Wednesday, July 12, 2017

Incubators and Universities: Need For A New Model

As the crisis in jobs becomes apparent, many think that the way to maintain the Middle Class society is to be found in entrepreneurship. In their mind, it is a straightforward transition: People not finding jobs would start businesses. In some quarters, those look for jobs are already maligned - 'Job Takers' they are called - as opposed to those committing themselves to entrepreneurial journey, the 'Job Creators'. As always, the reality is harsher than the theory. But my point is not to challenge the idea that there should be more entrepreneurs. It is how to get there I have questions about.

More specifically, my doubts are about the new trend of creating university-based incubators, US style, in the universities in developing countries. The incubators are taking the place of 'Placement Offices' or what was euphemistically called the 'Industry Collaboration Office', becoming the last mile of the students' life cycle in an university or a business school. 

The idea behind these incubators are to replicate the successes of the incubators in the top universities of the world. They are inspired by the stories coming out of the likes of Stanford and MIT. The governments are excited about it too, and treat the incubators as solutions to the jobs crisis they have in their hand. However, the trouble is, the universities in the developing world, particularly those in ex-colonies, are very different institutions than the American ones, and they are hardly designed to be hotbed of innovation.

It is a mistake to see all universities as same, when the Colonial University was set up with the very purpose of standardisation and connecting colonial education to colonial employment. Indeed, the countries are now free, but most of them maintained their colonial institutions and see modernity in continuity of the traditions bestowed upon them by the Colonial administrations. This was specifically the intention of the British administrators, who appreciated the value of soft power long before the term was coined. And, among the institutions of Colonial age, the universities were the most revered, seen as gifts of science and reason, an intimate ally of the modernising politicians who took over the running of the countries after the Colonialists left. 

The universities, therefore, are factories to create servants of the state. The whole university culture, with the possible exception of some elite technocratic institutions set up post-independence in some of the countries, is usually deeply rooted in the desire to maintain the bureaucratic continuity, rather than disrupt and innovate. Their students come looking for a qualification that will lead to a job, and their aspirations are more narrowly defined than that of their counterparts in metropolitan nations. The idea of the university as a fountainhead of innovation, therefore, stands on a false premise.

In a way, university-based incubators work against the grain of the host societies, where the innovation mostly happen outside the universities. It also imposes assumptions which are alien and unworkable, like a bias towards younger entrepreneurs, though family support structures are different in many developing countries and people starting enterprise in relatively later stage of life are far more common. Indeed, the investors sometime work with the assumptions they learn from American business schools, and override the considerations of local labour market and society. However, this is part of the problem rather than a justification of a wrongly designed system.

In my mind, there are two things that need to happen. One, and this is close to my heart, is to create Enterprise Schools, which are built upon the culture of entrepreneurship, which will attract a specific kind of people and support them through a longer development cycle. Two, and this is perhaps more scalable, while the incubators may be university based - if purely because the lower real estate costs - they should mandatorily create mixed cohorts, drawing from the outside population, particularly including people who already have work experience.

In summary, my recommendation is that the incubation model needs to be reinvented for the developing countries, rather than the plug-and-play approach that is now prevalent. This needs a conversation, and not blind faith. Enterprise is not a straightforward solution for the jobs problem, as these require changing markets, newer opportunities and upsetting existing corporate primacy, and this, before everything else, needs opening of minds and engaging at a different level.



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