Thoughts on Entrepreneurial Education

October 12, 2018 Commentary, Entrepreneurship, Featured Comments (0) 40

In December, I will complete the required coursework and earn a master’s degree from Western Carolina University’s Master of Innovation Leadership and Entrepreneurship program. Over the course my graduate work I have been asked many times if a master’s degree is worth the money if I really needed a master’s degree to be an entrepreneur, what prompted me to continue my education, and why I chose a Master of Entrepreneurship degree over an MBA.

As I wind down the program, I wanted to share my perspectives on these questions and offer other thoughts on entrepreneurial education.

My motivation for pursuing a graduate degree.

When I started the program in January 2017, my primary purpose was to earn the credentials to teach courses as an adjunct in higher education. My goal was to teach the basics of licensing and intellectual property protection to those students, like my summer interns from Savannah College of Art and Design (SCAD), who were on a path to creative careers but seemed to have little knowledge and understanding of licensing options for generating revenue and the importance of aggressively protecting their creations.

It was apparent to me that those with aspirations for careers in the creative arts are missing education in the fundamentals of business necessary to support themselves in those careers. I saw this not only in my student interns but also in my interactions with working artists and creators some of whom have been out of school for many years. I wanted to teach students how to establish a better business foundation for extracting long-term value from their future creative careers.

Two years later, my desire remains fundamentally the same; however, my vision is different. The coursework for the master’s program led me to think more broadly. We live in a world where corporate loyalty to employees is virtually nonexistent, and many individuals are pursuing entrepreneurial endeavors—some out of desire, others out of necessity. Moreover, the Internet enables everyone who wants to start a business, a way to find an audience, sell a product or service, and facilitate the delivery of the creation—whether its artwork, a book of ideas, a piece of furniture, or a service.

Most of us, though, are educated and trained to work for others. Very few of us understand how to be self-employed, or have the basic understanding of how to build a business that employs others. This lack entrepreneurial education and training must change, or the long-term impact is potentially devastating to the economy and the culture.

At the end of my program, I still see the significance of helping students extract long-term value from their future creative careers, but I now understand the necessity and importance of embedding entrepreneurial thinking and approaches in our post-industrial culture. I want to be a part of preparing future generations to think differently, to help them develop skills to identify opportunities and to teach them the building blocks that create products and services on which viable businesses can be built and thrive.

Why Master of Entrepreneurship (ME) instead of an MBA?

I chose the Master of Entrepreneurship program because I liked the idea of exploring the foundational theories for business management within the context of innovation leadership and entrepreneurial action.  Plus, I already hold a Bachelor of Business Administration, and I have significant hands-on experience in running and managing businesses, which is a core component of an MBA program. I found little additional value for earning a master’s degree in the same discipline.

While I suspect the curriculum may differ from university to university, I believe, based on my research and experience, the MBA curriculum primarily prepares students to run and manage the businesses of others, whereas graduate curriculum in entrepreneurship teaches students to identify and develop opportunities that can grow into businesses. While there may be some similarities in the ME and MBA programs, the business focus is often different. The curriculum differences would also seem to suggest some variances in the level of risk tolerance between graduates of the two programs, with the MBA leaning more toward risk avoidance and the ME leaning more toward risk acceptance.

A high level of risk tolerance is essential for innovation and is the cornerstone of most entrepreneurial education. Let me be clear: I am not saying MBAs cannot innovate—many do—although the curriculum for MBA programs and my experience with many MBA-trained executives in my career would suggest the educational foundation stresses an over-reliance on existing data and information in decision-making. Innovation stems from chasing the unknown, which is hard to do when there’s no hard data to support the chosen direction. Entrepreneurs know this, and a graduate level education in entrepreneurship soundly reinforces the concept of decision-making under uncertainty. For me, such a curriculum provided greater support and balance for my tendencies toward research and data.

Contrary to what some might think, a Master of Entrepreneurship degree doesn’t just teach you to start your own business—you don’t need a graduate degree, or any degree, to be an entrepreneur, but some entrepreneurial education does help your long-term success rate. Many, including the degree program in which I participated, teach entrepreneurial concepts applicable to existing organizations as well as startups. By focusing on those skills necessary to identify and drive innovation, a Master of Entrepreneurship degree provides a foundation that students can deploy for the benefit of any organization—from their own startup, to small businesses, to large corporations, third-sector organizations, nonprofit organizations, and everything in between.

As with many decisions of this nature, there’s no right or wrong answer. The choice depends on personality, background, experience, personal goals, and aspirations. There are indeed many individuals with an MBA who are successful entrepreneurs. The MBA-path was not the path for me.

Is a master’s degree worth it?

For me, this Master of Entrepreneurship degree is worth the time and expense because it helps to put in motion my future goals. My payback period should be short, I have learned a few new things, met some great people and earned a necessary credential for the next step in my career path.

