Relevance of Higher Education in Entrepreneurship

Relevance of Higher Education in Entrepreneurship

The OECD analysis revealed that one in four Latin Americans is between 15 and 29 years old and that two out of ten of them "work" in the informal sector, and the rest neither work nor study nor receive any kind of training.

Pedro LOPEZ SELA

University education has gone from being a necessity for professional growth to being a seedbed for new ideas, advanced research in different fields of knowledge, and a potential factor for the solution of many of the great global problems facing humanity.

More than the academic part, university research - whatever the educational institution - has had a fundamental impact on the lives of individuals and different societies, changing the world in one way or another.

Universities and institutes of higher education in the world influence society in environmental, political, economic, and social aspects. If there is no research, there is no progress, and the world could be paralyzed, which would mean no development; technologies or medical science would not progress. In some way, this would have repercussions on the countries' economies.

If you have any doubts about what university research has meant for the advancement of humankind, just think of some significant achievements: Hans Kosterlitz and John Hughes at Humboldt University in Berlin were the first to discover in 1975 that endorphins (those responsible for feeling pleasure) occur naturally in the body; Alec Jeffreys at the University of Leicester discovered in 1985 that each person's fingerprint is unique; Freddie Williams and Tom Kilburn at the University of Manchester, in 1948, created the world's first stored-program computer, which gave way to video games, the Internet and instant communication; and in 1995, James Lovelock at Yale University proposed the theory that the Earth is a living organism that constantly reacts and adapts to its circumstances (Gaia Hypothesis).

Beyond Science

In addition to scientific developments of great value, universities have also been concerned about entrepreneurship training. Not only because of the impact that the creation of companies has on the economic development of societies but also because it is increasingly less likely that a professional will find a real and competitive job option.

An analysis conducted by the OECD in 2017 reviewed the participation of young Latin Americans in productive activities, examining their insertion in the labor market, the skills acquired, and their entrepreneurial activities. The analysis revealed that one in four Latin Americans is between 15 and 29 years old and that two out of ten of them "work" in the informal sector, and the rest neither work nor study nor receive any kind of training. The situation worsened with the pandemic because before the pandemic. Young Latin Americans had few employment prospects, which, with the pandemic, further exacerbated due to the economic slowdown and the closure of many companies that could not withstand the confinement. In addition, no one motivated these young people to develop an entrepreneurial venture to help them weather the crisis.

However, it is worth remembering that in August 2015, the research group on Entrepreneurship at the National University of Colombia conducted research with undergraduate students, a level they considered "Research Seedbed" to know, from the theoretical review, the contribution that higher education makes to the process of becoming an entrepreneur. As a fundamental result, it was evidenced that the training processes in entrepreneurship develop attitudes, awaken interest and offer useful knowledge to develop the entrepreneurial potential of young people, so the team considered its growth in higher education institutions was important. The study was published in the Revista de Investigaciones de la Escuela de Administración y Mercadotecnia (EAM) del Quindío.

Another of the derivations of this study was that students who have had contact with programs to form competencies and strengthen the entrepreneurial spirit have greater opportunities for entrepreneurship than those who have not had contact with this type of training.

Dieter Holtz, President of Laureate Education Inc. in Mexico, said, "The role of higher education in strengthening the development of skills and promoting entrepreneurship among its students is fundamental. Moreover, universities are an indispensable link so that the ideas generated in the classroom can be transferred to the commercial sphere."

He suggests that empowering creative minds is essential to encourage competencies such as the ability to take risks and manage them, develop proactive attitudes and teamwork, and learn to deal with uncertainty, among others. Also, it recognizes the importance of exercising the entrepreneurial mindset through practice such as innovation competitions. "An example of this was Pitch to Rich Mexico 2016, which arose thanks to the alliance between Virgin Mobile and Laureate Mexico to promote university entrepreneurs through a business competition based on developments with applications in mobile devices and with a social benefit." More than 100 projects from 45 universities in Mexico participated in this event, and the winner was a company that developed a platform focused on employment for domestic workers.

