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Javier Gimeno Talks About Entrepreneurship

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Javier Gimeno Talks About Entrepreneurship
Learn more about INSEAD

Dean of INSEAD’s Executive MBA Programs, Professor of Strategy

Javier Gimeno, professor of Strategy and Dean of the EMBA programs at INSEAD, shares his thoughts on entrepreneurship and business education with TopMBA.com. 

Javier Gimeno has been a professor of Strategy at INSEAD since 2001 and currently holds the Aon Dirk Verbeek Chair in International Risk and Strategic Management. He has taught in the EMBA program since its launch, and became the Dean of the EMBA in 2009. Javier teaches business strategy and competitive dynamics. His research publications span the areas of competitive strategy and entrepreneurship. His most recent work explores the development of entrepreneurial identity, the interaction between organizational incentives and competitive behaviour, and the integration of strategy and risk management. He has provided leadership in professional associations, as a member of the Board of Governors of the Academy of Management and the Board of Directors of the Strategic Management Society. Javier holds a PhD in strategic management from Purdue University, and a Licenciate degree from the University of Zaragoza in Spain.

In today’s corporate world, what does entrepreneurship mean and why is it important?

Years ago, there was a clearer distinction between entrepreneurship and corporate management. Entrepreneurs would start and grow businesses, usually at the fringe of the corporate world, and managers would run mature businesses and allocate resources within complex corporate hierarchies. Over the last 25 years, this corporate world has become increasingly streamlined and dynamic. Companies like Google have gone from start-up to multibillion dollar corporations in just a few years. In order to remain competitive in such a dynamic environment, corporations have drastically downsized their management hierarchies and delegated strategy and execution responsibility to frontline managers. A lot more risk and uncertainty has been passed on to the shoulders of corporate managers, particularly middle managers, forcing these same managers to become more entrepreneurial in their approach.

In today’s corporate world, large companies must encourage internal entrepreneurship (or “intrapreneurship”), or risk falling behind more dynamic competitors. That means having executives who can identify and create new opportunities, communicate a vision to exploit those opportunities, assemble and motivate teams, take risks, allocate resources in an adaptive manner and grow the business. Doing this within a corporation requires somewhat different skills than doing this within a start-up context, but the similarities are becoming more apparent.

Financial innovations like venture capital, private equity and management buyouts, have made it possible and increasingly common for executives to move fluidly between corporate roles and entrepreneurial roles. As an indicator, approximately half of our INSEAD alumni have run their own companies at some point in their career. This is evidence that entrepreneurship is no longer a niche activity, but a core characteristic of successful leaders.

Do you think that entrepreneurship can be taught?

The idea that some people are born entrepreneurs (because of their natural traits like personality, decision-making style, attitudes to risk, creativity, etc) may sound appealing, but it is an idea that has been totally refuted by research. Entrepreneurship can definitely be learned – the question is whether business schools can create the appropriate environment (inside and outside the classroom) for such development.

There are some basic business skills and techniques that can help entrepreneurs such as market sizing, business plan development, financial modelling and valuation. Many MBAs and EMBAs learn those skills during their programs, but they may not become entrepreneurs. It takes more than business acumen to become an entrepreneur. Entrepreneurship requires seeing business opportunities that others don’t, taking personal risks in supporting the business, convincing others to support the ventures and assembling a management team to execute them. It is not just a set of skills, but a social role to be performed convincingly to oneself and to others.

In my own research, I have explored the process of becoming an entrepreneur (the process that leads to the decision to start a business), and an important factor is the development of an entrepreneurial identity – whether a person sees herself as an entrepreneur. I believe it is the lack of this self-image, rather than the lack of skills or techniques, that limits the confidence of nascent entrepreneurs, particularly among those who are highly trained. Some people develop an entrepreneurial identity early in their lives, such as from entrepreneurial parents or family members, or from early experiences that give them the confidence to take that role.

For those who have not yet developed such an identity, there are two main supporting influences that can help in developing one: role models and mentors. Role models, either in the public sphere (Richard Branson or Anita Roddick) or in the private sphere (a friend or a colleague), help new entrepreneurs act out their role. Mentors provide coaching, as well as psychological and emotional support, for making the transition – they are the ones who provide reassurance and feedback in times of doubt. Our Executive MBA program is an excellent incubatory context for exploring an entrepreneurial identity, because participants have intense contacts with potential role models and mentors. At some point, some participants will ask themselves, “if they can do it, why can’t I?” That is the beginning of an exploration of an entrepreneurial identity.

Can you specifically tell us about how your Executive MBA program helps students face the challenge of entrepreneurship?

We use a variety of approaches for participants to develop their entrepreneurial identities, including courses, pedagogical activities and experiences. On the academic side, we have a rich offering of entrepreneurship courses that help participants explore the idiosyncrasies of entrepreneurial leadership, and exercise some of the skills and techniques. Courses like “Building Entrepreneurial Ventures”, “Your First Hundred Days”, “Private Equity and Venture Capital” and “Entrepreneurial Leadership”, provide participants with concepts and skills for their entrepreneurial career. This year, we launched a new elective on “Social Entrepreneurship”, a subject of increasing interest for our participants and alumni.

Our Global Executive MBA program offers structured activitiesfor participants to reflect and apply their knowledge to their reality, as part of the implementation essays and final project requirements. Many participants use these papers and projects to explore entrepreneurial opportunities (on paper), and receive feedback from the faculty. This year, more than half of the final projects will have had some entrepreneurial flavour, often in a corporate context (market entry plans, launching new products), but also start-up business plans. In some cases, these have led to subsequent innovative new ventures in the real world, such as the first private jet airline in Pakistan, or the first solar energy company in Bulgaria.

