MARCELLA MOOHAN

Prof. Julia Prats, the head of the school’s Department of Entrepreneurship, describes an exercise in the entrepreneurship module of the Executive MBA. Entrepreneur program participants are asked to explain why they define themselves as entrepreneurs to their classmates. Then the class watches a short 1970s film about an entrepreneur who launches a company in the automotive industry.
Afterward, the participants are asked to compare the film’s protagonist with the entrepreneurs in their group. Do their personalities match? Are there characteristics in common? They quickly realize that there is no common profile: some are shy, others are outgoing. And the reason why there is no common personality type, according to Prof. Prats, is that there is no mythical “entrepreneurial gene.”
This is the first in a series of myths and misconceptions surrounding entrepreneurship rebuffed by members of IESE’s entrepreneurship faculty. Their comments are seconded by the experience of the many IESE alumni who have successfully launched their own businesses.  

Aptitudes not attitudes

What there is, instead, Prof. Prats says, is a set of common competencies or behaviors. So, since behavior can be learned, anyone can cultivate entrepreneurial skills - just like any other aptitude. Prats points to her colleague Prof. Pablo Cardona’s model of the three levels of competencies entrepreneurs should nurture (See Figure 1.).
“Everybody is a potential entrepreneur,” Prats’ departmental colleague, Prof. Chris Zott says. “There is this stereotype that it’s in your DNA. Entrepreneurship is a behavior and like all behaviors it can be learned,” he concurred.
One example Zott cites is “influence skills,” something that can be acquired, for example, in a negotiation skills class. If you do not have a two-page CV listing your previous successful start-ups, you are going to need to learn what Zott calls “symbolic or affective behaviors to connect with investors and convince them that they should trust you.” Such skills can be a cheap and effective resource when money is tight.
The difference between personalities and behaviors comes into sharp focus when IESE alumni explain how they got where they are rather than what they have achieved. Gustavo García (PDG ’05) launched Buy VIP, an online luxury clothing and accessories store in 2006. Since then, its turnover has climbed from €500,000 to €28 million in 2008. But how did García and his team get there?
“We chased our best brands for years. We called them every quarter and arranged meetings with them at every fair or event where they were presenting their collection. We sent them cake at Christmas and ice cream in summer. Sometimes they acknowledged the gift, sometimes not. But we kept chipping away until one by one, we got them all to work with us. Perseverance works, I guess,” he concluded.

Not for everyone

While faculty agreed that business schools could and should bring out and help hone students’ inner entrepreneurial abilities, most pointed out that students still have to decide whether it is right for them, though. “There are people who would prefer to have a fixed work schedule,” Pedro Nueno, IESE professor of Entrepreneurship, said. “And then there are people who seek success regardless of how many long nights or weekends it takes,” he added.
According to Nueno, these entrepreneurs are not mythical superheroes. They are simply very determined people with a strong spirit of sacrifice and capacity for hard work that they can tap into at critical times.
Evan Powell (Global Executive MBA ‘08) is an example of that. He launched Nexenta without external capital, also known as “bootstrapping.” Nexenta manages data storage for enterprises on the open-source principal, in contrast to the proprietary technologies favored by the major players. The company has grown by 450 percent since January. “If you are going to bootstrap, your life is going to be impacted. You will have neither time nor money for your hobbies. And 100 hour weeks may be the norm,” he said.

Out of the garage and onto the road

Another enduring entrepreneurialism myth is that of the geek in the garage who invents a new product. “Entrepreneurs are constantly thought of as inventors,” Zott said. “But the biggest insight of my research is that successful entrepreneurs don’t need to invent a brand- new product like the iPod,” he said.
Instead, their ingenuity lies in synthesizing existing processes or products, or applying different processes. Such is the case of Richard Vaughan (Executive MBA ’86). In 2001, his English-language improvement company, Vaughan Systems, launched VaughanTown, a kind of residential talk-a-thon.
The initiative consisted of “stocking” an abandoned Spanish village with 20 English speakers from all over the world and 20 Spaniards. After 10 days of fun and conversation, the Spaniards emerged three times more fluent in English.
Neither one-to-one conversation classes nor residential language courses were new: the program’s originality lay in combining the two.
Another ingenious aspect of the program is that it is “stocked” with volunteers from across the English-speaking world, from retired Irish farmers to Los Angeles firewomen. As a result, students are exposed to a variety of accents and cultures. The volunteers are provided with bed and board in exchange for conversation.
The other flaw in the myth of the geek in the garage who invents a new product is that the product is likely to remain there between the lawnmower and the old bikes unless the entrepreneur has the business skills to exploit a commercial opportunity. That is where management education can come in. In fact, it is often MBAs who take the reins of entrepreneurial projects, according to Mathieu Carenzo, director of IESE’s Center for Family-Owned Business and Entrepreneurship (CEFIE).

