The growing case that entrepreneurs don’t need an MBA

April 2, 2013
April 2, 2013

“Do as I say, not as I do” is the new mantra in business education.

Academic and entrepreneur Vivek Wadhwa says in a Wall Street Journal op-ed today, “I have no doubt that my M.B.A. from New York University’s Stern School of Business was one of the best investments I ever made.” But he no longer encourages startups to hire MBAs. Quartz has explored the disconnect between the teaching of business schools and requirements of startups in a piece by entrepreneur Jay Bhatti, who received his MBA from Wharton. He says:

The MBA program is designed to teach people to look at prior data and patterns in order to identify future outcomes. In the real world, this just does not work when it comes to new markets or innovation.

Similarly, Wadhwa advocates entering engineering-management programs, like one he teaches at Duke University, that cut out the focus on finance and investment banking, unnecessary for startup founders.

It’s an important realization for MBA programs since big corporations, which many MBA programs were designed to provide workers for, are no longer the bedrock of business:

There was a time, not long ago, when big companies were the keys to the nation’s economic growth and competitiveness. Big research labs produced almost all of the cutting-edge innovation. Now, the cost of developing world-changing technologies has dropped exponentially. Startups can out-innovate the big players. And as the Kauffman Foundation documented, all of the net job growth in the U.S. comes from startups. Startups invent some of today’s most innovative products, create new business models and disrupt industries. So, the people that business schools should be putting on the pedestal are the entrepreneurs, not the bankers.

This is something the US needs to fix, quickly. In a Q&A with Quartz in October, Wadhwa predicted that entrepreneurs will leave America for better opportunities abroad:

My prediction is that there will be reverse brain drain … fewer startups overall and that immigrants were increasingly returning back to their home countries.

If you look at Brazil or China or India, the economies are booming, entrepreneurs see better opportunities back home. We’re competing now, that’s the No. 1 reason. The No. 2 reason is we don’t give them visas, we don’t let them in.

It’s time for MBA programs to take a page out of the Silicon Valley playbook and disrupt themselves.

You can follow Lauren on Twitter at @laurenalixb. We welcome your comments at ideas@qz.com.

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