ingredients for entrepreneurial success

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Ingredients for entrepreneurial successJim Dewald, Dean, Haskayne School of BusinessSeok-Woo Kwon, Associate Professor of Entrepreneurship, Haskayne School of Business

January 12, 2017

WelcomeWebinar series by University of Calgary scholarsInformation presented is a summary of the scholars researchPlease submit questions throughout the duration of the webinarKeep the conversation live on Twitter during the webinar using #exploreUCalgary

Seok-Woo KwonAssociate Professor of Entrepreneurship at the University of CalgaryTaught at the University of Kentucky, University of California, and Temple UniversityEducation: PhD from the University of Southern CaliforniaResearch on entrepreneurship from a social capital perspective

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Jim DewaldDean, Haskayne School of BusinessAssociate Professor of Strategy and Global ManagementHeld several senior executive positions, including President & CEO of Hopewell Residential CommunitiesServes on the boards of Boardwalk Communities, the West Campus Development Corporation, CPA Alberta, Junior Achievement Southern Alberta, the Real Estate Development Institute, and Innovate CalgaryWritten two books, two book chapters, over 20 academic papers, and over 50 newspaper articles

TechnologyPersonal TravelAir TravelHome HeatingHome PlumbingPersonal CommunicationMediaManufacturing

Late 1800sHorse and CarriageNon-existentWood StoveOuthouseTelegraphNewspaperJob-based

1960sPrivate AutoBoeing 737Forced Air FurnaceMunicipal ServicesTelephone (land line)Newspaper and TelevisionAssembly Line

TodayPrivate AutoBoeing 737Forced Air FurnaceMunicipal ServicesTelephone (cellular, email, texting, etc.)Newspaper, Television, Internet, and Social MediaAutomated Assembly Line

Photo credit: Marci Plank, 2011; NetCarShow, 2015; HD Wallpapers, 2015Pace of change

https://www.flickr.com/photos/lovelaconner/6749802151/http://www.netcarshow.com/ford/1965-mustang_k-code/ http://hdwallpapersofcars.com/ford-car-wallpaper/ford-mustang-2015-convertible-red.html

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Change for someone born before IR 2.0Nellie McClung (1873-1951)Nellie McClung was a womens rights activist, legislator and author who is best known for her involvement in the Persons Case.

Consider the changes over her life time.

http://www.thecanadianencyclopedia.ca/en/article/nellie-letitia-mcclung/

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She grew up in a world of horses for travel, candles for light, salting and canning for food preservation, and telegraphs for communication.

Huberty, Mark. (2015) "Awaiting the second big data revolution: from digital noise to value creation." Journal of Industry, Competition and Trade.

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The world of her passing had cars and airplanes, electric light and refrigerators, telephones, radio, and motion pictures

Huberty, Mark. (2015) "Awaiting the second big data revolution: from digital noise to value creation." Journal of Industry, Competition and Trade.

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we find ourselves wondering why our present progress seems so paltry in comparison. Mark Huberty, 2015Berkeley Professor we were promised flying cars and instead what we got was 140 characters. Peter Thiel, 2011Co-Founder, PayPal

General Purpose Technologies are pervasive technologies that provide an inventive platform that will interrupt and accelerate the normal march of economic progressBrynjolfsson and McAfee, 2012

Wheel, 3500 BCMesopotamia

Printing Press, 1440Johannes Gutenburg

Light Bulb, 1879Thomas Edison

Telephone, 1876Alexander Graham Bell

Internal Combustion Engine, 1879Karl BenzTechnology is the foundation of changeIndustrial Revolution 2.0The Industrial RevolutionSteam Engine, 1775James Watt

Cotton Gin, 1793Eli Whitney

Brynjolfsson, E. and McAfee, A, (2012), Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. Research Brief produced by the MIT Centre for Digital Business.

http://www.ancient-origins.net/ancient-technology/revolutionary-invention-wheel-001713 http://j.whyville.net/smmk/whytimes/article?id=63

https://en.wikipedia.org/wiki/Invention_of_the_telephone http://content.usatoday.com/communities/driveon/post/2011/09/karl-benz-bertha-motorwagen-road-trip-1886-germany-sneak/1#.VkocSysQOhMhttp://www.e-torch.org/2015/10/october-9-1979-2/http://www.breker-news.com/newsletter_show.php?id=31http://score.rims.k12.ca.us/score_lessons/cotton_gin/pages/lesson.html

