Professor Wong Poh Kam, from the School of Business at the National University of Singapore (NUS), and Director for NUS Entrepreneurship Centre, spoke to THink about the teaching of entrepreneurship, the rise of social entrepreneurship and developing the sector’s ecosystem.
In 2015, you were awarded with World Entrepreneurship Forum’s (WEF) Entrepreneur for the World Award (Educator Category). What led you to becoming an educator in this space?
By personality, I am a bit of the intellectual type of person. After obtaining my PhD degree from MIT, I went back to Malaysia and became an academic at Universiti Sains Malaysia with the idealism to help develop the nation.
However, I was disappointed with the lack of intellectual meritocracy in the general environment. Meanwhile, I became more and more interested in entrepreneurship and started a couple of companies. In 1988, I got accepted as a senior lecturer at NUS Business School. I was very grateful that NUS gave me the opportunity to set up a research centre on entrepreneurship and innovation, and to launch a new Master’s Program on Technology Management.
In 2000, I was in the core team that set up NUS Enterprise, whose mission was to teach entrepreneurship based on experiential learning, and to provide incubation support for NUS students and alumni.
Under NUS Enterprise, I also helped initiate a flagship educational programme called NUS Overseas Colleges (NOC). I didn’t start off by planning to be an educator, although I always wanted to be a professor. I started with an intellectual interest in science and technology, but over time, my passion shifted from research to innovation and entrepreneurship. I am grateful lthat I was privileged with an academic position to shape the young to be more self-driven to change the world.
Can entrepreneurship really be taught?
Some literatures show that about 20 to 30 percent of entrepreneur characteristics are genetic, and the remaining by and large are shaped by environmental factors. If teaching and learning contribute to those environmental factors, then the answer will be “yes”.
The key traits of entrepreneurs can be divided into mindset and skillset. Skillset can be taught. For example, we can learn in a classroom setting how to pitch to potential investors.
On the other hand, mindset is about the way you see the world and the way you think. When most people complain about problems, entrepreneurs see opportunities in problems, and they look for solutions and develop them into businesses.
Another mindset example is risk-taking. An entrepreneur leverages on his or her experience and skills to mitigate risk and influence odd ratios.
In psychological terms, the entrepreneurial mindset is not cognitive, but affective. Therefore, experiential learning is more effective in changing mindset than conventional classroom teaching.
That is why children from business families are more ready to equip themselves with an entrepreneur mindset.
So, for those who did not grow up in a business family, how can such mindset be acquired?
That is one of the main reasons I pushed for experiential learning here at NUS Enterprise. We provide overseas internship opportunities under the NUS Overseas Colleges program. By Immersing themselves in small and young startup companies, our students get hands-on experience and observe how the founders manage the businesses.
This helps them absorb and develop the entrepreneurial mindset.
Let me come back to the question of whether entrepreneurship can be taught. The answer is “yes”, by using the experiential-learning method, by providing role models, by creating an environment in which first-hand observations can be made, and by imparting the emotional and affective understanding of what it means to take risks and what psychological reward to expect.
When most people complain about problems, entrepreneurs see opportunities in problems, and they look for solutions and develop them into businesses.
In your experience, to what extent does entrepreneurship education improve the success rate of the learners when they start up their own businesses?
There is evidence that showed that certain amount of intervention does improve the success rate. Interestingly, mindset learning is more effective in cultivating entrepreneurship than skillset learning. A colleague from NUS Business School did a study in Africa, where young entrepreneurs were randomly assigned to two groups. One group received training on skillset, which includes typical MBA type of skills. The other group was put in situations where they learn to better understand social relationships, empathy and diversity.
The second group performed significantly better. I also wish to emphasise that entrepreneurial mindset is also applicable in a corporate context — it is the so-called “intrapreneurship”. As an entrepreneurial employee, I do not just wait for my boss to tell me what I should do. I think for myself what I really want to do and convince my boss to give me the job and let me have the resources to do it.
In essence, it is about taking action and risk to mobilise resources I don’t have in order to exploit an opportunity.
In your view, what are the key distinctions between an entrepreneur and a social entrepreneur? Do you distinguish them in your teaching of entrepreneurship?
Social entrepreneurs are those who want to solve social problems. Sometimes there is a mixture of both social and financial motivations.
For example, you can innovatively solve a social problem and make some money while doing it, and there is nothing wrong with that.
In my teaching, I always include two other elements besides the innovative aspect of entrepreneurship. The first element is the social responsibility of a business, and I always make sure I have at least one or two lectures to talk about that. We have even developed programmes to cater for students who are only interested in social entrepreneurship.
On top of that, we also organise special activities, such as DBS-NUS Social Venture Challenge Asia, to encourage social investments.
The second element is the moral compass of a business. I want my students to be sensitive to the moral and ethical issues in business so that they do not wrongly apply their entrepreneurship skills to cause harm and injustice in society.
Social enterprises and social entrepreneurship have become a growing phenomenon in recent years. Why is this so?
Today’s young people are looking for meaning in life. The current generation of young people are living in a more affluent society. Without having to struggle for financial stability, they look beyond their basic needs to seek meaning in solving social problems. This forms the supply side of the equation.
On the demand side, there is a growing recognition that profit-making motivation alone could lead to suboptimal outcomes.
Market behaviours sometimes create negative externalities and social problems. Social enterprises have a role to play when government interventions and market forces are not effective in mitigating undesirable social outcomes.
In your view, what are the key differences between a social enterprise and a charity organisation?
Unlike a charity organisation, a social enterprise targets to be profitable. However, profit-making is not its primary purpose. Profit provides the financial means to sustain its existence so that it can fulfil its social purpose.
