Entrepreneurship, Edición 48

Towards Entrepreneurial Education

Opciones de Financiamiento Gubernamental en MéxicoBy: Gabriela N. Góngora
Departamento Académico de Computación

Mexico’s economy is “efficiency based”1 while countries such as U.S., U.K., Japan, Germany, Norway, amongst others, have economies “based on innovation”.

Mexico’s economy is “efficiency based”1 while countries such as U.S., U.K., Japan, Germany, Norway, amongst others, have economies “based on innovation”. What does this mean? For example, entrepreneurs in the U.S. have larger and diversified markets, as well as income sources to start new businesses, thereby propitiating entrepreneurial activity and competition within their economy. This actually gives the impression that starting companies have a rough time, but in the long-run competition translates into a broader field of options for consumers, ranging from prices, quality and product diversity, all of which conform stronger economies and better environments for innovation to arise. Mexico is far behind in this process. Even though it has a more advanced economy, than countries with basic-needs economies, and is heading towards services and innovation based economies, we can say it is half-way along the correct path.

In GEM’s2 2013 report, 54.6% of the mexican population (aged 18-64) asserted to have opportunities for entrepreneurship, and 58.5% perceived they had the abilities to do so. Sadly, 31.6% had fear of failure, which impacts in a 16.9% that actually had entrepreneurial intentions. In real terms, Mexico has a 11.9 rate of nascent entrepreneurship, while a 3.3 new business ownership rate and a 4.2 established business ownership rate. So…what are we, in Mexico, doing wrong? Is it cultural? Is our economy that is not strong enough? Is our government not providing the right means for innovation? Is there a deficit in education? Well, it is actually a combination of these factors, but we can pin-point the extremes to get a better glance at the problem.

According to GEM’s3 key entrepreneurial framework conditions, Mexico is severely lacking entrepreneurship education, specially at a basic school level, and not so much in higher education. On the other hand, Mexico’s best indicator is in physical infrastructure, having access to resources, communication, transportation and land, i.e. we have the goods but need to know more about how to use them properly, to innovate with them and appease new businesses.

One renowned educational institution, ITAM, has decided to join this road towards improved entrepreneurial education in Mexico, and as of the 8th of october 2013 it inaugurated its Center for Innovation and Entrepreneurship, by hosting a prominent entrepreneur, Bill Aulet, Director at Martin Trust Center for MIT Entrepreneurship. Mr. Aulet is also professor at MIT Sloan School of Management, and has more than 25 years of experience as an entrepreneur, previously being president and CEO of Cambridge Decision Dynamics and SensAble Technologies, MIT spin-outs, where he raised more than 100 million dollars.

Fernando Lelo de Larrea, academic and entrepreneur, spoke prior to Bill Aulet, as an introduction to ITAM’s initiative. He began by stating that “It has never been easier to start a company, its never been harder to build a business” (quoting Don Lodge, from Google Ventures). It has become harder due to all the challenges posed by technology, finance and the market dynamics. Nevertheless, ITAM can raise the leaders necessary to face these challenges and create the businesses that can provide new conditions for consumers, instead of small, basic businesses. Resources are becoming easier to obtain each time, and ITAM comes into the game with a serious proposal, with strength, strategy and the superb formation that it gives to every single one of it’s students. For this to become entirely true, it is up to its alumni to seize this knowledge and resources that ITAM has provided for them.

________

  1.  Previous and modified version of this article appeared on holaMundo magazine, ITAM, December 2013.
  2. Computer Science Master student, ITAM.
  3.  Amorós, J. E., Bosma, N. (2014).“Global Entrepreneurship Monitor, 2013 Global Report”. Global Entrepreneurship Research Association, pp 10.
  4. Idem, pp 26-30.
  5. Idem, pp 46-49.

But what exactly is “entrepreneurship”? Bill Aulet described it as being analogous to running experiments, a process of trail, error and adjustment in order to succeed in selling a product. So, entrepreneurship can be taught? Yes, indeed. Bill Aulet is certain that entrepreneurship can be taught, and that is what he does at MIT. Entrepreneurship cannot be taught by sitting down or looking at a keyboard all day long, entrepreneurship comes from research, training in the real world, getting experience and understanding the world that surrounds us. Therefore, one can only get better at being an entrepreneur by trying repeatedly. Some people might get it naturally, as it always happens there are people who are born naturals at dancing, or at handling a computer or constructing objects, but it is up to each person to excel their own potential through repetition and education.

