South African leaders are always talking about the importance of promoting entrepreneurship, and dozens of programmes seek to give would-be entrepreneurs the skills they need to start businesses. Yet despite this, South Africa has a very low rate of entrepreneurship. As GIBS’ Jonathan Marks tells us below, even among those who choose to do an MBA in entrepreneurship, only about 25% go on to start businesses, with the rest heading into corporate jobs.
What accounts for this reluctance to start businesses? I think that at least part of the reason is that many aspects of the South African economy make starting a business difficult. Navigating labour laws and regulations is intimidating, the slow growth of the economy makes it harder to find opportunities, bottlenecks in infrastructure add to the cost and complexity of doing business and so on. It isn’t enough to talk about the importance of entrepreneurship and offer skills training to those who hope to start companies – we need to create an environment that encourages entrepreneurs holistically. – FD
GUGULETHU MFUPHI: The promotion of entrepreneurship has been a major focus of policy makers in recent years. Thousands of national and local initiatives have been launched to foster entrepreneurship. Despite this many MBA students, who study entrepreneurship, are choosing to go into corporate after completing their MBA studies. But for more on this, we join Jonathan Marks, who’s a Senior Lecturer and Director of the full-time MBA programme at Gibbs. Thanks so much for joining us today, Jonathan. Maybe when it comes to entrepreneurship, it can’t be taught?
JONATHAN MARKS: Thanks for inviting me. I think this is the perennial question, is entrepreneurship taught or are you naturally just born as an entrepreneur? I think that… I’m not sure I have an answer for that but I do know that entrepreneurship can be learnt and I think one of the best places to learn that is within a business school.
ALEC HOGG: Jonathan, sorry, it’s Alec here. It’s interesting that, particularly in the introduction that Gugu was mentioning, many of the people that come out of the MBA courses, driving entrepreneurship, are joining corporates. Now, if you have a look at the logical way to approach this, the rational way to approach it, that’s entirely rational because your returns and your rewards in corporates are so much higher than someone, and I speak as an entrepreneur, who goes into their own business.
JONATHAN MARKS: Yes, I think you’re right Alec. I think that there are really two driving forces. I think the one is economic that the investment in doing an MBA is substantial and often students have borrowed that money or used their savings for that money and they need to often replenish that or repay the loan. So they find their way back into corporate because, as you say, the return on investment is that much better. But I think there’s another force at play here and I think that is that corporates are increasingly demanding MBA graduates that have some background or experience and knowledge, with respect to entrepreneurship. That increasingly the corporate world is seeing value in people who are, let’s call it trained, as entrepreneurs. I think there’s a real value in that what they bring to the corporate world. The experience in South Africa, and particularly at Gibbs, is not as similar to what we see elsewhere in the world. So we have around a quarter of our students who finish MBA and entrepreneurship that go on and start their own businesses. In the U.S., this is probably closer to ten percent but bear in mind that in the U.S. they often do MBA’s a lot younger. So, whereas our students have had a bit of experience in corporate life, so I think there’s a sort of slightly higher experience for them in going on and becoming entrepreneurs straight after their MBAs.
ALEC HOGG: It sounds almost like an oxymoron, an entrepreneur in a corporate environment. I’ve had the privilege of working in corporates before. My goodness, unless the whole culture has changed, they stifle entrepreneurship. They stifle the person who wants to get out of the mainstream and think differently.
JONATHAN MARKS: I think you’re right. I think corporate entrepreneurship is the sort of classic business of oxymoron but I think that businesses that really wish to compete and recognise that there are sustainable advantages, largely around innovation, are looking desperately for people who can bring that innovation and creativity and entrepreneurial thinking to their organisations. And in your previous interview, just talking about some of the tech companies in America, I would imagine most of those organisations are populated by people who are highly entrepreneurial and are finding an outlet for that entrepreneurialism, within large corporates. I’m not seeing a lot of instances of that in South Africa but there clearly are some and because we see the demand for our students, out of our MBA programme. So I think that South African corporates maybe a little bit slower to see the value, including entrepreneurs in their organisation. But I do see that there is a way, albeit quite small and slowly coming to.
