GRAND RAPIDS — Sam Hogg got a master’s in business administration degree at Michigan State University’s Eli Broad Graduate School of Management, where he worked with MSU’s Technology and Innovation Center to create a company, GiftZip.com, that he sold in 2011 to gift card industry leader SVM LP.
Hogg, 30, a partner at Open Prairie Ventures and currently the entrepreneur in residence at Grand Valley State University, said his MBA laid the foundation for his life as an entrepreneur and investor. But he’s uncertain whether other entrepreneurs should follow in his footsteps and get the degree, which at big-name business schools can cost $100,000 or more.
“It’s become trendy to say you don’t need an MBA to become an entrepreneur,” Hogg said. “But the bigger question becomes the cost justification. If you are an entrepreneur, your starting salary is zero. It then takes a very long time to get a solid ROI on your MBA investment. I’m not sure a traditional MBA program is really set up for entrepreneurs.”
But with so many entrepreneurs driving business growth these days, business schools are responding to this challenge by modifying their MBA programs, said Sridhar Sundaram, chairman of the GVSU finance department. He agrees that the traditional MBA has become less relevant to entrepreneurs.
“The new MBA programs put far more emphasis on developing leadership skills,” he said. “We teach leaders to work in teams. This applies for everyone today from first-level to C-level managers. An MBA teaches them to think differently and innovatively to move their organization to the next level. It teaches students to look at different problems and solve them in different fashions.”
He said what GVSU is trying to achieve in its MBA program is teaching students to look at businesses as a whole. Teaching this “holistic” approach is the new wrinkle in business higher education, he said.
Catering to students that want to become entrepreneurs is, in part, why GVSU launched its Center for Entrepreneurship and Innovation, he said. CEI practices two objectives: talent development and the support for businesses. It is led by Executive Director J. Kevin McCurren.
“The entrepreneur process is like any other management discipline,” McCurren said. “You can use experiential learning, testing a hypothesis, learning to adjust and make decisions with uncertain data. That is what the MBA process is all about.”
Davenport University’s new business school dean, Michael Bowers, Ph.D., said the traditional MBA programs may be better-suited for entrepreneurs looking to run second-stage companies. Second-stage companies are already selling products, unlike startups that are still looking for their first sale.
“MBA degrees still provide the skills needed in the business community,” Bowers said. “You’re also seeing most business schools revising their curriculums to respond to this new entrepreneurial environment. Yes, I’d have to say an MBA is still a worthwhile degree to have.”
Davenport University statewide has 2,220 students enrolled in classes leading to an MBA, including 353 combined at its campus in downtown Grand Rapids and the W.A. Lettinga Campus in Caledonia, as well as in Holland and Kalamazoo.
Western Michigan University also is tinkering with its MBA program to make it more relevant to fledgling entrepreneurs.
“We strive to be relevant and see how the market shifts,” said Satish Deshpande, associate dean for operations and graduate programs at the WMU Haworth College of Business. “We focus our MBA on how to adapt to an ever-changing economy.”
Said Deshpande: “If you want to become an entrepreneur, why do an MBA? Because it brings you up to speed on finance, marketing and sources of capital. It tells you where to get resources. It helps you create a network. Entrepreneurs can do this on their own, but it would be terribly inefficient.”
At WMU, the business school hosts a forum each month where successful entrepreneurs tell students how they started their companies and what lessons they have learned. WMU also has added a graduate course in entrepreneurship as part of the MBA program.
“If you look at entrepreneurs, they all go through start-up stages where an MBA can help them develop the product mix, the business model, teach them how to hire managers,” Deshpande said. “When this startup business transitions into a mid-sized company, an MBA teaches them how to grow it to scale. MBA classes also help students crystallize their thinking and formulate solid ideas that match their passions to real-world problems.”
But Steve VanderVeen, who runs the Hope College Center for Faithful Leadership, said an MBA has lost some of its cachet. He said classroom teaching, online or otherwise, has its limits in terms of developing the character, conviction and competence it takes to be an entrepreneur.
“As Max DePree, author and former CEO of Herman Miller, said: ‘We can’t learn leadership from a textbook.’ Textbooks provide frameworks that can help us think about things, but nothing can substitute for experience,” VanderVeen said. “I believe the same should be said about entrepreneurship.”
When an angel investor looks at investing in an entrepreneur’s company, an MBA can be included in the broader analysis, said Jody Vanderwel, president of Holland-based Grand Angels. Formal educational training is part of the experience, skills, character and passion that determines whether a deal gets funded, she said.
“Starting some kinds of businesses cannot be done without appropriate advanced degrees, which could include an MBA, engineering, Ph.D., and a medical degree,” Vanderwel said. “Other kinds of businesses don’t necessarily require that level of education. In some situations, business experience could compensate for the lack of an MBA.”