Description
This detailed explanation pertaining to close reality an entrepreneurial component in management education.
Close Reality – An Entrepreneurial Component
in Management Education
Karl Zehetner
1
& Peter Herbek
PEF Privatuniversität für Management
Brahmsplatz 3, A-1040 Wien
Tel: +43/(0)1/534 39-0
Contact:
Karl Zehetner: [email protected]
Peter Herbek: [email protected]
Experience-based paper presented at the International Conference on Management
Learning “Management Makes the World Go Around"
organized by the M/O/T school for Management, Organizational Development and
Technology
Vienna, Austria, December 1-4, 2010.
Reference:
Zehetner, K. & Herbek, P. 2010: Close Reality – An Entrepreneurial Component in
Management Education. M/O/T International Conference on Management Learning,
Vienna.
1
Corresponding author
Download from www.wbg.at
Abstract
Entrepreneurship can only be grasped, if it is experienced. This paper describes the
features of an entrepreneurial MBA program that follows the systemic-constructivist
management approach by integrating normative-rational knowledge into the socio-cultural
context. This is achieved by “close reality”, a clinical component, where students develop
a new business, which can be the creation of a new enterprise, the establishment of a
new business segment within an existing enterprise, the takeover of an existing enterprise
in a turnaround situation or the foundation of a new subsidiary of an existing enterprise in
another country.
To support the cultivation of the students’ entrepreneurial awareness and competence we
concentrate on experienced students (more then five years of professional experience),
and included a coaching component – we call it competence development – that is based
on the solution-focused approach and the concept of competence as self-organization
disposition.
The essential principles of the clinical component are (1) the holistic consideration of both
normative-rational issues, like strategy, structure, financials, and socio-cultural issues, like
identity, leadership, or corporate culture, (2) the affiliation of knowledge and experience,
intellect and intuition, (3) a high degree of motivation based on a real case with proximate
impact on the students’ personal social and financial success or professional
advancement, and (4) immediate feedback by scientific staff, fellow students and, if
applicable, clients in multiple feedback loops.
The application of these principles is presented using two examples of the successful
establishment of new businesses that originated in the clinical component of our program.
Close Reality – An Entrepreneurial Component in Management
Education
1. The controversy over management and entrepreneurship education
Business schools have experienced notable growth both in the number of students and in
the number of institutions. A quick inquiry in any of the major web search engines
indicates that the number of MBA programs has also increased in German-speaking
countries over the last decade. The impact of both management education and
entrepreneurial education has been controversially debated. Critical comments, like that
there is “less success than meets the eye” (Pfeffer & Fong, 2002) or that these programs
are “teaching the wrong people in the wrong ways with the wrong consequences”
(Mintzberg, 2004) have been commonly cited in executive education literature. The
financial crisis since 2007 has raised even more acute questions on the effectiveness, the
purpose, or even the harm of management education programs. “Perhaps we will become
acutely aware of the absurdity of training future managers in terms of abstract decision
making techniques only, largely ignoring the complex dynamics of real life in organization”
(Stacey, 2010: 228).
When we designed a new MBA program at the climax of the dotcom-bubble and started it
short after the burst, we introduced a significant entrepreneurial component, which is the
core of the whole program. The plan was to offer an entrepreneurial perspective to those
students who are latently interested in self-employment, and, drawing from the idea of
intrapreneurship (Pinchot, 1985), to create entrepreneurial awareness in those students,
who prefer a management career. The fundamentals of the program’s concept have not
changed over the years, and we are even more convinced of the model now in the era of
the mother of all financial crises, when business schools are urged “to provide
opportunities for managers and leaders to understand what they are doing in reflexive
ways” (Stacey, 2010: 228).
Designing a management education with an entrepreneurial emphasis raises the question,
if entrepreneurship can be taught at all. Only few scientists in the area of entrepreneurship
claim that they have actually experience as entrepreneurs. Some of those who have, like
David Birch, say that it is impossible to teach people to be entrepreneurs (Aronsson, 2004:
289). The “three skills that an entrepreneur needs to know and master [are] selling,
managing people, and creating a new product or service. And none of them are taught in
the business school” (290). On the other hand, there is “preliminary evidence that
entrepreneurial attributes can be positively influenced by educational programs and that
many entrepreneurship programs and courses are able to build awareness of
entrepreneurship as a career option and to encourage favorable attitudes towards
entrepreneurship” (Gorman, Hanlon & King, 1997: 63). Katz (2007: 223) found that “the
proof that non-entrepreneurs can successfully teach entrepreneurs is evident”. We
conclude that it is possible to teach entrepreneurship, but it is necessary to overcome
some deficiencies in entrepreneurial education.
2. Deficiencies in entrepreneurial education
Contemporary entrepreneurial education is affected by three deficiencies. First, there is an
overemphasis on analysis and techniques at the expense of developing personal skills.
Second, there is a narrowed view on new firms as high-growth ventures, although most
new enterprises have a moderate lower growth rate which does not mean they are a
failure. Third, the socio-cultural dimension is widely ignored in the education of managers
as well as entrepreneurs, mainly because it is difficult, if not impossible, to teach it in a
lecture room situation or with case studies. The socio-cultural dimension can only be
grasped if it is experienced.
2.1. The first deficiency: Overemphasis on analysis
Much criticism has been made on the overemphasis on analysis in business management
education. There is an old joke that MBA stands for “management by analysis”. Mintzberg
(2004: 38) even polemicizes that management is reduced to decision making, decision
making is reduced to analysis and analysis is reduced to technique. Paying too much
attention on quantitative analysis is at the expense of developing leadership and
interpersonal skills as well as communication (Porter, McKibbin 1988: 65). “Contemporary
business education focuses on the functions of business more than the practice of
managing” (Mintzberg & Gosling 2002: 28)
2.2. The second deficiency: Narrowed view on new firms
Whoever operates a business school program with an entrepreneurial component should
reflect who can benefit from their education. There are various motivations for starting a
business. Some entrepreneurs start a venture with the intention of fast growth. These
founders already have the concept for a promising product or service, they usually depend
on venture capital to cover the financial needs of conquering the market and they have to
deal with many organizational changes on their way from the backyard garage to the
multinational corporation. Others start their business as a form of self-employment, in
some cases involuntarily after they lost their jobs as employees, in many cases voluntarily
to be independent from an employer. The heaviest initial challenge for these
entrepreneurs is developing their product or service ideas to a marketable form and build
up selling power. A third group, who amazingly is widely ignored by business schools, are
existing entrepreneurs who want to improve their entrepreneurial skills. They learn like the
others, but they contribute to the program considerably more and thus are very valuable
participants. And there is an important fourth group of potential students, individuals who
prefer a management career (and usually are already managers) and who feel that they
need entrepreneurial awareness for advanced tasks like starting new business segments
within existing companies or expanding the business into new markets.
