A different approach to Business Education

After a year of management studies, I am beginning to doubt the aptness of the term “B-School”. The term B-School or business school conjures up an image of a place where “business” is taught. To most people (or atleast me) that brings images of entrepreneurship. However, the primary objective of the Indian Institute of Management must be to create managers. But are managers and entrepreneurs poles apart that the terms “B-school” and Management should appear contradictory?

Usually, the entrepreneur is portrayed as this swashbuckling man of action, stepping boldly and bravely into areas outside the realm of the common risk-averse common man who is contented working for others. I have always felt this portrayal cinematic and an unrealistic dramatization.

A framework that I came across recently sums up the difference better. In different situations, people either behave with a trustee mentality or a promoter mentality. (Reference: A Perspective on Entrepreneurship by Howard Stevenson) The term trustee more closely corresponds to the term manager and the term promoter more closely corresponds to the term entrepreneur. Therefore, any action can be classified in this spectrum as “trustee”-like or “promoter”-like. To give an example, a trustee may view a resource as something that has to be controlled while a promoter is willing to rent/borrow (or beg or steal) for this resource.

The crucial distinction lies here. Therefore, the association of entrepreneurial with certain personality traits is wrong and misguided. What is more important is the association of entrepreneurial with certain world views. Say, there is a person who wants to open a metal fabrication shop. He is new to the metal fabrication business, but his father and grandfather were traders of some commodity. Since they were traders, he is ready to rent machines, taking the gamble that the machines would pay for themselves. Now, would one call this an entrepreneurial personality or a promoter like world view? The individual may consider himself to be the most risk-averse person on earth, he just does not think it is a big deal renting out the machine. To extend this argument, our metal fabricator could show extremely un-entrepreneurial qualities in other matters.

Why all this Ramayana and how is it related to the title? Well, I just think you could design a different kind of business school education with the intent being to foster an entrepreneurial world view. What does that mean?

I would like to design a “B-school” for entrepreneurs in the following manner. The course is of two years duration. It has the semester system. However, each semester has two halves in terms of breaks. There are 60 days of holidays but they occur in 4 regular intervals of 15 days. (The benefits of a wise rest cycle can never be over emphasized).

The first semester has courses – Marketing, Corporate Finance, Organizational Behaviour and Operations. The third semester has a course. That is it. Conspicuous by their absence is Micro Economics and Macro Economics. Frankly, I am in a dilemma in this regard. On the one hand, it would be downright foolish to argue that micro and macro economics are not required by a businessman. Yet, say when you are brainstorming for ideas, or talk about new venture creation, frankly, you don’t use any of those principles, maybe a bit of game theory. Whatever economics you need can be obtained from the net or there are lots of “Economics for Dummies” books. Read it from there. (As an aside one book strongly recommended is Thinking Strategically by Avinash Dixit and Barry Nalebuff.)

Then what about consumer surplus or pricing? My submission is that whatever you need for a business is distilled into marketing. But when it comes to these four courses, just drive people crazy by the rigour. For new venture creation, you do not need accounting, but you need to be able to understand balance sheets. You do not need economics, but you need to know to do marketing research. You do not need to get into indepth quantitative modeling, but you need to be able to interpret SPSS results.

That is first semester. The next semester is spent on coming up with business ideas and refining them. This is where things get tricky. There are no classes as such but faculty mentor business idea teams. Therefore, the class size has to be small. If the intake is 20 say, then there could be 20 business ideas. (though that is unlikely) As and when the guys hit a hurdle they go and talk to the faculty. But there is a catch. What if these guys grow dependent on the professors running to them for every little thing? Every team gets a cap on the time they spend with the faculty. Therefore they better do their homework and come for the meetings. The first term is supposed to have taught the student the basics. Ideally, he/she should be able to google and figure out whatever can be googled and figured out and approach the teacher only when the limit of his/her thinking has been reached. That is why it is important to adhere to this rule very clearly.

The second year is spent on implementing the business plan. Two courses are run now. They are one hour courses that are optional. The two courses are “Business Law” and “Business Ethics”.

Here is an outlandish idea for what the school could do. What if the school gave everyone a sum of money in return for equity stake in the company? (The precise details of this system may have to be worked out) Issues crop up now. In this kind of an arrangement, will innovation truly survive? What if the school has a bad year, will it go out of business? For one, this sum of money will be given to a person and it will be lesser than the individual fees. This also unintentionally incentivizes people of the school to join together. But by giving money, the school also walks the talk. Also, the school could also grow to be obscenely rich or go bankrupt. The consequence of such a system would be to prevent its copying by others and that can be good or bad.

But let’s leave the “school-putting-money-where-its-mouth-is” idea out for a while. The second year is spent on implementing the business idea. The school arranges for legal help, which is again free upto a number of hours after which the startup has to start paying for it. The school organizes seminars and focused networking events. The main merit of the model comes here. Prospective investors (angelic or most often non-angelic) or Venture (Vulture) capitalists would find a lot of incentive to attend these events as they are ideas which have already been whetted to a certain degree.

At the end of the two years, everyone is given a degree. There are no examinations; the market place is the only judge. Also, the need for CGPA is primarily driven by the placement process. Oh and I forgot, this school does not organize a placement process. You are welcome to drop out at any time, you just forfeit the fees, which will be on the lower side.

Therefore, what are the incentives of someone who goes halfway though the course and realizes this is not for him/her. For one, surely outsiders would be very interested in knowing the various ideas that individual worked on. Also, the course could unintentionally create a market for entrepreneurial managers. But the creation of this market must be “natural” and the school must not do anything. That will be a test of the idea as well.

How does it tie-in with the initial framework of Trustee and Promoter. As you would have felt, the course is marked with uncertainty and constraints. This kind of an environment should alter the world view of anyone irrespective of personality. The fundamental point is, you don’t need to know all the answers, you just need to improvise as the problem comes up. From the little anecdotal evidence I have gathered, few people start out on a grand vision and few things started with a grand vision work. So don’t wait for that great idea to come, just look to do different things with small ideas, for a starter.

This just popped into my head today. Do comment on this