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Computer (IR3?)Principle 1: Constricted Vision (Scientific Paradigms and Framing)

Dewald, J (2016), Achieving Longevity: How Great Firms Prosper Through Entrepreneurial Thinking, University of Toronto Press

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Computer

This is why popular theory focused on bells and whistles, or faster, smaller, cheaper. The period when Modern Management Theory was developed.Principle 2: Narrow Theoretical Lens (e.g. Management Theory)


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With Principles 1 & 2 in play, one has to wonder? How do we ready ourselves for the next shift?

Photo credit: RemedyTip, 2015; Annapolis Valley Regional Library, 2015; Sott, 2015; Telco Motion, 2014; Yale Scientific, 2012; The Breakthrough, 2015

http://remedytip.com/how-to-assess-your-genetic-health/http://www.valleylibrary.ca/event/3-d-printer-demonstrationhttp://www.sott.net/article/254698-Eating-Nano-Nanotechnology-is-thriving-along-entire-food-chainhttp://www.telcointercon.com/industry-solution.htmlhttp://www.yalescientific.org/2012/05/machine-morality-computing-right-and-wrong/http://thebreakthrough.org/tag/Renewableshttp://www.ototrends.net/google-car-3d-model/

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Economists are entering a new debate

Robert GordonNorthwestern

Erik BrynjolfssonMIT Sloan

The truth is, we dont know what the future holds for us.

We dont know the challenges our students will face in the future a future destined to be unlike other times.

If we dont understand the challenges, how can we give them the answers? We cant.

But, we can teach HOW to tackle unknown problems.

One way is to teach both couple critical thinking AND entrepreneurial thinking.

Entrepreneurial thinking

This isnt new the best companies have known this for a long time. The best leaders practice this.16

Conventional view of the firm


Firms survival (data from 1994 to 2014)

Even the most successful companies are only two years from possible failureMac Van WielingenBureau of Labor Statistics Glossary, accessed on January 1, 2015 at http://www.bls.gov/bls/glossary.htm.

Strategy and entrepreneurship


https://www.pinterest.com/pin/104568022571054384/

http://www.orau.org/ptp/collection/surveymeters/cs40A.htm

http://pshfes.org/event-1851047

The three principles of agility/longevity A clear narrative across the firmAppreciation of failure and successRewards for learningDiscover and createNot limited in exclusive clubsThe use of processEffectuation pre-supposed meansBricolage pre-supposed endDewald, J (2016), Achieving Longevity: How Great Firms Prosper Through Entrepreneurial Thinking, University of Toronto Press

Evidence supports entrepreneurial thinking

NameEst.Original BusinessEvolvingCommentHonda1946Motorcycles RoboticsHonda will pursue anything with an engineHasbro1923TextilesToys Pencil cases led to Mr. Potato HeadIBM1911Tabulating & RecordingConsultingMultiple changes to core businessNucor1905Auto ManufacturingSteelTwice filed for bankruptcy and had multiple business changes3M1902Mining Adhesives & CleaningShifted from mining to sandpaper to adhesivesNokia1865Pulp, rubber, cableMobile PhonesMicrosoft purchased Nokia Mobile in 2013, and they continue their search for new entrepreneurial endeavours.DuPont1802Gun powderPolymer Adhesives, insecticides, fire extinguishers, etc.A legacy of innovation and entrepreneurial thinking


Local companies Borger, COSIA, PHX, Rainforest21

TakeawaysStart small strive to adopt an entrepreneurial culture in one part of your businessGet an idea use process, not expectations of brilliance, to find an opportunity to pursueCommit use either bricolage (vision without means) or effectuation (invention without vision) to move forward

Social capital & entrepreneurshipSeok-Woo Kwon

Best places for entrepreneurs

Entrepreneurship and job growthThe U.S.Since 1980, without startups, net job creation is negative (a 2011 report from the Kauffman Foundation)JapanCompanies created before 1996 shed a 3.1 million jobsCompanies created after 1996 add 1.2 million new jobs (Forbes, March 17, 2014)

http://www.forbes.com/sites/tompost/2014/03/13/why-small-business-communities-grow-in-clusters/#5fad4e286a56https://wallethub.com/edu/best-small-cities-to-start-a-business/20180/#mercedes-Delgadohttp://business.financialpost.com/entrepreneur/small-business/montreal-ranks-as-the-worst-city-to-run-a-business-in-canada25

2016 Entrepreneurial city rankings

From Canadian Federation Of Independent Business

Canadian Federation Of Independent BusinessOut of 40 places26

Resources for entrepreneurs

Financial capitalHuman capitalPhysical capital

Social capital?