Learning to manage

Richard Vaughan of Vaughan Systems agreed with Carenzo’s comments. He said that successfully completing the rigorous Executive MBA program convinced him that he could accomplish anything he put his mind to. And secondly, the modules on accountancy and control gave him agility with balance sheets, enabling him to quickly calculate an idea’s financial viability.
This is another important aspect of entrepreneurialism that is supported by IESE’s programs. Entrepreneurs, almost by definition, need to be general managers: few start-ups can afford to hire specialized finance, marketing, HR or production staff.
Josep Ll. Sanfeliu (Global Executive MBA ’06) is another alum who noted the benefit. “An MBA program is crucial for entrepreneurship because it allows you to gain knowledge and experience in concepts that you are familiar but not entirely comfortable with. It gives you the self-confidence to launch a new venture,” he said. Sanfeliu and his partners formerly launched Ysios Capital Partners, a venture capital fund of €70 million focused on the biotech, pharmaceutical and medical technology sectors in 2008.
“In this respect, IESE’s focus on general management is an advantage,” said Prof. Oosterveld, himself a former intrapreneur at Philips, an investor and graduate of the MBA class of ‘72.  At Philips, Oosterveld headed up the division that commercialized the technology behind the CD-ROM and DVD.
Indeed, let’s not forget that entrepreneurial skills and business models are currently much in demand among established companies. Increasingly, employees engaged in a special project within a larger firm are supposed to behave as entrepreneurs, even though they have the much larger resources and capabilities of the company to draw upon.
This practice, dubbed “intrapreneurship,” is most widespread among firms that use or produce innovative products or services and are actively involved in research and development. However, as the need for innovation intensifies across all sectors, many established companies are beginning to recognize the need for intrapreneurial solutions.  Some companies, such as 3M and Intel, even give their employees certain freedom to develop their own projects and then provide them with the funds to use for these projects.

Damage limitation

Francísco Martín, founder of Optenet,  a global IT company, says that his experience of entrepreneurship contradicts the myth that portrays the typical entrepreneur as a swashbuckling serial risk-taker.
“In my opinion, an entrepreneur should strike a balance between taking risks and playing it safe,” he said. “On the one hand, an entrepreneur should base his or her decisions on a profound knowledge of the market in order to minimize risks… On the other hand, it is impossible to be 100 percent sure of what is going to happen next.”
Rob Johnson, a visiting professor in the Department of Entrepreneurship, agreed. “There is a common misconception that entrepreneurs are big risk-takers, almost like gamblers. What distinguishes entrepreneurs is their ability to mitigate risks so that they narrow the risks down to two or three elements that will make or break a business,” he said.
Johnson speaks from experience: before teaching, he and his business partner successfully launched and sold their company, which was focused on the information industry just as the commercial importance of that sector was coming to the fore. He continues to support new enterprises as a venture capital investor.

Operating environment

As a successful venture capital investor and entrepreneur, Johnson knows first-hand that launching your own enterprise means accepting a high possibility of failure. On top of that, the entrepreneur’s sensitivity toward failure may be compounded by the culture of the country he or she is operating in.
While faculty accept that cultural norms in individual countries can impede entrepreneurialism, the majority felt that the myth of the failed entrepreneur as social outcast is overdone. Prof. Nueno believes that attitudes are changing. “If an MBA in the ‘70s launched a company that failed it would be perceived badly,” he said. “But nowadays it’s different: people think, ‘he’s worked hard, done his best … he’ll have learned something from the experience.’”
By any means, such attitudes tend to be limited to the “uninitiated” outside the world of entrepreneurialism, according to Mathieu Carenzo of CEFIE. The center runs a range of networking and matchmaking events on campus to bring together entrepreneurs and business angels in IESE’s Private Investors Network.
“Within the ecosystem of entrepreneurialism, they [investors, business angels and venture capitalists] value the experience gained through failure and are willing to invest in that person again,” he said.

