The Future of Entrepreneurship

As I sit around a table discussing entrepreneurship at the OECD I find myself surrounded by a good mix of dreamers and realists. We're talking about the future of entrepreneurship and I'm happy to hear that most people would like to see 'social business' at the heart of it. Are we really dreamers though? What is the reality exactly? And what's more, what's the reality of social business?

Filipe Santos, Professor of Entrepreneurship at INSEAD France, works ardently to convince us there is indeed a difference between social businesses and businesses with a social edge and that on trying to forge the two the cracks will start to appear.

- At a certain point you will have to make a decision which determines your role.  Will you choose profit over the distribution of social goods for example. What are you willing to share? - That's what seems to make the difference between a social entrepreneur and an entrepreneur.

We try to cite examples to make life clearer and to give us some hope for a social business future. These include Wikipedia, the open-source encyclopedia, and of course Danone, who worked with Muhammed Yunus to create Grameen Danone Foods. "But are they really a social business?" One person cries. "Does it matter if they're doing something positive." Adds another. "Yeh, but they have the means to do this kind of things, it's not so easy for small companies or start-ups with no where near the same amount of capital". Another quiet but sensible voice asserts.

So what will the future of entrepreneurship be? Is there in fact a paradigm shift, as perhaps exemplified by Danone, or is that a false exterior? Will it in fact be so hard for companies with less capital it won't be a reality? What about the role of the crisis? Only time will tell, but at least around the table there were those who wanted it to happen and perhaps that's half the battle.

Les 72 Heurese de l'entreprise sociale: what's your next big idea?

It's the 72 hours of Social Business at Sciences Po this week and it's great to see this new movement take off. The idea is quite simple, I believe, although the term still seems to be open to interpretation. Some see it as somewhere between an NGO and a business and some see it as a business that aims to maximise it's positive social impact. Some see it as a business approach to social problems. Personally, I'd like to see it as simply the future of business. If the idea really takes off and starts to take root, like it seems to have already, then we can hope to see a real paradigm shift where most businesses value their social profits as much as their financial ones.

What's also exciting here is thinking about we can also get involved. It's the thrill of entrepreneurship which drives so many and can be used in such positive ways. That's what was discussed today at the workshop "Who's next? L'entrepreneuriat social étudiant". Listening to thoughts from SIFE France, The Social Workshop and the work of SPEAR made me think about just what I could bring to life myself and how many ideas are waiting to be materialised.

Don’t forget the lessons of the emerging world.

So, I went back to study and I currently find myself in Paris doing a Masters in International Economic Policy. Within this I have countless new forms of inspiration. At the same time however I don’t have an unlimited supply of hours so squeezing in blogs will require some discipline. I’ll try…

Anyway, today I am supposed to be researching Greek Debt but whilst doing so I came across a Schumpeter blog in the Economist concerning Green Growth and was very happy to do so. I thus felt compelled to write.

So what does it have to say? It focuses on some emerging-world companies which are combining growth with greenery. They have been identified by a new study conducted by the World Economic Forum and the Boston Consulting Group. They include India’s Shee Cement and Broad Group, a maker of air conditioning, in China as well as Masisa a Chilean forestry company.

Dubbed “the new sustainability champions” they are using their eco-competitiveness to actually reinforce economic growth not undermine it. They have taken their various limited resources and in fact turned them into their advantage.

Manila Water, a utility in the Philippines was losing water through  wastage and illegal tapping. It reduced this waste from 63% in 1997 to 12% in 2010 by making water affordable to the poor. Broad Group taps the heat wasted from its buildings to power its machines. The Chilean forestry company, invites employees to “imagine unimaginable businesses”.

What’s even more interesting is the focus on emerging countries. As the blog reminds us this Western-centric focus on a top-down regulatory approach may not be the key in the emerging world where most of the world’s population actually lives.

“Their home-grown ideas will probably be easier for
peers to copy than anything cooked up in the West”

As discussed at the end of the article there is always the question of which came first the green or the growth? But what matters is that both are there. If we are indeed to focus on putting green first what this study and blog reminds us is that for many areas, especially in the emerging world, businesses are an essential player if this is going to work. Not only because they are a central part of everyday life but because in emerging countries where institutions and regulation may not play the same role businesses can step into the breach.

http://www.economist.com/node/21529015

Green Growth – OECD

In May of this year I went to the annual OECD Forum where they discussed economic questions for 2011 and beyond. Key subjects such as the crisis, jobs, the young and of course Green Growth were discussed. This year saw the official launch of the Green Growth paper and here was my related work. It’s a little late and I have a lot of catching up to do but I thought this was a good start.

