Can Entrepreneurship Be Taught To Big Business?

Forbes.com | by Matt Symonds | 4/23/2010
Entrepreneurship has become big business. Nearly two-thirds of all the colleges and universities in the U.S. offer formal courses in it, 10 times as many as in the 1970s, when only 200 institutions had the temerity to think they could teach such a thing. Now business schools are realizing that even if not everyone wants to be their own boss, people do want to know the secrets of successful entrepreneurship. So they are looking at a new set of potential students–“corporate entrepreneurs.”

The idea behind the notion of corporate entrepreneurship, or “intrapreneurship,” as it’s sometimes called, is that key features of start-up ventures–such as their pursuit of rapid growth, great flexibility and innovativeness–are just as vital for big corporations. “Intrapreneurship helps counter the tendency of large companies to become less agile and effective as their size produces more bureaucracy,” says Patrice Houdayer, dean of EM Lyon, which has become one of Europe’s top schools for entrepreneurship. “In times like these, large organizations need to be as flexible as possible, ready to change and develop rapidly to accommodate the shifting needs of their customers and of the market as a whole.”

EM Lyon has come up with a 10-point checklist of concerns for the budding intrapreneur. “It covers such basics as thinking and acting as if you were in a small organization, relying on a single backer who can withdraw their support at just the wrong time, the linkage of personal reward with success and overidentification with a particular project,” Houdayer says.

But how far should schools go in trying to foster entrepreneurial spirit in big businesses? The idea of mavericks shaking things up has its attractions, but doesn’t it also have dangers? Isn’t it mavericks who sparked every major financial blow-up from tulip fever and the South Sea bubble to the dot-com implosion and the subprime mess?

No it isn’t, says Gregg Fairbrothers, at Dartmouth College’s Tuck School, in New Hampshire. You’ve got to distinguish between entrepreneurs and gamblers. “Gamblers take risks in search of big payouts, especially under conditions of apparent moral hazard,” he says, “and they are motivated primarily by the idea of big payoffs out of proportion to effort and time expended. Those are the people who get us into trouble. Entrepreneurs are not risk takers; they are risk quantifiers and risk reducers.”

Fairbrothers also observes that true entrepreneurial behavior means seeking to do new things, to create something from scratch and to solve problems: “Of course entrepreneurs like to make money as much as anybody else, but most are motivated more by the achievement of making something happen than by the reward of quick, easy money. Very little entrepreneurial money comes easily–just ask a successful entrepreneur.”

Houdayer agrees with him but also sees the need for control mechanisms to curb over-adventurous behavior. “Organizations need to create environments that encourage new ideas, new approaches and new methodologies but also ones with rigorous checks and balances,” he says. “That’s the way to avoid the sorts of problems the financial sector ran into.”

Business schools trying to promote intrapreneurship and free organizations from red tape and conformity they may face their biggest challenge not with the well-established businesses of the West but with the new corporations of the developing world. China now has a number of global corporations that can afford to acquire, say, IBM’s computer business or Volvo. Those companies may superficially look like their Western counterparts, but their internal cultures are radically different. “The majority of Chinese companies are still driven by a single individual at the top, usually the owner or appointed CEO,” says Ryan Owen, a partner in the Chinese arm of Antal, an international management recruiter. “The paternalistic nature of so many businesses creates many benefits, but it can smother the intrapreneurial spirit. Coming up with your own ideas is simply not encouraged, and many employees come to confuse initiative with disloyalty.”

According to Haico Ebbers, a professor at the China Europe Institute at Nyenrode business school in the Netherlands, this challenge requires working within the system. “Because Chinese businesses are still at a relatively early stage of development,” he says, “there is a dilemma about how much freedom they can safely give their managers and professionals. It would be important to build safety measures into the system, because these aren’t people who are used to admitting when something isn’t working or is going wrong, and they’re not used to strategic thinking. There is still a common belief that you can deal with a problem when it arises rather than trying to prevent it from happening in the first place.”

A different approach to encouraging Chinese intrapreneurs may lie in partnerships such as the one between EM Lyon, Babson College in the U.S. and Zhejiang University in China. Those three schools have joined forces to start a Global Entrepreneurship Program that immerses young professionals in the business markets and methodologies of the host countries. It already attracts a high proportion of its students from China. “Working in international teams gives them an appetite for and an ability to use freedom within the workplace, but it also helps show them how to work not against but with their peers in the wider world,” Houdayer says. “The mutual benefit of that for both West and East could be significant.”

HT: Forbes.com

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