Diapers in Brazil, heart disease diagnostic tools in Africa, and taxi services in Malaysia would seem to have little in common. But at Harvard Business School (HBS) last month, impassioned M.B.A. students were making the case that all three areas shared a key trait: They were underserved markets where new start-ups could succeed.
As student finalists presented their ideas at the 15th annual HBS Business Plan Contest, they showcased not just ingenuity and business savvy, but the driving entrepreneurial spirit that increasingly guides the highly respected graduate institution.
“I think this is what Harvard Business School is all about,” Dean Nitin Nohria told the crowd. “It’s a place where people can come and imagine extraordinary possibilities. This is what entrepreneurship at its core is.”
In its first 100 years (1908-2008), HBS made its mark as one of the world’s best B-schools, and in recent decades as a golden ticket to competitive, high-paying jobs in finance, consulting, and banking.
This year’s Business Plan Contest yielded other bright ideas. Read about “The next big things.“
But if the massive crowd of professors, students, alumni, and others who turned out for the contest finals on April 26 were any indication, the School’s second century will be defined not by the Fortune 500 firms that its M.B.A.s work for after graduation, but by the companies that they create.
The contest finalists are hardly the only HBS students pondering bypassing the Wall Street fast track for an unknown path. In the wake of the recent recession, traditional jobs in finance and investment banking no longer seem like safe bets to many students. As technology lowers the cost of starting a new business, students are finding it easier to chase dreams of changing the world and making money without venturing far from Soldiers Field Road.
It’s a movement that the School wholeheartedly supports, Nohria said. Innovation and entrepreneurship were the driving forces behind America’s sustained growth in the 20th century, he said, and they’re the key to helping American business get back on track after a recession.
“It’s only when companies create value — not just for shareholders, but for a broad range of stakeholders — that business will earn the trust of society,” Nohria said. “And this trust is crucial. The largest challenges facing the world today, from energy and the environment to health care and poverty, will require business to be part of their solutions.”
HBS’s efforts range from the contest, in which more than 100 students participated, to a gleaming innovation lab that will open next fall, to student-led groups such as the new Startup Tribe with 150 members, to the voluminous research published by the 30-plus faculty members in the School’s entrepreneurship unit.
Then there are newer developments, such as the School’s Minimum Viable Product (MVP) Fund, which assists and funds students in their launch of early-stage products, and the creation of the “field method,” a set of curriculum changes to take effect this fall, which is intended to complement HBS’s case method of classroom learning with hands-on experience.
“These experiences will test not only [students’] technical intelligence but also their emotional and contextual intelligence, all of which will be called upon when they leave here,” Nohria said.
The idea that students come to HBS specifically to start new ventures is relatively new. What young upstarts are drawn to, professors and students said, is a growing culture of entrepreneurship — a critical mass of other like-minded professors, visiting business authorities, and even students who are already experienced at starting companies.
“When you see a good entrepreneurial example, you say: I can do it too,” said Howard Stevenson, M.B.A. ’65, Sarofim-Rock Baker Foundation Professor of Business Administration.
Entrepreneurship’s recent history
It’s hard to believe, given the popularity of entrepreneurship courses at HBS, that the subject was virtually unheard of in business school curricula as recently as the 1980s.
There’s a popular quotation in the business world often attributed to Stevenson: “Entrepreneurship is like raising children; it starts with a moment of enthusiasm, followed by decades of hard work.” The same could be said of starting an entrepreneurship program.
When Stevenson came to HBS in the early 1980s as the School’s first chair in the subject, he helped to build the entrepreneurship unit to its current levels. Finding good teachers was no easy task; the field was still in its infancy.
“A lot of research was about personality and risk taking,” Stevenson said. “But those descriptions [of what makes an entrepreneur] didn’t fit what I knew and the people I knew.”
Stevenson’s work in those years helped to reshape the concept of the entrepreneurial mindset as a management approach, rather than an inherent trait. Entrepreneurship — which Stevenson defines as the pursuit of a business opportunity beyond one’s immediately available resources — became something that could be taught.
