European Technology Entrepreneurship: What about Business Schools?
At InReach Ventures we believe in Europe and we believe in tech entrepreneurship as a key driver for future economic growth and prosperity. We are disappointed by the fact that all the largest technology companies in the world are American and Chinese and there is only ONE European software companies that features in the top 25 (a total of three including Ericsson and Nokia)
How can we change the current state of the art? Our typical answer is: work harder! This is exactly what we have been doing as described here.
However, this time around we want to step back and have a proper discussion with a friend and person we trust: Paul Tracey.
We have a thesis that we want to discuss with Paul: one of the key reasons for the lack of large, sustainable Europe technology companies is that we do not have enough product driven entrepreneurs, an issue that business schools could potentially play a more significant role in addressing.
Often product DNA is the key feature of a successful entrepreneur and in fact if we look at the top 25 largest technology companies in the world, in most cases, the entrepreneur and founder was first and foremost a deep product person.
Roberto: So, Paul you are an expert of business education. What does it mean to educate an entrepreneur ?
Paul: It’s an interesting question Roberto, and one that we in the business school community get asked a lot. Indeed, there are many people, including many business school professors, who still promote the old adage of ‘entrepreneurs and born not made’. For example, the idea of the ‘entrepreneurial personality’ — a set of innate traits like creativity and risk taking which some people believe characterise successful entrepreneurs — continues to be very influential. More recently there has been research by Scott Shane at Case Western Reserve which examines the genetic component of entrepreneurship. There’s also a debate, one that I myself have been involved in, about the prospects for ‘neuroentrepreneurship’, which involves taking brain images to figure out if entrepreneurs are ‘wired differently’.
Personally, I don’t find these debates particularly helpful. In my view it is quite apparent that entrepreneurs are born and made, and I’ve seen first hand that some business schools can do a lot to support and nurture people with the motivation and desire to create new ventures. Indeed, for every Steve Jobs who dropped out of college to create a successful venture, there’s an Elon Musk with formal business training!
Roberto: Ok so Paul, let me get this right. Can really somebody learn entrepreneurship like he or she can learn maths, English literature or chemistry?
Paul: Is entrepreneurship like teaching maths or chemistry? Not quite. I think there are two parts to teaching entrepreneurship from a business school standpoint. One is the formal teaching about business. Entrepreneurs need to know about marketing, they need to know about operations, they need to know about accounting — all of the key business functions in fact. And of course, that’s something that business schools have been doing for a long time and are very good at.
The other part is what you might call the softer side of entrepreneurship — such creativity, collaboration, opportunity recognition. Business schools have traditionally been much less effective in supporting students in these areas, and some schools continue to ignore them. But there has certainly been a significant shift in recent years, and schools like mine place significant emphasis on these areas now. For example, my Cambridge colleague Allegre Hadida recently led a creativity workshop for our MBAs that was designed to challenge conventional assumptions about the relationship between creativity and business. And more broadly, of course, the relationships and networks that students build at business school can be very useful in the creation of a venture, and alumni networks are increasingly active in supporting entrepreneurship.
Roberto: Paul, I do not want to upset you :) but let me for a second be a bit controversial on the role of European Business Schools to spark or at least feed European entrepreneurship. There has been an interesting debate on the internet started by Michael Seibel of CEO of Ycombinator here and applied to the European landscape by Michael Jackson here. I actually tend to agree with both of them. Do Business Schools in general and European ones in particular really care of unleashing the capability of technology entrepreneurs or they are significantly more focused in educating business consultants, bankers and/or private equity professionals?
Paul: Are you trying to tell me I’m wasting my life Roberto!!! To be fair, the question is a legitimate one. I don’t want to put myself forward as a defender of all business schools, European or North American — they are far from perfect. For example, for many years they ignored the broader social consequences of business, as others have written about extensively.
It’s also true that business schools have traditionally been very focused on placing students in large corporates — especially in finance and consulting. But there has been a big change over the past decade. One only has to look at the growth of entrepreneurship centres and courses over the past decade. Here at Cambridge we have placed entrepreneurship at the heart of what we do through our entrepreneurship and social innovation centres. I could point to many other initiatives at UK schools such as LBS and Imperial. It is true that, in general, European schools produce fewer of the most successful entrepreneurs compared to their North American counterparts, as indicated here. But that can hardly be blamed solely on the schools themselves; the ecosystems of which we are part are less developed than in the US.
I found Michael Jackson’s comments that you linked to very interesting — they feed the idea of an entrepreneur as a kind of maverick or free spirit whose need to take risks is somehow antithetical to any kind of formal training. I simply don’t buy into that idea; in fact I think it’s largely a myth (although I accept that such people do exist). The analogy I like to use is of an accomplished sportsperson or musician — yes, natural talent is crucial, but coaching, mentoring, and formal and informal knowledge can help nurture that talent and allow it to flourish.
Roberto: Ok ok…I give you that…perhaps some views about what makes an entrepreneur are a bit too romantic. In general by the way I am not against education but I do have a sense that European business schools are not really taking on the challenge of the European gap: product development. Why are business schools not training more product oriented CEOs/entrepreneurs?
