01 Feb 1997
Made, Not Born: HBS Courses and Entrepreneurial ManagementTopics:
Course descriptions by Elaine Gottlieb, Judith A. Ross, and John Simon (sidebars by Elaine Gottlieb)
Whether they come to HBS with a business plan in mind or become entrepreneurially inclined later in their careers, students who take HBS elective courses in entrepreneurship develop invaluable skills, as HBS faculty and recent alumni explain in the following course profiles.
Associate Professor Amar Bhide keeps a slide rule tacked above his office desk. "Although I don't use it anymore," he explains, "it taught me an intuitive feel for numbers." Like the slide rule, Bhide's Entrepreneurial Management course gives his students a feel for the skills they will need as entrepreneurs.
The course, first offered in 1983 and currently taught by Bhide and Assistant Professor Myra Maloney Hart, focuses on three main concepts: evaluating opportunities, securing resources, and growing and sustaining the enterprise. "We can't teach people how to come up with ideas, but we can teach them how to analyze ideas already available to them," he explains. "We also teach that entrepreneurs must react quickly not only to new opportunities but also to inadequate or low-quality resources."
Michael P. Cassidy (MBA '91), general manager of the Computer Telephony Product Group at Artisoft, Inc., a maker of tools that connect phones to computers, took these lessons to heart when he created his own company, Stylus Innovations, Inc., while taking Bhide's class. "We spent a lot of time in class discussing how to structure deals and leverage resources you don't actually have - both key issues when we started Stylus," he says.
"My goal," Bhide explains, "is to help students make smarter choices about the businesses they start."
Entrepreneurship, Creativity, and Organization
"Creativity," explains MBA Class of 1954 Professor Teresa Amabile, "is not just for the arts - it is possible and desirable in any activity." In her course Entrepreneurship, Creativity, and Organization, Amabile aims to expand students' notions of management and creativity by exploring concepts such as sustaining creativity on the job, entrepreneurial thinking in established organizations, and the link between individual creativity and organizational innovation.
While the course outlines the components necessary for individual creativity and suggests specific techniques that students can use to recognize and foster creativity in themselves and others, Amabile maintains, "I'm not trying to teach people to be creative, though sometimes it is a by-product of my course. Rather, I help students to sustain their own creativity in the work environments they choose or to support others' creativity in the organizations they lead. "
Fostering creativity in others is what former student Jeffrey H. Flemings (MBA '96) does for a living. Flemings, associate director of the Consumer Insight Group at Arnold Communications, a regional advertising agency in Boston, says the concepts discussed in Amabile's classroom help him to walk the fine line between guiding his company's creative team down the path recommended by market research and stifling their creativity by giving too much direction. "What Professor Amabile's research tells us about stimulating creativity is correct," he observes. "The more you try to dictate, the harder it is to inspire creative work."
Since 1985, when the Entrepreneurial Finance elective was first introduced by William Sahlman, Dimitri V. d'Arbeloff-MBA Class of 1955 Professor of Business Administration, the course has explored a range of topics including financing new ventures, deal structuring, valuation, initial public offerings, leveraged buyouts, and financial distress. "Entrepreneurial Finance looks at the acquisition and deployment of resources at each stage of the entrepreneurial process - from startup to harvest - in order to clarify the characteristics of successful investment and financing decisions," says Sahlman, who has taught the course for the past eleven years. "The goal in the course," he adds, "is to provide students with an accelerated dose of experience that will be valuable throughout their careers."
"One of the most important things Bill taught is that the source of your funding is often more important than the terms and conditions of the agreement," says James A. Goldstein (MBA '94), founder and sales and marketing vice president of PureSpeech, a Cambridge, MassachusettsÐbased company that specializes in speech recognition software. "That's proven true for our company time and time again. We decided to raise money from a prominent computer maker because of the credibility and opportunities such an association would provide, rather than going with a less sophisticated investor who could provide us only with high valuation."
Entrepreneurial Finance is currently taught by Professors Howard Stevenson and Jay Light, and Senior Lecturers Joe Lassiter and Ed Zschau.
Entrepreneurship in the Social Sector
Funding cutbacks, diminished government support, and the drive toward privatization are causing social enterprises to emulate business methods. At the same time, the social, business, and government sectors are converging to solve social problems. Entrepreneurship in the Social Sector (ESS) looks at the exciting entrepreneurial opportunities that are emerging as a result of this confluence.
"For managers, working in the social sector can be more exciting than managing a business - your influence as a force for entrepreneurial change can make an impact beyond your organization," notes Associate Professor J. Gregory Dees, who designed the course and teaches it, along with James E. Austin, the John G. McLean Professor of Business Administration, as the main curriculum anchor for the School's Initiative on Social Enterprise.
