"Today, the entrepreneurial approach
is vital for many kinds of firms," says Jain. "Despite
the organizational dynamics that differentiate a large company
from a smaller one, agile companies are those best able to
respond to and capitalize on market shifts. Typically, the
agile firm is one that embraces entrepreneurship to leverage
the entrepreneur's passion and creativity."
The reaction from most Kellogg students who
hear these messages is one of relief.
"Many of them come here with the idea
that the only way they can be an entrepreneur is to build
a business from scratch. We let them know that entrepreneurship
is much broader than that," explains Rogers.
As proof, he offers two enormously successful
entrepreneurs: H. Wayne Huizenga, who began the Blockbuster
empire by acquiring local video stores, and Howard Schultz,
who transformed a handful of Seattle-area coffee shops owned
by four others into Starbucks Corp.
"A person never has to feel burdened
by finding an idea. Sometimes you're just better at taking
someone else's idea and developing it," says Rogers,
whose introduction to entrepreneurship was as a child, working
in his family's used-furniture stores and selling goods at
flea markets.
As an adult, he's bought and sold three successful
lamp-shade companies and earned a long list of entrepreneurial
honors that includes being named one of BusinessWeek's 12
best entrepreneurship teachers and one of Fortune's top 10
entrepreneurial thinkers.
A place for young entrepreneurs to
learn
For those who envision an independent venture in their future,
there is perhaps no better place than the Kellogg School and
its Heizer Center for Entrepreneurial
Studies, Dean Jain says,
since its culture of constant, though calculated, change represents
the very heart of entrepreneurism.
"Kellogg by definition is a very entrepreneurial
school," Jain says. "One of the most significant
differentiating characteristics of Kellogg is our commitment
to continuous change and innovation. And our special strength
is speed of execution."
That ability to execute includes maintaining
the school's entrepreneurial excellence, an initiative
that
is being considerably enhanced thanks to the new gift of
a generous Kellogg School alum. Larry Levy '67 and his
wife
Carol have made a significant financial contribution to Kellogg
to establish the Larry and Carol
Levy Institute for Entrepreneurial Practice. The
Institute will help expand the classroom experience at
Kellogg, giving
young entrepreneurs increased opportunities to learn —
and practice — the skills necessary to launch and build
their ventures. (See
related story)
Indeed, the Kellogg School's existing curriculum
takes the prospective entrepreneur through the entire life
cycle of a business — from how to get started and then
grow an enterprise, to how to develop early stage capital
and find additional capital. Kellogg boasts one of the largest
selections of entrepreneurial courses of any business school
in the United States, as measured by the Ewing Marion Kauffman
Foundation, and teaches both the theory and practice of entrepreneurship.
Students select from a list of courses that includes Women
and Entrepreneurship, Venture Capital and Private Equity Investment
and Entrepreneurial Leadership. New courses, such as Family
Enterprises: Issues and Solutions and Business Law have continued
to add to the program strengths.
Few other majors effectively bring together
so many different areas of study. Becoming a successful entrepreneur
requires solid financial and marketing skills and the ability
to write and execute a business plan, as well as the leadership
and personal traits to motivate others.
Morton I. Kamien, the Joseph and Carole Levy
Distinguished Professor of Entrepreneurship and director of
the Heizer Center for Entrepreneurial Studies, says it is
imperative that students who choose the school's entrepreneurship
and innovation major soak up skills from all of Kellogg's
departments. The Kellogg School's curriculum strengths in
other areas are a distinct benefit to budding entrepreneurs,
he points out.
"The Heizer Center for Entrepreneurial
Studies is in the midst of the No. 1 business school,"
Kamien says. "It builds on the excellence of research
and teaching in all of these other areas."
Jain and other Kellogg professors see a world
of opportunity for MBA graduates who pursue jobs with small
businesses, family businesses and start-ups. They point to
statistics such as those published by the National Commission
on Entrepreneurship that reveal how, since 1980, small businesses
have added 34 million new jobs, while Fortune 500 companies
have shed 5 million jobs.
"The job creation throughout America
and throughout the world is fueled largely by entrepreneurial
ventures, not the Fortune 500 companies," Rogers says,
reprising a point raised in his 2002 book The Entrepreneur's
Guide to Finance and Business.
John Tomaszewski '98, for example, is building
a company called NaviAsia Consulting Group Inc., which helps
firms enter the China market by leveraging supply chain and
sales and marketing expertise.
"I've learned so much and I think Kellogg
provides an excellent foundation," Tomaszewski says.
"Starting your own business takes so many different skills
— from working with diverse groups of people, to setting
up a payment structure, to understanding the motivation of
people who want to buy your services."
Tomaszewski, president of the Kellogg
Alumni Club of Chicago, also is part of a Kellogg alumni effort to
volunteer services to fledgling firms associated with Northwestern
University's business incubator. So far, more than 60 alums
have volunteered to advise on such issues as marketing strategy,
patent law and fund raising.
Today's entrepreneur: inspired and
realistic
Kamien says it was rocky economic times and the corresponding
need to create their own job opportunities that prompted MBA
students in the 1980s to demand more course offerings in entrepreneurship,
once a mostly overlooked topic of study at business schools.