Bill asked the audience “why do people want to be entrepreneurs?”. The first answer was “because i want to be my own boss”. Surely, independence is a very attractive aspect, but a misleading one. Being one’s own boss, as Bill pointed out, is not easy and is partly untrue, because one ends up working for the customers (who ultimately buy the product and sustain one’s business), for a board of directors and even sometimes for investors.

How about “I want to work my own hours”? That is also a typical response as to why someone would like to be an entrepreneur. Bill assured that any entrepreneur will work its own hours, “all of them”, truth be told. Being an entrepreneur is not the easy way out and it is certainly not the least time consuming. So, why would anyone really want to be an entrepreneur? Bill singled out that entrepreneurs do not have to go interview for a job, they create their own job and a much better one because they can change the world the way they want and how they want to. One gets the chance to impact on the world, to innovate, to seek opportunities where others have not dared to look or exploit. Quoting Bill, “Nothing will test your skills more than to be an entrepreneur”.

Bill defined two basic types of entrepreneurship: SME and IDE. SME stands for Small and Medium Enterprise Entrepreneurship, meaning, small companies that will stay small, addressing the local market and providing a service to them, as would a pizza shop, beauty salon, amongst others. On the other hand, IDE stands for Innovation Driven Enterprise Entrepreneurship, and this is the one we should all have in mind at ITAM. IDE attacks the global market with innovation and taking higher risks, but in the long run creating skyrocketing revenues. For this to happen entrepreneurship has to be taught at scale i.e. universities need to provide the skills, resources and education necessary for students, thereby encouraging them to go build their own companies.

An important aspect of this necessity is that universities need to provide this education based on facts and not on stories. It is not enough to come in and tell students all the great stories about being an entrepreneur if the proper tools are not at their disposal. How does Bill Aulet suggest we should scale entrepreneurial education? By a very simple principle. He says that people should have “the fearless spirit of a pirate with the execution skills of a Navy Seal”. Schools are the optimal environment to eradicate fears and enter the entrepreneurship world, as they provide students with a support structure, the opportunity of finding their teams, of choosing their tools and pulling everything together.

“Focus on paying customers”, Bill mentioned, where he defines 24 steps, based on 6 themes, towards becoming a successful entrepreneur. They are not be taken as an equation or algorithm but if followed will certainly improve the odds of success in the entrepreneurial world.

The first theme is “who is your customer?”. To begin with, one needs to think of a paying customer, analyze who cares about the project, otherwise the product is a science project and not a business. After that, “what can you do for your customer?”. A product needs to be specified, the value of its proposition, never forgetting the care for the customer at hand. Next is “how does your customer acquire your product?”. A lot of effort and time in decision making has to be put in to knowing how to sell a product and acquire a paying customer. The third theme is “how do you make money off you product?”. How to calculate the marginal cost of a customer? By researching the particular market and selecting the correct pricing framework for it. After that, “how do you design and build your product?”. At this stage of the process the building of a product begins, in a very efficient way. Finally, the sixth theme is “how do you scale your business?”, i.e. have a plan for the product, in the long and short term.

What we can conclude from Bill Aulet’s conference is, first and foremost, fear of failure has to be eradicated, quoting him, every entrepreneur should have “the fearless spirit of a pirate with the execution skills of a Navy Seal”. After having the spirit, the correct environment and circumstances have to be propitiated i.e. getting education, and with it fear is lost, creativity is excelled and entrepreneurship can be further achieved.

Heading towards the correct path, mexican government has also ensured new international agreements that encourage entrepreneurial activity, as well as the formation of the National Institute of Entrepreneurs (INADEM). Efforts are in place towards creating laws that facilitate resources and conditions for new entrepreneurs to emerge. New financing channels are being provided, but work is still to be done when it comes to universities that are able to provide adequate education (orientation and quality) for the creation of new businesses, and their growth. Everyone has to put their own grain of sand for Mexico’s entrepreneurial education to change, but opportunities like ITAM’s Center for Innovation and Entrepreneurship, are more like a a bucket of sand. We have the sufficient resources to start shaping a better economy for Mexico and a more exciting future for the people, if we all learn to use the resources handed, learn to be fearless and seize the educational opportunities that help us handle the tools already in place for us.

References

  • Disciplined Entrepreneurship, disciplinedentrepreneurship.com, consulted: 9th october 2013.
  • Amorós, J. E., Bosma, N. (2014).“Global Entrepreneurship Monitor, 2013 Global Report”. Global Entrepreneurship Research Association.
  • “Entrepreneurship at a Glance 2013”. (2013). OECD.

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