In ESS, case studies on nonprofit, for-profit, and hybrid entities are the foundation for learning about finance, managing growth, and forming alliances. Students take part in "living cases," where they work with an active social entrepreneur. The course concludes with an exploration of the role of business leaders on nonprofit boards.
Offered three times since the spring 1995 semester, the course has received high marks from students. "It's a practical course for managers of all kinds of organizations," says Martin W. ("Marty") Rodgers (HBS '97). "There's a lot to be learned from nonprofits, particularly how to align your company's mission with its values."
"Many MBA students have probably overlearned how to be prudent in making business decisions," observes Lecturer Thomas J. Kosnik, who teaches Entrepreneurial Marketing. "Entrepreneurial Marketing encourages students to embrace analysis and logic while remaining open to the experience of creativity, commitment, passion, and altruism that can complement or even transcend rational thinking."
The course, which debuted in 1995, is designed to optimize the marketing efforts of entrepreneurs, who typically lack the time and resources for conventional marketing activity. The course is organized around four themes: choosing a portfolio of market opportunities and customers; selecting the right entrepreneurial marketing path; getting from the early stage to the mainstream in the market life cycle; and executing effective sales and marketing strategy in a dynamic environment.
Former student Patricia E. Baumhart (MBA '96), who now works in marketing for Silicon Graphics, recalls that her Entrepreneurial Marketing classmates included cross-registrants from Harvard's schools of education and government as well as students from Stanford's School of Engineering Management. All of these students were taught many cases concurrently and shared one class via videoconference hookup. Recalls Baumhart, "We were encouraged to leverage what we were learning from classmates, from guest experts, and from other MBA courses. I also made numerous contacts with individuals who share my interests in nonprofit work and in technology applications that stimulate childhood learning."
Adds Kosnik, "Sharing the learning process with these students reminds me there's no work I'd rather do more."
Real Property Asset Management
William Poorvu, the School's MBA Class of 1961 Adjunct Professor in Entrepreneurship, says that his goal in teaching Real Property Asset Management is to show students as many components of the industry as possible, as well as the management and entrepreneurial skills required to be effective in this field. "We cover everything from small-scale startups on Beacon Hill or Moscow to large-scale development in Mexico City or China," he notes.
The course walks students through the operational side of evaluating and owning real estate, discussing issues such as marketing, financial management, design, and construction. "It gives students who have no experience in this field a thorough understanding of the underpinnings of the industry," says Leonard M. Harlan (MBA '61, DBA '65), president of Castle Harlan, Inc., who has been a guest lecturer in Poorvu's class several times over the years.
Part of this understanding is learning how to make deals in a fragmented industry where nonstandard pricing is the norm and every property is different and where the financial markets are nonetheless looking to large-scale securitization. "I put considerable focus on negotiation and the decision-making process," explains Poorvu.
Also crucial, says Poorvu, are the links between the numbers on paper and the actual property. "If my students find they need to cut the cost of a building by 10 percent in order to make the numbers work, they need to understand what has been given up. I'd like them to be better at visualizing the impact of what is being created and its effect on the user and the environment. In a heavily regulated industry, there are many communities that must be satisfied."
Venture Capital and Private Equity
The pool of U.S. private-equity funds has grown on the order of 2,500 percent in the past decade-and-a-half. Venture Capital and Private Equity (VCPE), a course taught since 1993, focuses on firms that specialize in venture capital, leveraged buyouts, mezzanine investments, buildups, and distressed debt. VCPE is designed to be useful not only to individuals whose eventual careers will demand expertise in markets, deal-structuring, and investing but also to future entrepreneurs.
Associate Professor Josh Lerner, who teaches VCPE, maintains a strong financial orientation in the course, because he believes that the valuation of young growth companies - a complex issue often skirted in entrepreneurial education - is even more important when it involves the uncertainty and information asymmetries that tend to characterize such companies. Two other aspects of the course - its emphasis on understanding institutional features and its frequent comparison of both theoretical and practical perspectives - are also critical, Lerner notes.
Course alumnus Kevin M. Hayes (MBA '96), who currently works for Boston-based Weston Presidio Capital, a later-stage venture-capital firm, recalls, "There was a good mix of cases, both domestic and international, addressing the different investment philosophies of venture-capital firms according to their positioning, niche, and expertise. VCPE especially helped me and other students learn how to apply discipline to the inexact science of valuing private enterprises."
Running and Growing the Small Company
The dramatic beginnings of entrepreneurial businesses have been much discussed in the media and business world. But the next stage of the process - the transition from startup to successful small company - has often been overlooked. H. Kent Bowen, William Barclay Harding Professor of Business Administration, developed the new elective course Running and Growing the Small Company to fill this gap.
