Edward De Bono once said that to be successful you have to be ‘lucky, or a little mad, or very talented, or find yourself in a rapid growth field’.
Entrepreneurs intent on creating new markets or disrupting existing industries need all four in spades. Even then the terrain is treacherous – coming up with an idea (1% inspiration) is the easy bit. Successful execution (99% perspiration) is what really counts. The odds of success are not great and newly-minted MBAs know that – in terms of ‘risk-adjusted’ income alone – they’ll be better off getting a job than starting a business of their own.
London Business School, like other business schools and universities, has struggled to find meaningful ways to support the student intent on starting his or her own venture. This is in stark contrast to the support that students get during the MBA programme – thirty years ago LBS was one of the first to introduce entrepreneurship into the curriculum and since then has built a myriad of courses, competitions, challenges and a huge entrepreneurship community. But none of this completely conditions or compensates students for the looming loneliness and ambiguity of entrepreneurial life, especially when everyone around seems to be happily heading for the relative security of corporate life.
So, what does a business school do to support entrepreneurial students on graduation to convert knowledge gained here into a stream of great businesses?
London Business School’s answer, like so many good ideas, looks obvious in retrospect. We cleared a ‘house’ in the corner of the campus and re-dedicated it as a place where the most committed students could ‘incubate’ their businesses for a year before scaling. And like so many great initiatives, it was created by the students themselves.
Incubating an incubator
Let’s rewind. It’s June 2010 and the latest cohort of MBAs have just hit the streets – most heading for debt-reducing employment. But a group of contrarians are intent on eschewing corporate life in favour of founding a business of their own. This band of five have written to the School to ask whether they can stick around for a few more months to make use of a few unused offices to get their businesses up and running in ‘lean’ mode. The School – spearheaded by Career Central - trusts its students and likes intriguing experiments, so happily agrees.
The space isn’t much. A few shared rooms in a forgotten corner of the School. There is little provided or expected other than tables, chairs, wireless access and the School’s ebullient central heating system as winter descends. But the warmth makes all the difference to those pioneer businesses that use the space to hatch their businesses.
Those first few founders are keen to perpetuate the nascent incubator. They organise a meeting with the Class of 2011, ‘to discuss how to create a permanent incubator at LBS to support generations of entrepreneurs to come’. But by that time they are pushing at an open door – the majority of the ‘incubatee’ businesses are by now self-standing and spreading their wings. All are grateful for the support and keen to share what they’ve learned with students and happy to feature in case studies and School publicity. By the following summer the ‘incubator’ is buzzing with a second cohort of seven nascent businesses.
Fast forward four years. The School now has now set aside and refurbished an entire four-story, an 11 unit house (known as, ‘The House’) on the main campus. 30 businesses (50 or so students) applied for the space and twelve made it through the final cut. These, ‘Deloitte Institute Founders’ receive a bundle of support to build their businesses into viable ventures. Not all make it but most do and those that don’t seem to get offered great jobs by firms that value their entrepreneurial skills.
How does incubation help? And why should the School so enthusiastically back the incubator? It takes no equity or rent in exchange for an office in The House. And it’s hardly flush for space – as anyone who has tried booking space on campus will attest. Well, the consensus seems to be that an on-site incubator creates enormous value for the School in ways that were never envisaged at the outset and are far from financial.
‘It’s a fantastic showcase of entrepreneurship at the School’ says Jane Khedair, who manages the programme and works closely with the Founders throughout. ‘The initiative goes from strength to strength each year and 2016 looks set to continue that trend with the growing interest in entrepreneurship.’ There are valuable lessons to be learned by other universities wondering whether to do the same.
What the ventures value:
We asked some of the current ‘incubatees’ why they were so keen to enter the incubator.
We also asked past occupants of ‘The House’ what they valued most about their year in residence.
Four themes emerged:
1. Support and sharing
The early days of a venture are characterised by a huge amount of loneliness and ambiguity which can be terminally demotivating. Being part of an entrepreneurial community with others who you know, like and trust can make all the difference. Moreover, many of the feelings, issues and choices are new to a rookie founder but not to the world. Since none of the businesses are in competition, everyone gains from drawing on the experiences and insights of others and there’s always someone to share triumph and occasional despair: