The Enterprising MBA

If you are looking to start a career as an entrepreneur, an M​BA can help shape your dreams into reality.

An MBA is the foundation on which Robert Wright has twice built and sold a regional airline. 'It was a changemaker,' he says, reflecting on his experience at Cranfield School of Management 21 years ago. 'I still draw on its lessons every day.' 

When he arrived at Cranfield in 1982, he was a disillusioned commercial pilot in his early thirties, seeking an escape from an airline industry in crisis. At first, he found the academic discipline hardgoing, until he realised that an MBA was like flight school. 'You are finding out what you are supposed to do, before throwing yourself on the general public. You quickly discover your limitations.' As part of his course, he wrote a business plan for a regional airline, which won a prize with the Institute of Directors.

Encouraged to turn his idea into reality, he spent 18 months raising £200,000 and then picked up a discontinued route from British Caledonian between Gatwick and Antwerp, which was scheduled to carry 9000 passengers a year. Launching his airline, Air Europe, with one 18-seater, he took numbers up to 30,000. He also picked up a freight contract between Brussels and Luton, which meant taking the seats out of his plane and driving them back to Gatwick around the M25 every night. 'My MBA degree gave me the confidence to do it,' he says. By 1988, he had built up the business to a point where ILG Europe bought him out for £6.5m.

Three years later, following the first Gulf War, Wright bought the business back for £1. During the 90s, he built up the business again under the brand of City Flier Express. By 1998, it was turning over £120m with 20 airplanes and 900 staff. BA then bought it for £75m and integrated it fully into its own operations. Having twice been through the complete cycle of creating and selling an enterprise, Wright joined 3i's panel of independent directors and sits on the boards of three companies involved in buses, hospitals and fitness. Now at the age of 56, he has accepted Cranfield's invitation to return as entrepreneur in residence. His advice to students hoping to become entrepreneurs is that they will require four T's: tenacity, timing, teamwork and technique.

According to an exit survey of the 36,000 people who attended the World MBA Tour at the end of last year, 27.3% of all business school applicants would like to emulate Robert Wright and start their own business. The MBA might have originally been designed to produce excellent managers, but it is now also the starting point for entrepreneurial careers as well. Christina Hartshorn at the Foundation for SME Development at Durham Business School says that the main benefit entrepreneurs will draw from an MBA is confidence. 'After spotting ideas, they have to win the backing of stakeholders, persuading not just investors, but customers and suppliers as well. And then, in a fast-growing business, they will need a holistic view of management disciplines and to be able to pull them all together. That is what an MBA is designed to do.'

At Durham, MBAs can elect to take a course in new value creation. 'It allows a team to generate an idea and test it against the market, before presenting a final report to a panel of internal and external experts. By the end of eight weeks, students certainly know whether entrepreneurial activity is for them or not. They will also have learnt about gaps in their knowledge when they are working on projects for real.' After working for 30 years with local SMEs, Durham also has a strong foundation in analysing entrepreneurial behaviour not just in start-ups, but also in how entrepreneurs build organisations around themselves. Nor is the study of entrepreneurial techniques confined to smaller ventures. 'It is possible to be an entrepreneur in a larger organisation,' says Hartshorn.

'Progressive companies know that they cannot stand still, so they are actively pursuing strategic renewal. Our students should be a step ahead, because they realise how difficult it is to capture opportunities without disrupting the core business.' But how about all the entrepreneurs who leave at school at 16? Do they need to go back and do an MBA? Of course not, says Professor Ignacio de la Vega, professor of enterprise and strategy at IE-Instituto de Empresa in Madrid, which is consistently rated as one of Europe's leading schools for entrepreneurship. 'When did geniuses ever go to traditional schools? But how many are there? Very few. So we are talking about MBAs for normal, talented people.' 'As an entrepreneur, you will definitely need the spirit and capacity for risk. There is also a lot than can be learned. We are here to teach you how to combine the different elements that play a role in entrepreneurial activity.'

'You can go out in the market, put in your money and succeed. It is more likely that you will fail. We teach you how to diminish risk.'

At IE, Madrid, entrepreneurship is a mandatory part of the course. Everyone who graduates is expected to have a sense of how to develop a new business. Professor de la Vega has a full-time team of five, supported by 12 part-time professors who are active entrepreneurs and ten visiting professors from around the world. There is also a network of a hundred alumni who advise individual students on business plans. Each year's class is split into three Spanish-speaking and five English-speaking groups. Feasibility analysis and business planning are core activities, combining strategy and innovation with people, money, technology and infrastructure.

At the end of the course, 7% of students go straight ahead and launch a venture. Within five years, 25% have done so. 'People realise that the market is not easy,' says de la Vega. 'They go back to work to build up contacts and resources. They then come back after three years and say, "now, we are ready". We'll then help them with enterprise training, as well as working on their ideas and extending their networks.' Greg Dunne is certainly one of the 7% early-starters.

Having created high value for others as an investment banker at Flemings for 15 years, he decided that he wanted to create some for himself. In 2000, he enrolled for an MBA at Durham, attracted by its 30-year reputation for working with entrepreneurs. 'I reached a natural career break at Flemings when it was taken over by Chase Manhattan,' he says. 'I had been thinking about an MBA because I did not have any formal business training. I was just qualified by experience. I also wanted to shift focus and work for myself, rather than for a large organisation.' His MBA taught him to think through risk and innovation in a rigorous way. It also gave him the building blocs to build a business. 'I had a good grounding in finance, but was not so strong in logistics, operations and HR. Durham rounded out my knowledge of business.'

Dunne's MBA brought home the importance of running with a good idea. 'Innovation can sometimes transform a market by leaps and bounds, although organisations are often slow to respond,' he says. 'Many people do have wonderful ideas, but lack the ability to execute them operationally.'

'Where academic work meets economic life is where it gets really interesting,' comments Dunne.

He took the chance to apply these lessons in his elective on new value creation. He could have chosen to roll up his sleeves and help entrepreneurs in the North East turn new ideas into businesses. Instead he took the more risky option to set up his own business. His plan for an online gallery for local artists won a national award and a new venture, the Northern Heart Gallery, was incubated at the business school. 'Where academic work meets economic life is where it gets really interesting,' comments Dunne. The Northern Heart Gallery is now being sold and Dunne, now 43, is launching his next venture. Based in the City of London, Less Carbon is setting out to advise companies on how to use the financial markets to reduce their exposure to greenhouse gases. It is a vibrant area of strategy, believes Dunne.

'My MBA taught me to remember to be innovative in going forward.' The most valuable legacy of his time at Durham, however, is probably his network of contacts. 'Working with such a large cross-section of people was enriching. It gives you knowledge and awareness, as well as the experience of working in teams.'