Additionally, our program provides experiences for participants to identify entrepreneurial role models, and to receive feedback and support from mentors. We make an effort to attract some participants with entrepreneurial experiences and aspirations, who become role models for others. Some EMBA entrepreneurial teams compete in the INSEAD Business Venture competitions, which have great visibility within the INSEAD alumni community, and they have done very well (winners in 2009, second place in 2010). This opens opportunities for funding for these entrepreneurs. The EMBA Business Club, founded a couple of years ago by our EMBA alumni, also organizes presentations where entrepreneurs can pitch their ideas to the EMBA participants and alumni community. This year, one team was able to obtain full initial funding for their venture after their presentation to the Business Club.

To my mind, the benefit of these activities is that they create an atmosphere of entrepreneurial thinking that benefits not only those who are planning a start-up, but most importantly those who will be expected to be entrepreneurial leaders within corporations. Participants learn vicariously from the experiences of others in the cohort, and this encourages some of them to explore their entrepreneurial identity.

Do you think that leadership and entrepreneurship go hand–in-hand?

Absolutely. Without leadership, a potential entrepreneur is just an inventor; someone with a good idea but unable to execute it. The effective entrepreneur is able to create and communicate a vision that motivates others (investors, customers, suppliers, employees), and to create an organization to leverage and execute a business opportunity. Therefore, entrepreneurship is a fantastic context for developing and exercising leadership skills. In addition, leadership in an entrepreneurial context usually brings up special issues, such as managing transitions, the family’s role in the business and governance. A popular course in our curriculum focuses on entrepreneurial leadership and explores some of these issues in depth.

At INSEAD, leadership development provides the backbone of the EMBA curriculum. Our Leadership Development Process leverages our modular format so that participants can develop selfreflections about their leadership style during the residential modules (through courses, Leaders Forum presentations and panels, group coaching activities), and implement their leadership skills when they get back to work. These repeated loops of reflection and action provide a very effective way to develop leadership capabilities over the 15 months of the program.

Do you think there is any truth in the cliché that men are better entrepreneurs than women?

I disagree that men are “better” entrepreneurs. It is true that, statistically, more entrepreneurs are men, and as a consequence men have become the predominant role models for how entrepreneurs act. Fortunately, there is an increasing number of successful women entrepreneurs, and they provide alternative role models that fit better with a woman’s self-image. Women entrepreneurs may follow a different path to become such, and often enter entrepreneurship later in their career and with different motivations. For example, we have found that women are quite interested in social entrepreneurship, which is an area that we are actively developing at INSEAD.

Do corporations expect EMBA participants to bring back innovative thinking to the workplace as an acquired skill?

Yes. When companies sponsor participants to an EMBA program, they are looking for a return in terms of better and more innovative business ideas. Fortunately, compared to other forms of executive development, the EMBA experience is a natural incubator for innovative thinking, partly because these programs combine participants with rich but diverse experiences and backgrounds.

Research shows that diversity in teams spurs creativity, since people are confronted by others who see the world from very different perspectives. At INSEAD, diversity is a core value of the institute, and this is particularly reflected in the international diversity in our classrooms. For example, the largest national group in our full time MBA program represents only 8% of the cohort. In our Global Executive MBA, we had 74 participants from 34 nationalities last year. We also seek diversity in gender, industry background, functional skills and organizational forms. This diversity makes the experience richer for everyone, and increases the chances that people will discover innovative ideas as part of the program.

The challenge for corporations is how to leverage the innovative ideas of their EMBA participants once back in their business. This requires a good synchronisation between the talent management activities inside the sponsoring company, and the participant activities in the program. I have seen some good practices. For example, some corporations sponsor executives to our EMBA program as a prelude to a promotion to a new position of responsibility, such as becoming country manager or general manager for a unit. This provides the executive with space for preparing and reflecting on the transition. In other cases, the participant’s implementation essays and final projects are shared or presented inside the company, so that others can benefit from their
innovative thinking.

Does the EMBA classroom provide an environment that kindles innovative thinking?

As I mentioned earlier, the diversity of the EMBA classroom provides many opportunities for innovative thinking. Creativity often involves recombining existing knowledge in new ways or in new contexts. In a diverse program like ours, the participant is going to be continually exposed to business ideas that work in other contexts, but that are new to their company, new to their market, or new to their industry.

This exposure provides a first opportunity for innovative thinking, based on intellectual arbitrage between contexts (between companies, markets or industries). In fact, that is the role of the implementation essays, an important component of our pedagogy, where participants reflect about the application of concepts, techniques and practices learned in the program to their company and context. A recent participant, for example, was able to generate several million dollars of cash flows by applying best practices to the accounts payable management of a large multinational company. Although this may sound quite prosaic, this arbitrage offers powerful and low-risk opportunities for business innovation. Another major source of innovative thinking comes from gaining superior customer insights. In our course “Innovation Management”, teams of participants run an experiment where they observe and interview customers, and then design an innovation to meet those customer needs.

The final project is probably the greatest opportunity for innovative thinking. The expectation for these projects is that they have potential for real business impact. As I mentioned, many of the participants use these projects to explore entrepreneurial opportunities, such as planning the launch of a new product or service, entering a new market, or even developing a business plan for a new venture. The projects are supervised by INSEAD faculty, but we also encourage participants to tap into the knowledge from within their companies and from within the class itself. Over the last seven years, we have seen participants develop major corporate initiatives and create some new businesses as part of the program. For us, this is the ultimate measure of the success of our program – seeing our participants create value for their companies, customers and society.