Why Entrepreneurship is critical on a microeconomic level

 

 

I’m having a book launch this Saturday December 20th at The Book Shelf on Quebec Street in Guelph. Hope to see you and offer you a piece of cake in celebration.

The books are full of common sense self help information and make great gifts for anyone from teenagers to tech innovators to seniors who are reluctantly continuing their careers.

Entrepreneurial thinking is a valuable life tool not just a means to a business

The appeal and benefits of pursuing a global economy lie in the theory of comparative advantage whereby global completion will ensure that goods and resources will be allocated in the most efficient way, ensuring the most cost effective production of goods and services to the benefit of all. Yet the more we open ourselves up to globalization the greater becomes the discrepancy in wealth distribution which contradicts the theory. Oh to be sure there is a growing middle class in the highly populated eastern countries like India and China but in effect we are just averaging out the wealth of the poor – improving in the eastern world and declining in the west while those at the top accumulate huge fortunes. Upward mobility  on any kind of scale may be in jeopardy.

Life should be getting better for all of us. Instead large corporations are controlling the marketing of most products largely through effective branding  which allows them to keep the lion’s share of the benefits of low cost production in the form of huge profits rather than either paying a fair price or passing along the benefits to the end user. At the same time the demand for labour is shrinking in relative terms through technology and mechanization undermining wage structures around the world. These large corporations have abandoned their identity as national firms in favour of becoming global entities. They are routed in a culture of control and increasingly rely on acquisitions and outsourcing to give them the innovation and flexibility needed in a fast paced world economy immersed in rapid change. As long as they can control the market they retain control of the profits.

So how do we break this system and allow the mass sharing of the efficiencies being gained? The hope lies in entrepreneurs digging in the corners, finding comparative advantages and getting low cost products to market. The problem is that there are barriers to get products to market and if you manage to break through your company soon joins the club bringing in huge profits.  Rather than breaking the system, those that succeed are embracing it. Greed is a powerful motivation in the face of dynamic achievement. So as it stands now entrepreneurial success lies in pursuing startups and selling out or by leapfrogging through this stage and becoming one of the Bigs. Neither of these trends will break the current trend on wealth distribution which is moving back towards the historical norm.

On a macro level entrepreneurs are the main hope to break the culture of control but there are no guarantees that will happen. On an individual level, pursuing a career as an entrepreneur may be the only ticket to upward mobility. That is why the most important skill anyone can master today is the ability to create and manage their own career. We must all adopt the mindset of the entrepreneur.

Yesterday’s Alberta election produced a dramatic change but more than anything else it resulted from change and the inability of the PC party in Alberta to manage change.  One of the reasons so many experts maintain that failure is an integral part of succeeding as an entrepreneur is because we do learn from failure. We have to learn in order to recover so we take the time to analyze what we did wrong in order to avoid repeating the same mistake. Success masks our faults. It is rare for most of us to understand our weaknesses when we are getting results. Unfortunately for the electorate for a political party getting results means maintaining power as opposed to effective performance. When things are going well as they did for Alberta under the boom of the oil industry it was easy for politicians to look good and to develop some bad management practices. When a serious problem developed with falling oil revenues there was a huge need to adjust. We will never know whether the proposed budget was appropriate or not but remember when you have to provide customers, suppliers or employees with a bitter pill for the longer run good don’t turn around and immediately give them control to vote the new policy in or not.

My mantra for the individual in today’s dynamic world is that the number one skill you can learn is the ability to create and manage your own career, with managing being the key to sustain meaningful success. We face an unprecedented rate of change. Every one of us must have the ability to recreate ourselves in the face of this one certainty: change is a constant, by definition the only thing we can count on besides death and taxes. Despite the perception of many that entrepreneurship requires risk this need not mean reckless risk but instead should refer to managed risk. The PCs had the time and needed it to prove that their budget could work in an economy under duress rather than risking a quick election on the outside chance they would get another majority giving them even more time. So among the small business lessons from yesterday’s election results are the following:

1. Nothing lasts forever including good times in the oil industry

2. Sustained success requires a relentless commitment to adapt even after a long track record of doing so.

3. Managed risk produces results while reckless risk invites failure

4. Knowing your weaknesses in good times and bad will sustain your success

5. A change in leadership does not guarantee renewal of an organization

I’ m sure there are more.

