Stanford University is a perfect example of how an academic institution can play the leadership role in transforming society. When its illustrious faculty member Frederick Terman coaxed two of his students, William Hewlett and David Packard, to start an enterprise, he blazed a trail that altered the course of history. Terman created an entrepreneurial culture that today extends to every academic discipline of the university. It won’t be an exaggeration to say that Silicon Valley is a gift of Stanford University to the world.
A large number of start-ups got mentoring from the university which also includes new-age technologies, some of which are responsible for the unprecedented momentum of change human history has ever witnessed. After Hewlett-Packard, many enterprises such as Sun Microsystems, Google, Cisco Systems, EBay, Yahoo, Logitech and Dolby Laboratories started as student projects in Stanford University. The university’s entrepreneurial spirit has helped spawn more than 3,000 companies in high technology and other fields.
In our country, the need for entrepreneurs—though recognised by our policymakers—has yet to find enthusiastic backing in our institutes. In spite of being in existence of about 45 years, none of the Indian Institutes of Management (IIMs) or Indian Institutes of Technology (IITs) has created a ‘Silicon Valley’ in their vicinity, though some institutions such as the Indian School of Business (ISB), Hyderabad, and IIT Bombay have taken proactive measures in creating job creators rather than job seekers.
The Wadhwani Centre for Entrepreneurial Development at ISB is doing good work in creating an interface between students, venture capitalists and other financial institutions. The centre has also adopted 10 small manufacturing companies and is teaching them basic economics and finance related aspects such as reinvestment and scaling up. Other institutes that have effective incubator cells for entrepreneurship development are IIM Ahmedabad and Nirma University.
But, out of more than 1,200 business schools that we have, not more than six have incubation cells that have made some impact. The curriculum in most of our business schools also needs to be updated like some in the West have done. For example, Weatherhead School of Management (WSOM), Case Western Reserve University in the US radically scrapped some traditional courses and added new ones such as ‘How to start a business’ and ‘Running a business’.
Our business schools should also start such courses covering topics such as formulating a strategy, writing a business plan, raising capital, etc. Like ISB, we need more institutes that can help students with a business idea and then arrange for proper networking with financial institutions. Unfortunately, our MBAs, too, lack the enterprise spirit. I interacted with a number of faculty members of different institutions to find the reasons for this. One of the reasons often pointed out is the student mindset is conditioned by a society where the safety of a government job is highly valued.
Right from the primary school level, the pedagogy and the evaluation methodology don’t encourage entrepreneurial traits such as thinking out of the box, creativity, tolerance to ambiguity and risk-taking ability. Memorizing facts is encouraged rather than synthesis, analysis and creative application of information. The coaching institutes for qualifying exams such as CAT further reinforce the mindset.
These institutes have analysed the pattern of exams, and students are trained to play safe by spending a gruelling time practising answers to predictable exercises. Many students spend over a year cramming and practising exercises so that they can give right answers in the least time. As a result, many of the students who qualify—though beyond doubt very hard working—find it difficult to apply ideas in novel situations. It’s time we do some serious thinking in transforming our academic institutes into change agents. The entrance tests should be redesigned so that they give significant weightage to creativity and out-of-the-box thinking. If we have to transit to a developed economy, the big push has to come from entrepreneurs. Economist John Maynard Keynes gave a mantra to counter unemployment: dig holes in the ground and fill them up. In India, we don’t have to dig holes, there are potholes every where. This is the greatest irony of our times; on the one hand, we have so much development work to be done and on the other, an ocean of unemployed people. Our institutions, by spawning entrepreneurs, can be a link between the two.
Premchand Palety is director of Centre for Forecasting & Research (C-fore) in New Delhi, from where he keeps a close eye on India’s business schools. Comments are welcome at email@example.com