For his part José Ernesto Amorós, National Director of Doctoral Programs / Co-leader of the Strategic Focus Research Group (Giees) in Entrepreneurship and Leadership of the Graduate School of Business Administration and Management (EGADE) of the Tecnológico de Monterrey, upon presenting the 2019 Global Entrepreneurship Monitor (GEM, 2018-2019) report commented that one of its conclusions is that "Among the factors that present the greatest areas of opportunity are the education processes, specifically introducing notions of entrepreneurship, at basic levels (primary and secondary)." He also highlighted that two of the best-evaluated aspects were developing a pro-entrepreneurship culture, where society values the creation of new businesses, and training for entrepreneurship in higher education. "This last aspect is very motivating, as it recognizes the relevant role of higher education institutions in favor of entrepreneurship."

The MIT Experience

The Massachusetts Institute of Technology (MIT) is launching a new approach to company formation called "Proto Ventures". This approach will oversee the emergence of new companies through a full cycle from discovering ideas and resources within the MIT community to exploring the problem-solving space, a systematic process of risk reduction, and helping to build a "proto company" that demonstrates its viability and the strength of the technology.

This program will operate based on several "channels" led by a Venture Builder. I.e., a subject matter expert with a Ph.D. in a scientific or technological field and proven leadership experience, whose role has different aspects comparable to that of an MIT post-doc, a Startup founder, or an associate of a Venture Capital firm.

The pipelines are delineated topic areas, such as healthcare and artificial intelligence, in which the teams will work. The Venture Builder is someone within the MIT community whose sole job is to discover ideas that can lead to transformative technology companies and lead the iterative experimentation and company development process. This is someone with deep technology expertise, a full-time MIT employee, who will have a budget and the support of a team of Venture Fellows (current members of the MIT community looking to work on projects) whom they will recruit.

Additionally, the Venture Builder will be supported by an advisory board and a phased program framework (discovery, identification, exploration, and experimentation) with a series of milestone-based deliverables to help structure progress.

The Proto Ventures Program finds innovative people, ideas, and technologies at MIT. It brings them together to create transformative technology companies to solve "the world's grand challenges." It is expected that this program will generate new markets and transformative technology companies with a profound impact on the world's big problems. This program follows the same development and licensing rules as the rest of the research at MIT.

In line with the above, a movement has recently emerged that brings together a large global group of change agents who seek to create possibilities for solutions to various global problems. It involves graduates (masters and doctors) from different universities, organizations that support entrepreneurship, and some foundations, to integrate a massive community of change agents, converting the intellectual property into significant technological applications.

Among the many institutions that have joined are AUTM, EGADE Business School, Global Entrepreneurship Network, Hultz Prize, MIT, NACO, Alianza del Pacífico, Pontificia Universidad Javeriana de Colombia, Red Global MX, Red OTT Mexico, Stanford, UK Royal Academy of Engineering, Universidad Católica de Chile, Universidad Nacional Autónoma de México, University of Sheffield, University of Sheffield, University of West Indies, US National Innovation Network, US National Science Foundation, UT Austin, Virginia Tech, World Intellectual Property Organization, and XPRIZE.

It is a movement that helps innovators design, validate, and develop business models by linking academia with research centers and corporations, which has realized the importance of science and technology-based entrepreneurship and shortening the time to market for products or services.

What About Marketing?

University research is not only for consumption at the university, especially when its objective is related to solving major problems of humanity. A product or service emanating from an institution of higher education also has a commercial value that benefits both the author(s) and the institution itself.

The process of commercialization of research is carried out through a process called Technology Transfer. Through this process, companies or organizations are responsible for transferring among themselves the knowledge, technologies, and skills for better development and production of goods and services to generate technological intelligence for organizations that lack resources to improve within and outside the company.

Technology transfer adds value to the product or service, lost due to a lack of knowledge and technological advances. At the same time generates competition among organizations that have the financial resources to invest in scientific and technological research to not lose market share.