Fred Dawkins is a serial entrepreneur and the author of a series entitled The Entrepreneurial Edge. The third book in that series Ageless Entrepreneur is available from booksellers across North America on May 9th 2015

 

 

 

 

Generally anything that makes government facilitate as opposed to over regulate is a positive step. The government of Ontario has just announced initiatives that could reduce red tape for businesses and create cluster developments to help drive regional economic growth and create jobs. Will these reforms ever see the light of day in a minority legislature flirting with an election or are they just pre-election temptations to attract votes away from the conservatives?

Regardless both of these ideas focus on critical areas in the face of a fast paced global economy where all countries are fighting for talent and for markets. Governments at all levels need to become more efficient and more effective. Over regulation serves no purpose other than to increase the cost of government and limit the competitiveness of the private sector, discouraging investment in the province in the process. There is a place for regulation and there are important roles for government but the former needs to be reeled in while the latter needs to be more selective. One preferred area should be to co-operate with the private sector and academia to create ecosystems that foster business opportunities in a variety of areas where we can build comparative advantages. This is now a stated goal for Ontario.

The most startling evidence of cluster development is Silicon Valley where 350,000 Canadians live and work. That’s right 1% of our population and a much higher percentage of our intellectual capital are resident in northern California. The Valley offers the most dominant ecosystem for an industry that exists, nurturing tech startups and venture capital investment at a phenomenal rate. It is not one that can easily be replicated and it’s been underway for over sixty years.

In other words this project requires genuine commitment from all concerned. We can only hope that the Ontario government follows through and that the Feds add a level of support. We are in a new era dominated by change. The culture of government and business alike has to change. Government must move away from a culture of bureaucracy that has become an unbearable burden. Big business must move away from a culture of control to a culture of empowerment as change dictates that the status quo is short lived.

These new initiatives serve as a reality check that we must become more competitive. Government can not be the agent of change that makes this happen but it can facilitate a co-ordinated approach by reducing the costs of doing business and helping to create ecosystems that support the efforts of the private sector. Let’s hope that all parties rally in support of these programs that will create jobs and point us toward a better future.

One of the premises in the introduction of my new book Everyday Entrepreneur is that I wrote it to encourage entrepreneurs of every stripe across the spectrum. Since the high tech entrepreneurs have been getting the lion’s share of the attention and encouragement from the public and investors alike, they were far from my target market. Tech innovation was the creator of venture capital, setting a precedent for high rates of return that can’t be sustained in other areas. Virtually all other types of entrepreneurs have to struggle for funding because they simply don’t meet the criteria for venture capital. Those that have attracted VC funds often flounder to the detriment of the entrepreneur because the VC gets an agreed upon return which can sap a moderately successful business.

The Creative Destructive Lab at the Rotman School of Management at the University of Toronto (my alma mater) is focused on extreme success with a strong emphasis on taking tech developments from gestation to dynamic success on the international stage. On the surface this seems to be exactly the area that I previously suggested didn’t need my help or encouragement as people are lined up to help in almost every area to develop these type of businesses. So why did I choose to support these high achievers by becoming a partner of the CD Lab? Well here are my reasons:

1. I strongly support that we need to keep our brightest and best talent here in Canada – we are in the midst of a world wide competition to attract talent – success starts with keeping our own
2. Success at this level sets a terrific example for anyone in this country that wants to become an entrepreneur and start a business at any level
3. Both of these factors are critical for us to build a culture of entrepreneurial success to maintain a strong economy and bring in the new talent that every country is striving to attract.
4. If in the process I can influence some of the brilliant MBAs we are graduating to circumvent the conventional and lucrative path to becoming a business executive in favour of applying their abilities to becoming entrepreneurs who solve problems, make things happen, create jobs and provide the drive that leads to success, then my time and effort will have been well spent.
5. The very talented people who apply to the Lab are brilliant in their innovation but still need nurturing on the personal issues involved in becoming an entrepreneur, the fundamental business issues they will encounter and the overall philosophy inherent in being an entrepreneur.

My book will out at the end of November. In the meantime I am enjoying my involvement with the Lab targeting success in a global economy which I firmly believe will centre upon a New Age of Entrepreneurship.