helping entrepreneurs flourish

Helping entrepreneurs flourish: Rethinking the drivers of entrepreneurship

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ContentsAbout the research 02-03

Executive summary 04-05

The challenge of supporting entrepreneurship 06-09

How existing businesses can help create entrepreneurs 10-11

Formal education and entrepreneurship: 12-15a glass half-full

Making education entrepreneurial 16-17

Case Study: The National Centre for Entrepreneurship 18in Education: Getting the culture right

Conclusion: A more entrepreneurial 20society’s wider benefits

Helping entrepreneurs flourish: Rethinking the drivers of entrepreneurship02

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About the research

This report investigates the complex issue of encouraging entrepreneurship, and in particular the contribution that education and business can and should make towards achieving that goal. To shed light on these topics and compare the perspectives of potential and established entrepreneurs, the EIU conducted two global surveys. For the first survey we contacted 420 individuals aged 18 to 25, mostly students and recent graduates. Of these, 31 per cent are from the Asia-Pacific region, 30 per cent from Europe, 29 per cent from North America, and the remainder from the Middle East, Africa and Latin America. The 200 respondents to the second survey are entrepreneurs aged between 18 and 69, with an average age of 44. The geographical spread is similar, with 30 per cent each from Europe, North America and the Asia-Pacific region, and the rest from the Middle East and Africa.

Helping entrepreneurs flourish: Rethinking the drivers of entrepreneurship is a UK Trade & Investment (UKTI) report, written by The Economist Intelligence Unit (EIU).

In addition, the EIU conducted seven interviews with entrepreneurs and other experts in the field as well as substantial desk research. Our thanks are due to the following for their time and insight:

• Nicolas Brusson, co-founder and COO, BlaBlaCar

• David Frost, executive chairman, National Centre for Entrepreneurship in Education

• David Gorodyansky, co-founder and CEO, AnchorFree

• Rob Law, founder and CEO, Trunki• Kiran Mazumdar-Shaw, founder

and CEO, Biocon• Narayana Murthy, founder and

executive chairman, Infosys • Professor Yong Zhao, University

of Oregon

The report was written by Dr Paul Kielstra and edited by Zoe Tabary and Victoria van Lennep.

29% 30%

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31%

30%

30%

30%

10% 10%Geographic breakdown of people surveyed

18-25 Survey (420 respondents) Entrepreneurs Survey (200 respondents, average age 44)


Many would-be entrepreneurs, however, will fall by the wayside. Although entrepreneurship inevitably involves difficulties and a large number of failures, too often their efforts are hampered by unnecessary barriers.

This report looks at how to foster an entrepreneurial mindset both through education systems and business experience, and what makes entrepreneurs thrive. Drawing on seven in-depth interviews of entrepreneurs and other experts, substantial desk research and two surveys – one of established entrepreneurs and another of young people aged 18 to 25 – its key findings include the following.

Entrepreneurship is a highly attractive job option for young people.

In the global survey of young people, 30 per cent say that their preferred occupation by 2020 would be running their own business – the most common choice for that question. More generally, 75 per cent are open to starting a company one day, and a further 7 per cent have already done so. A significant proportion of student respondents look to running one’s own business as a source of personal satisfaction in their work (37 per cent) and a way to create something new / innovative (35 per cent). Part of this willingness or desire to become an entrepreneur, however, may be a lack of understanding of the difficulties: over half (57 per cent) of respondents running their own business say that aspiring entrepreneurs underestimate how hard it will be.

Executive summary

The roughly 10 per cent of the world’s adults who are entrepreneurs have, for some time, been recognised as significant drivers of economic growth. In a world where numerous countries are struggling to tame unemployment, their potential as job creators will make them all the more important.

A significant proportion of student respondents look to running one’s own business as a source of personal satisfaction in their work.

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Education has some positive influence on entrepreneurial success, but this is currently limited.

