• In Conversation

Entrepreneur (E): What is your role at IMD?
stuart read (sr): : All we do at IMD is executive education, designed for people who hold high posts in MNCs. We do pretty well in the ranking, especially in the MBA world. We don’t have any undergraduate programs. So, these executives who come in from big companies usually have something on their mind. For instance, we get a group of people from a particular company who want to be more innovative. That’s where I come in. I teach aspects of entrepreneurship and innovation.

E: What is IMD’s role in fostering entrepreneurship in the west?
sr: Our stakeholders are mostly MNCs, all of which are looking at creating new opportunities at all times. They all need to create new products, generate new customer segments. In a big company, how do you do that? We offer our guidance in such cases. In addition, IMD’s MBA programs can take in 90 students, who have worked for 8-10 years. It’s more selective to get into IMD than Harvard University. We teach entrepreneurship too. The deal from our MBA program is that a third of our students will start a venture at some point. Additionally, IMD is located right down the lake from a big polytechnic school in Switzerland, called EPFL. We actively connect their engineers with our executive participants/MBAs. But we don’t have any formal incubation/entrepreneurial cell. Our faculty independently fund many companies but not through the school.

E: Your personal interest in entrepreneurship?
sr: I invest in people and ventures I know about. I’m a magnet at IMD for people who want to start ventures. I like collecting stories about entrepreneurs which are there in my book. I write a story every month for British Airways.

E: You’ve done some research on entrepreneurship. Can you tell us about this experience?
sr: My co-authors and I realized that people place more importance on marketing and management than on entrepreneurship. A big company makes a big plan. An entrepreneur must do the same. Most entrepreneurs never use a B-plan. Even if they write one, it’s more of a marketing document to raise money. As soon as this is done, the B-plan is forgotten.

In marketing too, the whole idea is to learn about a segment and then to promote it. We teach that to entrepreneurs. But that’s not what entrepreneurs do. They are more interactive with customers, they co-create with them. That’s not what marketing tells you to do, it says sell what you’ve got. So, the bottom line is that many ideas from marketing and management used in entrepreneurship weren’t exactly working.

I also realized that there must be some characteristics about entrepreneurs that make them unique. For years, there has been research and studies on what makes an entrepreneur successful. The answer is that no physical or psychological traits can define an entrepreneur.
Then there is the finance view. We teach people how to write a B-plan, market and raise money. But few new ventures ever talk to a VC. And out of those, we know how many will get funded. So, what’s the point of teaching it? That’s why my co-authors and I decided to look at expert entrepreneurs and see what they do and teach those findings.

E: Can you explain these findings?
sr: There are five main points. First is the means vs goal debate. In B-school, we tell entrepreneurs they must write a B-plan. But expert entrepreneurs don’t. Instead, they start with what’s available and the people they know. This makes perfect sense because they don’t have to wait for some genius or a VC to start up.
The second point is to focus on partnership instead of competition. The basis of strategy is competition. How do you look at an industry, its competition and the condition yourself?

How much competitive analysis do you think an expert entrepreneur does? Not a whole lot, especially when you are creating a market. What expert entrepreneurs care about is their business and those who will work with them: their partners.

The third aspect is risk. How do we teach people to manage risk at any B-school? The obvious answer is to make a forecast with an expected rate of return. What is fascinating is that is not how expert entrepreneurs handle risk at all.

They look at risk from the downside. Thinking in this manner gives an entrepreneur the ability to control how much risks he/she can take. What we teach in business schools is to take bets, but expert entrepreneurs actually take small affordable loss bets! It’s upside down! The fourth aspect is the surprise element. The one thing that expert entrepreneurs learn is that surprise is inevitable in business. So, instead of trying to figure out a way around it, they look at it as a new opportunity.

The final aspect revolves around the need vs find debate. Management, marketing and finance believe that opportunities exist and all you have to do is find them.

But the other view is that opportunities can also be created by entrepreneurs. Some opportunities wouldn’t have arisen if entrepreneurs didn’t actually get up and do it. It’s really an important philosophical distinction because it guides your actions.

E: Your reflections on entrepreneurship in India as you see it?
sr: I see entrepreneurship everywhere in India. Someone in the middle of the road is creating a market and that is economic activity at its most grassroot level.
I’m also very impressed with the activity in spite of the lack of infrastructure, regulations against it, and everything else. If you really had policies that encouraged it and infrastructure that enabled entrepreneurs to share information and learn from each other, imagine how much you could do here!

E: The Indian entrepreneurial ecosystem is still evolving. Your comments?
sr: There is great potential on the financial, infrastructural and regulatory side in India. A formal infrastructure for the ecosystem would be a big help.

E: What are the new opportunities for entrepreneurs in the next decade, globally?
sr: I’m fascinated by waste. It’s free and readily available. For an entrepreneur the question is, “How do I turn all this waste into an opportunity?”
And it’s really amazing to see what people are doing. The richest woman in the world is Cheung Yan of China whose company is called Nine Dragons Paper [Holdings] Limited. It exports waste paper from the U.S., sends it back to China, recycles it into packaging material and sells it back.

E: Your advice to entrepreneurs?
sr: Start now! It’s the essence of turning everything upside down. Start cheap, fail cheap, but just do it.

©Entrepreneur May 2011

Tags:
b-school, Entrepreneurship, marketing, MBA, start up, Stuart Read