Entrepreneurship is the
Key
In my previous book “Change Hard:
Why Corporations Rise and Fade” I explained how big corporations leave empty
spaces for entrepreneurs to thrive, where their disruptive innovations erode
the base of their very existence putting under threat their own survival. Corporations
of course do not usually encourage entrepreneurial spirit. Quite the contrary,
they hire young, brilliant people who could eventually compete with them and
lock them in a sort of “career ladder” model, where they sell them a brilliant
future that usually never comes. Motivation can vary to take the path of
entrepreneurship. Some people are quite well financially but do it out of
boredom or personal interest. Many people come from business families and follow
the family tradition. Others are ambitious, and understand that it is the only
path to true freedom. But many more do it out of need, out of necessity. What
happens if you are fired from your corporate job when you are 40? If the market
is tough and you can’t find a job? Acquiring the right skillset and selling
your services independently will be a more and more common option in the
future.
The shift toward a small business
economy will have major implications. Consider the Welfare State model of
Scandinavian countries. They imply large corporations that create thousands of
jobs, stable government jobs and very well paid unqualified labor. A change
toward a small business economy means that more people will be forced to set up
their own family business, or sell their services independently, in order to
survive. There will simply not be enough place for all the new graduates in the
private sector. At business school, students are usually prepared to take a
position in big companies. But are they prepared to be independent, to solve
their own life? Can they survive the turbulence of the initial phase, and have
the stamina to reach out to customers and take care of all aspects of
management? The good news is: you don’t need as much capital as before. The bad
news is, experience and networking will still play a major role. That is where
the ecosystem comes in. A solid Start-Up community will mean a network of
contention where you will be provided ALL THAT YOU NEED to succeed in your
business. This includes Organization, access to Venture Capitalists,
Mentorship, Skills Transfer, Office Spaces, Tax Breaks, and most importantly, a
place to Network with like-minded people. In my blog
http://thenobeleconomist.blogspot.no/
I describe examples of successful Start-Up Hubs in different continents.
Regardless of efforts from the organizers, the people IN the Hub will make it
successful or not. A crucial component is to be attractive to foreign
entrepreneurs and skilled workers, whatever country they might be coming from.
Foreign skilled labor will bring value by driving innovation. Different
cultures will bring their own experiences and value added, and should not be
taken lightly.
Let us take a look at the article
“How important are small businesses to local economies?”
. “Small
businesses contribute to local economies by bringing growth and innovation to
the community in which businesses are established. Small businesses also help
stimulate economic growth by providing employment opportunities to people who
may not be employable by larger corporations. Small businesses tend to attract
talent who invent new products or implement new solutions for existing ideas.
Larger businesses also often benefit from small businesses within the same
local community, as many large corporations depend on small businesses for the
completion of various business functions through outsourcing. (…) Many small
businesses also possess the ability to respond and adapt quickly to changing
economic climates. This is due to the fact that small businesses are often very
customer-oriented. (…) Small businesses do not always stay small. Large
corporations such as Nike started off as small businesses that grew to become
major players in the national and international marketplace. Many
computer-industry leaders began out of their garages. Small businesses that
grow into large businesses often remain in the community in which the business
was first established. Having a large corporation headquartered in a community
can further help provide employment and stimulate the local economy”.
Entrepreneurship is also a skill,
as anything else in life. In can be acquired through practical experience, or
inherited. Consider that people who come from business families have a
head-start. They have internal insight as to how things work in the world of
business. They can also benefit from contacts, networking and insider
information. They can also work in the family business in order to build up
experience. Success can and will be found by people that do not have this
unfair advantage, but it will be much more difficult. Afro-americans, which
constitute 13% of the population in the US, constitute only 1% of the tech
workforce in Silicon Valley
. Born
and raised in hostile environments, the question remains if afro-americans are
not provided with the tools to come away from their less privileged position,
or if even being the best in their field racism and discrimination will make
their social ascension almost impossible. Today, thanks to the Knowledge Based
Economy, less privileged groups will find it easier and easier to climb up the
social ladder. Meeting like-minded individuals in the same city or areas of
residence, or even in other countries, will make it much easier for start-ups
to scale internationally. Also to get exposure and attention for their
business.
Whereas big corporations manage
massive numbers, it is small businesses that are the drivers of job creation.
