75 years after Joseph Schumpeter coined the phrase ‘Creative Destruction’ and identified innovation and entrepreneurship as the critical drivers of economic change, entrepreneurship is more than ever seen as key to global economic growth.
Perhaps nowhere is more associated with innovation and entrepreneurship than MIT and, according to a 2015 report, entrepreneurship among MIT alumni has increased at an impressive pace in recent years.
Living MIT graduates who have started and built for-profit companies do not qualify as a nation. However, if they did, they'd be the world's 10th largest economy, with gross revenue falling between the GDP of Russia ($2.097 trillion) and India ($1.877 trillion).
For entrepreneurs to flourish they need freedom to act and access to funding – think how China’s economy has burgeoned since the removal of multiple limits on the entrepreneurial drive of its people and how the U.S. has bounced back from recession driven by its dynamic entrepreneurial culture.
To flourish entrepreneurs also need education. In a complex fast changing world, characterised by big technological and social change, successful entrepreneurs need sophisticated knowledge and skills to refine their innovations and business models and to develop the leadership capability to take their ideas to the next level.
MIT’s approach to entrepreneurship education rests upon three principles:
- 'Mind and Hand' – the concept of linking theory and practice
- Teams not individuals
- Cross-disciplinary collaboration
The curriculum is focused on moving ideas to action, invention to the marketplace. The research discipline brought by MIT academic faculty in entrepreneurship is paired with the experience of successful entrepreneurs and investors who bring their ‘practice’ into the classroom. Whenever possible, academics and practitioners co-teach entrepreneurship subjects, to the benefit of teachers and students alike.
As well as knowledge acquired on campus, the support of innovation ecosystems in the key areas where many of MIT’s entrepreneurial alumni are located – Massachusetts, Silicon Valley, New York City, and in London, Israel and Singapore – is critical as alumni develop entrepreneurial companies after they leave the campus.
The report highlights some of the forces strengthening entrepreneurship at MIT:
Ease of market entry. The internet enables start-ups to promote, sell, and deliver directly, allowing them to compete with corporations which previously had a virtual monopoly on their markets.
The declining cost of starting an enterprise. Cloud computing and application program interface tools have lowered the IT costs of starting a company, which in turn reduces the opportunity cost of entrepreneurship.
Enhanced access to alternative forms of capital. For example, the increased engagement of recent MIT alumni in crowdfunding to support their innovations.
The falling age of first-time entrepreneurs. A strong shift over the past decade toward entrepreneurial career interests by young people is indicated by applications to undergraduate courses and the MIT Sloan MBA, and by rapidly increasing enrolments in entrepreneurial courses, as well as in student teams entering MIT’s business-plan and venture-formation competitions.
Industry shifts. The composition of entrepreneurship at the industry level is changing. In line with the broader U.S. and OECD economies, MIT start-ups have become increasingly services oriented and correspondingly less manufacturing-focused – in the 1980s they were split 50/50.
Women entrepreneurs. The story as far as gender diversity is less positive. The rate of entrepreneurship reported is 12% for women versus 29% for men. This is not a specific MIT problem – only 30% of all U.S. businesses are women owned – but a problem none the less. According to the survey, women-founded firms are smaller and less likely to go public or become acquired. However, they are also less likely to fail and less volatile, as a significantly higher proportion of them continue to operate as privately held firms.
While founders attract much of the limelight, other roles contribute to the economic impact of entrepreneurship and innovation. 31% of the MIT alumni responded that they are named as an inventor on a patent and more than half of MIT alumni noted that they were responsible for new product development.
MIT Sloan Executive Education, offers multiple courses that connect global executives to MIT's entrepreneurial network and help participants launch and navigate the challenges of new intrapreneurial and entrepreneurial ventures.
These courses include the Entrepreneurship Development Program. Drawing from the vast culture of innovation and entrepreneurship at MIT, this unique annual course introduces participants to MIT’s entrepreneurial education programs, technology transfer system, and global entrepreneurial network. It covers the entire venture creation process, from generating ideas to building viable global businesses, with a special emphasis on the nurturing roles of corporations, universities, governments, and foundations.