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Do Entrepreneurs need an MBA at all?

By Alok Rodinhood Kejriwal on 25 Comments / 4531 views

My column in the April issue of Entrepreneur magazine: 

Do Entrepreneurs need an MBA at all?

Often, I run into a spat with the MBA gang about my views on why an MBA is just the worst thing you can do to yourself if you are trying to become an entrepreneur.

On the other hand, I revere engineers and personally regret not being one.  I think being an engineer would have really benefited me in my entrepreneurial journey.

So, what is the role that Education plays in Entrepreneurship? These are my views on the ‘how’, ‘when’, ‘what’ and ‘why’ of education: 

Learning ‘How’ 

How do things work? How is a factory layout planned? How are workflow and logistics organized? I guess no one can ever argue that knowing ‘how’ helps. 

Take for example the subject of accounting. I believe that you have to learn accounting in a class. It’s very difficult to ‘self-learn’ how to extract a trial balance and then bifurcate that into a profit & loss statement and balance sheet. 

During my I.C.S.E exams, I blundered in Accounting. That silly mistake in the ‘bank reconciliation’ sum (a method in which you reconcile bank and cash books), cost me an additional 3% in my overall results. I scored 87.2% instead of crossing into the 90% range.

I was so embittered by that mistake, that I never forgot Accounting. And I am talking about 1985 and 10th standard level accounting. Even today, I routinely teach a thing or two to chartered accountant CFOs. 

Lesson –Learning ‘how’ is critical for entrepreneurs so that they can apply it as and when they have to, in their entrepreneurial journey.

Learning ‘When’ 

I love public speaking. The bigger the audience, the larger the venue and the more controversial the topic, the more it excites me! How and where did I acquire this strange fetish? From the elocution and public speaking classes in school! The late Pearl Padamsee personally taught me. She was probably the finest teacher one could hope for and she left a very formidable impression on my young mind.

When I was in the 8th standard, I remember reciting Martin Lurther’s “I have a Dream” in school and inter-school competitions. If you are not familiar with it, please google and read. It’s one of the most inspiring and ‘goose bumpy’ speeches you can ever read. 

Modulating “I have a Dream” correctly (in the 80s when there was no youtube!) taught me the secret of ‘when’. ‘When’ was I supposed to raise my voice, ‘when’ was I supposed to gesticulate and ‘when’ was I supposed to almost explode with passion was the secret of delivering this epic speech. I learnt in earnest and won most of the competitions I participated in. 

Lesson – Reflect back on education and seek out the ‘when moment’. Something will teach you timing and that’s a prerequisite for entrepreneurship. For me it was a speech; for you, it could be something else!

Learning ‘What’ 

In 1989, I was studying B.Com at Sydenham College of Commerce and Economics. In India, B.Com is widely considered to be a ‘useless’ degree. 

The B.Com Economics course extensively teaches Economics. Apart from the intricacies of Demand, Supply, Monopoly and Duopoly, students also get a chance to learn about the philosophies of the great economists like Schumpeter, Adam Smith, Keynes, etc. 

The economist who always intrigued me (and still does) was Karl Marx. I could not fathom Marxism and what it really implied. Marx’s diktat of “From each according to his ability, to each according to his need” as well as his theory of how the ‘proletariat’ (labour workers) would eventually overthrow the ‘bourgeois’ (rich capitalists), actually annoyed me. 

I could not understand ‘what’ Marx was implying or how realistic it was. 

In November 1989 (my final year of graduation), I finally learnt the ‘what’ I was seeking. The Berlin Wall that divided East and West Germany came tumbling down. And with it came down everything that communism and perverted socialism stood for. The Marxist notion that the capitalists would be thrown away and a second ‘French Revolution’ would come true was rubbished. The fall of the Berlin Wall proved the reverse. 

This live event taught me a lot about ‘what’. While theory is very important, great entrepreneurs should observe ‘what’ they have learnt and ‘how’ it’s being practiced and implemented.

Learning ‘Why’ 

This is my big debate against formal education. I believe that ‘why’ is zen-like and can rarely be learnt or ‘classified’ (pun intended). 