Those surveyed for this report have seemingly contradictory views about the role of education in their development. Among entrepreneurs, for example, 79 per cent say their university education aided them to start their own business. However, very few cite their primary and secondary schooling as a top influence in helping them launch their business. Similarly, nearly half of the 18-25-year-olds surveyed think an academic degree is important to entrepreneurial success (with that share rising to two-thirds in North America), but just 19 per cent say their university is effective at giving students the skills they need to start a business. Successful entrepreneurs, then, can make use of education, but traditional teaching methods risk undermining attitudes conducive to entrepreneurship.

Entrepreneur-friendly education requires a shift not only in how schools and universities teach, but also in what they teach.

Experts interviewed for this report recommend a greater focus on problem-solving, communication and networking skills. Rather than just helping those who may one day start a business at the expense of the rest of society, these so-called 21st-century skills are increasingly being promoted within educational circles and by business as beneficial for all students.

Existing entrepreneurs are crucial in developing aspiring ones through mentorship and employment-based learning.

Entrepreneurs believe that having mentors who have built up their own firms is vital for success. The growing number of mentorship schemes is testament to the value of such activity. The inevitable constraints of running a business can restrict the time available for external mentoring. Even more helpful, therefore, is running a company in ways that instil and develop entrepreneurship in employees: 81 per cent of entrepreneurs say that they acquired more entrepreneurial skills through work experience than through education.

Personal qualities matter greatly for success, but entrepreneurs are not simply born.

Respondents from both surveys for this report rank passion and determination as the most important attributes for entrepreneurial success. Such qualities are difficult or impossible to teach outright – entrepreneurs certainly cannot be manufactured to a template – which helps to explain why those who have started businesses are more likely to say entrepreneurs are born rather than made. On the other hand, those interviewed for this study point to the numerous other factors needed to become successful. Policy choices and the cultural environment can clearly support entrepreneurship by helping aspiring entrepreneurs understand what they need to know to avoid some of the many pitfalls of starting a business.

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Entrepreneurs believe that having mentors who have built up their own firms is vital for success.


The challenge of supporting entrepreneurship

Although there are no further data available, extrapolating by using the surveyed states’ proportion of global GDP yields a rough figure of nearly half a billion entrepreneurs worldwide, or over 10 per cent of the adult population.

Any phenomenon of this size is complex and multi-faceted, but research in recent decades has made several aspects clear, not least entrepreneurship’s substantial economic importance. A comprehensive 2013 analysis of World Bank data from 125 countries over eight years is only the most recent to find that entrepreneurship levels have a significant positive impact on GDP per head and employment.1 Such figures have for some time interested governments in promoting this potentially powerful engine of growth.

Entrepreneurship, even narrowly defined as the economic act of starting one’s own business, is ubiquitous. In 2012 the Global Entrepreneurship Monitor (GEM), a multinational academic research partnership, estimated that in the 54 countries its research then covered, 388 million people were either starting new businesses or operating businesses they had recently launched.

Entrepreneurship is also global, according to the World Bank’s most recent report that ranks economies on their ease of doing business. It found New Zealand to be the easiest place to start a small and medium-sized enterprise, ahead of Canada, Singapore, Australia and Hong Kong. The US and the UK rank in 20th and 28th place, respectively.

Looking ahead, Professor Yong Zhao of the University of Oregon, author of World Class Learners: Educating Creative and Entrepreneurial Students, cites developments which make further growth in entrepreneurship absolutely essential: “We have a world population growing very fast; a lot of people are living longer, working longer, and occupying more jobs; we have huge youth unemployment problems; and technology has replaced a lot of low-level jobs. The only thing that can help is more entrepreneurs who can create jobs.”

Those looking to boost the number of entrepreneurs have, potentially, a highly receptive audience. In the survey of 18-25-year-olds 30 per cent say that their preferred occupation by 2020 would be running their own business – the most common choice for that question, ahead of “working in business”. Their sector of choice would be technology (cited by 41 per cent of respondents), ahead of media and entertainment (24 per cent) and retailing (19 per cent). The attractions of entrepreneurship vary widely. The most common is the desire for financial independence which one’s own business can bring (44 per cent), but non-financial attractions such as personal satisfaction in general (37 per cent) and having an outlet for one’s creative ideas (35 per cent) are also important.

