Remarks for CFO Conference April 10, 2018 organized by ICAP
What should be the role of a university in fostering an
entrepreneurial ecosystem in Pakistan? At the IBA, we have found
that business schools can be useful in two niches of the
entrepreneurial ecosystem: training and incubation. Here are
some observations based on our experiences in these two areas.
Training
We started with what some would call a conventional training
model. This had four features: students; academic training;
formal business plans and big ambitions. By students I mean to
refers to our own BBA students since initially our training was
connected with a BBA entrepreneurship degree. Academic training
refers to the conventional set of formal lectures, readings,
case studies, class discussions and examinations. Formal
business plans refers to the practice of encouraging students to
think through all aspects of their proposed business in a
connected way and develop long-term business plans, run them
through alternative scenarios and so forth. Big ambitions refers
to an underlying, if unstated, assumption that potential
entrepreneurs should think big and arrange financing
accordingly.
We did not stay with this conventional model. We had some
successes with it but were not convinced that it was useful in
the Pakistani context. So we modified all four aspects of our
training model over time.
We oriented the program away from fulltime students and towards
existing or potential small entrepreneurs; we welcomed women and
we broadened the focus of the program to cover all sorts of
enterprise ideas, including livestock and agriculture. The idea
was that anyone could walk off the street and take our training
program provided he or she persuaded us through an interview
process (no SATs or other aptitude tests needed) that they had
an inner drive and passion for entrepreneurship. We mixed up our
classes by age, education and experience.
We introduced a large element of motivation (or what we call
entrepreneurial mindset development) into the training while
keeping necessary items relating to marketing, operations,
accounting, business law etc. What we realized was that
entrepreneurs learn from each other's experiences and exposing
them to such experiences helped a lot in keeping their interest.
We avoided formal business plans. Instead, we introduced such
ideas as learning by doing, staying lean and flexible, adapting
to changing business circumstances, and keeping capital at risk
to levels pre-determined by the entrepreneur as bearable losses.
We decided that one-page write-ups were sufficient to help
participants think through their plans and options. We
encouraged participants to feel free to change and refine their
business plan as they proceeded with their venture. We made it
compulsory for participants to start a business during their
participation in the program. When this happens, we are able to
help find partners, customers, suppliers, advisors, mentors and
even some employees.
We stressed modest ambition. We suggested that people develop
plans that were consistent with resources at hand. We emphasized
that resources at hand could be considerable when one thought
about all options. Over time, businesses could expand based on
customers, retained earnings and so on.
We have found that a little motivation, a little training and a
little capital is all it takes to launch small enterprises.
Those who come to us have some motivation to begin with. We
applaud their motivation and tell them to look around the class
and take strength from others who think like them. We give them
further encouragement through entrepreneurial mindset lectures
and guest appearances from actual small entrepreneurs. This is
highly motivational in impact. We tell them that they do not
need a lot of capital. This enhances their motivation even more.
We provide enough training to ensure that they are not wasting
time and resources in their work. This gives them more
confidence. How much confidence? Enough that most of them take
the plunge and start a business of their own. We have
implemented this approach for the last five years and found it
to be very popular and effective. About 60% of those who take
our certificate course stay engaged in various entrepreneurial
activities over time.
Incubation
We follow a somewhat conventional path on incubation. We offer
incubation facilities to about 40 trainees for a period of one
year each. We do not offer seed money unless it is part of a
government-sponsored program in which case we simply act as a
pass-through agent. We provide mentorship along with incubation.
We do not offer formal post-incubation support though some
incubates do keep in touch informally. We do not take equity
positions in our incubated projects.
Salient features of our approach to incubation are: