Lesley Nash and Lisa Astbury offer a compelling argument for executive education. They quit corporate jobs, set up online recruitment company Changework Now in 2000 and have since taken part-time MBAs – Astbury starting at Henley Management College in 2001, Nash a year later.
Turnover since 2002 has leapt from £250,000 to £1m with both applying newly acquired knowledge directly to the business.
And they’re not alone as entrepreneurs seek out executive education to grow their businesses. The Master of Business Administration (MBA) qualification clearly still has a certain resonance, but equally, there’s life beyond it with a multitude of shorter courses also available now, some of which are specifically geared towards the needs and hectic schedules of owner-managers like you.
So the question is, could some form of advanced business education add value for your business? This piece will illustrate why you might need to take it, what’s available, how practicable it is, what you can and cannot get out of it and the quality of courses available. It will also help you decide whether to send senior management on such a course or even what you might gain from hiring MBA graduates.
WHAT’S IN IT FOR YOU?
MBAs and other courses don’t teach you how to be an entrepreneur. But they can enable you to do it better, adding discipline, and increasing the likelihood of your venture’s success. In turn, your chances of failure will fall.
You won’t become a qualified accountant, an expert in marketing or know how to create complex IT systems. What you will get is more general. You’ll learn how to manage people, think strategically and operate within your industry effectively. Through analysing other business cases you’ll have a better idea of what to do with your company. If you come from a particular background, such as sales, accountancy or IT you’ll gain an understanding of the other facets of running a business.
As an owner-manager, you almost certainly rely on a fair amount of gut instinct already, but rather than agonise over critical calls, MBAs and to a lesser extent other courses, sharpen your focus. “An MBA, particularly through the case method, teaches you how to make decisions and make them quickly,” agrees Cheapflights.com’s CEO David Soskin, who graduated from the Harvard Business School MBA in 1979. “On the course and as an entrepreneur you have far more work than you can possibly get through. You develop an antenae to cut out the dross and prioritise.” It also teaches you to detach yourself emotionally and evaluate what’s in front of you, curbing some wilder tendencies.
Depending on where you go you’ll leave with a glittering or pretty influential alumni – bright people who will remain contacts and friends for the rest of your career. In the oftenlonely world of the entrepreneur having a network of peers to bounce ideas off or call on can be huge. On the course, these same people will challenge you, leaving you with a ‘healthy’ paranoia and a lack of complacency.
Executive education, and this is more true of MBAs again, will also offer some credibility with venture capitalists and other investors. It won’t open doors on its own, but, with a strong proposal and team, will engender a degree of trust.
For all the perceived benefits though, you’re right to be cynical. It represents an often huge expense, enormous time commitment and a return to academia, so there has to be direct value for your business. Can theorists really tell you how to run a business?
Professor Ian Turner of Henley Management College is in no doubt. “Entrepreneurs are quite inarticulate about the reasons for their success – they’re not the most reflective of people and are not theoretically inclined,” he argues. “There is a role for academics to study them and good entrepreneurs realise they’re not good at everything, particularly the more tedious aspects.”
Such a statement may sting, but the point is that academics have a body of knowledge gleaned from hundreds, possibly thousands of people like you who have learnt valuable lessons along the way. They can help you apply this knowledge unemotionally. John Bates, director of the Foundation for Entrepreneurial Management at London Business School and himself a successful businessman, adds that entrepreneurs are not over-endowed with humility.
The likes of Changework Now’s Nash and Astbury are happy to admit fallibility though and value the sharpening of skillsets and the common language and mindset they now share. “You’re either a jack of all trades, master of none or you try to develop a greater degree of mastery,” says Nash. “We’ve all got blindspots.”
As HR technology company McLaren Solutions’ founder and director Max Kantelia, who mentors students on the London Business School MBA, points out, this added mastery could mean the difference between the ability to grow a company to 20 staff and taking it from there to 50 and beyond.
WHO NEEDS EXECUTIVE EDUCATION?
So what type of owner-manager takes executive education? According to Kantelia very few who run businesses think about MBAs as a way of enhancing their companies. Indeed UK entrepreneurial role models, such as Branson, have had no formal further education at all, so why should you?
Some then choose to make up for what they missed out on by encouraging others. “With family businesses, sons or daughters are often sent by the parents,” says Kantelia. “It’s the education that mummy or daddy didn’t have.”
There are also those who have set up, run and sold a successful business, or else ceased their company, who feel they didn’t actually understand the process fully. In their case, growth occurred through instinctive decision-making or fortuitous timing, not through adhering to a tried and tested business model and understanding the nuances of finance, say.
And for others it’s the awareness or fear that the company will one day outgrow their management abilities. It surprises Kantelia how many reach fairly heady heights without an appreciation for financial management or fundamental business principles.
“I had dinner the other night with a friend who had just floated his business and wanted to know how investment banks worked, the difference between equity and bonds, and what a hedge fund was,” he says. “I was dumbfounded.”