1: Douglas Cumming et al., “The Economic Impact of Entrepreneurship: Comparing International Datasets”, manuscript December 31st 2013 (forthcoming) in Corporate Governance: An International Review.

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In 2020, which of the following would be your preferred occupation? (18-25 Survey)

Work in business

28%

Source: The Economist Intelligence Unit 2014.

Run my own business

(ie, become an entrepreneur)

30%

Other (please specify)

7%

Work in government

14%

Work in a charitable organisation

12%

Full time parent/carer

3%

Don’t know/not sure

6%


What has been, or would be, your main motivations for doing so? Select up to two. (18-25 Survey)

Financial independence

44%

Personal satisfaction in

my work

37%

Leaving a legacy

10%

Ability to be my own boss

31%

Being able to create something new / innovative

35%

Making a positive impact on others

22%


1%


companies then were not willing to hire a female brew master, the profession for which she had trained. The point is not to make a dubious defence of the economic merits of sexism, but to highlight the central importance to entrepreneurship of factors that policy can address often only obliquely at best. In particular, the role of personal qualities, especially in the face of the inevitable adversity of starting a company, has led to the question of whether entrepreneurs are born or made – a point on which the 18-25-year-olds in the survey are nearly evenly split and where entrepreneurs are more likely to say “born” (41 per cent to 26 per cent).

Entrepreneurs and experts interviewed in-depth for this study, though, are more nuanced about this issue, pointing out that circumstances and environment can do much to affect degrees of entrepreneurial success or failure. Recent academic research, has found that stronger property rights protection correlates with higher numbers of small entrepreneurs being willing to grow their firms into the larger companies which produce employment.2 The issue for those wishing to promote entrepreneurship, then, is finding the most effective interventions to create an environment in which it is more likely to thrive.

One area where change would be particularly welcome is helping potential and new entrepreneurs become better informed about the road they hope to travel. Failure is endemic among new businesses: in the UK and the US roughly half of all start-ups fail within five years. Part of this is inherent in what is by its nature a risky activity, and it is a valuable learning experience that most entrepreneurs must face. Nevertheless, finding ways to reduce unnecessary failure has clear benefits. Lack of preparation or appreciation of what is involved in starting a business is a widespread problem. In the survey, 57 per cent of entrepreneurs say that beginners underestimate how hard it will be. This, says Kiran Mazumdar-Shaw, is symptomatic of a larger problem: “Most entrepreneurs give up or fail because they have not understood what it takes.” David Gorodyansky, co-founder and CEO of AnchorFree, a US-based virtual private network that allows users anonymous web browsing, adds: “Everybody says [that they want to be the next famous entrepreneur], but nobody realises what that actually means. Entrepreneurship is not for everyone; it should not be romanticised.”

Finding better ways to educate potential entrepreneurs, both before they start out and in the early stages of their efforts, is therefore an important potential focus for creating an environment more conducive to successful start-ups.

The nature of entrepreneurship, however, makes its effective promotion “a complex question” in the words of Nicolas Brusson, co-founder and COO of BlaBlaCar, a service that connects people looking for a ride with car owners. “We tend in Europe to want to recreate Silicon Valley, but it was never the result of a mandate. It kind of just happened because the environment was right: it had the right mix of technology, top universities, lawyers and financial backers.”

The important role of individual personality should also induce wariness of seemingly easy answers. Our survey of entrepreneurs found that these individuals considered passion to be the most important attribute for success in starting a business (cited by 50 per cent), followed by determination and creativity (both 46 per cent). Similarly, young people put determination (59 per cent) and passion (52 per cent) as their first choices. Some individuals may lose these qualities as a result of bad experiences, but as Rob Law, the founder and CEO of Trunki, a maker of children’s luggage, puts it: “You can’t teach passion.”

Moreover, barriers rather than smooth pathways have more than once resulted in the making of an entrepreneur: Kiran Mazumdar-Shaw, founder and CEO of Biocon, one of India’s largest life-sciences custom research companies, recalls that she initially started a business because

2: Jonathan Levie and Erkko Autio, “Regulatory burden, rule of law, and entry of strategic entrepreneurs: an international panel study”, Journal of Management Studies, September 2011.