And many students wanted to learn. Stevenson and a new recruit, William Sahlman, M.B.A. ’75, now the Dimitri V. D’Arbeloff-MBA Class of 1955 Professor of Business Administration and senior associate dean for external relations at HBS, found that their entrepreneurship-focused electives (one of which, “The Entrepreneurial Manager,” is now required of all M.B.A.s) always filled up quickly.
“Students had always led faculty in their interest in entrepreneurship,” Stevenson said.
The School has long known that 40 to 50 percent of its graduates go on to start their own companies by their 10th or 15th reunions, and HBS counts among its alumni such entrepreneurial legends as Michael Bloomberg, M.B.A. ’66, and Tom Stemberg, M.B.A. ’73, the founder of Staples.
“The perception that HBS is only about finance and big business is just false,” said Sahlman.
A changing student body
It remains true that many students come to HBS from traditional business backgrounds — consulting, investment banking, or finance — and that many leave the School on the same track. But as the average age of the typical HBS student has risen in recent decades, more students are arriving ready to jump off the career ladder to try something different.
“There are lots of young adults in my classroom who have a sense that they’ve tried something, and they’ve made a decision either about what they do or don’t want to do,” said Joseph Lassiter, MBA Class of 1954 Professor of Management Practice. “There’s the fishing you do to be entertained and to think about the world, and there’s the fishing you do when you’re hungry. A lot of people reach this point in life where they’re ready to catch a fish.”
That was true for Roman Itskovich and Anita Venkiteswaran, who at 28 and 27, respectively, sheepishly call themselves “old.” Both HBS students had worked for McKinsey & Co. as consultants. They see their time at HBS as a chance to reflect on whether they want to stick with consulting or strike out on their own.
“Unlike Roman, I’m not one of those people who knows I want to” become an entrepreneur, Venkiteswaran said. “This is the best low-risk environment I could have to try something like this, to see if I like it and want to do it long term.”
Itskovich and Venkiteswaran are about as different as two M.B.A. students can be. Itskovich, a calm, collected Israeli who paid his way through college by running his own marketing business, has always been drawn to “start-uppy stuff.” Venkiteswaran, a native of Calcutta, India, with “the most traditional background at HBS,” exudes matter-of-fact drive and relishes numbers crunching.
But at HBS, the two first-year students found something in common: a great idea for a company, and a desire to make it work.
Inspired by a call center worker’s complaint that Itskovich once overheard — Why is it so hard to schedule shifts so the right number of employees work at a given time? — they’ve partnered with developers in Israel and a professor at Massachusetts Institute of Technology to create Qweek, software that makes scheduling fast and intuitive for large, customer service-oriented businesses.
Qweek has completed two successful pilot programs in Israeli hospitals and is testing a second phase of the software with a Boston Panera Bread franchise. Their pitch received a runner-up prize of $10,000 in this year’s Business Plan Contest. But the real value, Venkiteswaran and Itskovich said, was in being pushed to get their company off the ground sooner rather than later.
“We got to real feedback. It wasn’t just networking, but substantive talks,” Itskovich said of the contest. “Getting to hear from the judges was the real prize.”
Planting the entrepreneurial seed
Entrepreneurship is thriving in the classroom as well. Through its history, HBS has been defined by the case method, a successful teaching model that the School pioneered. As it turns out, many professors and students said, the method of presenting students with real-world business scenarios and asking them to come up with and debate their own approaches and solutions jibes well with fostering an entrepreneurial mindset.
“The very essence of the case method is asking questions,” said Sahlman. “If you’re leading a large organization, you often lead by asking the right questions and allowing your employees to figure out the answers. The answers change, but what stays the same is the questions.”
Derek Poppinga, an M.B.A. student and a member of BOSS Medical, one of two winning teams in the contest’s business venture track, said he has found his classes surprisingly helpful in shaping his work on the medical device start-up.
“It introduces you to a lot of the thoughts and dilemmas and choices one has to make,” Poppinga said.
Still, there are some old habits that M.B.A. students must unlearn if they want to become entrepreneurs, Sahlman said. For instance, the School tries to teach students that there are many paths to success, and that an initial failure doesn’t mean that their next venture won’t succeed.