In our perception this plurality of motives is not sufficiently recognized by business
schools. Katz (2007: 216) pointed out that “economists think of every … smaller firm as
alike, but research clearly shows two types of smaller firms: the classic small business,
which provides a substitute income to employment by others, with modest prospects for
growth, and high-growth ventures that start small but grow into major firms like Google or
Microsoft.” Consequently, entrepreneurial education concentrates on issues like
innovation, funding, and organizational development. Excellent models of the
entrepreneurial process have been developed in the last decades, e.g. the model depicted
in Baron & Shane (2008: 16) that we actually use in our entrepreneurship lectures. It
describes six key phases of the entrepreneurial process: New idea or opportunity
recognition; Initial decision to proceed; Assembling the required resources; Actual launch;
Building a successful business; Harvesting the rewards (exit by founders). These
instructive models are very useful for teaching, but unintentionally they are possible to
contribute to the narrowing of the view on new firms, particularly in education which
emphasizes analysis, models and techniques, so the narrowing might be amplified by the
above noted first deficiency.
2.3. The third deficiency: Teaching entrepreneurship instead of making it an experience
Linking research and teaching is an essential requirement of every academic education. In
some academic fields, particularly in social and economic sciences, experience should be
integrated as a third element. It is precisely the connection of these three dimensions – in
whatever order – that is crucial for the process of cognition. Unlike in natural science there
are no universally valid principles in economics – in our domain the apple doesn’t always
fall straight down, sometimes it makes a bow or even starts to float – and so we have to
content ourselves with probability structures in our conclusions. This enhances the
importance of expert knowledge, which has to be integrated into teaching, and the best
way of integration is to experience it in action.
Organizational development is a product of normative-rational professionalism and socio-
cultural abilities (Herbek 2010 a: 31). A lack of one of these can not be compensated by
the other – zero times infinite still equals zero. Normative-rational professionalism and
socio-cultural abilities manifest in the acting individuals (notably managers and experts) of
the organization as well as in the rules that inhere in every social system. These rules
usually become independent from the individuals in the course of time (Luhmann 1984).
Integrating socio-cultural issues pushes the boundaries of traditional entrepreneurial
education. The normative-rational dimension can easily be explained (yet sometimes not
immediately understood) in the laboratory-like situation of the lecture room or in the study
of business cases, but the socio-cultural dimension usually eludes being imparted
authentically, and transporting the inherent rules of a social system in a lecture auditorium
is virtually impossible. This is a central educational problem in applied social and
economic science, and particularly in entrepreneurial education.
Lessons can be learned from medical studies, where the affiliation of academia and
experience is perfectly accomplished by the integration of a teaching hospital. It enables
the students to immediately practice their acquired academic (normative-rational)
knowledge at a hospital patient and to experience the socio-cultural dimension of being a
medical professional: Exposition to stressful situations, dealing with difficult patients,
explaining shocking prognoses, the need to make decisions under uncertainty, ethical
challenges or emotional involvement.
The thesis statement that forms the basis of our program is: Entrepreneurship can only be
grasped, if it is experienced.
Before we discuss the principles, structures and contents of our educational concept
“Close Reality”, it might be helpful to define essential terms that are used in the following
chapters. This will illustrate how and where the third element – experience – is introduced
and how the three elements – research, teaching, and experience – are linked up,
following the systemic approach that the correlations between elements are crucial rather
than the particular elements themselves. Our MBA program is based on a systemic-
constructivist understanding of management. In contrary to a deterministic (causalistic)
management understanding, which presumes controllability of an organization, the
systemic-constructivist approach accepts that complex social systems can not be
controlled and should better be influenced in a target-oriented way.
3. Overcoming the deficiencies: Systemic-constructivist management approach
Malik (2000: 81) describes two paradigmatically different ways of understanding the
management of enterprises. The first is deterministic (“techno-causalistic”) and based on
the machine model, the other one is systemic-constructivist and based on the model of a
living organism.
Techno-causalistic management starts with analyzing tasks and processes within the
system, and it assumes that these elements can be composed in the “right” way to design
the optimal organization. It is based on the premiss of causality within a complex system
and ignores interpersonal relations. It focuses on the normative-rational dimension and
entirely fades out the socio-cultural dimension.
The fundamental idea of systemic-constructivist management is the organism analogy.
But is it possible to transfer research findings for living systems to social systems?
Sociologist Niklas Luhmann (1984 and 2000) is one of the main promoters of this idea.
Social systems are never made; they develop, learn from mistakes, perish, and are
replaced by new ones. Social systems are widely self-organizing (Steinkellner 2007: 63-
64).
Following this approach, the complexity of management increases and so does the
discomfort of managers and entrepreneurs and their fear of being unable to control the
system. Consequently, the socio-cultural dimension is often neglected, and techno-
causalistic approaches are preferred. We assume that this also applies to most
management and entrepreneurial education.
4. The features of our entrepreneurial MBA program
When the “Intra- and Entrepreneurship” MBA program started at a state accredited private
university in Austria (PEF Private University of Management, Vienna) in 2002, it followed
the style of the Anglo-Saxon business school model, with a significant share of instructors
from US-American and British universities, and with a strong international orientation.
There was some kind of differentiation from other programs, like the concentration on
professionally experienced students, but in the main it adopted the typical academic
entrepreneurship education model that consists of two cores, with the first one providing
knowledge of the functional areas of business (like accounting, finance, marketing,
management), and the second focusing on the completion of a business plan (Katz 2007:
213). The program received good evaluations, but at that time competition significantly
increased as various business schools started MBA programs mostly with American
partner schools, and we concluded that our program should develop more differentiation.
In 2004 we redesigned it to overcome the above mentioned deficiencies we had
investigated and started in fall 2004. Until now ten classes with approximately 160
students have passed the Intra- and Entrepreneurship MBA.
We classify the characteristics of the program into three elements: Content, didactic
elements, and the clinical component.
4.1. Content
It would not make sense to abstain from teaching business functions in an entrepreneurial
program, but it has to be taken into account that entrepreneurs use knowledge
individually. They “hinge on information that is not codified or highly idiosyncratic”
(Markman 2007: 72), so they “codify, process, and utilize that knowledge differently” (73).