WHAT COURSES ARE THERE?
If you recognise yourself at all there and have considered executive education, what types of courses can you take?
Full-time MBAs have declined in popularity and unsurprisingly for owner-managers like you they’re not a realistic option. Typically, it is a one-year course, with the last two or three months set aside for dissertation. The average age is around 30 with classes often comprising investment bankers, management consultants and public sector managers. Costs for an accredited business school range from £12,000 to £25,000 a year, although there are exceptions, such as London Business School, which runs over two years and costs more than £40,000.
Unless you’re between companies or have total confidence in your management team the part-time courses represent something more practical. But are you willing to give up your personal life for two years?
The typical part-time MBA is two or three nights a week or one day a week for two years. Some run over three years. However, there are schools now switching to a modular version. This would generally mean around six one-week modules a year for two years. All involve considerable hours of study each week too.
Graham Nicoll, founder of baby products website Smileybaby.com, who is in the final year of a part-time MBA at Warwick Business School is one who would have welcomed such a format sooner. “Five days away from the business sounds tough, but I would still be able to work in the evenings and first thing in the morning. It’s a lot better than being distracted for 10 weeks.”
There’s no difference in quality between full and part-time courses. And, as well as allowing you to balance your business commitments more effectively with your education the considerable cost is spread over the duration.
Distance learning is the other option, and in the world of MBAs is one that chief executive of the Association of MBAs Jeanette Purcell says is growing in popularity. It typically stretches over three years and like the part-time option attracts people in their mid-30s. Face-to-face contact is still necessary, but amounts to two or three weekends of the year, with the modules taken in your own time.
If MBA courses don’t appeal it’s worth shopping around and difficult here, given space, to highlight many, other than through the experiences of entrepreneurs we have spoken to. Jamie McGrattan of engineering company McGrattan Piling is one entrepreneur who values highly the short courses in strategic thinking, marketing and financial management he took through Glasgow North, a not-for-profit local development company.
Some six years on, and with a short course at Harvard also under his belt now, he still refers back to them, and has sent members of his management team on it too. “In Glasgow they’re trying to focus on companies that had experienced high growth,” he says. “It’s a terrible percentage of new start companies that don’t last beyond seven years.”
For the more mature entrepreneur London Business School offers something called the Sloane Programme, a one-year course for mid-career owner-managers who are at a major transition in life. Because of its size it has other targeted and respected courses for business owners, as do some other larger institutions, such as Henley and Cranfield School of Management.
Strathclyde University has a school of entrepreneurship. Southampton runs an MSc in business venturing. And Bristol University boasts an MSc in entrepreneurship. Peter Strachan, who heads it up and has started and built two businesses himself, says 25% of cohorts are early stage entrepreneurs. Spread over 13 weeks a year for two years between October and June, modules run on alternate weeks.
At £5,300 it’s cheaper than an MBA and students focus on six core modules – law and accounting, marketing, exploiting new ideas, entrepreneurial organisations, risk management, and business start-ups. Its USP is that it only covers what an entrepreneur will find essential. Wherever you choose, carefully consider the curriculum, environment, the structure of the programme and its reputation. Unless you opt for distance learning, you’ll also want to be based fairly nearby.
WHAT WILL COURSES COVER?
Any reputable generalist course will cover strategy, people management, financial management, sales and marketing, and IT. Some may offer product and operations management, inventory and distribution, organisational planning and cover various organisational structures.
You should leave with a clear understanding of different business models and a thorough knowledge of the analytical tools recognised throughout the business world, such as Porter’s Five Forces Model, which incorporates competitor analysis, the bargaining power of suppliers and customers, the threat of your offering being replicated, and barriers for others to enter your market.
The financial element stands out for many we spoke to. Some had a perceived aversion to it and found facing fears helped demystify the whole process. If you’re not entirely comfortable with cashflow reporting, management accounts, balance sheets, gearing and other facets, you soon will be.
Electives may well be more geared towards your needs, with entrepreneurship, new venture creation, entrepreneurial finance, innovation and creativity, sources of funding, competitor analysis, formulating business plans among those offered by various business schools.
To gain most from the experience, look for a course that is practitioner-based. London Business School has an established reputation for experiential learning. Henley and Cranfield School of Management are others. “Lots of other MBAs are university-based and have marketing, accountancy and other exams to tell them whether you’ve read a book,” says Professor Turner. “You only learn by applying the theory though. You might as well get value out of it so the titles and themes of coursework can be focused on an entrepreneurs’ own business.”
Nash backs this up. “Henley has a very practical bent,” she says. “So much is assessed on assignment work. It encourages working together with other people, organisational and interpersonal skills. All are very important.” The Association of MBAs’ Jeanette Purcell adds that the MBA curriculum is now focusing on smaller businesses, growth, entrepreneurial models and globalisation. It appears to be a good time to take a closer look.