Carl J. - The entrepreneurial imperative : how Americas economic miracle will reshape the world (and change your life)

To

Kate, Ellyn, Victoria

Three generations of grace

Americas future in the global economy

F OR THE UNITED STATES TO SURVIVE and continue its economic and political leadership in the world, we must see entrepreneurship as our central comparative advantage. Nothing else can give us the necessary leverage to remain an economic superpower. Nothing else will allow us to continue to enjoy our standard of living. We either support and nurture increasingly entrepreneurial activities in all aspects of our society and around the globe, or run the very real risk that we will become progressively irrelevant on the world stage and suffer economically at home.

In short, entrepreneurship in our businesses and universities; in our approach to both government and foreign policy; and in our personal lives is the only answer if we hope to continue to thrive.

Arent there other solutions?

No.

Technology isnt the answer, since everyone now either has the same technology or can easily obtain it. By definition, when everyone has access to the same asset, the asset itself cant supply an edge. Only innovative, entrepreneurial ways of employing that technology can provide a comparative advantage.

Education will not keep us out in front. Many parts of the world surpass the United States in teaching skills needed for the future. While we must pay more attention to education, especially in math and the sciences, simply drawing even with countries now leading, such as Japan and South Korea, will not be enoughwe wont be ahead. We must learn new entrepreneurial ways to employ what we learn.

It is imperative that we do so: For example, we have largely given up when it comes to basic manufacturing because we simply cant compete globally on price. Instead of running these factories, we need to exploit the advanced skills, niche opportunities, and geographic advantages that will allow American manufacturers to succeed. In a word, when it comes to manufacturing, we must become entrepreneurial.

Could our financial skills keep us ahead? It is true we possess a substantial edge in finance. We have huge sums of money to invest, and our capital markets are, indeed, the envy of the world, attracting money to our shores thanks to their efficiency and safety. But the fact is that all capital markets are now global and other parts of the world are beginning to enjoy or adopt our safeguards, so whatever sustainable advantage we have is bound to be fleeting. The only way to gain an edge is to back entrepreneurs and share in their success.

The only uniquely American resource at our disposal is entrepreneurial capitalism, and it is imperative that we nurture it. We must make sure that developing entrepreneurial systems reward risk takers who set out to be creative and innovative, who produce a product or service that allows us to do something better, faster, cheaper. It is the resulting efficiency of their efforts that permits wealth to be redeployed in ways that produce more wealth.

The message of this book is simple: entrepreneurship is Americas comparative advantage, and we need to exploit it fully both at home and abroad. We have an entrepreneurial imperative. The pages ahead explain what this means and what we must do to achieve its promise. They also discuss the effect that the entrepreneurial imperative will have on our nation and on our individual lives.

Specifically, this book examines the four key components of our nations economylarge corporations, government, universities, and start-up firmsand how different approaches to them will allow us to become even more entrepreneurial and what that means for us as individuals. These four institutions provide the greatest possibility for fostering entrepreneurial growth both here and abroad. Encouraging, managing, and supporting an entrepreneurial economy is central to our place in the world going forward. America enjoys both democracy and freedom, and this book shows that entrepreneurship is the force most likely to provide true freedom for individuals across the globe and here at home by giving everyone the opportunity to fulfill their potential.

Entrepreneurship is not only an integral part of our genius but also the only uniquely American resource at our disposal and we must exploit it fully.

This book discusses what it means to see entrepreneurship as our central comparative advantage and its impact on the way we:

Start companies

Lead large, existing companies

Run universities

Make our personal job decisions (where and how we choose to work)

Conduct foreign affairs

The starting point is to define what I mean by both entrepreneurship and being entrepreneurial, then talk about how the concepts can be applied in each of the preceding areas to provide us with the greatest comparative advantage and personal freedom and enjoyment.

Entrepreneurship is the process in which one or more people undertake economic risk to create a new organization that will exploit a new technology or innovative process that generates value to others.

The entrepreneur is one who undertakes personal economic risk to create a new organization that will exploit a new technology or innovative process that generates value to others.

As you can see from these definitions, entrepreneurship is an infinitely renewable resource. Every time an entrepreneur starts a business, convinced that she has spotted a niche in the marketplace or that it is the best way to control her economic fate, it is another step forward for democratic capitalism, a system of widespread participation and opportunity that protects political and economic liberties.

As renowned economist William Baumol has observed, the entrepreneur is an indispensable component of growth and prosperitythe bold and imaginative deviator from established business patterns and practices, who constantly seeks the opportunity to introduce new products and new procedures, to invade new markets, and to create new organizational forms.

We must make such trailblazing occur more often so that America can maintain and strengthen its position in the world marketplace. Generating additional ways to help us become more entrepreneurial as a people and as a nation, however, will not involve institutionalized programs or new bureaucracies. Trying to make entrepreneurship formulaic is both impossible and a strategy that repeatedly has proven to fail. The Small Business Administration (SBA) is an excellent example of this within our government. To be blunt, very few entrepreneurial businesses owe their genesis to the SBA.

A government agency like the SBA cannot be effective in fostering innovation for two reasons. First, in the broadest sense, government was never intended to predict what entrepreneurial activities will succeed. Government employees, many of whom have never worked in the private sector let alone run a business, cannot be expected to distinguish good ideas from bad ones or offer valuable advice to an entrepreneur.

Second, in the SBAs case, the problem is compounded by political capture. The agency is constantly used to advance the ideas of small businesspeople who are well connected to politicians. The agency will serve the political interests of the White House of the day, and reality also dictates that this includes offering help to businesses they wish to reward.