Lifelong learning is important to me and the Master of Entrepreneurship degree demonstrates my commitment to that concept. I didn’t pursue a graduate degree at this stage in my life with hopes of increasing my earning potential significantly. I chose the degree to update my foundational knowledge and to learn new techniques and approaches to business and entrepreneurship upon which I can form new insights and, hopefully, contribute knowledge to future generations.

Of course, everyone must weigh the pros and cons of a graduate degree themselves. In some fields I would imagine it’s worth the time and expense; in others, perhaps not as much. I do think many hiring managers consider a master’s degree to signify a certain level of knowledge and commitment that a bachelor’s degree once suggested.

My commitment.

There are too many entrepreneurs who, whether by choice or necessity, are flying by the seat of their pants, throwing things against the wall and hoping it will stick. I know, because I've been one of them and I have worked with many others. What I have learned through experience and formal entrepreneurial education is there is not a magic formula that will breed successful ventures, but there is a framework for innovation leadership that will improve the chances of entrepreneurial success. And it's time to give back.

I value the power and impact of entrepreneurial activity on the broader economy, yet my greater interest is in entrepreneurship as a solution for unemployment and economic growth in distressed communities. More specifically, I have interest in those communities where changing demographics, cultural and societal shifts, corporate closures, and access to education create barriers to employment and economic growth, and how to spur innovation and entrepreneurial activity to break down these barriers.

To this end, I rebooted my strategy consulting practice earlier this year, and I have incorporated a coaching component for startup founders and entrepreneurs as my first step in giving back. I am also looking for opportunities within academia as well as select organizations where I believe I can leverage my education, experience, skills, and abilities for the next generation.

Finally, I am exploring doctoral programs so that I might continue researching, working, and teaching how innovation leadership and successful entrepreneurial activity can be a positive force in cultural change.

If I can be of any assistance to you in your pursuit of entrepreneurial activity, please don’t hesitate to reach out.

 

David Harkins is a serial entrepreneur with significant experience in branding, strategy, licensing and marketing.

In his spare time, he consults, coaches, speaks, writes, hikes, explores, and creates art. Although, not necessarily in that order.

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Hiring People Like You

September 15, 2018 ENT600 - Entrepreneurial Planning, Entrepreneurship Comments (2) 112

You will have the desire to hire people like you when you're an entrepreneur.

Leveraging social capital to build your founding team makes it easy to hire people like you. People with your values, your background, and a substantially similar knowledge base can be advantageous for you, the founder. You’ll have a common language, communication may be more comfortable, it will take less time to get those new hires up to speed, and you will have greater confidence in their ability to achieve your goals and objectives (Wasserman, 2012). Hiring people like you might seem to be a smart business choice.

When you hire, people like you are probably hiring them because you have had a good working relationship in the past. You hire people you like and people with whom you enjoy working. You hire them because your experience tells you they are good at what they do. You hire them because although they have different areas of expertise—sales, marketing, or finance—they are likely to have similar backgrounds, networks, and possibly industry knowledge. Arguably, this may give you an advantage at first. Surrounding yourself with people like you when you’re risking everything else to get your business off the ground will provide some comfort. On the surface this seems rational; homogeneous teams may make things a little easier in the beginning but are likely to be the cause of stress as your business grows.

Hiring people like you means you may be hiring people who have not just similar strengths, but also similar weaknesses. Hiring people like you may also mean few will challenge your view of market opportunities, customer targets, or product features and benefits. People like you will tend to see the world in much the same way as you. And this might mean you miss business opportunities because hiring people like you limit your ability to see much of anything different than you may see it. Hiring people too much like you may well restrict your long-term success in business.

Hire people who have different backgrounds, education, and experiences. Hire those with a different world view, a different attitude, and from a different place in the community and the world. Cultivate this diversity within your company because it is this diversity that will help you identify and exploit opportunities for business growth. Hire people whose strengths bolster your weaknesses. Hire people who do things differently than you, who challenge your thinking, who push your buttons, who make you question your decisions. And listen to them. Surprising as it may seem at times, you do not have all the answers. The input of others—people who are not like you—can make you a better in business, a stronger leader, and often, a better person.

When you surround yourself with people like you, you will get a company built in your image. And as enticing as this might sound, it will likely limit your ability to achieve those business goals to which you aspire. Don't give in to the desire to hire people like you.

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Reference

Wasserman, N. (2012). The Founder's Dilemma. Princeton: Princeton University Press.

 

Photo by Andrew Wulf on Unsplash

David Harkins is a serial entrepreneur with significant experience in branding, strategy, licensing and marketing.

In his spare time, he consults, coaches, speaks, writes, hikes, explores, and creates art. Although, not necessarily in that order.

Connect with him on social media below:

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The Entrepreneur and the Sunk Cost Fallacy

May 25, 2018 Change, Entrepreneurship Comments (0) 359

If you’re an entrepreneur and you’re not familiar with the term “sunk costs” you may have a problem.

A “sunk cost” is any past cost for something that you’ll not be able to recover. Typically, sunk costs are not included when making forward-looking decisions because those costs will remain the same regardless of what you may choose to do. In manufacturing, for example, a sunk cost might be the cost of equipment because it is a cost that has been incurred which will remain constant regardless of whether that equipment produces any product.

