Saturday, January 22, 2005

Why MBAs can't normally become Entrepreneurs

These are some thoughts which came to mind during some class discussions this term on how new businesses get created, how the entrepreneurial companies and individuals "create" rather than "adapt" to the environments... and in the process, often violate (and change) the way of doing business...

...and it occured to me that why the typical B-school environment does not provide any groundings for making entrepreneurs... in fact, inadvertantly, it desists people from becoming entrepreneurs... so my take is that if MBAs become entrepreneurs, it is not because of the MBA degree, but in spite of it!!


Firstly, let's look at why people want to do MBA. In many ways, the motivation for doing MBA nowadays is same as why people used to prefer a government job in yesteryears - security!... a government job provided job-security, while admission to a good B-school provides the security of getting a well-paying job.

Secondly, unlike most other professions (e.g., engineering, medicine, CA, etc.), MBA admission is the only one which does not require an aptitude - or a basic grounding of the 'discipline'. For instance, to become an engineer or a doctor, one can apply for the admissions in the professional institute, only if one has a basic grounding in certain specific subjects (whether maths, physics, or biology, etc.). The admissions tests would also try to assess the robustness of this grounding.

However, an aptitude to manage can only be judged in a real-life situation; it cannot be judged by the paper-pencil tests which are used for admission.... with the result, for all practical purposes, the MBA admissions are based on the premise that anyone can become a manager!

And lastly, the predominant B-school curriculum is focused on learning from companies - as cases or as theoretical frameworks - who have already moved up to the latter-part of the S-Curve. So people learn, for instance, about
  • how to analyse industry to craft a strategy
    (and not how to strategise when the industry itself is in formative stage),
  • how to compete in a market
    (and not how to create a market),
  • how to manage resources efficiently
    (and not how to create and acquire resources),
  • how to operate within regulatory boundaries
    (and not how to push the regulatory boundaries to evolve to accommodate new business realities), etc.

  • in fact, if a person learns all these things, he is actually at a handicap for any entrepreneurial venture!!!