October 10th, 2011 → 1:07 pm @ Norman
David the tiler is laying new floor tiles in my kitchen. His wife, Frances, is crouched outside the back door cutting the tiles. Steve the gardener is trimming bushes in the back garden. It’s cold and windy, and I feel sorry for Frances and Steve. Their miserable work environment reminds me of a time many years ago when I was a Lineman, sitting atop the cross-arms of poles on bitterly cold mornings, and trying to keep my fingers warm as I worked on the wires.
Yesterday, David and I had a coffee break together. He told me that he’d thought about expanding his tiling business but didn’t want the added risk that came from employing staff. Steve also prefers to keep his business a ‘one-man-band’. In their efforts to minimise their hassle and risk Steve, David and Frances have become dependent on other people taking risk… and succeeding. This year the farmers are doing well and, thankfully, spending. Without the risk-takers… the farmers, manufacturers, and entrepreneurs, times would be very tough for David, Frances, and Steve.
It’s appropriate that risk-takers, including entrepreneurs have the opportunity to earn a lot of money from their efforts. But it’s more than ‘appropriate’… it’s also necessary. Without the ‘excess profits’ (to use the economic term) from entrepreneurial activity few people would bother taking all the risk and enduring the hassles of building innovative businesses. And without the successful entrepreneurs, there would be less work for David, Frances, Steve, and the many thousands of other people who benefit from discretionary spending by value-creators.
There’s certainly nothing novel in the idea that the excess wealth created by entrepreneurs ‘trickles’ through the economy. But I was reminded of it again today. If I was still a Lineman, then David, Frances, and Steve would be worse off… and I’d have cold fingers.
February 23rd, 2011 → 1:19 pm @ Norman
I am increasingly realising that teaching people how to be entrepreneurs and more importantly how to become successful as an entrepreneur is definitely learned and is not innate.
As I say many times in my book, there are some people who instinctively act in an entrepreneurial manner – but these are skills that can be acquired. You are not born an entrepreneur. (more…)
February 7th, 2011 → 2:48 pm @ Norman
Mistaken ideas about the nature of entrepreneurship abound. This morning I sat in a meeting with various people involved in economic development. One had just returned from an academic conference on entrepreneurship. He reported that only about 10% of entrepreneurs started commercial companies …say again! (more…)
November 24th, 2010 → 1:51 pm @ Norman
The Economist magazine ran a report on the World Economy – and I felt motivated to write to the Editor. [sorry I can't link to the article as it's behind the Economist paywall]
In your special report on the world economy (Oct 9), you provided a typically interesting discussion of the issues. However, your articles seemed trapped in the unique economists’ view of workers as ‘factors of production’. The Beveridge curve may have been relevant when most employment, and most growth in employment came from jobs on offer in large corporations. But considerable change in the labour market has occurred over the last forty years, and your analysis of the situation does not seem to recognise that.
I refer to the fact that entrepreneurship is now a major driver of new jobs. In his blog post “Startups or Behemoths: Which Are We Going To Bet On” Vivek Wadhwa quoted the US Kauffman Foundation saying that “From 1977 to 2005, existing companies were net job destroyers, losing 1 million net jobs per year. In contrast, new businesses in their first year added an average of 3 million jobs annually.”
If jobs are dependent on startup entrepreneurs, then the “lack of job openings” which you describe as “one obvious reason why American workers are taking longer to escape from unemployment”, is perhaps not the issue. The issue may well be, where are the startup entrepreneurs?
Your report finishes with a plea for the rich world to embark on a broader economic overhaul, and suggests a couple of policy changes. But changing the retirement age is also a red-herring. Getting the ‘factors of production’ to produce for longer may give GDP a boost, but it won’t introduce significant new, real wealth to replace the ‘wealth’ which was wiped out over the last few years.
Only entrepreneur-led innovation can do that.
The bogus wealth created by financial sleight-of-hand has thankfully been reduced. Let’s get entrepreneurs creating innovations which produce new products, better products, more efficient processes, and so on… things which create sustainable growth. That’s better than returning to financial parlour tricks, or to throwing money at the dying behemoths.
October 22nd, 2010 → 2:37 pm @ Norman
Yesterday I went to a luncheon where business people were briefed on how they might use the 2011 Rugby World Cup, which is being hosted by New Zealand, as an opportunity to build their global business relationships.
“Captain Kirk” (as he’s fondly known in NZ), gave us the expected run-down on which teams had a chance of winning the tournament… no prizes for guessing who he saw as the team to beat!…
But I was more excited by his opening comments.
He made a passionate plea for people to step up and maximise the entrepreneurial opportunities to build export businesses. Yes, even the captains of industry are now championing the “entrepreneur” word!
September 2nd, 2010 → 2:54 pm @ Norman
President Obama, speaking to the Summit on Entrepreneurship made a commitment to entrepreneurship because…
“throughout history, the market has been the most powerful force the world has ever known for creating opportunity and lifting people out of poverty”.
So, if the market is so important, how do we stimulate more entrepreneurship?
If we have fewer successful entrepreneurs than we want then clearly there is a market failure behind it. (more…)