Risky Business

When Reza Satchu talks, students listen. The dapper Harvard Business School graduate has a drill sergeant’s bark. And he takes that no-nonsense temperament into a class he teaches on entrepreneurship at U of T’s economics department.

Thirty-five select students, plucked from hundreds of candidates, attend what effectively is an entrepreneur boot camp, where the accomplished investor hammers home a simple philosophy: success means challenging yourself to take calculated risks.

If students are late, unprepared or their cellphone goes off in class, they’re out. Most stay. In return, they get to dissect real-life business case studies and meet high-powered entrepreneurs who routinely appear as guest lecturers. The top student every year wins a work placement and a scholarship that Satchu pays for. Perhaps most importantly, Satchu demands that his students set high expectations. “They are pushed in ways they are not used to being pushed,” he says.

He hopes that this uncompromising approach will produce a new breed of entrepreneurial leader in Canada. “Our goal cannot be to be a commodities-based nation. That is a recipe for disaster,” says Satchu, who came to Canada from Kenya. “Our goal has to be to develop an economy that is based on innovation and creativity.”

So far, the report card on that front isn’t good. In a recent study, the Conference Board of Canada, an Ottawa-based economics think-tank, gave Canada a “D” for innovation. The board’s brain trust warned that Canada was risking its future prosperity by slipping to the back of the innovation “class” behind the U.S., Germany and Japan. According to the board, Canada appears content to shore up its familiar “fading oldster” commodities-based industries at the expense of innovation and the emerging creative economy. “With some exceptions,” the report concluded, “Canada does not take the steps to ensure that science can be successfully commercialized and used as a source of advantage for innovative companies seeking global market share.”

Translation: Canada’s got talent, but it does a poor job of turning ideas into high-tech products that can be sold to the world. As for a prescription, the board offers little in its report beyond the admonition that Canada needs to dramatically change its thinking about innovation and entrepreneurship in order to compete globally.

A lot of that necessary thinking is taking place at U of T. Several faculties and departments are encouraging innovation and entrepreneurship to fashion what Richard Florida, the director of the Martin Prosperity Institute at U of T’s Rotman School of Management, calls the “idea-driven economy.”

This work is vital as the country emerges from recession. It’s also important because entrepreneurship in the age of the idea-driven economy is not simply about ringing the cash register; it’s about creating more knowledge-based jobs.

Clad in a heavy brown checked shirt and winter boots, and sporting an unruly salt-and-pepper beard, 48-year-old Scott Mabury looks more like a construction worker than a world-renowned chemistry professor.

Mabury, vice-provost of academic operations and U of T’s former chemistry chair, is eager to show a visitor how his department has become a hotbed of innovation and entrepreneurship. “Chemistry has more invention disclosures than almost any other department on campus,” he boasts. By his count, the chemistry department makes upwards of 30 invention disclosures a year.

Mabury is especially proud of the facilities the department has built to help convert these scientific discoveries into marketable products. In 2003, with money raised from private industry and U of T, Mabury and the chemistry department began to transform empty space and classrooms into state-of-the-art laboratories – where faculty and senior students get the time and space to let their ideas mature before they graduate into the market. (Statistics show that 30 per cent of small businesses don’t survive more than five years.)

Mabury calls the refurbished labs “pre-incubators.” It’s here that some of the new chemical compounds discovered every year by faculty, senior students and researchers begin the long journey to becoming products.

The department’s five pre-incubators have paid dividends. To date, five spinoff companies have taken flight after spending time in the facilities, while another five are gestating. These companies often hire U of T graduates.

The pre-incubators also make U of T money. “The university shares in the ownership of the intellectual property. The more valuable that property is when it’s sold, the larger chemistry’s and the university’s share of the cut,” says Mabury.

Finally, the pre-incubators nurture an entrepreneurial spirit among faculty and students in the chemistry department. “Today, the one word that would capture the culture of this department is entrepreneurial,” Mabury says.

That means abandoning old ways of thinking about the relationship between business and the university, coming up with novel ways to make investments in buildings and people to promote entrepreneurship, and, perhaps most importantly, taking risks.

Like Mabury, Professor Jonathan Rose is convinced that U of T needs to cultivate a culture of entrepreneurship, particularly among its science and engineering students. Canada has everything it needs, he says, to create robust startup companies − political stability, seed money and first-rate universities. “The only thing we really lack is a strong entrepreneurial culture,” says Rose, who is the former chair of the Edward S. Rogers Sr. Department of Electrical and Computer Engineering.

In 2005, Rose helped Professor Emeritus Joseph Paradi create undergraduate courses in entrepreneurship for all engineering students. A year earlier, Rose had launched a popular seminar series in which successful entrepreneurs had been invited to the university to share their business insights and experiences with engineering students.