In respect to content we found it beneficial to start with strategy, innovation, and
organizational behavior. There is a lot of analysis and technique in these subjects, but, in
contrast to for instance accounting, they leave space for reflection and expressing
individual views. Next we found it valuable to support students in deploying leadership
skills and emotional intelligence. Here it is obvious that benefits are mainly drawn from
experience, but we wanted to impart a research-based fundament, so we intensified our
existing courses in leadership and added courses in social psychology with a strong focus
on group behavior. Experience is built-up in our “leadership lab”, a didactic element which
is described below. Finally we found that is makes sense to reduce analytical skills training
(including financials, IT, process management, project management, marketing and law)
to the ability to communicate with experts in these areas in a feasible way, using their
preferred terminology. The goal is to deploy communicative competence to be able to lead
a team of financial, legal, marketing, logistics or IT experts or to outsource some of these
tasks, if the enterprise is intended to grow slowly.
4.2 Didactic elements
The findings in respect of didactic elements cultivating entrepreneurial awareness and
competence include the concentration on experienced students. The minimum access
requirement is five years of professional experience including significant management
experience. Students are practicing managers, they attend courses once a month
(Thursday to Saturday) and return to their work environments after the courses. It also
turned out to be advantageous for an entrepreneurial program to be established at a
smaller university: At universities the customers (i.e. the students) are an integral part of
the organizational structure, and that is likely to intensify the interaction between
instructors and students (Zehetner 2006: 185) – of course only if the university is not a
degree factory. We have also introduced a coaching element that we call competence
development, which is based on the solution-focused approach (de Shazer 1997, Lueger
& Steinkellner 2011), and the concept of competence as self-organization disposition
(Erpenbeck & Rosenstiel 2005; Steinkellner & Czerny 2010; Steinkellner & Czerny in
press). Here we take advantage of the fact that our university traditionally has a core area
in human resource management and coaching, so appropriate knowledge and skills are
available in the core faculty. Part of the competence development is the “leadership lab”, a
three day outdoor event where the group has to complete jobs – like crossing a gorge on a
self-built rope bridge or abseiling into a canyon – in a self-organized way, beginning with
choosing some of the group members to form a management team who is responsible for
planning, procurement, and allocation of resources. Only security and procurement of the
necessary equipment are beyond the group’s responsibility and outsourced to professional
alpinism trainers.
4.3 Clinical component
The essential principles of the clinical component (“Close Reality”) are (1) the holistic
consideration of both normative-rational issues and socio-cultural issues, (2) the affiliation
of knowledge and experience, intellect and intuition, (3) a high degree of motivation based
on a real case with proximate impact on the students’ personal social and financial
success or professional advancement, and (4) immediate feedback by scientific staff,
fellow students and, if applicable, clients in multiple feedback loops. At first sight, our
clinical component might look like the business planning courses that are most common in
entrepreneurial programs, so in the next two chapters we want to elaborate how we
attempt to meet the above claims.
5. An alternative (experience-oriented) approach: The clinical component
The development of a business plan long ago has been investigated to be the most
important feature of entrepreneurship courses (Hills 1988), albeit this is subject to critical
reviews: Honig (2004: 258) argues, that “neither the teaching of business plans, nor the
plans themselves, are sufficiently justified on the basis of theoretical or empirical literature
…There is little or no conclusive proof that [business planning] helps students learn the
requisite aspects of the field, or that it is of any benefit should they eventually decide to
become entrepreneurs”. Further, “once a plan is written, it may psychologically limit the
framework of options available to an organization and be outdated due to a constantly
changing environment”. (260)
To overcome these concerns we have developed “Close Reality“ (The term is also used in
HR development concepts, Herbek 2010 b). A medical study without integration of a
teaching hospital can hardly be imagined, and for entrepreneurial education the same
form of integration – let us call it clinical component – is desirable to build the bridge
between academia and industry, to enter it, and to explore and affiliate both worlds. The
philosophy follows the systemic-constructivist paradigm, thusly considerably increasing the
challenges for a university-level education, as the task is not only to transfer knowledge –
which seems to be sufficient according to the techno-causalistic paradigm – but
furthermore to suggest an understanding of organizations as holistic social systems with
complex interpersonal relations and implicit rules.
The pivotal challenge for an entrepreneurial or managerial education following the
systemic-constructivist paradigm is integrating normative-rational knowledge into the
socio-cultural context, systematically discovering opportunities, collect applied experience,
and incorporate all this into a concept of entrepreneurial or managerial work.
In the middle of the two year program each student has to present a project in an elevator
speech to the class and to the instructors. Approximately 40% of the projects are selected
for proceeding, with the selection being done conjointly by students and instructors. An
intervention might be necessary, if the plan seems unable to be finalized within six
months, or if there are any other obstacles apparent. The students then form groups of
two or three who cooperate in developing the project.
The project can be the creation of a new enterprise, the establishment of a new business
segment within an existing enterprise, the takeover of an existing enterprise in a
turnaround situation or the foundation of a new subsidiary of an existing enterprise in
another country. To give the task a conceptual framework, the development is recorded
and presented in the form of a business plan. The above cited arguments against
business planning do not appear in our setting, because the students either start their own
real business or they have an explicit client – the entrepreneur or the responsible manager
– and they permanently cooperate on the project with the client, with other students, and
with our scientific staff over a period of six months. This triggers a high degree of
motivation because the real case has proximate impact on the students’ personal social
and financial success or professional advancement. The status is presented monthly to
the class, and so there is feedback by scientific staff, fellow students and, if applicable, the
clients in multiple feedback loops with emphasis on both normative-rational and socio-
cultural issues.
Working “Close Reality” increases the motivation for all involved stakeholders – teachers
as well as students – and uncovers complexity that usually is missed in the laboratory
situation of a lecture room or the work on case studies. Besides the broad variety of
normative-rational issues (like strategy, organization, marketing, sales, and finance),
socio-cultural aspects appear, like: To what extent do the members of the student group
believe in the project and the acting persons (e.g. the client)? What kind of relationship
between the group and the client develops and to what intensity? How does the history of
the company interfere with the project, especially when the task is the creation of a new
business segment within an existing enterprise? If, what is common, resistance against
change, but also willingness to change appear in the course of the project, where or who
are the activating and where/who are the obstructing forces? Precariousness, discomfort
or even alienation in the client system may be perceived.
In the end, passable solutions have to be found, that consider both, rational necessities
(like a critical view of the core competencies, differentiation, competition, and of course
financials) as well as all socio-cultural factors. In some cases it is necessary to say a clear
“no” to a project, to advice against the founding of the new venture or business segment,
and to communicate this perspective in a socially compatible way to the client. In this
context “Close Reality” occurs.
6. Examples for businesses that originated in “close reality”
Up to date some 60 businesses have been developed by our students, with a distribution
of about half new enterprises and half new business segments within existing enterprises.
Our key evaluation criterion for the impact of the clinical component is the share of
successfully implemented projects: Until now, approximately 50% arrived at reality. They
represent a broad range of industries from dental technology to CNC plasma cutting, from
environmental consulting to ecological fish farming, from prefabricated houses to the hotel
business, from cancer research to the funeral industry.
