice president of research and policy at the Kauffman Foundation, where he leads analysts and researchers in creating new knowledge about entrepreneurship.
Entrepreneurship education has become big business in the United States. In the 1980s, roughly 500 institutions of higher education offered courses or degrees in entrepreneurship. Today, nearly every single American college and university has an entrepreneurship offering, and the diversity of those offerings has exploded. Now, in addition to courses and degrees, students can participate in extracurricular programs, pitch competitions, venture funds, and so on. Many universities have also expanded their offerings for faculty and alumni.
The reasons for this explosion are not hard to understand. One reason is growing interest among students in entrepreneurship. A survey of Yale undergraduates a few years ago found that three-quarters of them were interested in starting a business at some point. According to those involved in academia, this is a significant change from 20 years ago.
Another reason is the changing financial landscape of higher education. Many public universities have seen significant declines in state support, and some large state schools now receive less than 10 percent of their revenue from the government. Many schools look at places like Stanford and the Massachusetts Institute of Technology and see extensive networks of entrepreneurial alumni who in turn become significant donors. It’s been estimated that MIT alumni have started over 30,000 companies with combined revenues of nearly $2 trillion.
Finally, the enthusiasm for entrepreneurship on campus is part of many universities’ economic development mission in their communities. The biggest source of new job creation in the United States is the creation of new, young and fast-growing companies. Universities that seek to contribute to local and regional growth thus naturally look to entrepreneurship as a key piece of that contribution.
Here are some strategies to create a campus culture that fosters entrepreneurship education:
- Democratize ownership. This strategy allows schools and departments to “adopt, define and own concepts of entrepreneurship and programs themselves.”
- Blend funding. This allows for university general funds and money raised from other sources to be combined.
- Ensure the support of deans. A critical element of the entrepreneurial education program’s success at Rice University, for example, has been participation from the deans of engineering, science and business, along with the vice provost for research and technology transfer.
- Cultivate university champions. Support from the top is crucial, and the evangelism of a university president gives a program more clout within the university and more credibility outside.
- Talk it up. Universities must raise entrepreneurship programs’ visibility. As one educator put it, “Talk about it again and again, everywhere.”
- Combat stereotypes of entrepreneurship. Universities must show what entrepreneurship means in various contexts and discuss it in terms such as innovation and independence, which might appeal to students in a range of disciplines.
Knowledge of what is effective and ineffective in entrepreneurship education is in short supply. To be sure, there seem to be places doing it better than others, but in the absence of codified lessons, many schools are simply copying what others are doing without knowing what the impact will be for their students, faculty and communities.
For over a decade, the Kauffman Foundation has been involved in promoting entrepreneurship in higher education. In the mid-2000s, through the Kauffman Campuses Initiative (KCI), we awarded millions of dollars to roughly two dozen schools around the country to spread entrepreneurship across their campuses. Prior to that, in most places entrepreneurship was confined to business schools.
In our research and conversations with entrepreneurs, we realized that successful entrepreneurs could emerge from any discipline. Schools like Stanford are famous for the entrepreneurs that come out of engineering and computer science, but the Stanford music department has also been a significant source of innovation and entrepreneurship. The same is true of other schools, and part of what KCI aimed to do was democratize entrepreneurship across the entire campus.
What We’ve Learned
First, focus on the three M’s of entrepreneurship: money, markets and management. (Thanks to William Bradford of the U. of Washington’s Foster School for the distillation of this insight.)
This triad is not as simple as it may appear. The most straightforward is money, and many entrepreneurship education courses and programs give sufficient attention to this. That attention is warranted: any entrepreneur needs to raise money, whether from friends, family, fools, or investors. But the other Ms are no less important:
Markets. Entrepreneurs operate in markets, whether by entering an existing one or trying to create a new one. To succeed in markets, you need to know how to sell. Sales are the essence of business, yet we continue to be surprised by the number of schools that do not teach sales. Entrepreneurs are always selling: to customers, prospective employees, potential investors, suppliers, and so on. In fact, we are all selling almost all the time! So why not put more emphasis on sales in our entrepreneurship programs?
Management. This is often treated as the antithesis of entrepreneurship, as something that only matters in big companies or bureaucratic organizations. But entrepreneurs manage constantly: their time, their resources, their co-founders, their networks, etc. Focusing on management doesn’t mean every entrepreneur needs an MBA, but entrepreneurs are often generalists, and need to be able to manage many different things.
A second lesson is that peer learning and interaction are more effective learning techniques than classroom lectures or videos or other traditional teaching methods. We owe this insight to organizations like Village Capital and the Trust Center at MIT, where a premium is placed on peer interaction. In fact, Village Capital, which runs accelerator cohorts across the world focused on large-scale problems, even uses a peer selection model for equity investments. The entrepreneurs who participate in each cohort actually rank one another to determine the distribution of equity capital.
The Social Dimension
Third, the colleges and universities that appear to be doing the best job at entrepreneurship education emphasize direct experience and exposure. This may involve internship programs at startups or programs that put students through the intense experience of starting a company. Competitions may not be so good at this because students usually treat them as projects that end when the competition is done. But direct exposure and experience are critically important.
The reason is that entrepreneurship has a social dimension similar to other behaviors. The Framingham Heart Study is famous for finding that behaviors like smoking or overeating—and conversely, quitting smoking or losing weight—are enormously social. The behavior of those you surround yourself with influences your behavior. The same appears to be true of entrepreneurship—those who have more exposure to entrepreneurs are more likely to be entrepreneurs themselves.
Last, one thing I’ve learned from entrepreneurs and universities and different programs is that we may produce more entrepreneurs when we don’t necessarily focus on the particulars of entrepreneurship itself. The average age of entrepreneurs in the U.S. is 40, and this includes founders of fast-growing firms. The reason appears to be that people gain experience in their 20s and 30s by working at different jobs and for different organizations. They learn how to manage, how to sell, what problems need solving, and how to work in teams.
What universities can do is focus on what universities do best: teach students something about something. Maybe that’s computer science, maybe it’s music, or maybe it’s neurobiology. Whatever it is, while successful entrepreneurs have important generalist abilities, they have often learned the particulars of a certain field or discipline, learning the problems and opportunities there.
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