GUGULETHU MFUPHI: Jonathan then doesn’t that highlight the need for us to cultivate the spirit of entrepreneurship in the young?
JONATHAN MARKS: Absolutely, and I’m glad you used the term ‘spirit of entrepreneurship’ because I think learning on entrepreneurship, the skills, the nuts-and-bolts, of beginning a business is relatively easy but building a spirit to a mindset, around entrepreneurship, is a difficult thing and I think the sooner you begin, the better. The experience of researchers mostly in the U.S. and in Europe has shown that one of the important antecedents to entrepreneurship occurring is that you’ve experienced that in your home, you’ve seen, you’ve been exposed to this idea of being entrepreneurial, usually through your parents but often through your extended family. So that you’ve created, in a sense, a framework that allows entrepreneurship to occur in your future plans. Whereas I don’t see that occurring as much yet in South Africa and part of that is just because of our history but part of it also is because what we see more of in South Africa is small business, rather than innovation driven business. And I’m not sure everybody aspires to start a small business, then when we conflate the term ‘small business’ and entrepreneurship often people are saying, “Well, if I’m going to study for five or six years at university, I don’t really want to start a small business. I’ll go and join a corporate.”
GUGULETHU MFUPHI: So what will it take to change that mindset?
JONATHAN MARKS: Well, I think it will take a huge effort from a number of parties. I think entrepreneurship occurs largely through an ecosystem. So Government is clearly an important player. So long as Government has such a powerful role to play in education, so it begins there. I think it begins with the media, with showcasing entrepreneurship, in all of its forms, and, in a sense, celebrating entrepreneurship and then I think we have a raft of organisations and agencies in South Africa that promote entrepreneurship. They don’t always do a great job of sharing what it is they do and I’d like to see that occur to a far greater extent. And then I think there’s just got to be willingness, a desire for people to take on some of the risks and some of the uncertainty of being an entrepreneur. And maybe that will come as we become more affluent, you know, as a population and as a country.
ALEC HOGG: Perhaps we should also realise that entrepreneurship is hard work. You don’t just rock up at work and pull a salary at the end of the month. Often there is no salary. I’d love to know how many of the people who come onto the Gibbs course or the MBA course for entrepreneurs, are actually entrepreneurs themselves because I couldn’t think of anything further away from my mind giving the demands on your time of actually starting and running a business.
JONATHAN MARKS: Hard to say, you know, I think if I look at our current class I would, I hope that all of them show some proclivity to become entrepreneurs. Some of them are already entrepreneurs, in the traditional sense. They have begun a business or have begun a business and sold that one and joined corporates, so there is some track record. My hope, my sort of goal really is, as the Director of this programme, is to get people passionate about what it is they want to do in their life and about this notion of entrepreneurship. And I have a far more inclusive definition of entrepreneurship than just beginning a business. I think you can be profoundly entrepreneurial in whatever it is you choose to do. We often look at a business as creating a business as a high watermark, for all entrepreneurial activity, and yes, it is an important watermark, but I don’t think it is the be all and end all of being entrepreneurial. So maybe we cover ourselves slightly by having this all-inclusive definition but I think it gives comfort to students, who have invested a substantial amount of time and money, in an MBA, and not feeling that they’ve invested that only to learn how to start a small business. So I think that the success of the Gibbs MBA has shown there is a market there that sees value in conducting an MBA and entrepreneurship. At its worst, what it really presents to students is an opportunity to hedge your investment. That if you don’t become an entrepreneur and you are unable to raise the capital you always have an opportunity to return to the corporate life.
ALEC HOGG: Let’s hope that a lot of your students realise that entrepreneurship is actually about building, about creating jobs and not about taking on businesses and slashing away at the number of people who work there. That was Dr Jonathan Marks, Senior Lecturer, full time Director, of the Fulltime MBA Programme.