Exemplarily we want to present two projects – the start-up of a subsidiary in another
country that involved the establishment of a new business segment and the foundation of
a new enterprise – where the interdependence of the normative-rational and the socio-
cultural dimensions became distinctively visible. This way we want to point out both the
procedure and the effectiveness of “Close Reality”.
6.1. Overcoming a mental blockade to do something different from the headquarter
Austrian company A, belonging to the commercial cleaning industry, intended to open a
subsidiary in one of the major cities in western Romania. After the fall of the iron curtain a
huge number of western companies had entered the Romanian market, including many
from Austria and other German speaking countries. These corporations, many of them
already clients of company A in Austria, formed a good customer basis. The plan was to
offer premium (and high-priced) cleaning services mainly in the food processing and in the
health service industries. Provided with data from the parent company, and highly
motivated to do research on their own it was no big deal for the students (one of whom is
a senior manager in the parent company) to develop the marketing strategy, to design the
services, and to calculate the profitability. Yet there appeared a strategic challenge that
was urged by fellow students as well as by the scientific staff: The project group proposed
to additionally offer low-priced cleaning services in an attempt to attract local Romanian
customers and so to facilitate growth.
Apparently, offering low-priced as well as high-priced services causes a bunch of
problems. Labor cost is quite different between office cleaners and highly qualified
cleaning staff in a hospital’s surgery department. Training for skilled cleaners in the food
processing industry with its elaborated hygiene specifications requires specialized
seminars that may be adequate only for educated employees, while instructing office
cleaners can be done on the job. Performance evaluation of high-qualified personnel is
oriented on qualitative criteria, while low-qualified personnel are assessed on the basis of
quantitative rates (like square meters per hour). Usually the supervision of unskilled
workers is more direct than the supervision of skilled staff. Low-priced services need to be
standardized, high-priced services usually are individualized. Last but not least the
company’s image is shaped by the low- or high-price profile.
Of course the importance of distinguishing between a cost leadership strategy and a
differentiation strategy is familiar to the students when they start their entrepreneurial
project, so it was amazing why they sticked to the idea of mixing both strategies in the
subsidiary, and investigating the reasons was the trigger to integrate the socio-cultural
dimension. It turned out that the parental company in Austria had just introduced the
specialized cleaning services a few months ago, while they had long experience in offering
low-cost cleaning services. Without instantly realizing it, the company had become
exposed to an unclear strategic positioning. It is a common experience that strategic
ambiguity does not necessarily lead to immediate problems, it can take years until they
become apparent to everyone – but then the damage might be irreversible. It was the
establishment of the foreign subsidiary that disclosed the problem. But it is not so easy to
suggest a different strategy in a subsidiary, it will probably be perceived as criticism on the
Austrian headquarter, so the expectable consequence was a mental blockade.
Discovering this context was an exciting event for the project group. Still they had a tough
task to complete: to convince the senior management of rejecting the idea to offer low-
priced services in Romania.
6.2. The delicate decision to let loose
Company B was a manufacturer and lessor of agricultural and forestral machinery. The
cash cows were forestral trailers for trucks and tractors. It was foreseeable that this cash
cow would produce less milk in the future. Luckily a successor was about to be launched:
the pelletsmaker. This machine was designed to process lumber waste that remained
from timber harvesting into wood pellets for heating purposes. This lumber waste usually
is disposed by fire or simply left for rotting. So the basic idea was to convert the waste into
a marketable product. Instead of collecting the material and transporting it to a stationary
pellet plant, the “factory” should be transported on a semi-trailer truck to the material,
process it to pellets, and distribute the finished goods locally. The reduction of transport
routes and the facilitation of logistic formed the basis of a favorable calculation of the
product costs.
The project was a start-up, a foundation of a new enterprise. However, in the course of the
project development, the team came up with the proposal to integrate the stalling business
of the existing company into the new venture. This was surprising, as the businesses were
completely different, with only some overlap in the customer groups. The cheap and
technically simple forestral trailers were likely to corrupt the high-tech image of the
pelletsmaker, and obviously all the problems of strategic ambiguity could be expected in
this context. The project group made substantial efforts for a strategy definition that could
justify the proposal, like using two brands, but it was visible that this was just a kind of self-
excuse. We decided to investigate the reasons of this proposal, and it turned out that they
were solely socio-cultural. There was some fear that the new product could flop on the
market, and the old products were perceived as a fall-back solution. The project also was
part of a generation change in the company. One of the group members – the one who
had the business idea for the pelletsmaker – was a younger relative of the old company’s
founder. He did not want to displease the senior, and this caused a mental resistance
against a revolutionary access to the future. There was no problem in defining the core
competences, formulating the marketing strategy, assembling the required resources or
funding the project – i.e. in the normative-rational dimension. The real difficult part of the
project was socio-cultural: The delicate decision to let loose.
7. Conclusion
This paper discusses the features of an entrepreneurial MBA program which follows the
systemic-constructivist management approach by integrating normative-rational
knowledge into the socio-cultural context. Normative-rational issues are easily teachable,
but socio-cultural issues can only be touched on in the lecture room situation, so the
integration of both dimensions is hard to accomplish. Case studies are a helpful approach,
but in most cases they do not trigger emotions in the students. Working on a real case can
initiate emotions like passion, confidence in one’s own concept, and identification with the
idea – just like in medical studies, were the integration of a teaching hospital is a matter of
course.
To achieve the target we have introduced “Close Reality”, a clinical component, where
students develop a new business. Fictional business plans do not enable the experience
of the socio-cultural dimension. We suggest using real projects instead, where the project
team members either have an entrepreneur or manager as client or develop their own
start-up venture. The contact to the client or the personal involvement of a student who
builds up his or her own business is essential for a holistic understanding of
entrepreneurship.
The affiliation of knowledge and experience, intellect and intuition, and sufficient time for
reflection are essential. For the evaluation of the intermediate presentations of the
business plan we developed some boldness in incorporating our gut feeling. Too little as
well as too much persuasive power in the presentations is suspicious: Normative-rationally
correct but without passion, or conceptionally insufficient but with a dazzling sales show.
Unfortunately it is impossible to immediately recognize the success of our interventions,
because the realization of the projects will usually exceed the length of the study. We
admit that to completely fulfill the claim of “Close Reality” it would be necessary to
incorporate the evaluation of the whole project as a learning input.
In many projects the conflict between normative-rational needs and socio-cultural
feasibility becomes apparent. Integrating both forces without making a rotten compromise
requires (and develops) creativity, emotional power, empathy and persistence. In reality it
is usually the normative-rational dimension that misses out, in academic education it is the
socio-cultural dimension that is ignored. Close Reality attempts to affiliate both
components.
