Entrepreneurship doesn’t have to be about making lots of money. It can be ecological, too, and exist in ways that support the ecological transition, rather than continue to degrade the resources of the Earth.
What is entrepreneurship?
Entrepreneurship and the role of entrepreneurs in our society has increased significantly in the past decade, with much Government policy and resources being given to drive innovation, encourage people to become entrepreneurs, and therefore to drive the growth and competitiveness of the economy. The European Union has identified entrepreneurship as a key focus point of its growth strategy, yet cites the perception and recognition of entrepreneurs as being one of the barriers to boosting entrepreneurship on the continent. In New Zealand, a similar view of entrepreneurship is held, with then-minister Steven Joyce saying in 2016 that entrepreneurs “lead and grow the businesses that generate employment and deliver considerable export revenues for New Zealand.”
For the larger society, we need entrepreneurs for economic growth, and to make sure that our people are employed. Entrepreneurs create the businesses that enable us to make this happen. For entrepreneurs, their motivations likely lie elsewhere, with growth and revenue sometimes only the by-product of their motivation and skillset to solve a problem or change something.
New Zealand’s leading entrepreneurship education organisation, Young Enterprise, don’t seem to say what entrepreneurship is on their website, but they do claim that their programmes “inspire people to discover their potential in business and in life.” Entrepreneurs would seem to be those people who have discovered or realised their potential in either or both business and life. The Stanford Online site has a page entitled, What is Entrepreneurship? where they note that entrepreneurs are those who, by themselves or with others, “strike out on an original path to create a new business.” Entrepreneurs are people who create businesses, then. Oberlo who come up upon searching the question say the same thing, but add that modern entrepreneurship is also about solving big world problems “like bringing about social change.” Wikipedia say that entrepreneurship is “the creation or extraction of economic value,” “and is generally viewed as change.” They then also add that entrepreneurs create businesses, and like the other sites, note that entrepreneurs bear the most risk and also potentially gain the greatest reward.
Does entrepreneurship really have the impact that these leaders advocate for? In 2008, two Dutch researchers undertook a meta-study (reviewing other studies) of empirical evidence to see what the impact on entrepreneurs is on the society and the economy, compared to non-entrepreneurs. They concluded that entrepreneurs create more employment relative to their size (often small businesses, self-employed, etc.), but in doing so they reduce the stability of the labour market, meaning that job creation is more volatile and less predictable. Entrepreneurs were found to pay lower wages, offer fewer benefits, and create jobs in lower levels of the economy compared with their non-entrepreneur counterparts like large well-established organisations. However, employees seem more satisfied with their jobs as or with entrepreneurs, compared to at other companies.
Entrepreneurs also produce fewer new products and new technologies, and apply for fewer new patents than non-entrepreneurial companies. This means that entrepreneurs are not in fact more innovative, however their innovations are generally of higher quality than others. In terms of productivity, entrepreneurs are not at all very productive. And finally, regarding utility, most entrepreneurs would earn more in a wage job, because average entrepreneurial income data is skewed by some very, very large earners at the top of the scale. Despite all these things, the authors note that entrepreneurs have other, non-tangible benefits to being an entrepreneur, otherwise they would be “irrational, optimistic, or risk-seeking.” These are the classic benefits of being one’s own boss, choosing when to work, doing something which they believe makes a difference, among other reasons.
These understandings of entrepreneurship seem to be very focused on business, and on the economic outcomes of entrepreneurship for the society. Entrepreneurship is intimately tied with business, and one must, if one is an entrepreneur, have a business. Having a business means making money, and extracting value.
Young Enterprise UK teaches enterprise, as well as entrepreneurship, with a more general take on what this looks like: “Enterprise education provides young people with the skills, competencies and mindset to make the most of everyday opportunities and challenges. Being enterprising is something which can be applied to all aspects of life and work – identifying and initiating opportunities as well as adapting your response to situations.” They focus more on the skills involved in being enterprising, and seem to encourage students to apply these to any situation.