"Students became interested in entrepreneurship
more out of desperation than out of inspiration," he
says. "Giant corporations began to sway in the wind,
and people began losing their jobs at companies they thought
they were lifers for."
Conversely, the heady dot-com days introduced
a variety of entrepreneur sometimes fueled by inspiration
and little else, including strategic or operational insight.
Today's successful entrepreneur, Kamien says,
is both inspired and realistic about the challenges presented
by a changing marketplace. Graduates, he predicts, will seek
opportunities in traditional bread-and-butter industries,
as well as those that have yet to capitalize fully on modern
technology. Examples include the funeral industry and automobile
dealerships — sectors that are still trying to compete
financially, and aren't necessarily glamorous.
Kellogg School alum Pat Ryan Jr. '97 is finding
his opportunity with franchise automobile dealerships, an
industry he says has been slow to incorporate the use of business
intelligence software. First Look, the business he founded
in 2001 with fellow Kellogg alum Dave Jacobs TMP '98, is an
attempt to bring some of the analytical sophistication of
the airline and credit card businesses to the world of franchise
automobile dealerships.
First Look markets software that uses simple
outputs to provide the benefits of complex analysis to large
automobile dealers, allowing them, among other things, a more
precise way to value trade-ins. After entering a vehicle's
identification number, the software uses valuation and sales
data to calculate the precise amount a salesperson should
offer for the vehicle.
Ryan, whose previous work includes jobs in
private equity, teaching and with the City of Chicago's Police
Department, says he is energized by the opportunity being
his own boss affords. Though much research and a careful business
plan preceded the launch of the venture, he says a willingness
to remain flexible is an essential part of his business strategy.
"Our five-year goals will look a lot
like the goals we initially laid out, but our way of getting
there will have changed quite a bit," Ryan says.
Giving students a taste of what it
takes
To prepare students for the real-world challenges of entrepreneurship,
Kellogg Professor Barry Merkin guides them through the major's
capstone course, in which they create an idea for a viable
business, author a business plan and present the final version
to financiers, including commercial bankers, angel investors
and venture capitalists.
By all accounts, the class — Entrepreneurship
and New Venture Formulation — is complicated, fast-paced,
pressure-filled and entails a mountain of work. Merkin offers
no sympathy or spoon-feeding to students who haven't learned
what they need to complete their business plans, instead encouraging
them to go out and find the information they need on their
own, exactly as will be necessary in real life.
His goal: to create an entrepreneurial experience
that's as realistic as possible, without all the inherent
risks.
He says the process of presenting a business
plan is pivotal for success, requiring preparation and rehearsal
to avoid a life-altering failure. He recalls his own situation,
before such courses were offered. After a year of nonstop
research, he presented his first business plan again and again,
but failed to raise the necessary capital to launch.
"There is no question in my mind that
the company would have been successful if I had presented
it with the skill of today's Kellogg students," says
Merkin, who went on to earn his entrepreneurial stripes running
four companies.
He considers it a success when a former student
becomes a successful entrepreneur but, perhaps surprisingly,
also when a pupil decides entrepreneurship isn't the right
path. Merkin says he's seen the emotional and financial rewards
that can come from a successful venture, but also the bankruptcies,
ulcers, heart attacks and nervous breakdowns that sometimes
result when someone who isn't suited for the field enters
it.
"Entrepreneurship is a fairly lonely
place," Merkin says. "When you're a beginning entrepreneur,
you lack money, you lack time, you lack information and sleep.
It's an incredibly difficult thing and not a lot of people
can do it."
But for those driven to start their own businesses,
Merkin sees little choice other than to heed the call. Successful
entrepreneurs, he says, have a voice inside of them almost
screaming, "I must create something."
He says, "That need just takes over life.
It's a need that, for the most part, can't be satisfied by
a traditional role in a traditional company."
Increasing the odds of success
Kellogg School professors and alums agree that while many
people appreciate the freedom and the opportunity for wealth
creation entrepreneurial ventures offer, those who eventually
succeed are the few who are able to execute their ideas and
can perform many roles within an organization well. Qualities
commonly used to describe these entrepreneurs include "passionate,"
"persistent," "resilient," "tenacious"
— even "neurotic."
"The right person for running a company
is somebody who doesn't mind rolling up her sleeves and doing
anything that needs to be done," says Jill Gordon '80,
who founded a chain of children's hair salons called Kidsnips
in the Chicago suburbs with classmate Kim Stolze '80. "There's
no one else to do the thinking and the planning and the scrubbing
of the bathroom floors. I looked around and realized that
someone was me."
Along with the joys — the thrill of
making their business concept work and the flexibility to
spend time with their children — Gordon and Stolze must
deal with the frustrations the business sometimes deals out.
Gordon fields all the calls from customers who are unhappy
with their experience. An effective partnership with Stolze
helps to get her through the rough spots, she says.