Paul: I guess I go back to my point about ecosystems. We are just one actor — one could point to other players that are equally or more culpable. One might even point to European venture capitalists!!!
I also think that there is an important factor that is often forgotten about when evaluating the ‘gap’ between European and American entrepreneurship, particularly tech entrepreneurship, and that’s the role of government. If you haven’t read it already, I highly recommend Mariana Mazzucato’s book on ‘the Entrepreneurship State’. She has a great chapter on the iPhone in which she argues, provocatively, that when we look at the success of Apple we should think not of Steve Jobs, but of specific government funded programmes, particularly those related to universities and defence, which allowed the iPhone to be created (she details this argument very impressively, iPhone component by iPhone component). It’s well worth a read!
Roberto: Specifically, lately I read this article on The economist and then spent more time to read the actual FT Global MBA ranking 2017: Methodology and key. What’s going on in the world? It looks like the top performance indicators to rank a business school are all related to the salary of the student during the first few years of work after her or his MBA. Isn’t that short sighted?
Paul: Now here you do raise a very good point. The FT MBA rankings do, as you point out, prioritise the salary performance of MBA graduates (40%, by far the largest component). This is highly problematic, because not only is the FT ranking the most influential — the one that prospective MBA students look to when choosing a programme — it is often taken as a proxy for an overall business school ranking. This means that business schools are under huge pressure to perform well. In some schools it influences student selection and can, as you hint at, discourage the selection of people who declare that their ambition is to start a venture on completion of the programme.
I am lucky to work at a school that is not rankings driven. This doesn’t mean that we ignore rankings all together — no school can afford to do that — but we prioritise the construction an interesting cohort of people that will (hopefully) lead to a great classroom experience for both students and faculty. In many other schools, both European and North American, it’s often a quite different scenario — the focus is very much on earning potential, which means that the class is more likely to be filled with people who come from, and want to go back to, finance and consulting. Hardly an inspiring environment for entrepreneurs. But this is not the fault of business schools — it’s a bone to pick with the FT!
Roberto: Paul, we might say this is all the fault of the methodology used by the FT, but I have a hard time agreeing on this. Why don’t European business schools, instead of crying about their position in the rankings, stand up and prove their thought leadership and say: we can accept a low FT rank because we are investing in graduating the entrepreneurs of the future. Do you realize that Skyscanner, Spotify, etc., in order to find high quality product managers are all creating their Associative Product Manager programs? No European business school is showing leadership and making the statement: we want to graduate the European product leaders of the future. Paul, keep in mind that some of these product leaders could one day become top entrepreneurs. Nobody seems to care. Why?
Paul: As a proud Scottish person I’m glad you used the example of Skyscanner! An MBA
programme is not going to produce ready-made product managers of the type in the Skyscanner ad you highlighted, although much of the knowledge and many of the skills people learn on an MBA are appropriate for such a role. Here I think we need to step back a little and think about the purpose of an MBA. An MBA is fundamentally a generalist degree designed to build knowledge about all the main aspects of business — the scope is very broad, but because there is so much to cover there is less opportunity to build in-depth knowledge about one particular area. There are other, specialist programmes, such as Masters degrees in data analytics, which already exist in many European business schools, and whose graduates are probably more appropriate for the Skyscanner role — indeed, Edinburgh University Business School offers this type of degree so Skyscanner could even recruit locally! Again I don’t mean to put myself forward as a defender of the European business school community — we can for sure do much better, and it would be great if more schools had closer relationships with the tech community, but I guess we need support from the world of tech too; it takes two to tango as the saying goes!
Roberto: Paul don’t you think a top European MBA should first and foremost be an inspiring educational program to help Europe to stay relevant in the world of business ? Last time I checked technology entrepreneurship and the creation of original products is one of the most important strategic drivers of economic growth and prosperity… but somehow business schools keep focusing on graduating consultants and bankers. Is it time for a change?
Paul: Yes, I agree with you, at least to a point. The MBA curriculum has evolved quite dramatically in recent years, and there has been a broadening beyond consulting and banking, but there is certainly more that can be done. And as I hinted at above, there is also the more fundamental question of whether an MBA is the best type of programme for people who want to create new ventures, or even to work in a relatively established tech venture like Skyscanner. Interestingly, it was only a few years ago that some people predicted the demise of the MBA as the dominant postgraduate degree for people in the world of business. The thinking was that the MBA would be replaced by a new wave of focused, professional practice degrees in, for example, accounting, marketing, operations, and, yes, entrepreneurship. It hasn’t quite turned out like that — MBA numbers at the leading schools have been more resilient than many people expected — but we have seen a quite dramatic rise in specialist business school programmes, including in entrepreneurship. I would also point to the ELITE Programme — a partnership between the London Stock Exchange and Imperial College Business School which is focused on business growth — as an example of where business schools are trying to innovative and, in your words, stay relevant to the world of business.
Roberto: Paul, it was a real pleasure to have this discussion…can we please agree to design the future then? :)
Paul: Great to talk to you Roberto. I’m sure that between the two of us, we can solve all the problems of European tech!! :)