What is social capital?The benefits drawn from social networks or relationships

Loose concept. To oversimplify, as Putnam puts it, social networks have valueJust as a screwdriver (physical capital) or a college education (human capital) can increase productivity, so too social contacts affect the productivity of individuals and groupsSocial capital is closely related to what some have called civic virtue. the difference is that social capital calls attention to the fact that civic virtue is most powerful when rooted in a dense network of social relations. A society of many virtuous but isolated individuals is not necessarily rich in social capital.Refers to connections among individualsSocial networksTrustworthiness that arise from them

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History of the social capital conceptOld concept introduced as early as 1916

Graph: social capital as a keyword or in title in English publicationsa comparative study of regional governments in Italy which drew great scholarly attention for its argument that the success of democracies depends in large part on the horizontal bonds that make up social capital.[7]Putnam writes that northern Italy's history of community, guilds, clubs, and choral societies led to greater civic involvement and greater economic prosperity.[8]Meanwhile, the agrarian society of Southern Italy is less prosperous economically and democratically because of less social capital. Social capital, which Putnam defines as "networks and norms of civic engagement," allows members of a community to trust one another.[9]When community members trust one another, trade, money-lending, and democracy flourish.invitation to meet with then-PresidentBill Clintonand a spot in the pages ofPeople. Over the last decade and a half, the United States had seen an increase in bowlers but a decrease in bowling leagues.his most striking point was that many traditional civic, social and fraternal organizations typified bybowling leagues had undergone a massive decline in membership while the number of people bowling had increased dramatically.Putnam makes a distinction between two kinds of social capital: bonding capital and bridging capital. Bonding occurs when you are socializing with people who are like you: same age, same race, same religion, and so on. But in order to create peaceful societies in a diverse multi-ethnic country, one needs to have a second kind of social capital: bridging. Bridging is what you do when you make friends with people who are not like you, like supporters of another football team. Putnam argues that those two kinds of social capital, bonding and bridging, do strengthen each other. Consequently, with the decline of the bonding capital mentioned above inevitably comes the decline of the bridging capital leading to greater ethnic tensions.Communities in the US have decreased voluntary org activity, political participation, trust in others, and other indicators of civic virtue

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The decline of social capital

Social capital mattersFamilies and youth behavior problemsCrime and violenceSchools and educationPublic healthDemocracy

Studies have shown that all over the country, three predictors of urban success are January temperature, education level, and entrepreneurship Edward Glaeser, 2010).32

Social capital on entrepreneurshipSocial capital innations &cities

PollDo you think there would be, in the next 6 months, good opportunities for starting a business in the area where you live?

Yes or No

Global Entrepreneurship Monitor34

Perceived opportunities in Canada

from Global Entrepreneurship Monitor

Perceived opportunities

from Global Entrepreneurship Monitor

Components of social capitalResidents levels of general trustResidents voluntary organization membership

Fukuyama: high trust socieities (the us germany, japan) low trust socieities (italy, france, korea taiwan) the number and importance of large vs small firms

1 S.D. increase in trust =>0.5 S.D. increase in GDP (Knack & Keefer, 1997)

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PollDo you think most people can be trusted?

Yes or No

Global Entrepreneurship Monitor38

Can most people be trusted?

from World Values Survey Wave 5: 2005-2009

Plot of predicted probabilities (with 95% confidence interval) of entrepreneurial opportunity perception for generalized trust

Given the nonliearity of the probit model, the relative magnitutdes of raw probit coefficients were not directly interpretable.

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Interpersonal trustGeneral trustCan you trust her/him/them?Can you trust most people?