The entrepreneurship competencies or skills are well defined in many different areas. The European Union created EntreComp, a framework showing the entrepreneurship toolbox, and they share this transversal definition of entrepreneurship: “value creation in any sphere of life.” There are three competence areas, ideas and opportunities, resources, and into action, and they note that entrepreneurship is one of eight key competences for lifelong learning. They support the definition proposed by the Danish Foundation for Entrepreneurship & Young Enterprise: “Entrepreneurship is when you act upon opportunities and ideas and transform them into value for others. The value that is created can be financial, cultural, or social.”
An ecological critique of entrepreneurship
Economic growth cannot continue to rule our societies, if we are to confront the ecological crisis. We cannot continue to seek profit, we cannot continue to extract as much value from natural resources as we can, and we cannot make decisions purely based on financial and economic return. This has been highlighted by many intergovernmental research bodies, including the IPCC, the IPBES, and more. Entrepreneurship, therefore, in its narrow definition as “starting a business” would seem to be at odds with ecological action.
If we want more entrepreneurs, as Steven Joyce said at the beginning, to create more revenue and keep people employed, then we would be thinking very narrowly, if entrepreneurship is about creating value for others. Just how valuable is economic growth and revenue when we are facing the extinction of thousands of incredibly important species for the maintenance of life on Earth? Currently we are face-to-face with an ecological crisis, and economic growth is at odds with this.
All is not lost for the entrepreneur, however. He or she can and should continue to exist, but the challenge is to find a way to decouple the link between entrepreneurship on the one hand, and business, money, profit, and supposed individual freedom on the other. Having complete control over your life might be great, but at the expense of the planet and the livelihoods of other people, is not so great. If entrepreneurs can demonstrate and use their skills in different ways, with a different mindset, then they could become the key players of the ecological transition that is needed in our societies.
But just what might an ecological entrepreneur look like?
Ecological economics
A group of European and American scientists got together when they realised that their research had interesting conclusions for each other. These were not just a group of biologists, or economists, but actually a mix of the two: the economists saw that the biologists had something to say about the nature of the economy, and of entrepreneurship.
This work is being carried out by people such as Giuseppe Longo, Roger Koppl, Stuart Kauffman, Teppo Felin, and more. Their award-winning paper, Economics for a Creative World, outlines the possibilities for a new way of viewing entrepreneurship. Entrepreneurs keep the same skills, but their function and goal in the economy changes.
They propose both a theory of value in the economy, and a theory of entrepreneurship, or a theory of the evolution of the economy through the actions and services of entrepreneurs. In this new way of thinking, the greatest value is created for humanity when we find ways to move ourselves to a new state of society – be it with an invention like writing, the iPhone, or recycling. The entrepreneur is the person who enables this change, by combining resources in new ways. Just as the ant who goes a little further than the other ones might discover a new food source to keep his ant colony alive longer than the neighbouring colony, the entrepreneur makes and shares their solutions or discoveries to make progress as humanity. This is an evolutionary mechanism, and the authors of this idea have looked at how organisms evolve, and realised that as human beings, we in fact evolve in our economy in the same way.
The starting point of this research is the observation that the economic system is not a causal system. This means that there are no dynamic laws of economics. A consumer can always choose to act in irrational and unpredictable ways, and whole groups of consumers can do this, defying the commonly held beliefs in neoclassical economic principles. The ‘rational man’ of neoclassical economics doesn’t exist, and has been proven dead for decades.
Neoclassical economics views the market, and the economy, in the same way that Newtonian physics views the world. Everything is controlled and governed by laws that determine predictable outcomes for each and every action, and this all happens in a closed system. This is a mechanistic viewpoint, which relies on principles of cause and effect for action to happen and be explained. Viewing the economy in this way means that economists create laws and models to predict what will happen, and explain what is happening. These models very rarely explain the complexity of a situation, and, as we see again and again, are often wrong.