Take for example the MBA method of teaching via case studies. Sure, there are some amazing companies that can be put into nice binders to be read, discussed and debated. But what is the permanence of their success? 

If there was a case study of Apple’s success in the early 80s, would it be relevant to business school students to study in the 90s (when Apple went through its decline)? And if by that logic, there was no case study on Apple in the 90s because it was not doing well, would students be underprivileged not to read about it in the early 2000s when Apple resurged and peaked in performance? 

The ‘why’ in business education is tricky because it presupposes many things that will change.  There is no ‘why’, because consumers and their choices are very unpredictable. 

Zynga is a great case study as a gaming company, but in just a few months it’s gone from hero to zero. The same can be said for most of the ‘social’ game companies that were heroes just a few months back. 

I believe that entrepreneurs should learn the ‘what’, ‘how’ and ‘when’ while they are studying and apply that to ‘why’. 

No one taught me ‘why’ companies used contesting postcards for consumers to submit contest entries for many years. I asked that ‘why’ myself and created a business called contests2win.com. Yeah, just by asking ‘why, why, why’!!!

*******

2nd April 2013:

Irony of Ironies! The famous Vivek Wadhwa wrote this article in the Wall Street Journal today!!!

*****

 Read ALL my other articles published in Entrepreneur mag HERE.

 ******

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25 Comments

  1. In 2003 when I had shut Tekno Point and failed as an entrepreneur , I joined a weekend MBA program.  I was at lowest point in my life and ready to do anything to make a new beginning.  However less then a year into it , full fees paid , I quit the MBA program. It is certainly not a place for Entrepreneurs , They will doctrine you to become finest Manager of different levels. I felt if I continue to do this , I will loose something of me. 

  2. Today any formal education is merely a certificate in India and demand of society. Mr. Alok, as you said you wished that you were an engineer and it would hv helped you in your entrepreneurial journey, may be true, considering you would hv done ur engg in 80s. But today name any professional course in India, it’s in a bad shape. IT industry changes everyday but syllabus of IT engg has been not updated since 2 decades almost, same goes for all branches. As far as Entrepreneurs are concerned they can learn only by having inquisitive minds, keen observation and by practice!

  3. At the India Today Conclave, I asked Nandan Nilekani what he thought of MBA’s. He was dismissive..

  4. 2007.. i asked this question of MBA or Direct jump…. just before staring my entrepreneur journey. Was lucky to have some IIT-M Seniors tell me MBA will not team me entrepreneurship rather will increase my opportunity cost.

    Glad i listened to them.

    Cant agree more to  ‘Why’ of above.

    But WHY investors (other than Vivek) insist on hiring MBAs … !! And they do strongly stress on it as pre-qualifications?

  5. You might as well not need a degree or any other type of formal education. And we will be rid of all the money making educational institutes and lots of evils in our society.

  6. I being not a graduate, yet I say no to M.B.A. as in gujarati they have various abbreviations for it such as “Maha Bekar Aadmi ” (Biggest useless Man) or “Mane Badhu Aavde” ( I know everything), these are just a few of them.

    I feel education till under-graduate is sufficient to be in a successful businessman, as knowledge is good but only through experiences, as books are always written years back and you cannot implement the same in reality. So why waste 2 or 3 years on an M.B.A. and then start up, rather start up 2 years early and have the reality check of what you wish to do.

    If it works you will be 2 year old company by the time you graduate from a B-School, unless you have good amount of money in your bank and just want to waste it with your time, then you may do the M.B.A.

  7. Only few Indian product companies in IT and mobile space have been able to touch billion$ valuation.
    Three of them being  

    1.Inmobi, CEO Naveen Tiwari

    2. MakemyTrip, CEO Deep Kalra.

    3. Infoedge, CEO Sanjeev Bikhchandani

    All of above founders are MBAs.Anything to say about that Alok.

    I believe a degree cannot make or break an individual, they are just nitroboosters which can accelerate or deaccelerate your growth.