In the US around 27 million small businesses account for 60 to 80% of all US
jobs, and produce 13 times more patents that larger firms. Small businesses are
the backbone of any healthy economy, by providing for families but also
representing the larger part of the workforce. In some cases, large and small
companies are seen as opposite. When that occurs, the giants do their best to
crush the smaller players, by pushing them out of the market. They are afraid
that the smaller players will eat up a part of their market share. It should not
be so. Big and smaller players should collaborate in a joint effort to add
value to the economy. Being able to develop in a much more efficient and agile
way, Start-Ups are the true drivers of innovation. However, they are too small
and not well known. They can take benefit of the larger players’ distribution
channels. In my previous book “Change Hard: Why corporations Rise and Fade”, I
explained the concept of Innovation House as the support of Start-Ups that will
work outside the organization, but under the umbrella of the corporation. Once
the business is developed and functioning, it can be incorporated to the
organization. This is a fantastic example. The agility of the Start-Ups allows
them to be more creative and efficient. They can connect with the corporation
to reach bigger markets, even internationally. When the business has reached a
certain level, they can be bought, connecting to the Corporation as a
department. The original founders can continue on board as Managers, or reap
off the benefits and enjoy an early retirement. Attempting to achieve the same
results by developing In-House will be futile. Consider that area Managers will
push towards their own interest and not towards the Corporation’s. If the
employees are too Innovative they will feel threated. They will try to keep
things the same, and allow only some degree of creativity to show their own
bosses how committed they are. At higher level, Corporations act as political
parties. Managers are not chosen by their abilities, but by their political
alignments. When results are not as expected, the base of the pyramid is pushed
down.
Culture also plays a big role. In
Northern Europe for example, population is quite old in average. Management is
old as well. This is not positive for the technological industry, which thrives
on ideas from new, younger generations. Consider some examples in the US. Check
out the ages of some of the major figures: Marissa Mayer (41) (who was a
Pioneer member at Google), Mark Zuckerberg (32) (Founder of Facebook), Elon
Musk (45) (Founder of Tesla and SpaceX), Larry Page (43) (Founder of Google),
they are all under 45. Most tech entrepreneurs start at a young age and have
many failures before they succeed. The young age gives them the advantage of
drive and enthusiasm, to the detriment of experience. But this can be
supplemented by the right mentorship from more experienced professionals in the
field. Failure in Start-Ups also means valuable experience for new projects.
Here culture comes into play again. As explained also in my post “Successful
Tech Hubs: Silicon Valley”, Silicon Valley culture implies taking the skillset
from previous jobs as valuable experience for the NeXT job, without dwelling on
the reasons why the person left that job or not. In the tech industry, changing
jobs often is quite common. This obeys to better economic opportunities, but
also learning new technologies. It is quite common to found or participate in
several Start-Ups before succeeding. That is why perseverance is so important.
What makes an entrepreneur
successful? At some point, it runs in the blood. One of the things that is for
sure is that if the motivation is exclusively economical the chances of
succeeding are low. The bumps in the road are many, and it is difficult to
continue pushing forward without an inner purpose. Having a higher education is
not necessarily a plus either. Many successful entrepreneurs never finished
college: Steve Jobs, Mark Zuckerberg, Bill Gates… They had the advantage of youth and
many more years for trial and error. Being older and experienced however can
also be an advantage as well. Consider the CEO of Slack Stewart Butterfield
, a
liberal arts major. Whereas brilliant coding and engineering is important, the
real value added comes from the people who can sell and humanize. Great
communicational skills, and the ability to find the equilibrium between supply
and demand compose a large part of the business side of the project. Engineers
usually come up with great ideas, and it is then the business people who turn
them into a business. Great Start-Ups are usually composed of at least 2
people, the most legendary example being Apple (with Steve Jobs as the Sales
Person and Steve Wozniak as the Engineer).
A common mistake is to confuse
entrepreneurship with having ideas. Great ideas do not necessarily turn into
great companies. The idea is really not so crucial; it is the execution that
matters most. From that perspective, probably the most important factor for
success is Management. A good management team will eventually pull through, if
not with one project then with another. The team must know and trust each
other, but also be complementary. It is important to have people with different
skillsets. It may be also important to have people with different cultural
backgrounds as well. For example, if the project is launched in Northern Europe
and the goal is to expand in Spain, it would be beneficial to have a Spanish
member in the team, or a local with ties to Spain. It can be difficult for
entrepreneurs to succeed internationally without a global mindset.
A true entrepreneur can succeed
in any context. They are the ones that will always stand after falling. They
will never retreat and never surrender. They have an inner fire that will allow
them to surpass any obstacle. They will not back down. They seek to make an
impact in people’s life. They will not change the world, but will definitively leave
their mark. What is their motivation nobody knows for sure. Whether it is the
circumstances that push them towards independence, or they look for it themselves
is hard to say. Those who succeed do know that their impact is microscopical,
taking into consideration world events. Not considering yourself important will
allow you to get rid of your ego, which is KEY to endurance and resilience.
Hear what Steve Jobs has to say
about “The Secrets of Life”:
And NeXT, on his Legacy. No, it’s
not like the Renaissance at all.
Who will succeed… NeXT!!!
