In the modern entrepreneurial economy, business schools are poised to change. Gone are the days when a place at business school was an automatic ticket to a high-flying job. Although the number of students attending business schools is on the rise, the writing is on the wall for the majority: graduates have to be ready to take the entrepreneurial route. So the golden question remains: are business schools teaching crucial entrepreneurial skills?
Trends indicate that the future top 50 business schools in the world are likely to produce a greater number of entrepreneurs than employees. A global, connected, increasingly competitive economy needs these entrepreneurs as the people who will fuel the economy and develop the job market. Entrepreneurs who previously would have been rejected from an MBA for having unusual career paths are now sought after by business schools. The tables have turned. Now, it is the business schools that need entrepreneurs and not the other way around.
This means that the standard MBA has to adapt to better train this new generation of entrepreneurs. More risk-takers and independent-thinkers mean business schools are feeling the pressure to become breeding grounds for new ideas. Business schools have to show that they bring together like-minded people to collaborate on successful ventures.
Entrepreneurs who graduate from the MBA courses of elite business schools are however offered many more doors to success. One common entrepreneurial strategy used by graduates from top business schools is mimicking. Following graduation, alumni from the top-ranked business schools routinely find employment in large, successful corporations, spend a few years learning the tricks of the trade (with the cushion of a high salary) and then start their own business along similar lines. The premium tag of an elite business school, backed by access to its prominent alumni network and the knowledge gained from their previous company opens the door to venture funders. These elite business schools are in this way highly relevant and profitable for aspiring entrepreneurs.
However, students can’t – and won’t – ignore the trade-offs. It costs anything upwards of $170,000 and two years commitment to complete an MBA. With the current federal loan rate of 7.21%, an MBA graduate would need to pay $29,000 a year for ten years to pay off their student loan. This may be profitable for MBA graduates from Harvard or Wharton, but an MBA from a lower-ranked business school could be a dangerous proposition for a future entrepreneur. The large majority of business school alumni end up caught in a vicious cycle – feeding into less-powerful alumni networks, which can neither offer key jobs nor entrepreneurial support.
That being said, there is no better time to be an entrepreneur. The digital economy has dramatically reduced the cost of establishing businesses which has provided an incredible platform to start-ups and entrepreneurs. Today is one of the first times in history when start-ups can be on an almost equal footing with the giants. And they can do all this without attending a business school. Thanks to the internet, almost all the relevant knowledge is now available for free in the public domain. Furthermore, most business schools haven’t had time to develop entrepreneurial training that is practically useful in the business world. Most MBA curriculums are still largely theoretical and teach students using fictional company data. There are very few courses which help improve students’ innovation, creativity or imagination – just some of the skills needed by entrepreneurs.
One of the smartest strategies for a budding entrepreneur might be a work-around strategy. For example, he or she can join a course at a prestigious university other than an MBA, where the cost is dramatically lower but has the same level of access to resources and the alumni network. To make a success of this strategy they should maintain a tight relationship with the university’s business school by attending all workshops and networking events. This is one practical strategy to tackle the high fees charged by business schools but it still doesn’t answer the bigger question around the thousands of lower-ranked business schools whose high fees offer little in return.
About the Author: Ashish Jaiswal is the founder of The School of Business Schools having researched business school innovation at the University of Oxford. He is a fellow of the Oxford Centre for Higher Education Policy Studies.