Entrepreneurship Education 2.0: Redefining Value Creation – Putting Purpose Before Profit
By Jon Fjeld, Director, Innovation & Entrepreneurship Initiative
Increasingly, corporations are focusing on not just profits, but purpose, a trend spilling over into higher education. Entrepreneurship education is changing, and must continue to change, to match the changing corporate landscape; it is a welcome development.
With two decades of marketing, engineering, and general management experience in startups and public companies, followed by nearly two decades of teaching entrepreneurship and strategy to Duke students at all levels, I have the privilege of being in a position to help shape how we teach tomorrow’s innovators. The field has never held such rich opportunity.
The risks of putting profit first
Conventional wisdom holds that the purpose of entrepreneurial ventures is to turn a small amount of money (venture investment) into a large amount of money realized in a highly priced “exit.” Correspondingly, conventional entrepreneurship education teaches students to find opportunities that can be exploited for financial gain.
We’ve all witnessed the bad consequences of prioritizing financial gains above all else. Theranos and Insys Pharmaceuticals actively deceived customers and investors. Chemours, a Dupont spinout, continues to dump toxic chemicals into the Cape Fear River in North Carolina, poisoning downstream residents. Social media companies struggle with their responsibilities as misinformation and propaganda poison the political landscape.
Corporations have always been powerful, but their relative power over people and the planet itself has never been greater due to their vast control over resources and their ability to scale. Their ability to do harm has never been greater.
The rewards of putting purpose first
Corporations have the power to do great harm, but they also have the power to do good. In speaking with Melissa Bernstein, cofounder with her husband, Doug, of the highly successful toy company Melissa & Doug, I asked her why her company exists. She responded, “To create playthings that tap into the creativity of the child—to create a launchpad to ignite the child’s sense of wonder.” Since Melissa started her company more than three decades ago, this core idea has been her north star, helping her guide her company according to deeply held values. As a result, Melissa & Doug has created tremendous value in bringing joy to countless children and their caregivers, and has been very successful financially.
Doug Hirsch founded GoodRx, in his words, “to give Americans the tools they need to find affordable healthcare in the U.S.” After a visit to a doctor, he was shocked to see how wildly prices of the same prescription medicine varied between pharmacies, and even in the same pharmacy. Realizing that confusion and uncertainty make many people afraid to engage with the health system, he decided to give people the same tools they use for airfare and autos. The goal was to help people navigate the system and attain affordable care. He was determined “to deliver the best solution for the consumer regardless of the financials.”
Neither Melissa & Doug nor GoodRx is a nonprofit or social venture, yet both are propelled by the strong purpose and values increasingly typical of successful companies.
The need for a new kind of entrepreneurship education
Just as I strive to teach students to think critically, I have a duty to think critically about how we educate and how we are preparing students for the rapidly changing world that awaits them. Along with many others here at Duke who are invested in guiding the next generation of leaders, my role is to consider how we can better equip our graduates to succeed while they also take responsibility for the actions of their organizations.
We must evolve entrepreneurship education to teach students to maximize value in a broad sense, one that includes both financial performance and positive impact.
We must do this because it will better equip students for a work environment where they are more likely to succeed if they are thoughtful agents of change. More fundamentally, we must do this because it our responsibility as university educators to graduate students who are capable of tackling the world’s most pressing challenges.
We must also do this because our students demand it. Millennials and Gen Z are increasingly loyal to socially minded companies. They consistently report valuing purpose over paycheck when taking jobs. These young people want to pursue causes they’re passionate about—they want to change the world.
And what about profit? Melissa said it best: “When you create great products, people will pay. Profit is a byproduct… Profit is how you know you’re really filling a need.”
Similarly, Doug Hirsch found he “was rewarded from day one for doing the right thing for the consumer.” Profit is a consequence of creating great products. It is also the means, the fuel, that allows entrepreneurs to scale and serve a larger community. Financial success in an entrepreneurial venture is a target that’s hard to hit just by aiming at it; purpose provides the necessary direction and momentum.