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doc_143116596.pdf
This detailed explanation pertaining to close reality an entrepreneurial component in management education.
Close Reality – An Entrepreneurial Component
in Management Education
Karl Zehetner
1
& Peter Herbek
PEF Privatuniversität für Management
Brahmsplatz 3, A-1040 Wien
Tel: +43/(0)1/534 39-0
Contact:
Karl Zehetner: [email protected]
Peter Herbek: [email protected]
Experience-based paper presented at the International Conference on Management
Learning “Management Makes the World Go Around"
organized by the M/O/T school for Management, Organizational Development and
Technology
Vienna, Austria, December 1-4, 2010.
Reference:
Zehetner, K. & Herbek, P. 2010: Close Reality – An Entrepreneurial Component in
Management Education. M/O/T International Conference on Management Learning,
Vienna.
1
Corresponding author
Download from www.wbg.at
Abstract
Entrepreneurship can only be grasped, if it is experienced. This paper describes the
features of an entrepreneurial MBA program that follows the systemic-constructivist
management approach by integrating normative-rational knowledge into the socio-cultural
context. This is achieved by “close reality”, a clinical component, where students develop
a new business, which can be the creation of a new enterprise, the establishment of a
new business segment within an existing enterprise, the takeover of an existing enterprise
in a turnaround situation or the foundation of a new subsidiary of an existing enterprise in
another country.
To support the cultivation of the students’ entrepreneurial awareness and competence we
concentrate on experienced students (more then five years of professional experience),
and included a coaching component – we call it competence development – that is based
on the solution-focused approach and the concept of competence as self-organization
disposition.
The essential principles of the clinical component are (1) the holistic consideration of both
normative-rational issues, like strategy, structure, financials, and socio-cultural issues, like
identity, leadership, or corporate culture, (2) the affiliation of knowledge and experience,
intellect and intuition, (3) a high degree of motivation based on a real case with proximate
impact on the students’ personal social and financial success or professional
advancement, and (4) immediate feedback by scientific staff, fellow students and, if
applicable, clients in multiple feedback loops.
The application of these principles is presented using two examples of the successful
establishment of new businesses that originated in the clinical component of our program.
Close Reality – An Entrepreneurial Component in Management
Education
1. The controversy over management and entrepreneurship education
Business schools have experienced notable growth both in the number of students and in
the number of institutions. A quick inquiry in any of the major web search engines
indicates that the number of MBA programs has also increased in German-speaking
countries over the last decade. The impact of both management education and
entrepreneurial education has been controversially debated. Critical comments, like that
there is “less success than meets the eye” (Pfeffer & Fong, 2002) or that these programs
are “teaching the wrong people in the wrong ways with the wrong consequences”
(Mintzberg, 2004) have been commonly cited in executive education literature. The
financial crisis since 2007 has raised even more acute questions on the effectiveness, the
purpose, or even the harm of management education programs. “Perhaps we will become
acutely aware of the absurdity of training future managers in terms of abstract decision
making techniques only, largely ignoring the complex dynamics of real life in organization”
(Stacey, 2010: 228).
When we designed a new MBA program at the climax of the dotcom-bubble and started it
short after the burst, we introduced a significant entrepreneurial component, which is the
core of the whole program. The plan was to offer an entrepreneurial perspective to those
students who are latently interested in self-employment, and, drawing from the idea of
intrapreneurship (Pinchot, 1985), to create entrepreneurial awareness in those students,
who prefer a management career. The fundamentals of the program’s concept have not
changed over the years, and we are even more convinced of the model now in the era of
the mother of all financial crises, when business schools are urged “to provide
opportunities for managers and leaders to understand what they are doing in reflexive
ways” (Stacey, 2010: 228).
Designing a management education with an entrepreneurial emphasis raises the question,
if entrepreneurship can be taught at all. Only few scientists in the area of entrepreneurship
claim that they have actually experience as entrepreneurs. Some of those who have, like
David Birch, say that it is impossible to teach people to be entrepreneurs (Aronsson, 2004:
289). The “three skills that an entrepreneur needs to know and master [are] selling,
managing people, and creating a new product or service. And none of them are taught in
the business school” (290). On the other hand, there is “preliminary evidence that
entrepreneurial attributes can be positively influenced by educational programs and that
many entrepreneurship programs and courses are able to build awareness of
entrepreneurship as a career option and to encourage favorable attitudes towards
entrepreneurship” (Gorman, Hanlon & King, 1997: 63). Katz (2007: 223) found that “the
proof that non-entrepreneurs can successfully teach entrepreneurs is evident”. We
conclude that it is possible to teach entrepreneurship, but it is necessary to overcome
some deficiencies in entrepreneurial education.
2. Deficiencies in entrepreneurial education
Contemporary entrepreneurial education is affected by three deficiencies. First, there is an
overemphasis on analysis and techniques at the expense of developing personal skills.
Second, there is a narrowed view on new firms as high-growth ventures, although most
new enterprises have a moderate lower growth rate which does not mean they are a
failure. Third, the socio-cultural dimension is widely ignored in the education of managers
as well as entrepreneurs, mainly because it is difficult, if not impossible, to teach it in a
lecture room situation or with case studies. The socio-cultural dimension can only be
grasped if it is experienced.
2.1. The first deficiency: Overemphasis on analysis
Much criticism has been made on the overemphasis on analysis in business management
education. There is an old joke that MBA stands for “management by analysis”. Mintzberg
(2004: 38) even polemicizes that management is reduced to decision making, decision
making is reduced to analysis and analysis is reduced to technique. Paying too much
attention on quantitative analysis is at the expense of developing leadership and
interpersonal skills as well as communication (Porter, McKibbin 1988: 65). “Contemporary
business education focuses on the functions of business more than the practice of
managing” (Mintzberg & Gosling 2002: 28)
2.2. The second deficiency: Narrowed view on new firms
Whoever operates a business school program with an entrepreneurial component should
reflect who can benefit from their education. There are various motivations for starting a
business. Some entrepreneurs start a venture with the intention of fast growth. These
founders already have the concept for a promising product or service, they usually depend
on venture capital to cover the financial needs of conquering the market and they have to
deal with many organizational changes on their way from the backyard garage to the
multinational corporation. Others start their business as a form of self-employment, in
some cases involuntarily after they lost their jobs as employees, in many cases voluntarily
to be independent from an employer. The heaviest initial challenge for these
entrepreneurs is developing their product or service ideas to a marketable form and build
up selling power. A third group, who amazingly is widely ignored by business schools, are
existing entrepreneurs who want to improve their entrepreneurial skills. They learn like the
others, but they contribute to the program considerably more and thus are very valuable
participants. And there is an important fourth group of potential students, individuals who
prefer a management career (and usually are already managers) and who feel that they
need entrepreneurial awareness for advanced tasks like starting new business segments
within existing companies or expanding the business into new markets.