46%

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What would you say are the most important attributes for a successful entrepreneur? Select up to three

18-25 SurveyEntrepreneurs Survey

52% 50%

Passion

59%

Determination

36% 29%

Imagination

12% 17%

Strong academic skills/educational background

30% 19%

Strong soft skills (leadership, networking, etc)

14% 34%

High appetite for risk

36% 46%

Creativity

38% 30%

Ability to accept failure/learn from mistakes

20%7%

Self sacrifice


Young people seem to concur: the most frequently mentioned change they would like to see in education is better contact with the professional world (47 per cent). This is not simply about providing contacts who might offer work: having a network and the skills of knowing how one uses it are critical to entrepreneurial success.

“Because they understand the need for such support”, says David Frost, who earlier in his career led the UK Chamber of Commerce for a decade, “in my experience, entrepreneurs are willing to help out.” If anything, more are getting involved. A recent Ernst & Young survey on entrepreneurship in G20 countries found that the availability of mentorship has even been increasing in the last three years.3 The practice has also gone far beyond one-on-one help – which remains common – to encompass almost innumerable government-supported and private schemes to link those in need of advice with more established businesspeople.

Looking back, substantial majorities of those surveyed in this group wish that they had had better access to other entrepreneurs (selected by 64 per cent), others who could have provided support (62 per cent), and incubators or accelerators that could have provided information and guidance (71 per cent).

Indeed, it is difficult to overstate the value of mentorship, especially for new entrepreneurs. Rob Law says: “It is vitally important to be able to bounce ideas off people who have been through similar experiences. When I first started, I was mentored through the Prince’s Trust [a UK-based youth charity], and it helped me find out what I wanted to do very quickly, rather than just chasing my tail.” David Gorodyansky similarly recalls: “When I started AnchorFree, I had no experience and I didn’t know what I was doing. I just knew I wanted to help the world and impact a billion people. I got a lot of mentorship and help from many entrepreneurs.” This included support from board members of his company, which greatly contributed to the firm’s success.

These can reach substantial scale and sophistication. For example, the recently launched National Entrepreneurship Network Mentor Platform of India’s Wadhwani Foundation – an NGO which supports entrepreneurship education in a wide variety of forms – brings together new and aspiring entrepreneurs from across India with individuals from its pool of 1,200 mentors who can provide specific, detailed advice in one-on-one or small group settings.

For many entrepreneurs, such activity is about giving back. It also has advantages, however, helping to extend the networks on which even mature entrepreneurs continue to rely for success. The difficulty, says Narayana Murthy, is usually time: “Until I retired, I was busy ten hours a day, six days a week, and did not have time to mentor many people until then.” Similarly, Kiran Mazumdar-Shaw says that she has mentored a few entrepreneurs and played a role in about a dozen start-ups but, inevitably “one’s bandwidth is limited”.

How existing businesses can help create entrepreneursAccording to entrepreneurs looking back, the most valuable help was often practical advice at the point of need from people who have been there before.

3: The EY G20 Entrepreneurship Barometer 2013.

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Therefore, a potentially even more important contribution to the entrepreneurial environment is how businesses approach recruitment and employment. Although entrepreneurs are typically young, at least some time working for others is normally a key part of their development. Of entrepreneurs surveyed, 81 per cent say that they acquired more entrepreneurial skills through work experience than education, and 70 per cent say that having corporate experience before becoming an entrepreneur is preferable. That share is highest in North America, with 78 per cent of entrepreneurs advocating corporate experience, compared with 57 per cent and 67 per cent respectively in Asia-Pacific and Western Europe.

Making entrepreneurship a part of one’s own company culture can therefore be a way of cultivating future entrepreneurs. According to Nicolas Brusson, for example, 80 per cent of what is done [at BlaBlaCar] is based on those patterns he observed in earlier ventures. Now his company, when recruiting, “selects people who have an affinity for entrepreneurship,” including a large number who had already started their own companies in the past. He describes the results as “challenging but great”, with much higher employee engagement and ability to act autonomously. Not only does this approach bring business benefits, but the impact of an entrepreneurial environment in which to learn on the job can be profound.