Build on experience

Experience, of course, is only acquired over time - which shoots holes in the myth of entrepreneurialism being exclusively a young person’s game. In fact, most entrepreneurs are 35 years old and upward, according to Prof. Tony Dávila of the Department of Entrepreneurship.
“With over 10 years of work experience, you’re so much better prepared,” Joëlle Frijters (Global Executive MBA ‘08) said. Frijter’s company, Improve Digital, provides advertising optimization technology to major online publishers, including BBC Worldwide and Reuters. “You have more visions (with more context), you have a better network, you are able to move things from A to B faster and convince others to come along with you,” she said.
On top of that, it can be a long, hard slog and could take years before your work comes to fruition. “It’s never a quick buck,” Prof. Oosterveld said. “It’s like growing a plant, you water it for days and weeks and months before it blooms and, even then, the rabbits could come and eat it and you have to start over from zero,” he said.
Hans Cool (MBA ’03) knows this from personal experience. His company, Alucha, develops innovative recycling technologies. One such application can recycle the thin layers of aluminum and plastic that make up Tetra Brik containers, along with carton board. Tetra Brik is notoriously hard to recycle.
The idea of marketing this technology was born in Prof. Nueno’s entrepreneurship class in the MBA program. Almost six years later, the Nordic forest products multinational, Stora Enso, is currently building a €6 million installation based on Alucha’s technology at its paper mill outside Barcelona. The plant is due to start operations at the end of this year.
Make your own luck
But perhaps the most pervasive myth of entrepreneurialism, discredited to a greater or lesser degree by most of the faculty members and entrepreneur alumni, is that of luck. Prof. Rob Johnson echoed the opinion of many alumni  by quoting golfer Gary Player, “The more I practice, the luckier I get.”
When it comes to crafting an entrepreneurial opportunity, there is no substitute for sheer effort and bloody-mindedness. “Luck can play a role and I have seen some examples of that,” Improve Digital’s Frijters said. “But never without really hard work and determination,” she said.
Another group said that it is not that entrepreneurs catch a lucky break, but rather that they grab chances that others let slide by. “Pure luck does not exist,” Vaughan of Vaughan Systems said. “Successful entrepreneurs open the door every time opportunity knocks. Most people don’t even hear the knock,” he said. 

Wanted: entrepreneurial solutions

With the global financial system still recovering from the crisis, some would argue against embarking on a new venture at the moment. But while financing may be thinner on the ground, opportunities are likely to crop up as companies outsource services to save costs or retrench and focus on core strategy.
Moreover, others suggest that the crisis has left the world in greater need of entrepreneurs than ever. “The problems we are undergoing right now won’t be solved by major corporations,” CEFIE’s director Mathieu Carenzo said. “Mass employment brought by mass industrialization got us out of the depression. That will be the case with this crisis,” he said.
By any means, as Prof. Chris Zott points out, “Research into job creation shows that jobs are not created by large multinationals; large multinationals tend to restructure and shed jobs. It’s the small companies that create jobs.” Despite the high profile of large entrepreneurial companies such as Microsoft and Inditex, lots of entrepreneurial companies are SMEs.
Instead, it is entrepreneurs who are best suited to grab opportunities in today’s shifting environment. “The recession has brought about a sea change in the world and is accelerating the shift from old, heavy industry to clean industry,” Prof. Oosterveld explained. “These sectors lend themselves to entrepreneurialism.”
Just as the digital world emerged from the early 1990s’ banking crisis, Dean Jordi Canals believes we are going to see something similar in areas such as clean energy, health care, life sciences and education. “Despite the uncertainty, now is also the best of times,” the dean told the IESE MBA graduating class of 2009 on April 30. “It’s an ideal time for MBA graduates to bring their entrepreneurial spirit to fruition.” The same is true of IESE graduates of all ages.