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.
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.
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: