Edwin Nyanducha

In this article published in the Africa Growth Agenda Magazine www.africagrowth.com, Mr Edwin Nyanducha, a Principal Consultant at Strathmore Research and Consultancy Centre (SRCC) tackles the age-old  question: Are entrepreneurs born or bred? And much more

INTRODUCTION

Capacity building is one of those terms associated with NGO training programs that don't seem to head anywhere. Trainees are taught basic skills and some business principles etc but generally, the effort comes to naught. So you ask the question, what makes this paper any different? Read on.

For starters, if carrying out capacity building, should focus be on the institution or the personnel? Is a hospital the structure or the doctors? This is the chicken and egg question. Whereas the structure for treating the patients is critical, it would be useless without adequate training of the men and women who discharge the treatment (more importantly, you may develop acute phobia if you had any doubts as to the abilities of the aforementioned staff).
Similarly, entrepreneurship cannot be successfully developed only by the setting up of the required infrastructure like venture capital funds, incubators etc: people must also be trained to take up the required roles.

CAN ENTREPRENEURSHIP BE TAUGHT?

"Untilled ground, however fertile, will bring forth thistles and thorns. So will the mind of man".
 Spanish saying

"If you take a stone and an egg and let a hen brood over them, with time, the egg will hatch but the stone will remain a stone."
Ghanian proverb.

The above cuts at the crux of entrepreneurship: is it a function of nature or nurture or both? My view is that it is a function of both but in varying proportions. Give two people 1 million dollars and let them go out into the business world for 5 years. The results will be mixed. Some people are blessed with tonnes of business acumen. Given a chance, these get on the fast lane to the land of billionaires. Other people have a bit of entrepreneurship in their blood but require to learn how business works through observing many operations. In the fullness of time with the necessary injection of capital these will slowly but surely grow their wealth.

Then there are others that no matter how much training that is conducted and no matter how much money is given to them, they will just never turn the caterpillar into a butterfly. Education comes from the Latin term 'educare' which means to draw out. In this sense, the essence of building capacity in entrepreneurship is to identify individuals with the latent entrepreneurial talent and then guide them in the right direction. Of this school of thought is Stephen Spinelli, director of Babson's Arthur M. Blank Center for Entrepreneurship. "Entrepreneurship can be taught. But I'm not sure it can always be learned. There are processes to entrepreneurship that we teach, but does that create a prescription for entrepreneurship? No. There are millions of variables, and they're too dynamic for us, at least in our present state of understanding, to be able to prescribe success. But can we teach students enough to push up the odds of success? I think so."

In the final analysis, the fact that not everyone can learn entrepreneurship does not mean that it should not be taught. Rather, we should target as many of those who are 'entrepreneurship material' and then direct them on the path to improving their odds at succeeding in the entrepreneurship game.

THE ROLE OF BUSINESS SCHOOLS

Universities exist for the betterment of society by the generation, extension and application of knowledge. Business schools are no exception. This therefore means that the responsibility for development of curriculum, creation of ideal circumstances, nurturing talent and by extension increasing the material wealth of society rests in large part with universities.

HOW SHOULD ENTREPRENEURSHIP BE TAUGHT?

Given the inherent subjectivities of entrepreneurship, nonetheless, my views as to how it should rest on four main pillars:

• What should be taught
• How it should be taught
• Who should teach it
• Who should be taught

What should be taught?

My essay will assume that courses such as financial accounting, costing, taxation, basic law, organizational structures etc are sufficiently known to the would be entrepreneur being targeted.

1. Market Surveys – Warren Buffet has always stated "If something is not worth doing at all, it is not worth doing well." Entrepreneurship is part capitalizing on untapped markets and part keeping up great spirits in often difficult times when everything seems to be going wrong. Knowing the subtle difference makes all the difference in the world because some people interpret bad results as a temporary setback and redoubling of efforts and patience will solve the problem. But in other instances, it is just that the area the entrepreneur is venturing into simply has no potential and is a total waste of time. Market surveys can play a big part in winnowing the grain from the chaff.

1. Financing structures – I once read that 90% of ventures started fold within 2 years of formation. In places like the US where risk taking is encouraged and failure is not scoffed at especially when there was heroic effort behind it, elaborate financing structures for venture capital have developed over time. In comparison, Sub Saharan Africa peoples generally lack such risk taking culture and failure is by and large laughed at, sometimes loudly. It is therefore no surprise that the bulk of financing for investment in the region is obtained from bank debt which is wholly unsuitable for venture capital as at the first sign of trouble, which is when the entrepreneur needs extra injection of cash the most, the bank will decide to cut its losses and pull the plug.

1. Legends - Legends are larger than life figures who have accomplished some heroic deeds. Their deeds are recorded and recounted in great detail in an effort to raise a society to emulate their virtues or to do acts of great feat which are badly needed. But as has been charged before, the stories of legends are at times exaggerated but nonetheless, society keeps them circulating. Why? From the web page http://www.brownielocks.com/folklore.html, I came across the following narration: "Some educators feel that we need legends (and to keep creating them) because we as humans need to feel we can always attain a more higher goal than where we are. And if we are told that someone else has achieved something great, that means we can too! … I often imagine back in the days in 1500 when Christopher Columbus and his crew were setting off in a squeaky wooden boat to go conquer new lands. Once you set sail, you were at the mercy of the ocean, disease etc. And once you got to the land you set out for, there were savage natives who could tear you apart: all this was in the name of searching for gold and riches. These men undertook great risks but the increase in land and wealth that they brought was of such immense value that they had to be immortalised. America has excelled in legend creation. Since the days of the Pilgrim Fathers, it has always been in dire need of legends. The story of David Crockette conquering the wild, wild, west was one such story when land supply was quickly diminishing and new immigrants kept flocking in. The computer revolution saw America immortalizing the campus drop out marching on to making millions or the high school kid with the computer in the garage solving some problem of industry. The results, needless to say, have been spectacular. But more importantly, America has always lionized its business heroes at times even referring to them with such a grand term as captains of industry. The unfortunate incidences of Enron should not deflect us from the general good done by their past efforts.