Green Growth –Crossing Borders

So what exactly is Green Growth? Is it about implementing recycling systems? What about insulating buildings? On the other hand is it related to unemployment or education? Does it concern economic growth and furthermore what kind of economic growth? Moreover, why is Green Growth so important to us? And finally, how are we supposed to achieve this so-called Green-Growth?

Green Growth concerns all of the above and it is here where the challenge lies. What is certain, however, is that we have to take up this challenge whole-heartedly. A rising global population, growing industrial output, increasing energy demands and mounting levels of waste alongside depleting natural resources, energy scarcity and rising levels of atmospheric CO₂ indicate that something has to change. Add to this mix a recently shocked economy, high–levels of personal and government debt and on-going concerns over social-welfare and poverty it is certain that something really does need to change.

By working across silos, listening to each other and most importantly by involving as many sectors and people as we can, we will be able to achieve a growth which is all-encompassing, truly sustainable and indeed “green”. The key to its success lies in ‘crossing borders’.

First of all, this needs to cross disciplinary borders. Disciplines such as energy need to be looked at alongside transport, housing, education, welfare, as well as economics and finance. We need to take into account that, for the OECD as a whole, the contribution of renewables to energy supply increased from 4.8% in 1971 to only 7.1% in 2008[1] to see how far we need to go. Furthermore we have to realise, for example, that 96% of energy for transport is from oil-derived products[2], or that our biggest waste of energy comes from the lack of energy efficient buildings. On top of this we need to address welfare issues such as an aging population and on-going unemployment, which is currently 8.2% in OECD countries.[3] Then, questions of personal and sovereign debt as well as issues and opportunities in the financial industry should be incorporated into the solution.

Secondly, this work needs to cross disciplines. It needs governments, businesses and individuals to get involved. Government policy can indeed make a difference, this is evident from the fact that solar and wind experienced the most rapid growth in OECD member countries particularly where government policies stimulated expansion of these energy sources.[4] At the same time however businesses are very important especially SMEs which count for more than 99 percent of European enterprises and are the backbone of an economy being a major source of entrepreneurial innovation and skills.[5] The involvement of citizens is also extremely important as they are our grass-roots link to real change.

Finally this needs to cross geographical and political borders. It has to be done on a global scale to ensure that we really are achieving our goals and furthermore that we are not simply pushing the problem elsewhere. This is highlighted by figures which show China accounted for 15% of world energy production, the United States for 14%, the Middle East region for 13% and the Russian Federation for 10% in 2007. [6]

Green Growth is a big task and the nature of the challenge means that we have to work together and everyone has to be on board. Consequently, only through an open dialogue crossing borders will we be able achieve a truly sustainable economy and society.

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[1] E:\factbook-2010-en\05\01\06\index.html

[2] ‘Renewables make the difference’ European Commission 2011, p. 7.

[3] http://www.oecd.org/topicstatsportal/0,2647,en_2825_495670_1_1_1_1_1,00.html#499797

[4] E:\factbook-2010-en\05\01\06\index.html

[5] http://www.neurope.eu/articles/65119.php

[6] E:\factbook-2010-en\05\02\01\index.html

Sustainable Energy Week – is it sufficient enough?

This week is European Union Sustainable Energy Week. In registering for the events I accidentally signed up for one at 9am on Saturday morning - a daunting prospect. In the name of giving it a go I did however decide to get up, get on my bike and cycle to ULB to listen to this talk named “Energy efficiency is not sufficient. What are possible sufficiency strategies?”

Grégoire Zallenborn, a researcher at the Centre for studies on sustainable development at the Univesité Libre de Bruxelles started by addressing the idea of efficiency and sufficiency. Is efficiency enough? His answer was no, stating we should also focus on the idea of sufficiency. It’s a simple concept really, we’ve become so bogged down on the idea of efficiency that we've stopped asking ourselves what we actually need. He also asked us to experiment. I suppose what he’s saying is - let’s start trying.

So, solutions? Come on we need some solutions. Well, that’s what else this surprisingly interesting talk at 9am on a Saturday morning provided. Great – I’m listening. François Jégou, Director of the Brussels-based design company Strategic Design Scenarios exhibited a show case of innovative designs which were shaped around our everyday behaviour in an attempt to implement efficiency - or is it sufficiency? He presented ideas such as as a HomeSwitch to reset all the lighting at once. 