While some scientists continue to publish their research in renowned journals to obtain more grants and continue their research, others see in the results of their work a possible new product or service for the good of society. This is when they turn to technology transfer.

According to research conducted by David Hsu of the Wharton School and Matt Marx of Cornell University, about 74% of academic discoveries translated into products obtained patents and appeared in academic journals. According to William Shaw, senior director of Technology Transfer and Industry Collaboration at Tufts University, "Here at Tufts, our mission is to bring together the various stakeholders necessary to get an idea out of the lab and into the marketplace. Bringing the right team together will ultimately get it to market with the greatest likelihood of success."

For researchers who follow the entrepreneurial path, there are programs in some countries that offer early-stage funding to bring university research to market. For example, in the United States, the government has implemented Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR).

There are also venture accelerators where the scientist can learn all about entrepreneurship; the only issue is that the result of university science must work, and proving it may take time. The measure of validation of the scientific idea is published in journals and patents. Business validation will be measured by the scientist's ability to get private investors or corporate partnerships, not by customer response or sales because the research may not reach the market for many years.

This commercialization of knowledge, its rapid expansion, and increasing reliance on computerization, big data analytics, and automation is shifting the world's economy towards one that relies more on intellectual capital and skills and less on the production process. It is what we now know as the Knowledge Economy.

The knowledge economy supports and thrives on innovation, research, and rapid technological advances. The overwhelming majority of knowledge economy workers are extremely computer literate and, thanks to institutions of higher education, are trained to create business and financial models. This is why there is a back-and-forth between research centers, universities, think tanks, and companies that use their discoveries. The emphasis on knowledge and innovation in the business world stimulates more and faster growth of information and data analysis and manipulation in the academic world.

In Sum, Four Points

  • Creating the better conditions for entrepreneurship, that is, having well-articulated ecosystems around universities, is a formula that has been very successful in several of the most emblematic places of entrepreneurship worldwide. Entrepreneurs and their companies are the generators of greater competitiveness and innovation, two indispensable aspects of the economic and social growth of any country.
  • In the 21st-century economy, it is also necessary to boost the ability to acquire new knowledge and continue learning throughout life. Fostering intellectual curiosity is vital for adapting to the speed of innovation and expanding entrepreneurs' chances of success.
  • Similarly, strengthening the link between higher education institutions and the productive sector is necessary for the successful development of the entrepreneurial ecosystem. To this end, training programs that combine classroom learning with work experience are crucial.
  • Business incubators in universities have also proven to be very useful. Since offering academic support for the business model, they approach sources of financing, advice for the Startup of the company, and follow-up in its first years.

Today's universities are challenged to foster entrepreneurship and not become more entrepreneurial themselves through more active participation in the solution of social problems. They should not be a mere spectator of change but become the main actor of such change, contributing by generating innovative ideas that drive their communities ' economic and social development.  Entrepreneurship is important as an element that generates wealth and employment.

A Cornell University study highlights two models of entrepreneurship education: Magnet and Radiant. The difference lies in where entrepreneurship is taught. The former implies that all programs are taught in a school or college. An example of this model is Babson College (Massachusetts), although this does not imply that students from other schools cannot attend. In the second model, courses are taught in several schools. For example, at Cornell University, courses are taught in all nine schools.

The bottom line is that knowledge provides the basis for the necessary technical expertise, data collection and analysis skills, and innovative management practices that enable companies and businesses to compete in the modern, global economy. In addition, specialized knowledge and skills can serve as productive assets for a company to employ or products for a company to market and sell.

Have you ever wondered why some universities are stronger in promoting entrepreneurship?

If you think that the teacher-student learning system no longer works to motivate entrepreneurship, what would you propose to your alma mater?

Do you think the higher education system should be more aggressive in promoting innovation and entrepreneurship?

What would you say has made MIT successful in new technologies and entrepreneurship?

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Pedro LOPEZ SELA

Pedro helps individuals & organisations thrive. He simplifies complexity, identifies inefficiencies, connects dots & imagines ideas that drive meaningful outcomes.