Management Rosta (St. Petersburg), No. 4, 2007

TEACH TO BE TALENTED, Alexei Leontyev

 

It is possible to teach students enterprise also in the framework of usual programs of business education. However, it is more likely yet that education of enterprising businessmen will require separate educational projects.

Organizing the roundtable meeting "Education and enterprise: how universities and business schools assist to development of private initiative" Management Rosta magazine and Enterprise Center US-Russia planned to discuss the issues related to principles and methods of teaching. However, discussion exceeded the borders of these topics.

Participants of the roundtable meeting tried to decide who were entrepreneurs in the contemporary world. Are these the people who establish their own companies or someone else? Participants also actively discussed if the enterprising spirit was embodied in a human being by nature or if it was acquired. What is more necessary for an entrepreneur: development of personal qualities or knowledge about business? Because there is no common standpoint with regard to these questions, there is no consensus about what should the education for entrepreneurs be like. One thing is clear: in this field like in any other supply is determined by demand. The bigger need for enterprising people business has the more educational institution will take into account interests of such people.

ABOUT WHOM WE SPEAK?

The tone of the discussion was set by Executive Director of the Bayster Institute of the Californian University Doctor of Philosophy Raymond V. Smailor and dean of the Higher School of Management of the St. Petersburg State University Valery Katkalo. Smailor reported about appearance of the first programs of teaching enterprise in the US. These programs were formed under influence of two trends: growing weight of the rapidly developing innovation companies in the economy and changing of motivation of those coming to get education. Very many students do not wish to get knowledge that let them work as hired managers for a large company anymore. They wish to learn to establish their own firm. A significant part of programs of enterprising education in the world is still oriented at the people who have created startups or at the people wishing to do this.

Along with this, Valery Katkalo emphasizes that one of the turning points in the history of any company if it wants to live long is birth of a new business idea. Sooner or later, potential of the old ideas that have enabled a company to get established on the market in the past will be exhausted. If this is so any business needs the managers who can see market opportunities, create and successfully develop innovation projects, the managers who plays the role of entrepreneurs. Katkalo remarks, "In contemporary business a manager is not viewed as administrator anymore. Since the end of the 20th century, we have been pronouncing the word "leader" more often than the words “manager” or “director." This means that now we speak about a style of management to which innovation spirit is the most inherent."

Elena Pereverzeva, Deputy Director of the Center of Regional Education Programs of business school Mirbis, continues this thought, "I visit international educational seminars and see that approaches change and the notion of "entrepreneur" grows wider simultaneously. Education of entrepreneurs is not confined to courses "start up your business" anymore. It is getting clear that fulfilling any function you should not confine your efforts to your service duties alone but should be able to look at familiar things in a new way and to open development prospects for a company."

HOW MANY OF THEM ARE THERE?

In any case, if we admit that nearly all companies need people with enterprising capabilities (this presumption is not very obvious and we will return to it later) it is necessary to decide if the educational system can be oriented at mass training of such specialists. The most diverse opinions about this sounded at the roundtable meeting.

Vladimir Nerovny, partner of OBI in Northwestern Federal District, says, "Enterprise is one of the capabilities of a human being that is ether given or not given by nature. It is like some people are gifted to be musicians and some others have no ear for music. There are not so many people who are capable of enterprise, approximately 5%." Really, says Olga Verkhovskaya, lecturer of the Higher School of Management of the SPbGU, remarks that sociological polls show that there are not more than 6% people having a possibility and wish to start up their business in Russia. Still, potential owners of business represent a vanguard of enterprise. Relying on this very widespread point of view at enterprise as a rare gift it is possible to state that teaching people the enterprise is either useless or it should be exclusive education for a small percentage of people.