  8. I think it is not a binary – 0 or 1 thing.   There will obviously be successful entrepreneurs who are MBA’s . It will be great to know from them only if MBA helped or was it something that became an obstacle to deal with in their entrepreneurial journey.  I mean  to me they were wise enough to not let MBA experience create any damage.   

  9. Alok,

    I was looking at the tags you have used in this post..education and learning. And we must understand that there’s a difference between the two–while learning is student-centric, education is a one-size fits all. You are right to say that a MBA degree doesn’t quite help the “learning” cause that’s essential to be an entrepreneur. But having said that, I feel the MBA programme has helped to broaden my perspectives. While you’re right in saying that case studies about past company events might not be relevant, how it has helped me is to get into the habit of making decisions based on facts and data and then hearing my logic being critiqued by fellow classmates the next day. Taken in the right way, an MBA education can also be quite humbling and useful in the entrepreneurial journey!

    Arindam

    http://www.flixstreet.in

  10. Nothing to say! All respect!! Ps – take a look at non dot coms, and a company called Apple and Facebook & spot MBA’S there?!

    That’s THE ISSUE!!!

    Ur point (are you an MBA?) has a narrowness attached to it!!… A limited view…3 companies out of millions in the world!?

    Why on earth would Wadhwa make this statement ?! He IS an MBA & is closest to ‘billion dollar’ companies than u and me!!

  11. I am an engineer by degree, not an MBA.

    Speaking of Apple, Tim Cook has a MBA and Sheryl Sandberg, COO, Facebook has an MBA.
    Do you believe that Steve Jobs categorised his employees as MBA and non MBA, and then handed over the reigns of his company to an MBA.

    I believe MBA degree in all over the world cut balls of the student pursuing, only because it is damn expensive and this is its only limitation.
    In an nutshell, entrepreneurship has do with spotting problems / opportunities and then taking consistent action towards solving it in a better way.
    Some people like Mark Zuckerberg, Steve Jobs took action early in their lives.
    For others, it takes time to identify what to do, with their lives.
    I believe it took you 9 years before you quit your father’s business and started up on your own.

    How can this decision and the journey following, be categorised based on one’s education.

  12. My bad. I should have done an MBA. And Vivek Wadhwa had just lost it…

  13. MBA cud be a launch pad to ‘good’ job and might also make one entrepreneur, but guess ALOK is hinting that MBA is not a MUST to be an entrepreneur OR for success of a business.

  14. A couple of things I guess I can say from my personal observation  (thats what entrepreneurs do most of the time, right 🙂

    1. One really has to be keen observer & a sucker for knowledge & learning which helps in shaping the intellect. So deep intellectual curiosity can surely be a viable alternative to formal education….its just that formal education compared to self-learning is damn expensive because of the entire package it comes with:  bundled gyaan + degree + placement

    2. Be an MBA or a self-starter entrepreneur, there is no substitute to practical experience & dogged perseverance. And here is where Mr. MBA might be at a disadvantage (since he may not think on his feet or he may relate it to some college case study or he may assume that he knows it all). Also MBA guys, tend to look at entrepreneurship with a safety net in mind (yeh nahin chala toh McKinsey ka offer toh hai hi naa!!) & so may not have ‘that kind’ of madness or raw passion.

    Btw, am a new age Marwari entrepreneur & not an MBA but I proudly cherish those moments in my earlier professional work-life (feeling respected at par with IIM alumni at Edelweiss Institutional Equities Team or beating MBAs to stand 5th out of 210 teams at the CNBC telecasted- Tata Crucible Corporate Quiz Mumbai final in 2005-06 etc.)

    Although to be frank, in hindsight I do feel jealous at times when I come to understand that media, investors, some employees, etc. tend to over-rate the Ivy League MBAs vis-a-vis equally intellectually competent & far more committed entrepreneurs like me. Some VCs might not be right in their thinking that this Harvard MBA grad is more deserving as he is paying more opportunity cost & doing a much bigger favor to entrepreneurship!!  😉     And Rajesh Sawhney of GSF told sometime back on a TV show that in India, so far the funding scene has largely been like this:  Don’t take any concept risk in a high-beta market like India, Just Copy-Paste a concept from the west & find an appearingly smart guy who can tweak the last mile to Indianize it!!   Here an MBA tends to lend a halo effect to the entrepreneur!