“The whole point is to have students hear the stories – the good, the bad, the great – and think about how they could do it, too, and come to believe that they could do it,” Rose says.

This burgeoning interest in entrepreneurship reflects changing attitudes on campus. Rose says that today’s engineering students have a bigger appetite for business and risk-taking than some of their professors, who focus on basic research. Entrepreneurship and academia, Rose insists, can coexist without sacrificing the central purpose of a university − the pursuit of ideas and understanding.

“We would all like to have unfettered, curiosity-driven research. But new government [research] programs aren’t in large part designed that way,” Rose says. These days, governments often require that engineering faculty and students set up shop with companies that can commercialize their ideas or technology before governments hand over research grants.

Rose acknowledges that it’s difficult to measure how quickly the culture of entrepreneurship is taking root inside U of T’s third-largest faculty. He points, however, to the five companies that recently have been launched out of the electrical and computer engineering department and the several others in the offing. “The act of creating a [company] is so delightful when it succeeds,” Rose says.

Civil engineering professor Bryan Karney also wants U of T’s engineering students to learn how to develop ideas into commercial products. To help them, he is taking Rose’s seminar series and entrepreneurial course a big step further.

Karney is helping design a minor degree in engineering business as the co-leader of a task force made up of engineering alumni, students, faculty and two professors from the Rotman School of Management. “We want to foster in our engineering students a greater degree of awareness of the opportunities that exist for people not to simply be employees, but to think about starting their own business,” he says.

The new degree is slated to be offered to all undergraduate engineering students in the fall, and it will bring together faculty and students from the Rotman School of Management and the Faculty of Applied Science and Engineering. “There’s an appreciation that [economic] problems aren’t going to be solved by staying in silos,” Karney says. “To my mind, one of the most exciting things we are doing is breaking down those barriers that have often existed between business and engineering.”

Karney believes the new degree will also encourage students who are already inclined to think outside the box to apply their critical-thinking and analytical skills to spreadsheets and business plans. Though the curriculum is still a work in progress, Karney says engineering students will likely take courses in economics and finance so they can better understand the vocabulary of business.

Those wishing to combine engineering with a business degree have another option at U of T. The Jeffrey Skoll program, established a decade ago with a $7.5-million gift from the former EBay president, allows students to earn an undergraduate applied science degree and an MBA degree (as well as do a professional experience year) in six years and eight months. Karney says the main difference between the two programs is that the Skoll MBA is accelerated – it’s intended as a fast track for extremely motivated students. The minor “will reach out to a larger group,” he says.

Becky Reuber, a professor of strategic management at Rotman and another member of the task force, cautions that business courses and degrees offered to engineering students are no guarantee of success or that entrepreneurs will emerge. “[No one] is born with an entrepreneurial gene,” she says.

The new degree will, she hopes, help aspiring engineering entrepreneurs recognize commercial possibilities, navigate their way in the uncertain world of business, and attract potential investors and customers. “When you get the stamp of a good university behind you, people are more apt to listen to you,” Reuber says.

Jim Milway (BA 1973 St. Michael’s), executive director of the Martin Prosperity Institute, says the broader public policy problem confronting Canada is that governments need to recognize that innovation and entrepreneurship on campus should involve more than a “love affair” with “white coats and labs.” “Business skills and entrepreneurial skills are equally important for innovation,” he says.

This means that governments need to spend more money not only to fund science and engineering departments, but business schools as well. Rotman, for example, offers a major in innovation and entrepreneurship that caters to students interested in launching their own company. The emphasis is on creating value from new ideas and bringing new products to market.

University administrators also need to invest not only in basic research, but in ways to enhance the student experience. “It’s a matter of getting the balance right, of getting back to the notion that professors do research and produce innovative technologies in the labs, but they are also teaching students and those students are the entrepreneurs of the future.”

Reni Barlow (BSc 1982) agrees. The executive director of Youth Science Canada, a nationwide organization devoted to getting students from grades 7 to 12 interested in science and innovation, believes university leaders need to do a better job of shattering the myth that a science degree invariably leads to donning a white coat in a lab or hospital.

One way U of T can do that, he suggests, is by publicizing the success stories of science and technology graduates who have become entrepreneurs. Ottawa can also play a bigger role. Barlow has urged federal officials to duplicate high-profile campaigns promoting the skilled trades and careers in technlogy. “The success of that program could be replicated in the areas of science and technology to say that working in science can not only be fun, but lucrative too.”

Andrew Mitrovica (BA 1983 VIC) is a journalist in Toronto. He wrote “The New Freedom Fighters” in the Autumn 2009 issue.