Why Business Schools Are Still Missing The Mark On Entrepreneurship

Are any business schools making strides in corporate innovation?

Corporate innovation is something that’s coming down the pipe. But I haven’t seen a business school that has understood that this is a big idea. The first couple that do will own the space. It’s wide open. We’re going to have a great time in the next five to 10 years.

This is a huge opportunity and unmet need – business schools haven’t pivoted yet. Now they’re getting the startup innovation courses right, but corporate innovation is a lot more complicated, and the startup techniques and classes don’t apply. There has been very little literature and research on the subject.

Why are business schools so slow to introduce corporate innovation into their curriculum? 

By design, universities are laggards. They don’t want to adopt fads, and so there is a real tension between missing a trend and adopting a fad. Remember the history of business schools: Harvard established the first MBA program in 1908. Remember what the name of the degree is: master of business administration. It wasn’t designed to train people to start a company; it was designed to create a management course for people to administer companies.

So for 100 years, business schools have done exactly that: management strategy, organizational theory, process technology, supply chain, and so on. They made the modern corporation. There’s nothing wrong with that.

But it’s only in the last couple of years that we’ve understood that while we’ve built a management stack for execution, we didn’t build a management stack for search, which is what founders do. So we’ve been busy doing the whole lean startups thing, and the irony, of course, is now that we look at that lean management stack, we’ve realized that corporations are having to act like startups because the externalities have changed.

The 21st century looks nothing like the 20th century. Even if you were doing the same thing now that you were doing 30 years ago, you’re going out of business, my friend, because the world has changed. China is a manufacturer, there is transparent pricing. All of that stuff has changed how corporate management needs to work, think, move, and innovate.

So now business schools need to be thinking about, “Oh, there’s the beginning of this lean stack over here, how do we apply it to 21st-century business schools? The world has changed, so what do we need to supply corporations? We need to supply innovators as well as executors.” The paint is still wet on that idea.

Do you plan to do anything in the space, such as launching a corporate innovation MOOC or executive education courses?

I’ve been working with large companies on how you actually bring some of the startup DNA into corporate America, but the classes, tools, processes, and procedures are actually quite different from how they apply to startups. So that circles back to my observation that this is a large opportunity for business schools to lead in. I’m a little surprised that no one has gotten on it by saying, “This is what we’re going to be known for.”

So what I’ve been doing, to be honest, is inventing the language for corporations. There needs to be a curriculum for corporate innovation. Before I did the lean startup curriculum, I invented the language for startups: customer development, business model canvas, iterative engineering. We don’t quite have all of the pieces together yet to describe what the curriculum would be.

It’s too bad there’s not a faculty with a dean who has been astute enough to realize,” Oh my god, this is the next big area for business school because this is a huge problem for corporate America.”

What programs and courses would you recommend for students who are interested in corporation innovation?

Take all of the entrepreneurship classes you can, take all of the corporate finance courses you can, and start thinking about why they are incompatible.

I think every business school student needs to take two classes: an experiential entrepreneurship class and a learn-to-code class. Period. If they don’t have those, I don’t think they can be credible managers, even with an MBA.

Not knowing how to code is not knowing a basic skill. Not that I want you to become a coder, but you’ll never be able to manage people or manage budgets for software if you don’t even know what the hell it is. If you don’t know what innovation feels like and the pace it operates on, then there’s no way – even if you’re the CFO of a company – that you’ll be able to judge things like are these programs running fast enough, do we have enough money, are we doing the right thing. You need to be exposed to that in your career, and business school curricula don’t include that.

You offer the Lean LaunchPad course online through Udacity. Are online courses the future of business education?

No. I think using online education is useful as a hybrid component of a flipped classroom. And it depends, business education covers everything from accounting to entrepreneurship. Startups aren’t run by accountants, so online education might be great for teaching you about income statements and cash flows, but that’s not how you teach experiential education.