There are also other opinions. Raymond V. Smailor says that it turns out that there are not several percents but tenfold more people inclined towards enterprising activity in the world. He explains, "When we communicate with our students we see that all of them have internal passion for enterprise and majority of them have enterprising ability. Working for large companies they simply did not know if it was possible to use this passion somehow." This is confirmed by experience of Victor Tisenko, Deputy Director of the Department of Innovatica of the St. Petersburg State Technical University, "All those who come to us are definitely charged for enterprise. When I give the first test exercises it becomes clear that a half of them also have enterprising talent." Tisenko adds that this is not incidental that 5-6% of the students who come to him start up their own business even before graduation.

Lyudmila Murgulets, Director of the Russian Association for Teaching Enterprise, remarks, "Nobody has calculated what is the percentage of those who have not used their talent because, for example, they have not acquired self-reliance." In other words, a small percentage of entrepreneurs is a consequence of peculiarities of the environment and not natural inclination of people. Many participants of the round table say that the environment from secondary school to the organization to which a person gets employed often suppresses initiative and other qualities that form an entrepreneur.

ACQUIRED ENTERPRISING ABILITY

What distinguishes an entrepreneur and which qualities help his distinguished condition? Dmitry Yegorov, lecturer of the Department of Economy of the European University in St. Petersburg, explains that besides motivation for creation of the new such qualities also include striving for independence in combination with a wish to undertake responsibility and inclination towards risk. Alexander Yanchevsky, Director of the St. Petersburg branch of Leuven Gent Management School, remarks that to these qualities it is necessary to add ability to feel demands of the market and to understand how it is possible to satisfy these demands.

All these are not traits of a character but are rather skills. The word "skill" implies that a certain quality is formed in the process of education. First, life itself teaches people. Vladimir Nerovny says that parents and inner circle exert a strong influence on turning of a person into an entrepreneur. Second, skills are trained with assistance of special programs. Lyudmila Murgulets is convinced, "It is possible to reach creativity and it is worth starting the teaching already in secondary school."

Programs are being created now that enable schoolchildren to get acquainted with work of companies. This circumstance generates the interest that may be transformed into an initiative for creation of the own firm or a project later. Various role games make a noticeable contribution to manifestation of personal initiative of both schoolchildren and acting managers. Valery Katkalo remarks that competitions organized by the leading business schools and Western companies for creation of projects, new brands, products etc help development of the enterprising inclinations.

Along with this, skills unlike knowledge cannot be obtained in university or in a business school at guest lectures where well-known entrepreneurs are invited to share their experience. From outside such education is perceived as nothing more than a new feature of the university environment. Vladimir Nerovny says, "Charging with personal example is not a method of education. "Do as I do," - we were taught this way back in the army. It is possible to say that so far business schools have only some milestones that will be later developed into normal programs for entrepreneurs." In any case, there is a widespread opinion that lecture lessons that constitute the basis of the programs of higher educational institutions and business schools are not even milestones but simply a pastime little necessary for the entrepreneur. He wants to take only practice from the education and its share in the Russian educational system is very small yet.

NO WAY WITHOUT TEXTBOOKS

Definitely, business schools have counter arguments. Very many creative ideas are proposed in Russia but there are serious problems with their implementation. The major part of the difficulties experienced by entrepreneurs results from absence of basic knowledge, says Oleg Savchenko, consultant for organizational development of the Swedish Institute of Management. People who have already started their business do not know how to analyze market information correctly and how to build strategies. New problems appear in the course of development of the company. These are surmounting of the diseases of growth and difficulties in delegation of powers. Savchenko states, "Russian entrepreneurs have a very weak notion about how this is done and bear huge losses."

Representatives of business schools were proposed to recall the theory of a life cycle of an organization in accordance with which various needs appear in a company at various stages of its development. According to Valery Katkalo, well-known examples of Bill Gates and Steve Jobs, founders of Microsoft and Apple, are very illustrative in this aspect. Perfect innovation business models were created in both cases but at the next stage of the life cycle of his company Jobs actually lost leadership continuing to manage the company on his own. Katkalo explained that he failed to transit from the stage of an entrepreneur to the stage of a leader-manager. Jobs failed to build a clear formalized management system unlike Gates who hired a lot of managers-entrepreneurs educated in business schools. They have actually created Microsoft that we know now.