The PayPal Mafia – a group of individuals who worked with the online payments business PayPal when it was a start-up – have famously gone on after leaving to found a variety of companies, including LinkedIn, Yelp and YouTube.

Business is a competitive world, but an environment that is conducive to entrepreneurship relies on those who have gone before helping new aspirants. Rather than an act of altruism, however, such activity brings existing entrepreneurs stronger networks and potentially better companies of their own.

Having corporate experience before becoming an entrepreneur is preferable (Entrepreneurs Survey)

70% Agree

19% Neither agree nor disagree

11% Disagree Source: The Economist Intelligence Unit 2014.


On the question of education, Kiran Mazumdar-Shaw says: “I had a very technically grounded higher education. All that I do today has been leveraged from that foundation.” David Gorodyansky, by contrast, who studied business, believes that “nothing in my educational background helped me start AnchorFree.” These diametrically opposed experiences may reflect differences in personal histories, but they are also emblematic of the often hit-and-miss relationship that currently exists between education and entrepreneurship.

Our survey indicates that, on the one hand, numerous entrepreneurs have derived benefits from their tertiary education: 79 per cent of entrepreneurs say that it aided them to start their own business – a slightly higher figure than those citing earlier professional experience as a help (78 per cent). Many young people are certainly hoping for benefits as well: 49 per cent say that an academic degree is important to entrepreneurial success, and only 19 per cent disagree. Academic research backs this up: a study covering 20 years of American data found a significant link between longer time spent in education and average income for entrepreneurs.4

However, 18-25-year-olds and entrepreneurs are far from believing that universities are delivering all that they could. Only 19 per cent of young people say their university is very effective at giving the academic knowledge needed to start a business. Meanwhile, 78 per cent of those who have started companies say education systems need to give more support to potential entrepreneurs.

What helps explain these somewhat contradictory results is that the benefits of education – especially tertiary education – for entrepreneurs tend to be indirect rather than direct. Narayana Murthy, founder and executive chairman of Infosys, a provider of information services and now India’s sixth-largest publicly traded company, notes that academic success gave him the ability to work with, and the confidence to compete with, highly educated individuals. His technical training further instilled in him an appreciation of the value of feedback and of simulation exercises. These are not specific business skills, but they were essential to his company’s success.

Nicolas Brusson recalls that, when he worked as a venture capitalist, an analysis of his firm’s investments showed that, while it did not actively seek out entrepreneurs with an impressive educational background, most of the founders and CEOs of companies in which it put money had degrees from the top five to ten universities in the country. In that sense, he says, educational achievement “matters, but it is not the trigger” for success or attracting investment. In fact, only 10 per cent of entrepreneurs in the survey cite having an academic degree as a key requirement for investors.

Unfortunately, all too often these indirect benefits from formal education are accompanied by elements which impede attitudes conducive to starting a business.

Formal education and entrepreneurship: a glass half-full Another obvious potential source for the promotion of entrepreneurship is the education system. Here, though, the results are mixed.

4: Mirjam van Praag et al., “Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees”, Forschungsinstitut zur Zukunft der Arbeit, Discussion Paper 4628, December 2009.

Entrepreneurship education has grown rapidly in recent decades in many parts of the globe.

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Professor Yong Zhao explains: “In traditional education, success requires a different set of skills than those needed for being an entrepreneur.” An emphasis on the acquisition of a specific body of knowledge and the ability to get a right answer, rather than on solving problems in new ways, creates a mindset appropriate for an employee, he believes. More important still, he says: “Traditional education does not encourage failure. We want straight-A students all the time. We don’t reward people,” when they take risks but fail. Narayana Murthy also thinks that in practice an advanced formal education is not necessary for entrepreneurship. Although it gives “the ability to do more and more and deeper and deeper analysis, entrepreneurship is all about synthesising solutions and walking the road less or untravelled.” Education systems are attempting to respond.

