Universities need to embrace entrepreneurship

About 18 months ago I was in the middle of gathering evidence for my second report on small firms, “Growing your Business”, when I met the chief executive of the Association of Business Schools. At first I could not see its relevance to my report until I idly asked him how many members the association had and he replied 138. I then realised that we had both a problem and an opportunity.

To appreciate why you have to look at the effect that the internet has had on business over the last 15 or 20 years. We are all aware of the effect it has had on social relationships, of Twitter and Facebook and all the other social media sites which have so transformed the way people interact. Over the same period the internet had an equal if not greater effect on business. The barriers to entry to form a new company are now so low that you can literally start a new business on a few thousand pounds and a smartphone, as many hundreds do, week in and week out, using a Start Up Loan – a government initiative providing funding, mentoring and support to entrepreneurs.

There are more than 5m companies in the UK today and of them more than 19 out of 20 employ fewer than 10 people. While technology was making it so much easier for many to start a new company it was also enabling large companies to do more with fewer people. Today large companies number under 1 per cent of ventures and employ about a third of the workforce. Although the UK rate of unemployment compares well with that of the EU, it is still difficult for young people to find their first job. Surveys show that more and more are seeking to work for themselves, not out of desperation but of desire. Indeed the RSA Action and Research Centre – recently reported a survey that showed that 82 per cent of self-employed people were happy to work for themselves and did not wish to return to working for someone else.

Yet when I looked at the business schools I found that they were in the main taking school leavers (about 70 per cent of their student population came straight from school) to work for large employers, which in itself was a very difficult employment market. I realised that here was an opportunity to help create many more entrepreneurs. Happily, so did the association and its members. We have now created the Small Business Charter – I hope, in time, a Royal Charter – and the first 20 members have already been announced, with many more to come over the next year. The Charter members are business schools that have undertaken to place their students with local SMEs for work experience, to encourage the management of the local SMEs to use the business school and to encourage entrepreneurs among their students by setting up incubator units. A student with work experience in a small firm is likely to be attractive to other small firms and much more employable after graduation.

We have now taken things further. My third report “Enterprise for All” proposed that the business schools open their doors to the entire university, for you are more likely to find entrepreneurs in the general student population than those in a business school – whose students go there to become a manager. Many universities today have an enterprise society, a student society that brings together all like-minded students with hopes of becoming an entrepreneur or even discovering all the opportunities ahead of them. I have spent much of the last year visiting universities and business schools up and down the land and the one model I found that worked well was where the business school worked with the general student population. I have now proposed that all Charter members run a start-up programme alongside the enterprise society and use Start Up Loans to create new businesses opportunities within the university.

However there is still more that can be done. Many, but not all, universities run an elective enterprise module and indeed in one or two universities I visited this was by far the most popular elective course. More of these enterprise modules are needed.

But crucially only a minority of universities currently have business schools as Charter members, so we have gone further. I have agreed with the National Business Awards – the cross-industry award for enterprise excellence – to launch a national E-Stars programme in November 2015. This programme is to award a gold star to the most entrepreneurial university and His Royal Highness, the Duke of York has agreed to become our royal patron. One of the leading figures in the university world – Sir Malcolm Grant, former chairman of the Russell Group, (an association of leading UK research universities) – has agreed to chair the panel of judges and we shall be recruiting judges from leading figures both in academia and in business. The university will be judged on the strength of its enterprise society, the availability and quality of an elective enterprise module, the relationship with its own business school and whether or not it has an incubator unit for the general body of students. I anticipate in time this will be a most sought-after distinction for a university and one which will be highly valued by incoming students.

The author is the UK prime minister’s adviser on entrepreneurship.