Alexei Popov, Director of EMBA program of the Stockholm School of Economics in Russia, says that similar to development of a company it is possible to divide the life cycle of an entrepreneur into stages. When a person only wishes to be an entrepreneur yet he needs certain knowledge and skills. An entrepreneur who has created a startup is a quite different phase at which appears a need for other kinds of knowledge about business, for instance, about the ways to increase market value of the company. There is a phase of maturity of a company and transition from rapid growth to stability. At this moment an entrepreneur needs more detailed knowledge like principles of organization of IPO, methods of changing of the organizational structure etc. Actually speaking, the task of business education is being such that an entrepreneur can always obtain knowledge necessary for him at a certain specific moment.

Valery Katkalo comments, "Definitely, no business school, in Harvard, Stanford, Moscow or St. Petersburg will teach 100 entrepreneurs of the 100 sitting in the class efficient business models applied to 100 certain companies. However, it can help them learn at mistakes of others and to understand the direction in which the global economy is moving now and the current national business environment."

Boris Fedorov, Director of the Open School of Business, emphasizes, "Very often we do not think what the phrase "business education" means. This is very simple, "business education" means "image of a business." If in the process of training a person does not get an image or a face of business this is a faceless formation and it should not exist." Image of a business is both your own idea that should develop when the person learns and knowledge of numerous tools. Fedorov concludes, "There cannot be a whole-hearted image of a business if you are not acquainted with business planning or do not know marketing laws." That is why he thinks that it is impossible to oppose education for managers to education of entrepreneurs. A modern entrepreneur is also a good administrator and a modern manager is much more than an administrator and they learn the same things, by and large. We came to the things from which the discussion started.

LIMITATION FOR NOVELTY

Well, it seems that everything is clear. A good program of lectures, seminars, preparation of projects for a degree in a business school gives the knowledge necessary for an entrepreneur and it is possible to supplement it with development of personal skills in the same school or in a training company. Further you can open a startup if you wish or you can play the enterprising roles on managerial positions with honor. However, majority of the people who have graduated from business schools somehow state: they prepare administrators who act in the framework of preset schemes. Moreover, Raymond V. Smailor points out that "traditional education often kills an entrepreneur in a person."

One of the problems is that teaching of creation of the new can be done only by those who can do this themselves. Because the group of entrepreneurs is not big in Russia it is difficult to expect that there will be many such people among professors. Lyudmila Murgulets presumes, "Honestly speaking, a new attitude to enterprise on the level of directions has not been formed in business schools and in universities among professors yet. Majority of lecturers hardly share the values of enterprise and hence they hardly convey them to students."

Another problem is that original demand determines the same supply. Customers of the business schools are actually corporations. Even if a student pays for the education independently he tries to learn what will help him have a career in his company or in the organizations where he wants to get employed. Although it has been said above that the entire modern business is interested in managers with enterprising capabilities, many companies do not suspect this. Vladimir Nerovny says justly that only a few large Russian companies can work with creative managers in a systematic way, "In the best way they keep several key people possessing potential of entrepreneurs on the top positions." Correspondingly, customers demand business schools to train skilled actors rather than generators of promising ideas and projects. As long as this disproportion persists appearance of special programs for teaching of the enterprise will persist.

Photo: Alexander Krupnov

***

SIMULATE, THIS IS USEFUL

The Center of Innovation Educational Technologies of the Academy of Economy (ANYU, developing new educational programs it puts an emphasis on practical methods. Among them is simulation method (computer imitation models). The center brought to the market about ten simulators touching on various sectors of business and even state governance up to simulation of governance of a region.