Entrepreneurship education has grown rapidly in recent decades in many parts of the globe, so that now 45 per cent of 18-25-year-olds in our survey report that their universities offer some form of entrepreneurship education, a figure which varies little by geography.

Providing academic content relevant to entrepreneurs in traditional courses holds out some benefits. What most of those who set up their own business wish they had had when starting out, for example, is better financial advice (53 per cent), something which could form an element of such a course. That proportion rises to 63 per cent in the UK.

Merely treating entrepreneurship as another subject, however, is likely to only prove partially effective. Strong academic skills are seen as an important attribute for entrepreneurial success by just 17 per cent of entrepreneurs in our survey and 12 per cent of young respondents. What Professor Zhao says of courses at Chinese universities applies more widely. All too often these become limited offerings in a traditional academic mould. More generally, he adds: “Just because you can teach an entrepreneurship course, it doesn’t mean you can [make people successful entrepreneurs]. We talk about teaching them, but it is something we have to cultivate. It is a paradigm issue.”


Ave

rag

e P

ISA

Sco

re

Perceived Entrepreneurship Ability

570

560

550

540

530

520

510

500

490

480

470

460

450

44020 4010 15 25 35 45 55 6530 50 60 70

• Croatia

• Lithuania

• Poland

• Japan

• Portugal

• Slovenia

• Singapore

• Greece

• Czech Republic

• Belgium

• UAE

• Hungary

• Germany

• Slovak Republic

• Chinese Taipei

• Spain

• France

• Switzerland

• United States

• Denmark

• Finland

• Russian Federation

• Sweden

• Netherlands

• United Kingdom

• Australia

• Ireland

• Norway

• Korea

• Latvia

Source: Yong Zhao, Associate Dean for Global Education, University of Oregon.

PISA 2009 maths scores vs perceived entrepreneurship capabilities

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Which of the following do you wish you had had more of when starting your own business? Select all that apply (Entrepreneurs Survey)


Better financial advice

Better access to company schemes when in education

Support from friends and family

Access at school or university to practical information

on entrepreneurship and networking events

Better access to public funding schemes

Targeted courses at school / university on entrepreneurship

Early-stage entrepreneurial support such as incubators and business accelerators

54%

35%

46%

35%

40%

20%

38%


Instead, individuals need a way to put this information into a range of contexts. As David Gorodyansky puts it: “It’s time to evolve education from just being information-driven to being experience-driven and personalised. If you are going to be an entrepreneur, it’s a lot more important to understand the world and different cultures, people and mindsets.”

Even more important, say entrepreneurs, is developing the ability to make practical use of information in new and innovative ways, or, as Rob Law puts it: “What to do with that information when you’ve got it. In general, we need to teach more creativity and problem-solving techniques.” Narayana Murthy agrees: “The first requirement for all of us to become more entrepreneurial is the ability to relate what we learn in the classroom to finding solutions to our problems around us.” He believes that even greater use of practical examples by teachers in explaining formal ideas would go some way in this direction.

An emphasis on using information to solve problems, however, will ultimately have little effect if the goal remains to find a single right answer. Narayana Murthy says: “Our teachers should be encouraging children to take more risks – whether in sports or conducting lab experiments, or solving more difficult problems – so that they realise there is nothing wrong in failing. That is extremely important.”

A final area in which many entrepreneurs wish educational institutions could inculcate better skills, largely through providing practical experience, is networking. One of the most frequently mentioned options which those surveyed wish they had had when starting out is access at school or university to practical information on entrepreneurship and networking events (selected by 35 per cent). Similarly, the most frequently mentioned change young people would like to see in education is better contact with the professional world (47 per cent). This is not simply about providing contacts who might offer work: having a network and the skills of knowing how to use it are critical to entrepreneurial success.

According to entrepreneurs, a strong network of contacts for mentoring is the second most important factor for their own business success (33 per cent), after personal determination, which tops the list for entrepreneurs based in Western Europe (42 per cent), particularly in the UK (53 per cent).

