Graduate Management News

Innovation Can Be Delivered Through Entrepreneurship

Innovation is a hot topic in business schools, but what does it mean, and how do you teach it? In conjunction with the Ideas to Innovation Challenge, a two-phase commitment by GMAC’s US$10 million MET Fund in which schools can win funding to bring innovation to management education, Graduate Management News is presenting a quarterly series of guest columns by deans on innovation and management education.

By Xiongwen Lu

Many business schools have strengthened their research on innovation courses. But what is innovation? I believe it comprises two aspects: technology innovation and management innovation. Of these, business model innovation is particularly important because technology innovation cannot develop without the foresight and promotion of entrepreneurs. Perhaps only 1 out of 10, or even 20, technological R&D projects can achieve success, and the technologically advanced enterprises usually require an innovation cycle of continuous R&D, application and reservation. Therefore, innovation usually is a kind of large-scale organizational activity.

These two types of innovation have both become an important impetus to the sustainable development of contemporary global economy. Especially in China, the technological strength of our nation is still relatively weak, and we must continue to increase our investment in high-tech innovation, develop our capabilities, and educate and train our talents. China's rapid economic development over the past decades demonstrates that the vigor and dynamics of our economy derive from the business model innovation so that many enterprises have secured a leading position in their respective industries by achieving ever-increasing profitability, and have even seized a large market share in the global market. Looking into the future, the Chinese economy will continue to be an important engine and impetus to the global economy.

The Role of Fudan University

The School of Management, Fudan University, will undoubtedly help the young people to get more prepared for setting up a business. I did not encourage students to set up a business in Shanghai 15 years ago because the economy was dominated by state-owned and foreign-funded enterprises, the private economy was very weak, and the barriers to entry into the market were very high. However, the situation has changed significantly in the past 10 years. The government has been continuously loosening regulations to encourage private enterprises, both overseas and local PE or VC funds are accumulating, and excellent talents from all over the country are swarming into Shanghai. The increased demand for entrepreneurship has imposed great pressure on the management education. FDSM is obliged to provide more knowledge and training to the young people in setting up their businesses or innovating the business models within their existing companies.

In the past 10 years, we have offered courses such as high-tech management, innovation management, knowledge management, new venture creation and entrepreneurial leadership, etc. At first, the lecturers offered one or two electives courses based on their own backgrounds and research interests.  Then they began to offer a series of entrepreneurship and innovation courses. Recently, in addition to the specialized courses, more faculty members have embodied the idea of innovation in most of the courses they teach, including Strategy, Marketing and e-Commerce. The school impels its faculty members to apply the concept of innovation to each course and use the state-of-art theories to explain the unique business practices in China. Meanwhile, they crystallize their own academic thoughts through combination with many successful business practices and technology innovations.

Building an Innovation Culture

In recent years, we have invited many entrepreneurs and venture capitalists to lecture at our school. We also organize a business-plan competition annually and encourage students to team up with science and engineering peers to submit business proposals. In the competition, we invite faculty members and entrepreneurs to coach the students and help them to improve the plans. Some winning projects in recent years even got investment from venture capitalists, and many students thus have taken up entrepreneurship as their careers.

In addition, we also cooperated with Hong Kong-based Shui On Land Limited to launch the "Fudan-Shui On Youth Entrepreneurship Course." Vincent Lo, Chairman of Shui On Group, went through numerous hardships and challenges before he became one of the most successful entrepreneurs in Hong Kong. He is determined to offer more training and learning opportunities to the young generation so they can be better prepared for pursuing their dreams. His formula is to combine a series of entrepreneurship courses with varied workshops, seminars and team projects, and to conclude with the business competition. It is based at my school and open to all Fudan students, even to all the college students in Shanghai. All student start-up team are coached by entrepreneurs or professors with practical experience, who supervise their business plans or even make capital investments.

Last year’s data show that about 6.2 percent of our full-time MBA graduates did not choose to be professional managers, but were actively engaged in setting up their businesses. It is important to note that in the US, which has a strong innovative culture and entrepreneurship, this percentage usually is no more than 10 percent. The Fudan MBA Program is educating young students with a global vision to set up their own businesses, and this will become an important impetus to the sustainable development of Chinese economy. A couple of days ago, I met with an alumna of our part-time MBA program. She started up her business after graduation and set up a fund with the capital from her MBA classmates. Similar examples are too numerous to list.

How Innovation and Entrepreneurship Overlap

There are innovations caused by revolutionary technological breakthroughs, in other words disruptive innovation, from the steam engine and electricity to the computer and Internet in modern times. Yet innovation also comes through entrepreneurship. In my eyes, Steve Jobs is more an entrepreneur than a technology developer because he saw the unique novelty of the iPhone and iPad as well as their unique value to the customers. He was dedicated to bringing innovations to his industry from business processes, product designs to marketing campaigns, and customer services. Ordinary technology innovations are always realized under the guidance and support of entrepreneurship, because we need the enterprises to undertake the risks. Entrepreneurs must have both the vision and financial ability to bear the risks.

The industrial transition and upgrading in China need innovative mindset. Since the innovation practices are developed at such a rapid pace, many secrets of business successes in China still need to be further explored and researched. We cannot translate directly the extensive innovation practices—including failures—into education, which needs a long process of studies and knowledge processing. Our academic research is not enough known to the outside world, and the world does not know what is happening in China. We can borrow ideas from foreign theories, but we have to readapt them to the Chinese situation. We strive to build up our faculty teams by not only recruiting talents from overseas but also cultivating academics by ourselves.

How can we evaluate the success of entrepreneurship and innovation education? I think it can be assessed on the following aspects: whether the innovation culture has been established in our school, whether the students can feel a strong atmosphere of innovation, and whether they are willing to talk about and practice innovation while their learning about new knowledge, ideas, and concepts. Even they work for enterprises after graduation, our students can still help the enterprises to realize transition and upgrading by introducing the innovative strategies there.

I look forward to seeing how many of our alumni achieve success in business innovation and how many achieve success in technology innovation in 10 years’ time. Their practices are the outcome of our education, and it is most convincing to evaluate our performance through practical results. I'm fully confident about this.

Xiongwen Lu, PhD, is dean of the School of Management at Fudan University and a member of the GMAC board of directors.

In previous columns, Sir Andrew Likierman explained why it’s important for London Business School to teach innovation, and Raghu Tadepalli showed how entrepreneurial thinking drives innovation at the Babson College Olin Graduate School of Business.

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