Great, great, I’m in, so what next? How do we make sure these ideas are not thrown on the Betamax pile of ideas. Well Françcois talked about continued experimentation and there were some ideas mentioned about regulation. Well, yes but don’t we need more? My thoughts are, yes. As I have said regulation can help, and perhaps he’s right that we shouldn’t jump into bad ideas, but I that we should seriously think about the role of businesses. We can use businesses to hep these developments and there in fact lies the key.

Then, the next speaker came along and started to talk, starkly, about our carbon reality – it’s going to be a tough job. Putting many numbers together he showed that efficiency was, as we suspected, hard to calculate and carbon neutrality was almost unthinkable. When we buy a new energy efficient car, for example, how many years do we need to own the first car before the purchase of the second car is actually efficient after taking into account aspect such as production carbon. His name was Frédéric Chomé, the director of Factor-X a consultancy group which provides environmental strategic guidance and it was this which interested me. He has been working with businesses to produce “low impact diversification schemes” or rather “solutions that help to restore the environmental capital with added value for users and sellers. He is another advocate for harnessing the power of businesses to make a difference.

So, yes, let’s think about sufficiency and let’s think about product design – there were some great ones - but please let’s put sufficient faith into what businesses can do for our sustainable future.

But how does that effect me?

I can see that a lot of regulation currently goes through the Corridors of the European Parliament. I don’t know from my own experience but I am also sure that a lot goes through Westminster as it flows around the Asemblée Nationale. I also have the impression that a lot of this moves around the Bundestag and I could go on….

My next point is, how exactly does this effect me? Or you? for that matter. Is regulation important? Does it really have an effect? If we’re talking about being “good for business” then the ECCJ, the European Coalition for Corporate Justice certainly seems to think so.

According to the ECCJ there are many “legal opportunities to improve Europe’s corporate accountability framework”. They outlined that these would come down to two main areas. First of all, legal requirements should be introduced for Multi-National Corporations to report on the impacts of their operations both within the EU and internationally which are “clear, audited, comparable and enforceable standards for large and medium-sized companies” and should consider third-country victims. Secondly, they highlight the need for systemic legal reform. This should improve governance in MNE operations as regards foreign subsidiaries and sub-contractors, improve transparency of information and mitigate the practical obstacles facing victims.

I still think that work can be done to change the attitudes of businesses in general however I can see that some kind of legal framework may be a good start. At least setting clear guidelines would

In this way, regulation would ensure that companies really look at what impact they have. That they begin to truly understand the interconnectivity of their operations and how this effects people and planet. So, I suppose in some way regulation must have effect me? It must effect us? However, let’s see what other solutions there are as well.

Making up the Rules

Tomorrow I will be going to London for a delegation visit to the Houses of Parliament, the Bank of England, the Treasury and the TUC (Trade Union Congress). Discussions will be centred on the Special Committee of the Financial, Economic and Social crisis for which I used work. Now I’m not saying all this to name drop but simply to set the scene of my trail of thought.

The discussions are, as of yet, unclear but it seems to me they will discuss the impact of the economic crisis on the UK and how they dealt with it. Furthermore, meetings with the EU Select Committee, lead me to believe that they will discuss the ongoing relationship of the UK with Europe, most probably on an economic level.

These are discussions amongst regulators, mainly. They are discussions between European regulators and British regulators. These are the people who make up the rules. They aren’t really the players; they aren’t the businesses, the corporations or the workers. They are the people who sit down and write up the rule book.

It’s the “regulators” such as those who will be talking tomorrow who will draw the game board in the coming years. They will place the chess pieces where they see fit and they will determine how businesses can run. (Well to a certain extent. I’m not denying the organic nature of the beast. Organisations, businesses and enterprises often set the tone but let’s not complicate things right now).

So, so far, they – the regulators - have cut back on the budget, increased VAT and initiated the ‘Big Society’. Well that’s in the UK at least. Financially speaking, they are looking into ring-fencing banks operations and trying to force them to increase lending as well as increase their own reserves. A statement from John Vickers, currently head of the Independent Commission on Banking, highlights this and so does the Merlin Project – a collection of guilty feeling   banks and regulators who are trying to up their image.

Overall though, let’s hope they come up with some good rules. After that we can hope that people follow them but I fear they won’t necessarily. For them to be a real success though there needs to be a general change of opinion but I can also see that starting to happen.