Entrepreneurial Model Counters Business School ‘Irrelevance’

Newswise — A Harvard Business Review critique of how many business schools are “institutionalizing their own irrelevance” by focusing on theory rather than practical education runs counter to a more entrepreneurial model embraced by the University of Missouri-Rolla’s three-year-old School of Management and Information Systems, where students must run their own companies before they graduate.

The critical article, “How Business Schools Lost Their Way,” by two professors at the University of Southern California’s Marshall School of Business, appears in the May issue of Harvard Business Review, which was published Thursday (April 28, 2005). The two professors, Drs. Warren G. Bennis and James O’Toole, conclude that business schools are “institutionalizing their own irrelevance” by focusing on theory and quantitative approaches. As a result, they are graduating students who lack useful business skills. The article is available online at harvardbusinessonline.hbsp.harvard.edu/b02/en/hbr/hbrsa/current/0505/article/R0505F.jhtml .

At the University of Missouri-Rolla School of Management and Information Systems, however, all seniors enrolled in the school get a practical education. As part of the school’s capstone course, students form real-world companies, present their business plans to venture capitalists (a local bank) and repay the loan and donate whatever profits they make to local charities.

The class, now in its second year, currently involves 66 students, who have formed four companies. Last spring, the two companies in the class donated more than $5,000 in profit to local community service agencies.

The capstone course draws students from three UMR academic departments: economics and finance, business administration, and information science and technology.

The class is taught by Dr. Lance Gentry, assistant professor of business administration, and Dr. Madhu Reddy, assistant professor of information science and technology and business administration at UMR.

The professors let the students divide responsibilities and grade each other based on perceived contributions to the companies. Each company elects a chief executive officer and chooses a team to make presentations to Phelps County Bank representatives, who approve the business plans before extending seed money loans.

“By the time students get to this course, they should have taken all the classes they need to be successful,” Reddy says. “In theory, they are ready for the real world.

“But the whole goal in many ways is to let them make mistakes. This is probably one of the last times they can make business mistakes without serious consequences.”

Earlier this spring, one of the graduates of last year’s capstone course, Aaron Clarke, was named the 2005 Student Entrepreneur of the Year during the four-campus University of Missouri’s 2005 Technology Transfer Showcase in Kansas City, Mo. Clarke was a leader in one of the senior capstone course companies in 2004 and formed his own company in the summer of 2004, a pressure-washing business called New Image Deck Renewal. He now works for the consulting firm Accenture in St. Louis.