Three open championships were organized on the basis of this method, namely all-Russian student game Business Battle (more than 3,500 participants), competitions of acting managers Global Management Challenge (500 participants) and new program Point of Growth – Cup of Yugra for management of business starting in Khanty-Mansiysk Autonomous Area (Yugra). According to Director of the Center Vyacheslav Shoptenko, so far education of entrepreneurs is arranged badly in Russia just because there are very few programs of practical education.

Shoptenko states, "All over the world MBA programs are criticized now primarily for excessive academic nature and I absolutely agree with this critique. It is difficult to teach even a classic manager working for a large stable company efficiently with assistance of the lecture method. An entrepreneur opening a startup in an unstable environment needs quite different form of education. Although the practical component is gradually growing in MBA, lecture classes prevail yet, especially in Russian business schools. Europe is more inclined to innovation forms and to simulation technologies that we adopt adapting them to the Russian environment.

Simulation differs from the traditional command games in the business schools. Computer models the processes that take place in a company that acts in a competitive environment. For instance, each of the teams receives a bank with assets of $500 million for management and the teams compete against each other. The starting conditions are the same but as soon as people start managing profiles of businesses change and a short time later these are already quite different banks. For instance, the first bank has almost fully become a consumer bank and the second bank has put emphasis on corporate clients. Some people act cautiously and some others act aggressively. The program shows how a business behaves as a result of decisions of managers. It is possible to see dynamic of client base, profit and loss. The tams see the resulting the form of value of their own shares on the market.

Now we launch a competition in cooperation with the Fund for Support of Enterprise of the Khanty-Mansiysk Autonomous Area. In the framework of Point of Growth project more than 100 teams of entrepreneurs will manage startups for 18 virtual months. In real time the competition will take six weeks. Receiving decisions of participants we will analyze them and will give feedback. This is a part of a large program of the region that wants to diversify the economy through development of enterprise and to reduce dependence of the economy on the raw materials sector (oil).

In my opinion, modeling should become an important but not the only part of the education of an entrepreneur. The second necessary element is development of an own startup project by a student and evaluation of the project by fellow-students and experts (working on the real market and in business schools). The third possible component is the case method, although the cases useful for entrepreneurs are specific (they should describe a process of establishment of a company and its coming to the market) and there are very few of them yet.

There is also another significant moment: I think that success of an educational program is laid down primarily at the stage of students selection. First of all, the so-called risk-takers or people inclined to risk and capable of coping with risk should come to the enterprising programs. Among the other necessary qualities are ability to work in a team in conditions of permanent stress and many hours of collective work. If these qualities are embodied in a person to some extent a good educational program will develop them."

***

DRAW YOUR BUSINESS

The sooner a person starts developing his skills necessary for an entrepreneur the bigger will be the result. The program of uninterrupted training formed by business school MIRBIS now is based on this principle. According to Elena Pereverzeva, Deputy Director of the Center of Regional Programs of MIRBIS, such education differs from classic education of managers significantly, "The program that we implement passes on several levels. The second level is a course of basics of enterprise for schoolchildren. The second level includes special courses for students and post-graduates. The third level includes courses for acting managers in the framework of MBA programs.

We have been working with schoolchildren for two years. Classes are organized in a playing form. For instance, participants of a program draw their business. This task develops creative thinking and allows formation of an image of a business that schoolchildren wish to build. Our task is transformation of the image into a business model by the end of the course and schoolchildren defend their models in front of lecturers and parents. In the course of education, schoolchildren are given knowledge about marketing, finance, planning, the role of these and other activities in a company. Because schoolchildren work actually on their own projects they do not take knowledge as abstraction but take it as a tool that is used in implementation of promising ideas. I think that in all cases when we speak about enterprising education knowledge and practice should be close neighbors. Theoretical education is necessary for an entrepreneur but it is necessary to supplement it seriously. In my opinion, one of the optimal solutions is establishment of real firms by students. Western business schools establish their own incubators for these purposes. Now we cooperate with several business incubators and create an incubator of our own. Even if a student or a participant of an MBA program does not wish to start his own business he needs enterprising skills for implementation of new ideas inside of an acting company."