In Singapore, we have a form of legal entity called “Public Company Limited by Guarantee”. Eighteen years ago, I founded Business Angel Network Southeast Asia (BANSEA) under this category. Instead of calling ourselves shareholders, we are members who don’t receive dividend. The profit of the company is ploughed back to supporting developmental activities. Incidentally, Mendaki, the Council for the Development of Singapore Malay/Muslim Community, is also an organisation of this category.
Social enterprises can also take another form, in which the investors do receive dividends. These “impact investors” have their expected rate of financial return ranging from zero to a lower-than-market rate. They recognize positive social impact as a form of return.
Are there many such “impact investors” in this part of the world, or has it been difficult to convince investors to accept social benefits as a form of return?
Impact investment has a longer history and it is more developed in Europe and the US. There are two reasons for that. Firstly, wealthy individuals in these advanced economies realized that pure philanthropy does not work well for the lack of a right incentive structure. They need alternative forms of contribution to create bigger impact. Secondly, there are more tools in their more sophisticated financial systems to suss out and measure good impact investments.
We are seeing a growing interest in Asia in recent years. However, Singapore’s impact investment industry is still at a very nascent stage. A few impact investment funds from the US and Europe have set up their offices here, but it is still a small number.
The traditional model of philanthropy and government funding are still the preferred ways of creating social impact. Another reason for the underdevelopment of impact investing in Asia is the shortage of investable social enterprises.
We are short in both quality and quantity. For impact investment to thrive, we need a good supply of both social entrepreneurs and impact investors. In fact, this is the reason why we organised the DBS-NUS Social Venture Challenge Asia (SVCA), in the hope of growing both.
Market behaviours sometimes create negative externalities and social problems. Social enterprises have a role to play when government interventions and market forces are not effective in mitigating undesirable social outcomes.
You have been involved in DBS-NUS SVCA for many years, and probably other similar competitions as well. Is competition an effective way to promote social entrepreneurship?
Whether it’s the right thing to do depends on the stage of development of the ecosystem. Five years ago, we faced a situation in which impact investment funds hadn’t come in and the supply of social enterprises was very low. We needed to do something to break the equilibrium trap. We believed increasing the supply of social enterprises is the right thing to do at the nascent stage. We started the DBSNUS Social Venture Challenge Asia.
Over the years, the DBS-NUS SVCA proved to be a good platform that encouraged more social entrepreneurs to surface and showcase their innovative projects.
In this partnership, DBS provided the initial funding, while NUS developed the educational materials and the social investment network. With this, we successfully demonstrated to the potential investors that there were viable and profitable social enterprises in Asia.
Besides the availability of investable projects and impact investment funds, what other elements need to be in place to complete the social-enterprise ecosystem?
To complete the ecosystem, a middle layer of “capability development” needs to be built. “Capability development” is equivalent to the incubation stage of tech start-ups. The young start-ups have not gained enough knowledge and skills to face the real market. Their business plans need to be refined to appeal to the potential investors. The incubation process provides them with local support and training to get them ready.
As part of the design of the DBS-NUS SVCA programme, we outsourced the incubation support to local incubators in multiple countries. The incubators helped to nurture the competing teams with investment knowledge and business skills that are specific to their home markets. In so doing, we made the projects and project teams more “investable”.
In a typical arrangement, I would first train the local trainers on project evaluation, impact measurement, financial sustainability and other social investment skills. The local trainers would supplement the training materials with relevant local context and case examples. This “train the trainer” approach has a multiplier effect on the local community, and it expands the social investment ecosystem.
Social entrepreneurship training is not a lucrative business. Does this make it difficult to get good trainers for social entrepreneurs?
This is true. In the tech start-ups industry, some investors take up the training roles because they view the incubated project as an investment pipeline. To them, the potential upside is huge even if the success cases are very few.
In the social investment sector, we are not at that stage yet. We don’t have enough impact investors who are willing to grow deal flow by providing comprehensive training. Therefore, in the interim, I think this is where educational institutes like NUS can play a role. Through the partnerships with corporate sponsors and foundations, such as The HEAD Foundation, we are hoping to fill this gap. When this sector becomes more mature with more impact investors coming in to take on the training role, we can eventually withdraw and move on to something else.
What’s your plan for the next stage of the development in social entrepreneurship?
After five years of organising DBSNUS SVCA, the initial goal of catalysing interest and demonstrating a viable pipeline for social enterprises has been achieved. Going forward, DBS will continue to look for social enterprises and support them directly via DBS Foundation. On my part, we have started a partnership with Alipay and launched Alipay-NUS Enterprise Social Innovation Challenge, which focuses on using ICT and mobile technology to solve social problems in Southeast Asia.
We hope this more inclusive approach will help create more jobs for the low-income groups in these countries. If we compare the two, DBS-NUS SVCA covered a wide range of business domains, whereas the Alipay-NUS project will be more vertical and more in-depth, with a focus on mobile-Internet technology in Southeast Asia.
There appears to be a lot of investments in technology these days. How does that affect social enterprises?
Traditionally, most social entrepreneurs come from a social science or non-profit background. They are therefore not tech savvy in general. Going forward, in order to make a broader impact, social enterprises need to make better use of technology. Just like in many other industries, technology helps to cut out intermediaries and reduce transaction costs. I believe social enterprises could similarly achieve more with the help of technology. However, it doesn’t mean that the social entrepreneur him/herself must be a technologist. To stay relevant, a social entrepreneur only needs to be able to attract tech-savvy talents.
Five years ago, we faced a situation in which impact investment funds hadn’t come in and the supply of social enterprises was very low. We needed to do something to break the equilibrium trap.
JULY 2019 | ISSUE 5
Profit for Good