In our perception this plurality of motives is not sufficiently recognized by business
schools. Katz (2007: 216) pointed out that “economists think of every … smaller firm as
alike, but research clearly shows two types of smaller firms: the classic small business,
which provides a substitute income to employment by others, with modest prospects for
growth, and high-growth ventures that start small but grow into major firms like Google or
Microsoft.” Consequently, entrepreneurial education concentrates on issues like
innovation, funding, and organizational development. Excellent models of the
entrepreneurial process have been developed in the last decades, e.g. the model depicted
in Baron & Shane (2008: 16) that we actually use in our entrepreneurship lectures. It
describes six key phases of the entrepreneurial process: New idea or opportunity
recognition; Initial decision to proceed; Assembling the required resources; Actual launch;
Building a successful business; Harvesting the rewards (exit by founders). These
instructive models are very useful for teaching, but unintentionally they are possible to
contribute to the narrowing of the view on new firms, particularly in education which
emphasizes analysis, models and techniques, so the narrowing might be amplified by the
above noted first deficiency.
2.3. The third deficiency: Teaching entrepreneurship instead of making it an experience
Linking research and teaching is an essential requirement of every academic education. In
some academic fields, particularly in social and economic sciences, experience should be
integrated as a third element. It is precisely the connection of these three dimensions – in
whatever order – that is crucial for the process of cognition. Unlike in natural science there
are no universally valid principles in economics – in our domain the apple doesn’t always
fall straight down, sometimes it makes a bow or even starts to float – and so we have to
content ourselves with probability structures in our conclusions. This enhances the
importance of expert knowledge, which has to be integrated into teaching, and the best
way of integration is to experience it in action.
Organizational development is a product of normative-rational professionalism and socio-
cultural abilities (Herbek 2010 a: 31). A lack of one of these can not be compensated by
the other – zero times infinite still equals zero. Normative-rational professionalism and
socio-cultural abilities manifest in the acting individuals (notably managers and experts) of
the organization as well as in the rules that inhere in every social system. These rules
usually become independent from the individuals in the course of time (Luhmann 1984).
Integrating socio-cultural issues pushes the boundaries of traditional entrepreneurial
education. The normative-rational dimension can easily be explained (yet sometimes not
immediately understood) in the laboratory-like situation of the lecture room or in the study
of business cases, but the socio-cultural dimension usually eludes being imparted
authentically, and transporting the inherent rules of a social system in a lecture auditorium
is virtually impossible. This is a central educational problem in applied social and
economic science, and particularly in entrepreneurial education.
Lessons can be learned from medical studies, where the affiliation of academia and
experience is perfectly accomplished by the integration of a teaching hospital. It enables
the students to immediately practice their acquired academic (normative-rational)
knowledge at a hospital patient and to experience the socio-cultural dimension of being a
medical professional: Exposition to stressful situations, dealing with difficult patients,
explaining shocking prognoses, the need to make decisions under uncertainty, ethical
challenges or emotional involvement.
The thesis statement that forms the basis of our program is: Entrepreneurship can only be
grasped, if it is experienced.
Before we discuss the principles, structures and contents of our educational concept
“Close Reality”, it might be helpful to define essential terms that are used in the following
chapters. This will illustrate how and where the third element – experience – is introduced
and how the three elements – research, teaching, and experience – are linked up,
following the systemic approach that the correlations between elements are crucial rather
than the particular elements themselves. Our MBA program is based on a systemic-
constructivist understanding of management. In contrary to a deterministic (causalistic)
management understanding, which presumes controllability of an organization, the
systemic-constructivist approach accepts that complex social systems can not be
controlled and should better be influenced in a target-oriented way.
3. Overcoming the deficiencies: Systemic-constructivist management approach
Malik (2000: 81) describes two paradigmatically different ways of understanding the
management of enterprises. The first is deterministic (“techno-causalistic”) and based on
the machine model, the other one is systemic-constructivist and based on the model of a
living organism.
Techno-causalistic management starts with analyzing tasks and processes within the
system, and it assumes that these elements can be composed in the “right” way to design
the optimal organization. It is based on the premiss of causality within a complex system
and ignores interpersonal relations. It focuses on the normative-rational dimension and
entirely fades out the socio-cultural dimension.
The fundamental idea of systemic-constructivist management is the organism analogy.
But is it possible to transfer research findings for living systems to social systems?
Sociologist Niklas Luhmann (1984 and 2000) is one of the main promoters of this idea.
Social systems are never made; they develop, learn from mistakes, perish, and are
replaced by new ones. Social systems are widely self-organizing (Steinkellner 2007: 63-
64).
Following this approach, the complexity of management increases and so does the
discomfort of managers and entrepreneurs and their fear of being unable to control the
system. Consequently, the socio-cultural dimension is often neglected, and techno-
causalistic approaches are preferred. We assume that this also applies to most
management and entrepreneurial education.
4. The features of our entrepreneurial MBA program
When the “Intra- and Entrepreneurship” MBA program started at a state accredited private
university in Austria (PEF Private University of Management, Vienna) in 2002, it followed
the style of the Anglo-Saxon business school model, with a significant share of instructors
from US-American and British universities, and with a strong international orientation.
There was some kind of differentiation from other programs, like the concentration on
professionally experienced students, but in the main it adopted the typical academic
entrepreneurship education model that consists of two cores, with the first one providing
knowledge of the functional areas of business (like accounting, finance, marketing,
management), and the second focusing on the completion of a business plan (Katz 2007:
213). The program received good evaluations, but at that time competition significantly
increased as various business schools started MBA programs mostly with American
partner schools, and we concluded that our program should develop more differentiation.
In 2004 we redesigned it to overcome the above mentioned deficiencies we had
investigated and started in fall 2004. Until now ten classes with approximately 160
students have passed the Intra- and Entrepreneurship MBA.
We classify the characteristics of the program into three elements: Content, didactic
elements, and the clinical component.
4.1. Content
It would not make sense to abstain from teaching business functions in an entrepreneurial
program, but it has to be taken into account that entrepreneurs use knowledge
individually. They “hinge on information that is not codified or highly idiosyncratic”
(Markman 2007: 72), so they “codify, process, and utilize that knowledge differently” (73).