For these researchers – both biologists and economists – the economy is not a causal system, algorithms cannot be used, and we cannot predict or pre-state what will happen in a particular case. Instead, economic dynamics are creative, much like evolution. In evolutionary biology, random traits appear, which just so happen to be better at dealing with certain stresses put on a particular organism, and this is what helps these organisms survive over other ones. The economy is a bit similar: creativity, innovation, and random inventions are what shape and define the progress that the economy makes. Before Apple, we did not predict based on “current trends” or “current laws” that there would be a product, the iPhone, that would change the way we interact with each other. But it has.
If we think of the economy in terms of one central square, there are many, many possible ways of putting resources together which lead people to a new square, slightly outside of the current one. There are infinitely many possible combinations of things, ideas, resources, which constitute inventions, which could change the way people do things. This is the evolutionary logic of the economy: we make new things, and therefore evolve. For example, think about the uses of a screwdriver: there are millions of possible uses, many where the screwdriver is useful but ineffective. We could use it to make holes in paper, we could use it to write in the sand, and we could also use it as a radio antenna. In 1800, we had screwdrivers but not radio transmission, so we could have never predicted this use of the screwdriver at that time. However, through more developments and combinations, we arrived at a point where this became a possible use for the screwdriver.
Therefore, we cannot accurately predict or model what happens in the economic space, with enough certainty. We can observe tendencies and behaviours, but these are not accurate predictions nor are they laws, because as we have seen what shapes the evolution of, or changes in the economic space is creativity and novelty – the combination of current things to make new things which lead the economic space in another direction. Past innovations, like screwdrivers, did not cause new inventions, like radio antennae, to be invented. They enabled them, but they did not cause them.
The economic space is therefore changing all the time. People are inventing things, buying things, combining things, and selling things at an incredible rate. Trying to model or predict within this is near impossible.
Statistics and modelling of the economy means that we close off our economic system to this novelty and creativity, because we do not allow for or account for the possibility of an unpredicted and unpredictable change or invention. The more open a system, the greater the wealth of this system, because of greater diversity, and greater possible avenues of evolution, just as a system of insects in the biosphere.
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Ecological entrepreneurs
Taking this new vision of the economy into account, the ecological entrepreneur is someone who is able to spot an opportunity to move from one economic state to another: someone who combines resources, or knows of an idea from somewhere else, and who successfully moves from the general frame or way of doing things, into one which conforms with his product, service, or solution. This does not necessarily involve the buying and selling of solutions, nor does it have to respond to a practical problem, which is often taught in entrepreneurship education. Rather, the entrepreneur spots an opportunity for a new way of doing something, and is able to share this way with enough other people to move the group towards the adoption of this new way.
Entrepreneurs can act in and with community groups, organisations, businesses, and society at large. There is nothing which says that entrepreneurs must bring about change on a societal level, or disrupt a whole market and ‘ecosystem’ of businesses. Opportunities are present everywhere, and the skills required to identify these and take action upon them are applicable in various situations.
According to these scientists, the most successful innovations are “non-algorithmic responses to new possibilities.” The entrepreneur is able to identify a possibility, and create a way to get us from where we are now, to a state in which that possibility is the normal. An algorithm could give us a thousand ways to use copper, for example, but the entrepreneur is creative about his use of resources, and develops unpredictable solutions. This is a new way of thinking about innovation.
The entrepreneur is therefore decoupled from business, money, and profit. They are someone who spots an opportunity, invents in a creative way to move towards that possibility, and enables transformation in order to make that a reality. We no longer value entrepreneurs because of their gains in economic value, productivity, and employment, but because they enable societies to innovate, solve problems, and move beyond their current position.
Societies that can innovate and change are more resilient because they are better able to adapt. The entrepreneur becomes a useful force in the ecological transition because they have the key skills needed to develop ideas, spot opportunities, and make necessary transformations to stop the ecological destruction we are now causing. The only competency to add to the EntreComp framework is therefore ecological knowledge: for this new way of ecological entrepreneurs, they must know about the impact of their change on social, environmental, and subjective or psychological levels.