In a recent informal survey, more than half of current MBA students expressed an interest in working for a small company, attracted by opportunities for advancement and the opportunity to be involved in all areas of a business. Bowen's new course helps students prepare for small-business management by taking a nuts-and-bolts approach to topics such as handling cash flow, husbanding resources, and hiring and motivating staff.
"Small companies are so vulnerable," notes Bowen. "The margin of error is very narrow. Dealing effectively with these operational issues is a matter of survival."
Many of the cases in the course focus on the problems of companies based in the New England area. Some of the case protagonists are HBS graduates who will visit the class to discuss their companies' current issues. "The small company provides a perfect framework for integrating functional knowledge and experience," Bowen says. "Students can see the interrelationship between accounting, operations, human resources, and customer and product development. The context is small enough to understand the entire organization."
In addition to the faculty members who teach courses in entrepreneurship described above, several other members of the faculty are affiliated with the unit. They include: Professor Louis B. Barnes, who teaches in the Owner/President Management Program (OPM); Professor Norman A. Berg, chairman of OPM; Assistant Professor M. Diane Burton, who teaches the first-year course Leadership and Organizational Behavior; Senior Lecturer John Davis, who is developing course materials in family business; Assistant Professor Paul A. Gompers, who teaches first-year Finance; Assistant Professor Walter Kuemmerle, who teaches first-year Technology and Operations Management; and Associate Professor John J. Sviokla and Assistant Professor Jeffrey F. Rayport, who teach the elective Managing in the Marketspace.
Taking to the Field
When Cornell P. ("Buck") French (MBA '96) entered HBS, he wasn't just fantasizing about being an entrepreneur - he had a startup business already mapped out. After spending three semesters connecting his idea to his coursework, he was ready for the practical experience of the Entrepreneurial Management Field Studies (EMFS) course. The case studies, he notes, were valuable. "Having the opportunity to work through the actual issues involved in starting a business gave me a whole new perspective," he says.
The Entrepreneurial Management Field Studies course enables students to apply midlevel theory to the operational issues of a new enterprise. "Students learn to frame research and analyze difficult questions that entrepreneurs face in the course of starting a business," says Associate Professor Amar Bhide, the EMFS faculty coordinator. While a small number of students over the years have started businesses based on EMFS projects, that outcome, Bhide emphasizes, is an occasional by-product of the course but not its goal.
During their project work, students develop some of the skills they will need to be entrepreneurs, such as working with a team and making key decisions based on limited information. For French, now president of Westport, ConnecticutÐ based On-Link Corporation, a maker of electronic catalogs for online and Internet services, the program's most valuable component was working closely with a faculty member. "Howard Stevenson was my sounding board," says French. "He helped my partner and me work out the details and brought up issues that never would have occurred to us. We're a better company now for that experience."
Most EMFS projects are student-initiated, providing a special opportunity for students to focus on what interests them. As part of their projects, they can evaluate new business ideas, prepare business plans, or consult with existing entrepreneurial businesses. One team of students, for example, worked with a fast-growing biotechnology company in 1995 to find ways to maintain its entrepreneurial culture. "This is the sort of learning we could never replicate in class," says Bhide.
Calling All Business Planners!
Whether they submit the top entry or not, all participants in the first annual HBS Business Plan Contest will profit. The School has put its stamp of approval on this much talked-about MBA event, because it views the contest as an in-depth learning experience. "We designed the contest to integrate many aspects of what we've learned in business school - writing a business plan makes all the subjects we study come alive," says David Rosenblatt (HBS '97), the contest's cochair and copresident of the Small Business & Entrepreneurship Club, which is sponsoring the event along with the Entrepreneurial Management faculty and MBA Career Services.
The contest, which is open to second-year students only, began in September with a Harvard Entrepreneurial Learning Program (HELP) seminar series, chaired by faculty and professionals. "One of the School's greatest assets is its alumni and business relationships," says contest cochair Jennifer Scott (HBS '97). "We wanted to encourage their involvement in the educational process."
Students whose proposals are accepted for the competition must develop their plans in an elective course or field study. They will also work closely with a faculty member. Many if not most HBS students will start a new venture someday, say Professor William Sahlman and Senior Lecturer Joe Lassiter, faculty advisors for the contest. "We hope that what they've learned from the seminar series and the contest will help them be more successful."
The plans will be judged by venture capitalists, entrepreneurs, and business professionals on the basis of their commercial viability. The prizes of $20,000 for the winner and $10,000 each for the three runners-up will consist of cash awards and in-kind services from businesses such as law and accounting firms (for example, Arthur Andersen and Foley, Hoag & Eliot). Winners who decide to implement their ideas will be able to draw on these resources to help them get started. The distinction of winning the contest will bring them the visibility that Sahlman and Lassiter believe "will make a real difference" in their business prospects.