We’ve identified the problem with the MBA: its teaching is completely antithetical to the skills needed for entrepreneurship. But how can we fix it? Well, surprisingly enough, I found part of that answer at my Wharton 10-year reunion. A former professor of mine had been doing research into this very issue and came out with an approach that can help startups and companies better identify innovation.
Karl Ulrich, the Vice Dean of Innovation at Wharton, gave a talk during our 10-year reunion about identifying exceptional opportunities. It’s a great approach that will help any aspiring entrepreneur or corporation innovate towards the right idea.
In addition to Professor Ulrich’s talk, I’ve identified the five books that offer lessons for both MBAs and non-MBAs to become better entrepreneurs and give their startups a higher probability of success. Here they are:
Innovation Tournaments. The basic thesis of Professor Ulrich’s research is that entrepreneurs and corporations spend too much time researching just one solution. A better approach is to take in a bunch of ideas and filter them through a process. In the end, when only a few ideas remain, become super critical and diligent in research to weed out ideas until the best one is identified. This approach to innovation is the opposite of what MBAs do today. MBAs do a ton of diligence on one idea and stick with it until failure. In reality, they should open themselves up to dozens of ideas and approaches and then filter them through a rigorous process.
The Entrepreneur’s Guide to Business Law. I had the privilege of working with Craig Dauchy and, in my opinion, no book is more valuable to a founder than this one. I took several legal classes at Wharton, and all of them combined cannot teach you the reality of legal issues in entrepreneurship like this book does. One reason this book is so important is that early decisions made in a start-up around the structure of a term sheet, patent filings, trademark filings, and privacy terms can have long-term consequences for the company. It’s vital that every entrepreneur knows the legal aspects of a term sheet, stock holders agreement, board resolutions, and other areas so that they make informed decisions early and hopefully the correct one. I have seen numerous times when someone ignored something in a term-sheet because they thought it was legal jargon, and it comes back to bite them.
Founders at Work. Most MBAs are trained to look at things as having a clear pattern, structure, and formula. Do x and the result will be y. However, in startup life, things are very random. From identifying innovation, to hiring, to taking a company public, the amount of chaos and uncertainty in a startup is staggering. In fact, many times, the difference between a billion-dollar company and a bankrupt startup is nothing more than a few minor decisions and inflection points. To prepare yourself for this level of craziness, you must read Founders at Work. It will give you insight into what it really is like to start and run a technology company. One of my mentors and early investors in my first startup, James Currier, is profiled in the book and talks about the challenges he faced while running Tickle.
Getting More – How to Negotiate in the Real World. The author of this book, Stuart Diamond, was my professor at Wharton and he’s the best professor in teaching negotiation by countless graduates and organizations. If you cannot take his class, the next best thing is to get this book. Many MBA schools teach you how to strike the best deal for yourself but, in reality, when doing a deal of any type, you need to make the deal work for everyone. There is always another party at the negotiating table (VCs, employees, partners, etc) and you need to make sure the other side is motivated to complete the terms of the deal. The only way to do that is to make sure you understand the other sides’ interests and goals.
The Lean Start-up. While Professor Ulrich’s book talks about what you need to do in order to foster innovation, this book will teach you “how” to do this in a startup environment. It’s a must read for any aspiring entrepreneur. The author, Eric Ries, tells startups to stop wasting time creating elaborate business plans (an MBA favorite), and urges companies to to test their vision continuously, to adapt and adjust to things they discover through testing.
If you have an MBA or not, I strongly recommend these books—in my 10 years after graduating from Wharton, I found these books do the best job in helping to prepare for a future in entrepreneurship.