"Our colleges, universities, and business schools should be at the very heart of entrepreneurial capitalism as the biggest contributors to the changing economic landscape," asserts Carl Schramm in his new book, The Entrepreneurial Imperative. "But they are not."

Schramm, the president and CEO of the nation's leading foundation to promote entrepreneurship, The Kauffman Foundation, says higher education has been taken off course by the following:

• Graduating degreed people who are not educated and who are certainly not as prepared as they need to be to contribute;
• Becoming too bureaucratic, and bureaucracy is the antithesis to entrepreneurial capitalism;
• Confusion about their mission; and
• The fact they don't even teach very well.

"Instead of aiding economic change, they are in many cases a hindrance, which is one of the greatest ironies of our age," notes Schramm. Many - if not most - of our great universities were founded by entrepreneurs and were intended to be entrepreneurial in their own right, but they have not turned out that way.

He believes higher education should graduate intellectually curious students prepared to make innovative contributions to society and the economy. That will be the only way to succeed in the entrepreneurial economy ahead.

Schramm also cites the reasons that underlie higher education's failed policy. First, campus business schools pay little attention to the forces of the new economy and the very processes by which entrepreneurial business is conducted. Second, typical business faculties are traditionally reluctant to create courses for non-business students. Most business schools look at themselves as studying an encapsulated set of insights presumed to be of little interest to students not enrolled in the business curriculum. Even worse is an implicit assumption that students who are not dedicated to studying business are not central to the teaching mission of the business school.

Schramm acknowledges that changing universities will be difficult. They are institutions beset by two disabilities. The first is a huge bureaucracy. Second, it is difficult to reform an institution where the key human capital, the faculty, has gathered power unto itself over the years. Thanks to tenure, bizarre anti-intellectual episodes.

"Universities do need to expose students to the likelihood that they might want to start a business or convert an idea into a commercial organization at some point in their lives," says Schramm. "Every student should know that entrepreneurs play a central role in the economic welfare of society. Perhaps the easiest way to make that happen is to eliminate everything in the university environment that is standing in the way."

The Entrepreneurial Imperative outlines how higher education can help entrepreneurs, offering these ideas:

• Colleges should get out of the business of teaching specific skills such as fraud detection. Let's return to the liberal arts and sciences that provide students with insights and skills that permit them to constantly adapt to the challenges and opportunities of life.
• We should close schools of education that obviously are not working. Math teachers should be trained as math majors! Science teachers should be trained in the sciences. You don't need to be an education major to teach.
• Though he is not proposing more entrepreneurship courses per se, they are important, and should be available to every undergraduate.
• Universities should be delivering content that will allow entrepreneurship to flourish, which means an increased emphasis on science and math.

For entrepreneurial capitalism to succeed, universities must become the most entrepreneurial of institutions. Many, however, continue to perform suboptimally, hampered by enormously bureaucratic cultures. One free-market solution offered by Schramm is to have universities compete for federal funds. "Competition will keep internal bureaucracies from overwhelming universities entirely. Bureaucracy is the enemy of innovation. It is the arterial plaque in an economy," he says.

If a college or university realizes it cannot compete in a world where a comprehensive liberal arts education is the basis of all learning, the market should push it out of business.

"The students being produced by higher education today are not as ready as they once were to be contributing members of an increasingly entrepreneurial society," concludes Schramm. "Unless this changes, our nation's economic future is in peril."