The imperative to reach all students
Education must keep pace with students’ passion for purpose and with the growing demand for responsible corporations. Value-based decision making needs to be embedded into entrepreneurship education. And this education should be designed for a broad base of students.
Duke has our share of student founders, but the majority of our students will not launch their own ventures. Nevertheless, we believe that all students will benefit from an entrepreneurial mindset and from acquiring the skills of entrepreneurial action. In other words, we support them in developing not only a bias toward innovation, but also the means by which to realize their innovations—whether they are creating a new product or service, or simply improving an existing process.
This type of education prepares students to be critical observers and creative problem solvers in any industry or environment. Moreover, it helps students to develop the self-awareness that is vital for success in any organization.
Duke’s approach: ethical entrepreneurial action
At Duke, our approach to teaching entrepreneurial action is based on some elements often overlooked in entrepreneurship education. The first is ethics—a term that can put people off. (As someone with a PhD in Philosophy, when I mention ethics, people fear that I’m attempting to engage them in a conversation about Aristotle.)
In fact, two and a half millennia of ethical thought have given us four basic concepts: goal (or purpose), principle (or value), consequences, and virtue. When students are evaluating actions by considering their goals, their principles, and the potential consequences of their actions, including on their own character, they are practicing ethics. The practice of evaluating one’s actions in light of these considerations is self-reinforcing. Eventually it becomes second nature to think this way.
So we strive to create awareness of ethical issues and to create opportunities to practice reasoning using the core ethical concepts. Practice builds confidence and the courage to stand up for one’s decisions.
In this approach we aim to be practical—we avoid both theorizing and moralizing.
Often when people hear ethics, they think in negative terms—how to prevent the transgressions that are all too prevalent. How do we inoculate young entrepreneurs against the temptation to do the wrong thing? As though we could put a final ethics check on decision making. But this approach cannot work—it has things backward. Once a decision-making process has come close to a conclusion, human powers of rationalization are stronger than any “ethics test.”
Teaching students ethics as a practice
Rather, to avoid doing the wrong thing, we have to try to do the right thing, and this aim has to be with us from the beginning. When we adopt this ethical orientation, we recognize that there is often not a clear-cut right and wrong. Decisions usually involve trade-offs. This is the nature of ethical decision making. With practice, we become better at it, and practice builds character.
So what does this look like in the classroom? How exactly do we equip tomorrow’s entrepreneurs and leaders and teach entrepreneurial action?
As the skills in question are developed through ongoing practice, they are best learned in a practice-based context, that is, via experiential programs. When students are working in earnest to realize an innovation, they’re able to work through issues as they arise. They themselves are the decision makers, the primary agents of progress. Ideally they will work in diverse teams, thereby gaining everyone’s unique expertise as well as learning to handle communication issues. Students are not told what to do, but rather are guided by questions.
In this experiential learning context, we encourage the students to focus on a worthwhile goal, adopt a small set of explicit principles that guide decision making, and constantly evaluate the consequences of the team’s actions—and take responsibility for those consequences.
Transforming education, tomorrow’s leaders, and the corporate landscape
Entrepreneurship education looks different for every institution depending on its specialties and capabilities. Duke affords us wonderful opportunities to provide students with experiences working on real innovations in diverse teams, particularly given our world-class Duke Health system, our leading resources in science and technology, and our location in the Raleigh-Durham-Chapel Hill Triangle region, among the fastest-growing hubs for innovation and entrepreneurship.
Regardless of where entrepreneurship is being taught, however, our ultimate goal is to arm all students with the tools of entrepreneurial action. To help them realize innovation and effect change, to help them live lives of meaning and purpose, and to guide them in making difficult decisions with confidence and courage.
To do this, questions about purpose, values, and consequences can’t be optional, they must be woven into engineering, technology, and all other disciplines. In this way we can help maximize value, helping students create not only prosperity, but progress.
By focusing on ethical entrepreneurial action, together we can help change the culture of entrepreneurship, and we can help students change the world.
Jon Fjeld is the Director of the Duke Innovation & Entrepreneurship Initiative, Professor of the Practice of Strategy at The Fuqua School of Business, and Professor of Philosophy.