Empowering entrepreneurs
Norman Evans has a simple answer to the question of how to grow an economy
Monday, February 21 2011 || Starting out || BY Mark Revington
There is a simpler answer, according to Dr Norman Evans, the man who runs Dunedin’s Upstart incubator. Empower entrepreneurs. The problem with economic development programmes which are all about visiting experts and new policies, is that they frequently fail to deliver any significant increase in economic activity, says Evans, who uses some interesting statistics from Tom Kane’s The Importance of Startups in Job Creation and Job Destruction to bolster his argument.
Kane, from US-based think tank the Ewing Marion Kauffman Foundation, reckons startups have created three million jobs a year in the US since 1977, while established companies have lost one million jobs a year.
If he’s right, says Evans, then focusing on the needs of established companies is not very useful.
I don’t know how those statistics compare to New Zealand. Anecdotally, we seem to be good at startups but they often go nowhere. There’s nothing wrong with starting your own company because you don’t want to work for someone else. But creating zillions of lawn mowing companies or hairdressers is not going to grow the economy.
Only entrepreneur-led innovation will grow GDP in any significant way, says Evans. We need motivated, experienced entrepreneurs to start and grow companies. And we need to create the right environment to encourage them.
The Upstart incubator, for example, runs a development programme where aspiring entrepreneurs are not expected to work on a business until they find something they believe in. They are encouraged to research ideas. When they do find a project they passionately believe in, Upstart offers support and feedback while the entrepreneur sets milestones for the business and runs the project. In essence, it’s about real-time development of a startup, not theoretical, classroom-based training.
Innovation in business is not about product innovation of the sort which comes from inventors and scientists because they have little value until they are commercialised, says Evans. Entrepreneurs create new wealth innovating in business models and processes.
He doesn’t say so, but the model Evans suggests is a long way away from our current innovation ecosystem which is based on the US model of encouraging research in universities and crown research institutes which rely on commercialisation offices to take the ideas to market.
Now the government has set up the Ministry for Science and Innovation which sounds to me like another excuse for bureaucrats to carry out some empire building. Maybe it’s time we took another look at the whole innovation ecosystem.
With reference to Dr Evan's note about new wealth from innovating in business models and processes; this is how Japan dramatically changed it's economy and image in the 1950's and 1960's. 90% of their research funding went into process. Typically in the west 90% of investment is in product/technology. What would need to happen in New Zealand to include process, along with passion and funding?
In my experience commercialization is a process, as is the development of a business from an entrepreneurial founder to an economically and socially sustainable organization; energy and resources applied to this process early in the development stage would significantly increase the survival rate for entrepreneurial organizations as well as the success of innovative products/services.
Posted by Eileen Page at 03:54 on February 21, 2011
Most would agree that we'd like entrepreneurs to grow businesses and create jobs. Not so many people mention the word 'selling'. In a business context, growth almost by definition includes marketing and selling. Yet these fundamental aspects of business development are often overlooked in the pursuit of some kind of 'innovation economy' holy grail. Surely the key is not to come up with a hundred thousand ideas, or even ten thousand products, but to create real value with a comparably few products that are sold successfully, preferably in overseas markets.
With my company I'm focused on getting products to export markets and selling, using software and on-line technology in new ways to market and sell New Zealand products. I suspect, and anecdotal evidence would appear to confirm, that innovation in the process of getting products to market and actually selling them isn't considered "real innovation" in, as the author describes it, New Zealand's current innovation ecosystem. It should be.
Posted by Paul Grey, World Wide Access at 06:40 on February 21, 2011
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