In respect to content we found it beneficial to start with strategy, innovation, and
organizational behavior. There is a lot of analysis and technique in these subjects, but, in
contrast to for instance accounting, they leave space for reflection and expressing
individual views. Next we found it valuable to support students in deploying leadership
skills and emotional intelligence. Here it is obvious that benefits are mainly drawn from
experience, but we wanted to impart a research-based fundament, so we intensified our
existing courses in leadership and added courses in social psychology with a strong focus
on group behavior. Experience is built-up in our “leadership lab”, a didactic element which
is described below. Finally we found that is makes sense to reduce analytical skills training
(including financials, IT, process management, project management, marketing and law)
to the ability to communicate with experts in these areas in a feasible way, using their
preferred terminology. The goal is to deploy communicative competence to be able to lead
a team of financial, legal, marketing, logistics or IT experts or to outsource some of these
tasks, if the enterprise is intended to grow slowly.
4.2 Didactic elements
The findings in respect of didactic elements cultivating entrepreneurial awareness and
competence include the concentration on experienced students. The minimum access
requirement is five years of professional experience including significant management
experience. Students are practicing managers, they attend courses once a month
(Thursday to Saturday) and return to their work environments after the courses. It also
turned out to be advantageous for an entrepreneurial program to be established at a
smaller university: At universities the customers (i.e. the students) are an integral part of
the organizational structure, and that is likely to intensify the interaction between
instructors and students (Zehetner 2006: 185) – of course only if the university is not a
degree factory. We have also introduced a coaching element that we call competence
development, which is based on the solution-focused approach (de Shazer 1997, Lueger
& Steinkellner 2011), and the concept of competence as self-organization disposition
(Erpenbeck & Rosenstiel 2005; Steinkellner & Czerny 2010; Steinkellner & Czerny in
press). Here we take advantage of the fact that our university traditionally has a core area
in human resource management and coaching, so appropriate knowledge and skills are
available in the core faculty. Part of the competence development is the “leadership lab”, a
three day outdoor event where the group has to complete jobs – like crossing a gorge on a
self-built rope bridge or abseiling into a canyon – in a self-organized way, beginning with
choosing some of the group members to form a management team who is responsible for
planning, procurement, and allocation of resources. Only security and procurement of the
necessary equipment are beyond the group’s responsibility and outsourced to professional
alpinism trainers.
4.3 Clinical component
The essential principles of the clinical component (“Close Reality”) are (1) the holistic
consideration of both normative-rational issues and socio-cultural issues, (2) the affiliation
of knowledge and experience, intellect and intuition, (3) a high degree of motivation based
on a real case with proximate impact on the students’ personal social and financial
success or professional advancement, and (4) immediate feedback by scientific staff,
fellow students and, if applicable, clients in multiple feedback loops. At first sight, our
clinical component might look like the business planning courses that are most common in
entrepreneurial programs, so in the next two chapters we want to elaborate how we
attempt to meet the above claims.
5. An alternative (experience-oriented) approach: The clinical component
The development of a business plan long ago has been investigated to be the most
important feature of entrepreneurship courses (Hills 1988), albeit this is subject to critical
reviews: Honig (2004: 258) argues, that “neither the teaching of business plans, nor the
plans themselves, are sufficiently justified on the basis of theoretical or empirical literature
…There is little or no conclusive proof that [business planning] helps students learn the
requisite aspects of the field, or that it is of any benefit should they eventually decide to
become entrepreneurs”. Further, “once a plan is written, it may psychologically limit the
framework of options available to an organization and be outdated due to a constantly
changing environment”. (260)
To overcome these concerns we have developed “Close Reality“ (The term is also used in
HR development concepts, Herbek 2010 b). A medical study without integration of a
teaching hospital can hardly be imagined, and for entrepreneurial education the same
form of integration – let us call it clinical component – is desirable to build the bridge
between academia and industry, to enter it, and to explore and affiliate both worlds. The
philosophy follows the systemic-constructivist paradigm, thusly considerably increasing the
challenges for a university-level education, as the task is not only to transfer knowledge –
which seems to be sufficient according to the techno-causalistic paradigm – but
furthermore to suggest an understanding of organizations as holistic social systems with
complex interpersonal relations and implicit rules.
The pivotal challenge for an entrepreneurial or managerial education following the
systemic-constructivist paradigm is integrating normative-rational knowledge into the
socio-cultural context, systematically discovering opportunities, collect applied experience,
and incorporate all this into a concept of entrepreneurial or managerial work.
In the middle of the two year program each student has to present a project in an elevator
speech to the class and to the instructors. Approximately 40% of the projects are selected
for proceeding, with the selection being done conjointly by students and instructors. An
intervention might be necessary, if the plan seems unable to be finalized within six
months, or if there are any other obstacles apparent. The students then form groups of
two or three who cooperate in developing the project.
The project can be the creation of a new enterprise, the establishment of a new business
segment within an existing enterprise, the takeover of an existing enterprise in a
turnaround situation or the foundation of a new subsidiary of an existing enterprise in
another country. To give the task a conceptual framework, the development is recorded
and presented in the form of a business plan. The above cited arguments against
business planning do not appear in our setting, because the students either start their own
real business or they have an explicit client – the entrepreneur or the responsible manager
– and they permanently cooperate on the project with the client, with other students, and
with our scientific staff over a period of six months. This triggers a high degree of
motivation because the real case has proximate impact on the students’ personal social
and financial success or professional advancement. The status is presented monthly to
the class, and so there is feedback by scientific staff, fellow students and, if applicable, the
clients in multiple feedback loops with emphasis on both normative-rational and socio-
cultural issues.
Working “Close Reality” increases the motivation for all involved stakeholders – teachers
as well as students – and uncovers complexity that usually is missed in the laboratory
situation of a lecture room or the work on case studies. Besides the broad variety of
normative-rational issues (like strategy, organization, marketing, sales, and finance),
socio-cultural aspects appear, like: To what extent do the members of the student group
believe in the project and the acting persons (e.g. the client)? What kind of relationship
between the group and the client develops and to what intensity? How does the history of
the company interfere with the project, especially when the task is the creation of a new
business segment within an existing enterprise? If, what is common, resistance against
change, but also willingness to change appear in the course of the project, where or who
are the activating and where/who are the obstructing forces? Precariousness, discomfort
or even alienation in the client system may be perceived.
In the end, passable solutions have to be found, that consider both, rational necessities
(like a critical view of the core competencies, differentiation, competition, and of course
financials) as well as all socio-cultural factors. In some cases it is necessary to say a clear
“no” to a project, to advice against the founding of the new venture or business segment,
and to communicate this perspective in a socially compatible way to the client. In this
context “Close Reality” occurs.
6. Examples for businesses that originated in “close reality”
Up to date some 60 businesses have been developed by our students, with a distribution
of about half new enterprises and half new business segments within existing enterprises.
Our key evaluation criterion for the impact of the clinical component is the share of
successfully implemented projects: Until now, approximately 50% arrived at reality. They
represent a broad range of industries from dental technology to CNC plasma cutting, from
environmental consulting to ecological fish farming, from prefabricated houses to the hotel
business, from cancer research to the funeral industry.