  15. “Good Job” doesn’t implies success. To be successful one has to be success conscious. 
    As Alok said in one of his previous posts, “Surround yourself with right thoughts.”
    The MBA degree is as fine as any other degree.
    The problem lies with the attitude and expectations of people who are preparing for or pursuing MBA.
    80% of MBAs whom I have come in contact, pursue the degree for the sake of making a quick buck after graduation. MBA for them implies shortcut to success.

  16. I had written this sometime back : https://www.dare.co.in/columns/business-insights/why-digital-entrepreneurs-hate-mbas.htm

    Maybe an interesting read for you 🙂

  17. Alok let me ask a Zen question to you:

    Should an enterprenuer be spiritual? Will an enlightenment help him additionally in doing business?

    Ans: may be or may not Or not necessary …but being enlightened and an enterprenuer too Does not go waste!

    Same way being an MBA doesn’t go waste we only learn concepts there better than not knowing

  18. The best answer can be given by an entrepreneur who has done an MBA too. I asked a few of them and guess what they say: you don’ t need an MBA.

       If you are entrepreneurial, you will learn the language of the books by yourself. You don’ t need someone else to teach you how to manage a business. It’s a skill learnt best self taught.

  19. I joined MBA at IBS business school Bangalore last year, with the aim of becoming an entrepreneur. Getting a job was never an idea.If i would be able to create some jobs instead, I’d consider my life to be successful. After completing the first year of the course i would say that i have taken the right decision. Pursuing an MBA ( or any related courses such as PGPM, PGDM), not only helps to gain expertise in your area of interest but also helps to develop your network. Many of the colleges including the IIMs, Symbiosis, IITs, ISB, And even in my institute we are fortunate to have Entrepreneurship cell. The e-cells are directed to build entrepreneurial skills in the students. But sadly I see a trend among students that they are more oriented towards job ( i call it joining others business). I am fortunate to have a mentor in the institute Mr. Surjyabrat B. who himself is an entrepreneur. Currently developing a business model along with him. Hopefully by the end of my MBA i will be coming up with a start up , creating jobs, helping the society. 🙂

  20. True entrepreneurs just need a fire in their belly , rock solid will power , a logical thinking a pratical approach same luck some guidance some failures but because every thing has now became so mature and systematic that MBA etc might help one with confidence building that yes I am an MBA and a know-how of technical terms and all , the experiments one can do with his own life are his biggest teachers and help to truly improve the existing and build the missing qualities.

  21. Agree they are successful entrepreneur and MBA too but just a co-incidence! If you ever get a chance to meet them, just ask one question, ‘Did case studies and theories you memorized and solved during MBA helped you to be successful?’

    And when you talk about entrepreneurs why only talk about IT companies, go through other sectors too.

    1. Vedanta, Mr. Anil Agarwal

    2. Su-Kam, Kunwer Sachdev

    3. Infosys, Narayan Murthy (IT Sector)

    Degrees only play the role of cushion!

  22. I agree with Alok to a certain extent. The problem is not the MBA Program, but what we are made to learn in MBA.

    First thing we should make a MBA do is to make him a do sales & teach him the importance of Cash Flow. Most of the tech entrepreneurs fail not because of funding or manpower etc. but they cant sell. The best lesson I got form my MBA was form my marketing professor Prof. Tendulakr – Sales is the only function in an organitation which brings in cash.

  23. Thanks for clearing some doubts.

  24. SELL nahi to KHEL nahi!….shut and go home

  25. Honestly, I think the best way to sum up this argument is that being an MBA neither inproves or worsens a person’s chances of being a “SUCCESSFUL” entrepreneur. The fact that when you are doing MBA you are obviously being filtered and only the smartest make the cut into an Ivy League college. Also are groomed in soft skills as well. This makes it easier for people to classify them as “Intelligent” and hence makes them more attractive to “Clients” and “Investors”. Does that mean others can’t do it? Definitely no! But its much more difficult for others to make an impression on others (not really their fault actually) especially if it’s without traction to justify it.

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