1. Managing success – It has often been noted that the entrepreneur with the ability of founding businesses often turns out to be very poor at managing success. Most of the time, entrepreneurs tend to be intelligent, domineering, opinionated eccentrics who can wither the criticism and dark days of the founding of a venture. But having become successful, what is required are people with experience in managing large businesses.

How Should  entrepreneurship be Taught

There are many different ways of skinning a cat, but in my view, considerable success can be attained if entrepreneurship is taught via the following methods:

a. Case studies – Most people, myself included, were educated in the classic classroom style of lecture and problem review. This approach was, and still is extremely effective given a specific set of objectives: the understanding of a preferred or generally accepted set of principles and an understanding of how to apply those principles. This seems to be most clearly associated with beginning courses. It is only at the advanced level of studies that the focus of the educational process moves from one of conceptualization and preparation to one of analysis and utilization. When the focus of learning shifts in this way, it is unclear if the classic lecture/problem solving approach is effective. It has been the experience of many educators that the effectiveness of a teaching method is a function of the educational objectives: the lecture approach is extremely successful with beginner students particularly because of their need to avoid as much uncertainty as possible. At the advanced level, however, the case method is the more appropriate approach as students have to question the way things are done and for decisions taken, they have to be ready to defend such courses of action. Entrepreneurship is an advanced level course and the emphasis of many successful business schools in utilising them simply goes to validate the point.

b. Guest speakers – There is a world of a difference between saying I have a toothache and he has a toothache. It will make a world of a difference if as part of the course, successful entrepreneurs are brought in so that aspiring entrepreneurs can get it straight from the horse's mouth.

c. Business plans – The ultimate way the entrepreneur gets to learn is via putting together a business plan. Literally, in the business plan, the rubber meets the road: this is where concepts and hypotheses are credibly interrelated to cash. I have often heard that if you analyse too much, the entrepreneur will loose steam and riches would have gone down the drain. Whereas I believe that view is valid in some instances, many times asking a few questions before putting the firewood in the fire is useful. A business plan does not guarantee that the revenue projections indicated will be met. Rather, it provides a vessel in which ones thoughts can be aggregated into and then analysed and critiqued by those with experience. Even for the entrepreneur who despises analytics, take him/her through the process of a business plan and they will be very glad that they undertook the process as its real value lies in aiding one to better understand their business in great detail and the implications of say, not being able to hit certain revenue numbers, costs spiralling out of control or financing from a certain quarter being refused.

Who should teach entrepreneurship?

• Professors with some practical business experience – professors would still be important as they will transmit broad based theories that are founded on unchanging, tried and tested principles in certain industries
• Guest lectures by venture capitalists – As indicated earlier, it makes a great difference if some aspects of the difficulties of founding a venture, raising finance etc are presented to students by a successful entrepreneur as it forms a useful learning experience
• Video interviews – Some entrepreneurs become successful that getting them to give guest lectures becomes very difficult. In these instances, video interviews that they give will still make a useful contribution.
• Students – Most business school classes comprise of individuals with 4 or so years of working experience and normally emanate from diverse backgrounds. The learning that the students can impart on each other will also be of immense value.

Who should be taught be entrepreneurship?

Entrepreneurship is ideally a post graduate course that should be targeted at intelligent, motivated and results oriented individuals with 4 or so years work experience. Such individuals will normally have the right raw material from which to 'educare' the entrepreneur. Also having worked for some time and demonstrated results, such individuals will be eager to prove to their colleagues who remain in stable employment that they did not make a mistake in
breaking out to form a venture of their own. They will also have the sort of tolerance and maturity that is required to form a successful business and hopefully run it professionally.

CONCLUSION

As things stand today, most of the successful businesses in Sub Saharan Africa are family owned entities and multinationals. Most state owned enterprises have been privatised which has led to the often mentioned comment of "the missing middle" which refers to small and medium enterprises. Capacity building for entrepreneurship is something that is badly required and should be implemented immediately. The definition of investment in Sub Saharan Africa lies in building rental houses and buildings. This is borne out by statistics published by the Kenyan Retirement Benefits Authority where property still accounts for a significant portion of the investments of pension funds. Real estate could a safe and stable investment and perhaps explaining the concentration. But when you put up a structure, the contractor, sub contractors and his labourers will get some money to spend and the economy feels some small ripple effect. Thereafter, isn't it only the landlord who will be benefiting from the investment? Supposing the same structure had been converted into a high end tourist destination, highly skilled managers will have jobs, cooks will have jobs, watchmen, porters, cleaners etc. Clearly, a rethink of the allocation of resources is required.

The current state of affairs in Sub Saharan Africa is that agriculture in most instances still accounts for over 30% of GDP. Entrepreneurship is a vital avenue through which the economies can grow and diversify their bases. Business heroes are in very short supply. Those that exist like Bill Gates or John D Rockefeller or J.P. Morgan cannot be easily identified with. The slot of legends has mostly been occupied by liberators of colonialism. It is high time a fair share of them came from business.

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