“People who end up in elite business schools have often almost over-performed through their early career,” Sahlman said. “They got A’s, they were presidents of the class, they got recruited by Goldman Sachs. They’ve never experienced a failure.”
There are plenty of ways to help students avoid beginners’ mistakes. HBS programs can guide student entrepreneurs as they conceive ideas, search for investors, and write business plans. As the hub of non-classroom entrepreneurial activity at HBS, the Rock Center helps with more than 100 student proposals a year, said Michael Roberts ’79, M.B.A. ’83, Ph.D.’86, who is James M. Collins Senior Lecturer at HBS and the center’s executive director.
“Successful entrepreneurs rarely stick to their original business plan,” Roberts said. “Even people whose ideas I might not think are great, there’s often some germ there that if they pursue it — and if they’re smart and open-minded about the way they pursue it — they will learn some things that help transform the idea into something that’s quite good.”
The growth of social enterprise
Within the entrepreneurship field, however, the types of businesses that students see themselves creating have changed in recent years, professors said. As the world’s problems grow more complex, and as the boundaries between the for-profit and nonprofit sectors blur, more students see an HBS education as a steppingstone to creating social change — by creating a business.
“Whether it’s Teach for America or Facebook or Diagnostics for All,” a Harvard-based global health care nonprofit, Lassiter said, “students see business as a vehicle for putting ideas to use and for spreading those ideas in society.”
Electives in social enterprise, where organizations apply business strategies to social problems, now attract 500 students per semester, said Laura Moon, director of HBS’ Social Enterprise Initiative. Up to 20 percent of those students are cross-registered from Harvard’s other Schools.
“It’s been a somewhat tumultuous last few years, and partly as a result of that we’ve seen students taking a different look at their career paths,” Moon said. “They’re looking at how and when social enterprise will fit within their professional and personal lives.”
The rise of the microfinance industry, for instance, has shown business’s ability to address persistent societal problems (in this case, poverty) on a vast scale, said Michael Chu, M.B.A. ’76, a senior HBS lecturer who specializes in social enterprise and emerging markets.
Chu is one of about 25 HBS professors whose backgrounds are largely nonacademic. He is co-founder and managing director of the IGNIA Fund, a Latin American microcredit organization.
In 2006, in partnership with the Harvard School of Public Health, he created Project Antares, a grant-funded effort that pairs public health and business students to launch enterprises that address such global problems as malaria, HIV/AIDS, and maternal and child health. In five years, Antares has launched 14 projects in 11 countries, utilizing the work of more than 75 students.
The challenges that the Antares teams face, he said, are no different from those confronting any type of entrepreneur.
“You may understand the problem, but you then have to apply it to a given reality that always has its challenges,” he said. His student advisees learn theories — in business, what is profitable; in public health, what makes an effective health intervention — “but then you have to apply it in the messy reality of the street.”
“The problems in the real world, and the opportunities, don’t come completely separated into cubbyholes,” Chu said. “Addressing almost any problem is a multidisciplinary affair.”
Innovation and collaboration
Collaboration across Harvard’s Schools and hospitals is the next step in the evolution of entrepreneurship at HBS. The nascent Harvard Innovation Lab, the brainchild of Peter Tufano, Sylvan C. Coleman Professor of Financial Management, is taking shape on Western Avenue as the most prominent example of how the entrepreneurial bug has spread across Harvard.
“I think the use of business to spread ideas is something that has swept the entire University,” said Lassiter, faculty co-chair of the new Innovation Lab. “But that’s merely a symptom that, in every endeavor, a lot of people are increasingly interested in putting their ideas to use.”
The I-Lab will house research groups of students and faculty working across disciplines to address problems in everything from business to law to medicine. Last month, the University announced that Gordon S. Jones, an adjunct professor at Bentley University with extensive marketing and sales experience with companies of various sizes, will lead the lab, which will be housed in the old WGBH headquarters in Allston.
“The world of entrepreneurship is alive and well across the University,” Lassiter said.