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The entrepreneurial environment

by Paula | 14 May 2009 | permalink | comments
Tags: entrepreneurship, collapse
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I don’t normally do this, but I posted an article at my business blog that I thought was important enough to share over here.

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One of my mainstay blog reads is The Entrepreneurial Mind by Dr. Jeff Cornwall, Director for the Center for Entrepreneurship at Belmont University.

Today Dr. Cornwall blogs about an editorial which ran in the Detroit News:

It seems that the Kauffman Foundation folks are trying to lure venture capital up to Michigan.

As Mr. Gregg rightly points out — the answer to spurring entrepreneurship is not throwing money or support bureaucracies at the
problem.  From Gregg’s editorial:

But in the midst of this enthusiasm about entrepreneurship, we risk forgetting that entrepreneurship’s capacity to create wealth is heavily determined by the environments in which we live. In many business schools, it’s possible to study entrepreneurship without any reference being made to the role played by factors such as rule of law, property rights and low taxes in stimulating wealth-creating entrepreneurship.

I could not agree more! We need to educate entrepreneurs not only to be technically good at what they do, but informed citizens who can speak up about the issues that effect their business ventures.

I have a VC colleague whose hometown is Detroit, and just about a year ago he left for the Bay Area because the entrepreneurial environment in Detroit looks like this:

The problems faced by Detroit, and Michigan by extension, are not unique to its geography. Detroit has always been at the leading edge of industry and entrepreneurship in the US, and I believe it still is — the city is ahead of the same downward curve the rest of the country, and indeed the world, faces for reasons that no one in business (save a handful of investment bakers) seems willing to tackle head-on.

The fact is, the world is running out of the natural resources required to sustain business-as-usual; governments have become so unwieldy as to be totally unmanageable; market structures have grown so large and so complex they defy apprehension by even the most learned scholars and businessmen; supply chains and communications systems are so fragile that even a small disruption can cause havoc in numerous nations simultaneously; erratic weather, financial boondoggling, and diversion to fuel production threatens the global food supply. Add to this an unprecedented level of blatantly obvious high-level corruption and growing unrest among populations, and the future of entrepreneurial environments looks very bleak indeed. Even macroeconomics is subservient to greater forces.

I personally believe that entrepreneurs are the ones who will resolve these intractable problems, but unless folks understand the big picture, i.e., the environment, no one will know to step up to the plate.

I highly recommend anyone involved in entrepreneurship read John Michael Greer’s Theory of Catabolic Collapse. It describes concisely the nature of the current crisis (financial and otherwise) and demonstrates that at this point, further investment can only accelerate decline because our society has reached the level of diminishing returns on investment in complexity.

This is our entrepreneurial environment. The path of the entrepreneur now is very different than it was even 40 years ago: our job is to decentralize what is currently too complex and top-heavy; and to make resilient that which is currently too brittle. The current direction of economic complexity is unsustainable — read: it has reached its physical limits and cannot continue.

If entrepreneurs are too stuck in myopic views of what constitutes entrepreneurialism and reward, the work that needs to be done, and that could in fact produce very nice returns, isn’t going to get done.

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