Let’s look at a brief example. A lot of energy is wasted in boiling more water than is needed for a cup of tea, when we fill the kettle and only use some of what we boiled. We could create a cup-measure, we could create a kettle with marks on the side for the number of cups, or, we could create something which sticks in people’s minds, which means they use their tea cup to measure the water first, before boiling the jug. The best solution to this problem involves no extra resources – it is simply a procedural, and behavioural change. The successful ecological entrepreneur therefore figures out a way to encourage this behavioural change, and transforms the society to adopt this behaviour. He or she knows that selling a product to put next to your existing kettle to measure water would generate money, but would also be an incredible waste of water, when a simple behavioural solution would suffice. He or she is able to take a risk on a zero-resource solution, and is effective at getting others to adopt his solution.
The question that arises here is how we value and compensate such entrepreneurs. They won’t necessarily be making huge amounts of money – the entrepreneurs’ dream is, and remains, for many, a dream. As the meta-study at the beginning points out, most entrepreneurs would earn more in wage employment than they are earning as an entrepreneur. But if they are following this new model of entrepreneurship, selling products people don’t need is only one possible way of being an entrepreneur. Those who have a sense of responsibility, or a moral attitude towards our flora and fauna, can dream of being entrepreneurs, just in a different sense. Responsibility for the environment means avoiding the idea that we need to extract more, sell more, and create more value, and trading this for the idea of innovation and creativity to help us move to new spaces and new ways of doing things. We need to find ways to reward the ‘enablers’ who are developing ideas, and connect them with the more practical entrepreneurs who know how to change or transform. These new and ecological entrepreneurs are not necessarily straight out of business school, either. They are to be found in research centres, in practical and community organisations, or the most ‘random’ places – because these people intimately know the systems they are working with or against, and are best poised to creatively help us out of trouble.
The benefits of an ecological entrepreneurship
Western societies are facing incredibly difficult challenges at social, economic, health, environmental, technological, and governmental levels. Promoting the idea that entrepreneurs will help us out of this mess through innovations which they sell on the market is a very narrow way of thinking. More money, more growth, more GDP, more waste, and more consumption will not solve these issues. They are much deeper and structural than could be solved through money alone.
Promoting a vision of ecological entrepreneurship enables people to imagine ways in which they could improve their surroundings and communities, and make that into a life project which we now call ‘work.’ Ecological entrepreneurs won’t work solo on projects – they will often need teams of people with various knowledge bases to help them implement their transformations. This possibility, this vision, of entrepreneurship, is a mobilising and active way of thinking about entrepreneurship, rather than a predetermined and algorithmic method that we normally see. True non-algorithmic solutions can only come about when we let our citizens know that they can viably seek to transform systems, and do this as a means for life. The question of funding does and will continue to exist, but any Government looking for innovation I think has a duty to support truly innovative solutions from ecological entrepreneurs. Venture capitalists will not necessarily get any financial benefit from innovative behavioural changes, but perhaps their focus will shift to more philanthropic causes if ecological entrepreneurship became a ‘Big Thing’. That is, if these funding sources and financial institutions are really concerned about the crises that we are facing, and failing to deal with.
To sum up in four points
- The current everyday definition of entrepreneurship is one where a person comes up with an idea, develops this idea, takes it to market, and then sells and markets this item for a profit as a business.
- Instead, we could look at entrepreneurs as having three successive roles: spotting an alternative possibility outside of our current way of life, making that behaviour, way of thinking, or solution a reality, and then maintaining it such the old possibility becomes everyday life.
- Thinking like this means that entrepreneurs do not need to create and sell products or services in the market. Entrepreneurship becomes a notion uncoupled from capitalistic relations, and we can now undertake entrepreneurial projects in many different, ecological, and democratic ways. Entrepreneurs are the evolutionary enablers of the human economy.
- This is ecological thinking because we can promote a vision of entrepreneurship which is not destructive towards the environment, nor towards our social relations. We are aware of the impact that the idea has, and word business does not appear in the definition. Profit is completely up to the person.
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