How Business Schools Are Responding To The Rising Tide of Entrepreneurship

HBS Rock Center director Meredith McPherron

HBS Rock Center director Meredith McPherron

The center’s New Venture Competition has both business and social-impact streams, matching students with mentors and judges around the world as they develop and ultimately pitch their ventures.

In the Rock Accelerator program, which has been receiving more than 120 applications for 20 spaces, student founder teams receive $5,000 to $8,000 to capitalize business ideas, while student “Venture Partners” help select and support participant teams. In the Summer Fellowship program students work at a start-up or work on their own startup, between their first and second years. “Over the last couple years we’ve had enormous pickup in demand on that,” McPherron says.

The center’s Entrepreneurs in Residence mentoring program has grown from two mentors eight years ago to 14 to 16 over the past two years.

Student demand for entrepreneurship-related offerings at HBS has been rising at a rate of 20% to 30% per year, McPherron says, adding that the school has 20 elective courses and 31 faculty dedicated to entrepreneurship.

DEBT REDUCTIONS FOR ENTERPRISING HBS ALUMS

Although HBS recruiting reports show the number of students who didn’t seek employment because they were starting their own businesses hovered at 7% from 2012 to 2014, half of graduates are entrepreneurs by 15 years after finishing school, according to HBS. Student debt is a main factor behind that timing, McPherron says. To help entrepreneurial graduates jump into startups, HBS gives out 20 to 25 debt reductions per year, valued at $10,000 to $20,000 each. “You have to be a founder with an idea with traction, that has shown some merit,” McPherron says. Two years ago, responding to increased demand for the reductions, McPherron asked for and received more funding for the program, which pushed reduction amounts toward the $20,000 end, McPherron says.

Among the top B-schools, there are stated divisions in what entrepreneurial roles they’re training their graduates to enter. Wharton, says FitzGerald, is chock full of MBA candidates chomping at the bit to launch companies and replicate the achievements of Wharton alumni startups such as phone-based payment app developer Venmo; Warby Parker eyewear; startup investor SeedInvest; and baby products company Quidsi, bought by Amazon for $545 million in 2010.

Wharton entrepreneurship lecturer Patrick FitzGerald

Wharton entrepreneurship lecturer Patrick FitzGerald

“They see the successes of those companies and realize that there’s a real possibility that (their) startup can do well,” FitzGerald says.

LARRY PAGE, STEVE JOBS: FALSE IDOLS?

At Kenan-Flagler, Zoller says they’re taking a different approach, combating the popular press’s “prototype of the successful entrepreneur being the maven, the Steve Jobs profile, the Larry Page,” Zoller says.

“We are finding that entrepreneurs are more everyday entrepreneurs, people who run businesses that are making huge contributions but may not be necessarily brand names,” Zoller says.

At some B-schools, says Westerbeck, entrepreneurs are romanticized and a degree of “hero worship” exists. “I’ve spoken with several business school deans who privately express some concerns that celebrating the glorious side of a successful entrepreneur’s story, while it may be inspiring, does a potential injustice to students because they don’t develop the skills they need to deal with the often terribly difficult dimensions of entrepreneurship – the financial hardships, the inevitable failures, health challenges, the family disruption and conflict, the isolation, extreme stress and need for steely resilience for prolonged periods of time,” Westerbeck says.

“These are the essential skills and competencies of entrepreneurs that are perhaps not being properly addressed in business schools.”

Corporate innovators who may fall outside some definitions of “entrepreneur” because they don’t do startups may achieve massive financial success that goes largely unperceived among business school prospects and students, says Zoller, because school rankings measure post-graduation salary and ignore major windfalls earned through IPO-related options conversion, and mergers and acquisitions.

NOT ‘THE BEST SCHOOL FOR STARTUPS’

“We’ve decided not to be the best school for startups,” Kenan-Flagler’s Zoller says. “We’re going to be the best school for ‘grow-ups.’ We’re building a program that serves not only to support management training for large enterprises, but also high-growth enterprises.”

Within those rapidly expanding companies, countless opportunities exist for entrepreneurial innovation, and Kenan-Flagler is putting its entrepreneurship emphasis on preparing students to enter executive positions in high-growth companies, or becoming funders of entrepreneurial and expanding businesses, Zoller says.

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