“I hope we never again trust overpaid fools who think they know best thanks to bogus theories! This was the end line from a piece by Luke Johnson in the Financial Times on Friday 29th May in FT.com.
I completely agree that the world should not trust overpaid fools. It seems to me that while Luke Johnson makes a very valid point that entrepreneurs with a strong element of common sense and intuition as guiding principles over the jargon filled board rooms of corporate would not have made the catastrophic decisions that have led finally to companies like GM filing for bankruptcy, he over simplifies the story.
The costs of instinct, gut feel and down to earth decisions can also have a high price – it is not a perfect system. Investors always talk about the need to have a portfolio of say 10 or more companies, from which they hope one will bring in the big returns, acknowledge that four or five will remain as part of the living dead in the portfolio and accept the losses they may incur in the remainder of the portfolio. How come that intuition and common sense also lead to the endless churn of management teams as investors get fed up with their top teams and fire them in favour of yet more people coming in from their close network of people with common sense, intuition and it seems increasingly, a further requirement – dyslexia? (Most commonly trotted out as a disadvantage in articles on entrepreneurship).
Common sense and down to earth ability of entrepreneurs have also lead to high levels of success or failure in terms of the performance of millions of small businesses in the UK and indeed around the world.
Intuition and common sense are required in good measure in business, but they are not the only requirements. And it is true that highly educated individuals who have lost this ability are a burden, not just in business but also in society. Luke Johnson could have written about business ethics and societal values in his article more than about the virtues of untrained and uneducated entrepreneurs.
It is important to differentiate between formal know-what and informal know-how and indeed know-who in entrepreneurship. Often people confuse entrepreneurship education with a kind of business studies or business plan writing course. Formal understanding of business principles and theories that have stood the test of time are invaluable to the majority of people. In addition it is important to have a high level of self-awareness, social skills, and an ability to pitch a story, practical skills and to build a network of individuals who can help each other. Most, if not all of this is best learnt from practitioners and the role of Universities is to help put programmes and events in place that can provide the best of insights from formal and informal sources to enrich society with people who can make a difference. And while I agree completely with Luke Johnson that we never want to trust over paid fools again, let us not confuse education with ethical behaviours – which can be violated by both the overpaid fools and by entrepreneurs.