Two types of trust

Particularized trust is a kind of sociological superglue, whereas generalized trust provides a sociological WD-40 (Putnam)

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Interpersonal trustGeneral trustCan you trust her/him/them?Can you trust most people?Depends on the trustworthiness of specific individuals/groupsDepend on your opinion about the trustworthiness of the average person/group

Two types of trust

Interpersonal trustGeneral trustCan you trust her/him/them?Can you trust most people?Depends on the trustworthiness of specific individuals/groupsDepend on your opinion about the trustworthiness of the average person/groupCritical at interpersonal levelCritical at societal- and community-level

Two types of trust

Interpersonaltrust

Low general trust

High general trust

A point here is that behavior, opinion, and information, broadly conceived, are more homogeneous within than between groups. Person B is positioned to integrate the work of people who have much in common, whereas person a is positioned to benefit from differences between people who vary in their behavior and opinions.

Non-redundant info flow The strength of weak ties argument (Granovetter) => opportunity recognitionReduce inter-group conflict & discrimination Generalized truster more tolerant of diversity (Putnam, 1993; Seligman, 1997)Reduce local optimizatione.g., the Mafia (highly particularized trust that has negative effect at the societal level)

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Have you invested in a new business?In the past 3 years, have you personally provided funds for a new business started by someone else?If yes, what was your relationship with the person that received your most recent personal investment?close family membersome other relative, kin, or blood relationa friend or neighboura work colleaguea stranger with a good business idea

Have you invested in a new business?

Weak tie investmentRespondents were first asked whether they had, in the past 3 years, personally provided funds for a new business started by someone elseif they said yes, they were subsequently asked the following question: What was your relationship with the person that received your most recent personal investment? The answers were coded as follows: 1 = close family member2 = some other relative, kin, or blood relation3 = a friend or neighbor4 = a work colleague5 = a stranger with a good business idea

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Probabilities of weak tie investment

Note: The vertical line marks the average value of generalized trust in the sample.

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Components of social capitalResidents levels of general trustResidents voluntary organization membership

Fukuyama: high trust socieities (the us germany, japan) low trust socieities (italy, france, korea taiwan) the number and importance of large vs small firms

1 S.D. increase in trust =>0.5 S.D. increase in GDP (Knack & Keefer, 1997)

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Breadth of organizational membershipsSchoolChurchProf. assoc.

B

A

A point here is that behavior, opinion, and information, broadly conceived, are more homogeneous within than between groups. Person B is positioned to integrate the work of people who have much in common, whereas person a is positioned to benefit from differences between people who vary in their behavior and opinions. 49

may have access to very different network resourcesA

B

50Who do you want to be? A or B? Why?

(1) The set of your network contacts and (2) the pattern of these relationships determine:Degree of access to information, resources, referrals, opportunities, supportAbility to create and mobilize linkages among relevant players

Research Findings: Intra-organizational Networks Individuals who own structural holes tend to be more innovative and get promoted fasterbut individuals who have more dense networks enjoy more long-term cooperation

The most effective teams balance cohesion (dense connections) and range (unique external connections)

Breadth of organizational memberships

from World Values Survey Wave 5: 2005-2009

The average number of different types of formal organization memberships religious organizationsSport or recreationArt, music, educationalLabor unionsPolitical partyEnvironmental organizationProfessional organizationCharitable/humanitarian organizationConsumer organizationAny other organization

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Plot of predicted probabilities (with 95% confidence interval) of entrepreneurial opportunity perception for formal organizational memberships

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Geography of entrepreneurshipin the US

The 2000 Census of Population 5% Public Use Microdata Sample (PUMS)53

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Two types of organization membershipsConnected organization membershipsIsolated organization memberships

Connected associations

BA


BAD


BAD


BACD


BACD


BACD

Isolated associations

AB


AB

CD


AB

CD

EF

Social capital matters

Financial capitalHuman capitalPhysical capital

TakeawaysSocial fabric of a community matters for entrepreneurship

Entrepreneurs should surround themselves with the network of high trust and diversity

Upcoming webinarsLessons in refugee settlement, January 17, 12-1 p.m. MSTHealthy neighbourhoods, January 19, 12-1 p.m. MSTPets, people and urban places, January 26, 12-1 p.m. MST

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