However, creating institutions that inculcate abilities such as problem-solving and networking, as well as an understanding of the rewards of risk and its dangers, will require substantial changes of attitude and approach within many educational systems. In the words of a recent European Commission report, entrepreneurial skills “are difficult to teach through traditional teaching and learning practices in which the learner tends to be a more or less passive recipient”.5 The key, as Britain’s National Centre for Entrepreneurship in Education (NCEE) has found in recent years, is for these institutions themselves to become more entrepreneurial [see case study].

Making education entrepreneurialWhat, then, would entrepreneurs consider a more effective education? Those interviewed for this report stress the need to go beyond imparting a given body of information, especially with data so easy to access in today’s digital age.

5: Entrepreneurship Education: Enabling Teachers as a Critical Success Factor, November 2012.

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What would you say is key to your business’s success today? Select up to two (Entrepreneurs Survey)

My plans and determination

Strong network of contacts/ mentoring

My start-up team Access to finance

The current economic

environment of the country in which I

reside

Ability to leverage the technology

infrastructure in my country


33%

30%

22%

51%

32%

29%

1%

One obvious objection to such thorough-going change, though, is the fact that education systems cannot be designed solely with entrepreneurship in mind. Inculcating an employee mindset is no bad thing if most graduates will end up as employees. A more entrepreneur-friendly education, however, is also consistent with much recent thinking about education reform in general.Problem-solving and the ability to work in teams – or networks – are two of what are increasingly being described as essential skills for the 21st century. David Frost, the executive chairman of the NCEE, points out that transforming education in this way “is not all about starting a business.

Employers say that a lot of young people lack enterprising skills: the ability to communicate, work as part of a team, take initiative rather than sit and wait to be told to do something.”

Rob Law adds: “Problem-solving and creativity are the future needs of industry and business.” Indeed, entrepreneurs cite passion, determination and creativity as the most important attributes for a successful entrepreneur. When asked about the keys to their own business’s success, they point to determination (51 per cent) and a strong network of contacts / mentoring (33 per cent).

The intention of the OECD’s Programme for International Student Assessment (PISA) to add in 2015 a problem-solving test to its long-standing reading, writing, and science tests shows just how mainstream this thinking is becoming. If entrepreneurs do not think academic skills are important to success in their field, it is because up until now those skills have been conceived too narrowly. A broader definition will lead not just to an environment more supportive of entrepreneurship, but one where everyone is better prepared for the challenges of the future.


The evolution of Britain’s National Centre for Entrepreneurship in Education (NCEE), based at Coventry University, reveals a widening understanding of how education can best contribute to entrepreneurship. It was established in 2004 to deal with a specific problem. The NCEE executive chairman, David Frost, recalls that at the time the government was concerned because, although the country’s “young people appeared to be entrepreneurial, something happened in the three years at university where the entrepreneurial spirit was lost, not stimulated”. The NCEE’s original task was therefore understandably narrow: to raise the profile of graduate entrepreneurship and increase the number of students and graduates seriously considering engaging in business start-ups.

It quickly became apparent, however, that success in this specific aim required a broad approach. “Simply hectoring people to start businesses isn’t the way to do it,” says Davd Frost. “You can’t expect entrepreneurial individuals to come up through higher education if the institution itself is not entrepreneurial. You must develop an ecosystem that understands and supports the

entrepreneurial spirit.” The NCEE now, therefore, has a far wider remit. In addition to its original goals, it aims to bring about cultural change and build capacity so that colleges and universities themselves become entrepreneurial.

An entrepreneurial tertiary institution takes an entrepreneurial, decentralised approach to decision-making and operations. This means encouraging individual initiative and innovation in the face of various challenges facing such institutions today, from research and teaching; through knowledge transfer and engagement with a range of stakeholders, including government and business; to responding to the challenges faced by the communities in which these schools are based.

To help bring about the necessary cultural shift in universities, says David Frost, the NCEE’s programmes target three broad groups: university leaders, academics more generally, and students and recent graduates. Efforts to help the latter are certainly effective. The NCEE’s ‘Make It Happen’ programme, which provides resources, tools and online mentoring for graduates starting up a company, has helped with the launch of 1,900 new businesses since 2009.

