1.3 The Need for Entrepreneurship
The Future of Work
Entrepreneurship is the new leadership model for today and the future. The skills of entrepreneurship are becoming more and more significant for a number of reasons: First, technology is replacing jobs in nearly every industry at an accelerated rate. Second, many of us want the more attractive lifestyle that smaller communities offer. And third, our buying preferences are shifting from the large conglomerates to smaller, local businesses. Let’s take a few minutes and discuss each trend in a bit more detail.
Technology is Eliminating Jobs
Science fiction writers have warned us for decades that we will become the architects of our own obsolescence, being replaced by the machines we create. This warning, often laughed off as amusing humor, is now becoming a reality. Every year the software, computers, and machines we create become more and more sophisticated and capable of doing a wide variety of jobs far superior to human labor. As a result, entire employment categories are being obliterated in nearly every industry, and they are not coming back! Self-checkout lines are eliminating positions in the grocery industry. E-commerce is reducing the number of jobs in the retail world. Robots are being used increasingly in manufacturing and other industries. Many jobs in the service sector are now being performed by computers. Online learning is replacing the traditional “brick-and-mortar” educational model. Smart cars may reduce the need for humans in the driving sector. And delivery drones may eliminate millions of jobs in the transportation industry.
The outcome of this technology uprising is that large corporations are becoming more efficient and need fewer employees to achieve major gains in productivity. This is a significant shift from the past century where economic growth and job creation went hand in hand—more growth led to more jobs. Now significant increases in productivity are occurring with corresponding decreases in employment opportunities. So what does this mean for our future careers? Recent studies by researchers at MIT, Oxford University, the Associated Press, the Federal Reserve Bank, and others, suggest that: 1) nearly half of our occupations could become obsolete due to new technology, 2) four out of five of us will experience significant periods of unemployment during our careers, 3) new technology often leaves employees feeling disengaged and disconnected from meaningful work, 4) and job displacement due to technology acceleration will primarily impact the middle class.
A series of recent articles in the New York Times about the reshaping of the American economy shows that members of the middle class are feeling increasing stress about their financial security. This middle-class anxiety is the result of fewer attractive jobs for those with higher educations, instability of income, and failure to achieve “real incomes” beyond their parents’ level. Especially troubling is the fact that the typical American family today earns 4.8 percent less income than families made 25 years ago even though the costs of housing, education, and health care are significantly increasing. Unfortunately, this troubling trend may continue as computers, robots, and machines continue to efficiently replace jobs in nearly every industry. While we don’t know what jobs of the future will look like exactly, we can probably count on more outsourcing, more contract work, more project-based opportunities, more part-time employment, and shorter employment periods. Hence, the greater need for us to create our own meaningful jobs and organizations.
Our Preference for Smaller Communities
"Blow up your TV, throw away your paper Move to the country, build you a home Plant a little garden, eat a lot of peaches Try to find Jesus, on your own"
The dream-life expressed in this witty John Prine song, “Spanish Pipedream,” is alive and well in America. A recent survey conducted by the Pew Research Center shows that 46 percent of Americans are not happy with the place they are living, an attitude most widely held among city dwellers. When participants were asked what type of community they would prefer, 30 percent said a small town, 24 percent said a rural area, 21 percent said a suburb, and 24 percent said a city. Thus, three-fourths of us would prefer to live in smaller communities, suburbs or rural areas.
Other studies reveal the reasons we want to move to smaller communities: better lifestyle, safer streets, lower traffic, affordable housing, a great place to raise a family, sense of community, scenic beauty, and environmental quality. Since job opportunities are limited, employment is seldom mentioned as a reason people want to move to small towns and rural communities. So those of us who want to “blow up our TV and move to the country” need to figure out what we can do to support this lifestyle choice. Ironically, the same technologies that are eliminating jobs allow us to work from anywhere: home, hotels, airports, and desirable smaller communities.