Think of it this way: It’s money you needed to spend that you’ll never get back.

The problem for most of us is that our forward-looking decisions become too tied to those sunk costs. We often become emotionally invested and the more investment we make, the harder it becomes to divest ourselves from those costs. In these situations, it is difficult to consider the pros and cons objectively. Instead, we try to recoup sunk costs, which makes us do irrational things.

Researchers Hal Arkes and Catherine Blumer argue that when we continue a behavior or work because of our previous investments of time, money, or effort, we fall victim to what has become known as the sunk cost fallacy (Arkes & Blumer, 1985). We place such a high value—either monetarily or emotionally—on those investments that we irrationally behave when faced with a decision that devalues those prior investments. Moreover, we look for ways to justify our choice rather than accepting the sunk costs as what they are—money we can never recoup.

Let’s look at it a more personal way.

Say you bought a quart of your favorite yogurt at the grocery store. It’s been in the fridge for a few weeks unopened, and putting away the dinner leftovers you spot it and realize that yesterday’s date is the “use by” date on the package. Concerned that it will spoil, you open and eat as much of the yogurt as you can—maybe even all of it—even though you’ve already had dinner because you’d rather do that than “waste your money” on food that will spoil.

The money for the yogurt was gone several weeks ago. You’re not going to get it back. But you’re emotionally invested with your favorite yogurt and your money. So, you chose to load up on the yogurt, which you didn’t enjoy as much this time. You only felt bloated and uncomfortable in the end. You made a decision that left you uncomfortable because of your emotional tie to money and your yogurt.

Make sense?

Consider another example. If you’re an artist, you invest a lot of time and energy in creating art. You might even have an MFA, so you have those education costs and maybe student loans to pay back. The time and energy to earn the degree, and the cost of your education are sunk costs. You will never get that time, energy, or money back. And still, you may be inclined to factor all those costs into the sales price of the art you create because you’re emotionally invested in those costs. But in doing so, your art rarely sells, or sells very slowly, because trying to recover the sunk costs will likely price your work out of range for your market. What you should really be doing is setting the price for the art based on the current market value of the art and perhaps the incremental costs to create it—paint, brushes, canvas—rather than all of the costs—sunk and incremental—you have invested in the artwork.

It.’s important to remember that sunk costs can occur in any situation where what is invested cannot be recovered in any way. Sunk costs can be the 30 years we spent in an industry that has since evolved beyond our experience, skills, and perhaps relevancy, for example.  Or trying to prove you are right about something when being right doesn’t matter. Maybe even ending a partnership that has long outlived its usefulness to all parties, but you keep hoping things will improve. Or maybe, doing everything you can to save a failing business because you’ve invested so much in it, hoping that things will turn the corner if you don’t quit. Those decisions are all based on the sunk cost fallacy and will become one of the causes of failure.

Making decisions about the future by basing them on backward-looking decisions of investments time, money, or effort, do not move the business forward. And many of us are guilty of spending too much time in the past for fear of wasting our investments. Psychologist Robert Leahy suggests that human beings fundamentally hate the idea of wasting anything. We have a desire to prove we’re right, we fear regret, we don’t want to feel bad, and we are unable to anticipate the positive side of giving up on the past or how others may view us if we chose to give up (Leahy, 2014).  I would argue that for entrepreneurs, this is all about overcoming the social stigma of failure, a risk that every entrepreneur faces when he or she steps into the ring.

No one likes to fail. But it takes many entrepreneurs a long time to admit that they are failing, or have failed, especially if that failure is not public. Even in the midst of a failing business, many entrepreneurs don’t seek the help they may need, often for fear of judgment. Failure suggests you didn’t do your homework—you misjudged the market, the opportunity, the customers. Perhaps it suggests you didn’t manage your budget well, or couldn’t keep your employees motivated. Those things could be true, but it is just as likely that you have been—conciously or not—making forward-looking decisions that factor in your sunk costs. And putting sunk costs in proper perspective can make all the difference between swimming with the sharks, or being eaten alive.

References

Arkes, H. R., & Blumer, C. (1985). The psychology of sunk costs. Organizational Behavior and Human Decision Processes, 35, 124-140. Retrieved May 24, 2018, from https://pdfs.semanticscholar.org/e456/4b88ca2349962a707b76be4c75076ad6bd43.pdf

Leahy, R. (2014, September 09). Letting Go of Sunk Costs. Retrieved May 24, 2018, from psychologytoday.com: https://www.psychologytoday.com/us/blog/anxiety-files/201409/letting-go-sunk-costs

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Image source:  GEORGE DESIPRIS from Pexels

David Harkins is a serial entrepreneur with significant experience in branding, strategy, licensing and marketing.

In his spare time, he consults, coaches, speaks, writes, hikes, explores, and creates art. Although, not necessarily in that order.

Connect with him on social media below:

Continue Reading