Along with the other hardships entrepreneurs
face, there's this reality: the companies they start are
by
no means guaranteed success. (See related story)
Rogers' advice to those who want to maximize
their chances is fourfold: Use your time at Kellogg to gain
a solid grounding in business fundamentals; take advantage
of experiential learning opportunities, such as the school's
internship program; develop a network of consultants and advisers
who can help you refine your ideas; and, perhaps most importantly,
save as much money as you can to finance it all.
Rogers also advises students to continue to
build their skills at established companies after graduation
— whether the companies are entrepreneurial firms or
Fortune 500 juggernauts — before venturing out on their
own. "We are not focused on developing students to become
entrepreneurs immediately after graduation," he adds.
"We believe that entrepreneurship is a journey, not a
10-yard sprint."
Eventually, though, all prospective entrepreneurs
realize it is time to face their fears, putting their plans
and market research to the test.
David Weinstein TMP '00 says he drew on nearly
everything he learned at the Kellogg School when founding
two companies, the technology firm BlueMeteor, and later,
David Weinstein & Associates LLC, a Chicago-based consulting
firm.
Despite successfully raising $30 million to
launch BlueMeteor, Weinstein says he underestimated the importance
of selling and wasn't quick enough to hire people with skills
the firm desperately needed.
"My passion got the company from Point
A to Point B," he says. "What I was slow to realize
was that I needed someone else to get it from Point B to Point
C."
Now president of the Chicagoland Entrepreneurial
Center, a Chamber of Commerce-affiliated organization striving
to strengthen the growing base of small businesses in the
region, Weinstein translates those experiences into advice
for the city's new entrepreneurs, helping them raise capital
and develop a rapport with potential clients.
"It's difficult to tell an entrepreneur
to do something. But because I've been there I can connect
with them," he says. "Entrepreneurs relate to others
who have taken similar risks and share the ability to be decisive."
Innovation at large firms yields big
benefits
Despite the impression fostered by the Internet boom, the
entrepreneurial spirit isn't limited to gutsy dot-com firms.
Even large, established corporations need an infusion of new
ideas to fuel growth and take calculated risks to keep up
with changing markets and customer needs — an idea sometimes
referred to as "intrapreneurship."
This idea isn't new to Scott Smith '76, publisher
of the Chicago Tribune, who says Tribune Co. embraces intrapreneurship
by rewarding employees for their innovations and not penalizing
them when ideas fail.
He offers an illustration from his own career.
As chief financial officer in the early 1990s, he got the
company involved in a start-up newspaper in the United Kingdom
that, for a combination of reasons, went under two years after
its launch. The bottom line: the company lost $10 million.
A few months later, Smith recommended the
company put $5 million in a fledgling new media venture called
America Online. His superiors OK'd the investment despite
his earlier association with the failed newspaper —
a move that turned out to be a huge boon to Tribune Co.
"My willingness to take another risk
that could also have been a failure was supported by the environment
in our company that says we're willing to take educated risks
for significant opportunities," Smith says. "Having
people who are resilient, and an organization that is supportive
of that resiliency, is vital."
More recently, the paper forged a plan to
create a special edition geared to young adults and the advertisers
who want to reach them, assembling a small team dedicated
to the venture. Five months later, it introduced the Red Eye
edition. Refinements, such as the addition of home delivery
and an expanded entertainment section, continue today.
"You cannot be afraid of competing with
your established business, because if it's a good idea, someone
else is going to do it eventually — and better you than
the competitor. It's about opportunity-seeking where risks
are inherent," Smith says.
The key, agrees Smith and Dr. Charles Reich,
executive vice president of 3M Corp.'s health care business,
is taking smart risks. 3M CEO James McNerney is a member of
the Kellogg School Dean's Advisory Board.
The Minneapolis-based company spurs innovation
with its Technical Forum, a company-wide organization to which
each technical employee belongs. Special-interest chapters
such as "adhesion" and "optical" cut across
the firm of 70,000, with each employee selecting areas of
membership based on individual interests.
The sharing that takes place in these chapters,
Reich says, allows employees to find new market applications
for research, and has allowed the company to introduce hundreds
of successful products — everything from stationary
lines to dental supplies.
"From very early on, this company has
had a philosophy that you are better off with people making
mistakes and learning from them than not trying at all. Management
expects people to try new things and that's what we do. All
we ask is that they take smart risks and, if they fail, to
learn from the experience," Reich says.
Heroes of the American economy?
When all of the data is factored in, entrepreneurs
might be the unsung heroes of the economy. Despite the job
growth fueled by small businesses and start-ups during the
last two decades, fewer than two in 10 Americans credit entrepreneurial
companies for the growth, according to information from the
National Commission on Entrepreneurship.
When Steve Rogers speaks about the contributions
entrepreneurs make to society, he barely contains his emotion,
revealing a deep respect and passion for those with the courage
to start independent ventures, as well as his passion for
helping novice entrepreneurs succeed.
Entrepreneurs, he says, are the heroes and
"she-roes" of the American economy — people
who create jobs for themselves and others. And the greater
their chances of success, the more they are able to take others
along with them on the journey.
"People who have jobs pay taxes,"
he says. "People who have jobs tend to own their homes.
And people who own their own homes tend to build healthier
communities. All these things are interrelated."