Our Preference for Small Businesses
A few years ago, a consulting team was hired by a large buying co-op that purchases and distributes products to more than 500 independently-owned grocery stores. The executives were starting to buy some of the stores in their co-op and were trying to figure out what to do with these company-owned units. They hired the former president of a large grocery chain to address the opportunity. His solution was to create a new chain with a common brand, logo, design, and strategy. The CEO of the co-op hired the consulting team to see if they were moving in the right direction.
After several months of focus groups and customer surveys, the answer was clear. No one wanted the company to create a new national chain with a common name and design—and the feelings were rather strong. Customers wanted to continue patronizing local businesses where they knew the owners and employees by name. They wanted the stores to support the local Girl Scouts, soccer teams, and community fundraisers. They wanted each store to be unique and quaint, different from other stores in the area. Some people surveyed said they would not support these stores if they became another big chain. So the co-op kept all the original brands intact and even gave some store managers ownership so there would still be a local owner in the community.
Research strongly supports this anecdotal story. We love small businesses far more than we do large corporations, big box stores, and standardized chains. Studies by the Public Affairs Council during the past few years shed light on our attitudes about small versus large companies. Nearly 90 percent of those surveyed view small businesses favorably, with 53 percent giving them a “Very Favorable” rating. This compares to a 67 percent favorability rating for large businesses, with only 16 percent viewing them as “Very Favorable.” In addition, nearly half of Americans say small business owners exhibit high ethical standards; only 6 percent say the same about CEOs of large corporations. Perhaps most important, two-thirds of us would rather shop at small businesses even if the prices are slightly higher.
In some parts of the country we are even seeing a backlash against big box and chain stores. Zoning laws in some cities against “Formula Retail” are restricting the growth of these large businesses in various locations. Along with these growing restrictions, many cities and organizations are taking a positive approach to promoting small business around the country. For example, American Express launched “Small Business Saturday” in 2010. The goal is to celebrate the smaller companies on Main Street America that serve as cornerstones to our neighborhoods and communities. In addition, Goldman Sachs has allocated $500 million to their “10,000 Small Businesses” program. The goal of the program is to help existing small business owners grow their companies. Clearly, smaller businesses are capturing our hearts and our dollars.
In some ways, we are experiencing a “throw-back” to the 19th and early 20th centuries where people grew up knowing they had to develop skills to take care of themselves because there were no large corporations to provide long-term employment security. Based on products and services needed in their communities, people chose to become farmers, carpenters, blacksmiths, merchants, furniture makers, seamstresses, innkeepers, doctors, dentists, nurses, butchers, bakers, and candle-stick makers. And most families developed multiple streams of revenue: farmer and carpenter, rancher and blacksmith, merchant and seamstress, and so on. While our changing employment landscape presents obvious challenges, it also provides an opportunity to rethink our careers.
A New Career Path
Learning the skills of entrepreneurship is a new strategy for navigating our changing economy. This strategy includes elements from the past coupled with modern technology that allows us to live where we choose and reach attractive markets beyond our geographic location. The important question today is not, “How do I find a job?” but rather, “How do I create my own job?” To successfully answer this question, we need to view ourselves as our own unique enterprise and develop the attitude and skills to succeed. We must learn how to identify important needs in our community, develop products and services to meet those needs, build a strong network of contacts, provide astounding value to customers, cultivate multiple streams of revenue, and operate effectively in well-connected communities.
This new career path puts each of us at the center of our own future. We might call this epicenter “My Enterprise” or “M.E.” for short, and then add “LLC” because most new ventures are registered as Limited Liability Companies, the most flexible business entity that combines the tax advantages of a partnership with the liability protection of a corporation. Hence: M.E. LLC. In this new career path, you may build a primary venture, spin off a second related venture, occasionally do contract work, and start making investments to provide long-term security. Here is what your new enterprise may look like:
This course provides a systematic roadmap to help you develop and launch a new venture. It teaches critical skills that will help you succeed in your future career. Even if you don’t plan to start a for-profit business, the practices taught in this course are needed in all types of organizations: large corporations, schools, governments, and non-profits. As you learn and master entrepreneurial skills, you will be able to make great things happen in any organization.