Meanwhile, programmes aimed at the other targets are also having an important impact. The NCEE’s International Entrepreneurship Educators Programme, designed to train and support those providing enterprise education at the university level, has been copied in the EU and China, and an independent assessment by the consultancy EKOS estimates that it generates very roughly £20 of economic activity for every £1 invested. David Frost, though, believes that so far the most successful programme has been one aimed at heads of institutions, the Entrepreneurial University Leaders Programme. He explains that the cultural shift needed to create the conditions favourable to entrepreneurship “has to come from the top. Things will not change unless leaders believe it is appropriate to do so.”

The collective impact of the NCEE’s approach can help create institutions with impressive results. The NCEE and the Times Higher Education Supplement present an annual Entrepreneurial University award in Britain. The 2013 winner, the University of Strathclyde, has in the last decade seen 50 spin-off companies and 84 student or alumni start-ups creating total employment for over 900 people.

Case study – The National Centre for Entrepreneurship in Education: Getting the culture right

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Conclusion: A more entrepreneurial society’s wider benefits

Economies would benefit if there were more entrepreneurs, and supporting entrepreneurship therefore seems like an obvious course for governments and societies. Finding the right way to do so, however, is complicated because success in this activity revolves closely around personal qualities and choices. As Kiran Mazumdar-Shaw of Biocon puts it, whatever help is given, “at the end of the day, the individual entrepreneur has to run with the idea, make his or her own mistakes, and so on.”

Whether entrepreneurs are born or made, they cannot be manufactured out of whole cloth. They can, however, be cultivated by creating an environment where those who wish to are better able to take the risks of starting a company. This might involve anything from TV shows which help shift cultural attitudes to any number of potentially helpful government policies. This report, however, has concentrated on two areas vital for shaping the capacity of interested individuals to become entrepreneurs: the work environment and education.

Business has a key role to play. Mentorship networks are essential for new entrepreneurs as they seek to navigate the numerous challenges facing any start-up. Although many do so out of a sense of giving back, established entrepreneurs also stand to benefit from being a mentor by building up and renewing their own networks. Similarly, a company that teaches entrepreneurship by example can have a dramatic impact on the ability of its employees to start companies in the future even while remaining innovative itself.

Education can also be of help but too often universities and schools actually impede entrepreneurship. This is not for lack of trying: entrepreneurship education has expanded dramatically in recent decades. Rather, it is the traditional academic format which blinkers students and instils a fear of risk-taking and a search for single right answers. Overcoming this requires a shift in how teaching takes place in order to build up their problem-solving abilities, networking skills and willingness to search for the creative approaches that entrepreneurs need. In doing so, educational institutions will inculcate attitudes and skills that help not just entrepreneurs but a broad range of people across society.

Creating an environment more conducive to entrepreneurship, then, is not just about helping the minority who start businesses. It will let many individuals reach their full potential.

Although the exact figures are rough, a significant proportion of the world’s adult population is already engaged in entrepreneurship.

Entrepreneurs can be cultivated by creating an environment where those who wish to are better able to take the risks of starting a company.

© 2014 The Economist Intelligence Unit Ltd.

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UK Trade & Investment is the Government Department that helps UK-based companies succeed in the global economy. We also help overseas companies bring their high-quality investment to the UK’s dynamic economy acknowledged as Europe’s best place from which to succeed in global business.

UK Trade & Investment offers expertise and contacts through its extensive network of specialists in the UK, and in British embassies and other diplomatic offices around the world. We provide companies with the tools they require to be competitive on the world stage.

UK Trade & Investment is responsible for the delivery of the Solutions for Business product “Helping Your Business Grow Internationally.” These “solutions” are available to qualifying businesses, and cover everything from investment and grants through to specialist advice, collaborations and partnerships.

© 2014 The Economist Intelligence Unit Ltd.

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Neither The Economist Intelligence Unit nor its affiliates can accept any responsibility or liability for reliance by any person on this information.

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