Exemplarily we want to present two projects – the start-up of a subsidiary in another
country that involved the establishment of a new business segment and the foundation of
a new enterprise – where the interdependence of the normative-rational and the socio-
cultural dimensions became distinctively visible. This way we want to point out both the
procedure and the effectiveness of “Close Reality”.
6.1. Overcoming a mental blockade to do something different from the headquarter
Austrian company A, belonging to the commercial cleaning industry, intended to open a
subsidiary in one of the major cities in western Romania. After the fall of the iron curtain a
huge number of western companies had entered the Romanian market, including many
from Austria and other German speaking countries. These corporations, many of them
already clients of company A in Austria, formed a good customer basis. The plan was to
offer premium (and high-priced) cleaning services mainly in the food processing and in the
health service industries. Provided with data from the parent company, and highly
motivated to do research on their own it was no big deal for the students (one of whom is
a senior manager in the parent company) to develop the marketing strategy, to design the
services, and to calculate the profitability. Yet there appeared a strategic challenge that
was urged by fellow students as well as by the scientific staff: The project group proposed
to additionally offer low-priced cleaning services in an attempt to attract local Romanian
customers and so to facilitate growth.
Apparently, offering low-priced as well as high-priced services causes a bunch of
problems. Labor cost is quite different between office cleaners and highly qualified
cleaning staff in a hospital’s surgery department. Training for skilled cleaners in the food
processing industry with its elaborated hygiene specifications requires specialized
seminars that may be adequate only for educated employees, while instructing office
cleaners can be done on the job. Performance evaluation of high-qualified personnel is
oriented on qualitative criteria, while low-qualified personnel are assessed on the basis of
quantitative rates (like square meters per hour). Usually the supervision of unskilled
workers is more direct than the supervision of skilled staff. Low-priced services need to be
standardized, high-priced services usually are individualized. Last but not least the
company’s image is shaped by the low- or high-price profile.
Of course the importance of distinguishing between a cost leadership strategy and a
differentiation strategy is familiar to the students when they start their entrepreneurial
project, so it was amazing why they sticked to the idea of mixing both strategies in the
subsidiary, and investigating the reasons was the trigger to integrate the socio-cultural
dimension. It turned out that the parental company in Austria had just introduced the
specialized cleaning services a few months ago, while they had long experience in offering
low-cost cleaning services. Without instantly realizing it, the company had become
exposed to an unclear strategic positioning. It is a common experience that strategic
ambiguity does not necessarily lead to immediate problems, it can take years until they
become apparent to everyone – but then the damage might be irreversible. It was the
establishment of the foreign subsidiary that disclosed the problem. But it is not so easy to
suggest a different strategy in a subsidiary, it will probably be perceived as criticism on the
Austrian headquarter, so the expectable consequence was a mental blockade.
Discovering this context was an exciting event for the project group. Still they had a tough
task to complete: to convince the senior management of rejecting the idea to offer low-
priced services in Romania.
6.2. The delicate decision to let loose
Company B was a manufacturer and lessor of agricultural and forestral machinery. The
cash cows were forestral trailers for trucks and tractors. It was foreseeable that this cash
cow would produce less milk in the future. Luckily a successor was about to be launched:
the pelletsmaker. This machine was designed to process lumber waste that remained
from timber harvesting into wood pellets for heating purposes. This lumber waste usually
is disposed by fire or simply left for rotting. So the basic idea was to convert the waste into
a marketable product. Instead of collecting the material and transporting it to a stationary
pellet plant, the “factory” should be transported on a semi-trailer truck to the material,
process it to pellets, and distribute the finished goods locally. The reduction of transport
routes and the facilitation of logistic formed the basis of a favorable calculation of the
product costs.
The project was a start-up, a foundation of a new enterprise. However, in the course of the
project development, the team came up with the proposal to integrate the stalling business
of the existing company into the new venture. This was surprising, as the businesses were
completely different, with only some overlap in the customer groups. The cheap and
technically simple forestral trailers were likely to corrupt the high-tech image of the
pelletsmaker, and obviously all the problems of strategic ambiguity could be expected in
this context. The project group made substantial efforts for a strategy definition that could
justify the proposal, like using two brands, but it was visible that this was just a kind of self-
excuse. We decided to investigate the reasons of this proposal, and it turned out that they
were solely socio-cultural. There was some fear that the new product could flop on the
market, and the old products were perceived as a fall-back solution. The project also was
part of a generation change in the company. One of the group members – the one who
had the business idea for the pelletsmaker – was a younger relative of the old company’s
founder. He did not want to displease the senior, and this caused a mental resistance
against a revolutionary access to the future. There was no problem in defining the core
competences, formulating the marketing strategy, assembling the required resources or
funding the project – i.e. in the normative-rational dimension. The real difficult part of the
project was socio-cultural: The delicate decision to let loose.
7. Conclusion
This paper discusses the features of an entrepreneurial MBA program which follows the
systemic-constructivist management approach by integrating normative-rational
knowledge into the socio-cultural context. Normative-rational issues are easily teachable,
but socio-cultural issues can only be touched on in the lecture room situation, so the
integration of both dimensions is hard to accomplish. Case studies are a helpful approach,
but in most cases they do not trigger emotions in the students. Working on a real case can
initiate emotions like passion, confidence in one’s own concept, and identification with the
idea – just like in medical studies, were the integration of a teaching hospital is a matter of
course.
To achieve the target we have introduced “Close Reality”, a clinical component, where
students develop a new business. Fictional business plans do not enable the experience
of the socio-cultural dimension. We suggest using real projects instead, where the project
team members either have an entrepreneur or manager as client or develop their own
start-up venture. The contact to the client or the personal involvement of a student who
builds up his or her own business is essential for a holistic understanding of
entrepreneurship.
The affiliation of knowledge and experience, intellect and intuition, and sufficient time for
reflection are essential. For the evaluation of the intermediate presentations of the
business plan we developed some boldness in incorporating our gut feeling. Too little as
well as too much persuasive power in the presentations is suspicious: Normative-rationally
correct but without passion, or conceptionally insufficient but with a dazzling sales show.
Unfortunately it is impossible to immediately recognize the success of our interventions,
because the realization of the projects will usually exceed the length of the study. We
admit that to completely fulfill the claim of “Close Reality” it would be necessary to
incorporate the evaluation of the whole project as a learning input.
In many projects the conflict between normative-rational needs and socio-cultural
feasibility becomes apparent. Integrating both forces without making a rotten compromise
requires (and develops) creativity, emotional power, empathy and persistence. In reality it
is usually the normative-rational dimension that misses out, in academic education it is the
socio-cultural dimension that is ignored. Close Reality attempts to affiliate both
components.
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