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Global entrepreneurship: Crisis? What crisis?

While we in the West continue to be anxious about the pace of the economic recovery, from China, India and Indonesia all the way to Sub-Saharan Africa, the excitement of a new generation — no longer hamstrung by the economic, technological and personal limitations of their parents’ generation — is palpable

Carl Schramm (The Jakarta Post)
Kansas City
Mon, July 4, 2011

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Global entrepreneurship: Crisis? What crisis?

W

hile we in the West continue to be anxious about the pace of the economic recovery, from China, India and Indonesia all the way to Sub-Saharan Africa, the excitement of a new generation — no longer hamstrung by the economic, technological and personal limitations of their parents’ generation — is palpable.

Masked underneath all the talk about the global financial crisis, an even bigger phenomenon is at play, one that in due course will overpower the memory of the current crisis. That phenomenon is the true unleashing of the global entrepreneurial capabilities of the bottom half — or, rather, two-thirds — of humanity. It is boom time in “Global Entrepreneurland.”

As a result, a great reversal, or rather rebalancing, is underway. While Westerners are in for more uncertainty, people in the developing world who have lived with significant uncertainty for many decades, if not centuries, now find them selves moving in the opposite direction.

The scope of entrepreneurial innovations is truly breathtaking. In Africa, ordinary consumers are now able to pay their bills and purchase goods and services using their mobile phones instead of cash, thanks to innovations by companies such as South Africa’s MTN.

In India, the startup EKO India Financial Services has transformed the concept of microlending into microsaving. The firm’s founders saw the opportunity to provide India’s urban migrants with a low-cost, secure way of saving money and sending money back home to their families.

In other regions, entrepreneurs are using their knowledge of the tastes and preferences of local consumers to challenge the long-standing dominance of multinational firms from the United States and Europe.

In Brazil, Natura — a company that manufactures skin and hair care products, cosmetics and fragrances — has displaced the Avon Lady with the Girl from Ipanema. Since 2006, the company has outsold Avon in Brazil — and its 800,000 “consultants” sell Natura’s products door-to-door from Argentina to Mexico.

Innovators and entrepreneurs in the developing world have a powerful advantage: They can often start from a clean slate and engage in leapfrogging strategies. On a broad scale, the story of mobile technology obviating the need to install a nationwide fixed-line network is going to play itself out in sector after sector, and country after country.

Companies like China’s BYD are keen not just on blanketing rural China, but plenty of other parts of the developing world, with their distributed energy solutions backed up by local battery stations. The company is making inroads on using solar and wind energy to reach areas far away from any national electric grids and power lines.

Similarly, on the frontlines of health and life sciences, count on companies hailing from emerging markets to utilize their inherent advantage of not being hemmed in by an overpowering, innovation-stifling regulatory infrastructure to come up with some truly game-changing concepts and innovations.

That is especially true for emerging market nations endowed with huge populations. Their internal market size makes investments potentially that much more profitable — by allowing for the rapid scaling-up of innovations upon successful deployment.

For Westerners, accustomed as we are to having been at the top of the global economic pyramid, this profound transformation of global entrepreneurial fortunes will require an acute rethinking. We will need to come to terms with a world where innovation is no longer considered synonymous with Silicon Valley and other icons of Western success.

While we Americans, in particular, can take credit for having been a crucial element, and perhaps the catalyst, of this global wave of entrepreneurship, we will need to work extra hard, and smart, to preserve our position in the global vanguard.

All of this has led some to ask whether the West’s entrepreneurship-driven job creation machine is slowing down precisely when we need it most to create jobs and get us out from under a mountain of debt.

The challenge for Western entrepreneurs is to think bottom-up, not top-down. For too long, so much entrepreneurial activity has focused on the needs and desires of the one-sixth of the world’s population that lives in rich economies.

Finding new entrepreneurial pathways to focus on the emerging markets’ needs — and responding to their more natural focus on resource constraints — will yield tremendous business opportunities all over the globe.

The demand is certainly there, from billions of people. That is why I have an abiding sense that we are still stuck in an era similar to that of the horse and buggy, when — prior to the arrival of the internal combustion engine — Manhattan’s biggest worry was that it would be buried in horse manure.

What was true of innovative personal mobility solutions back then is true for today’s key challenges, such as food security and alternative energy. We don’t even fully know what we don’t know — and what we still need to discover.

Constantly pushing those boundaries, asking radical questions and prodding policymakers to get out of the way is what entrepreneurs do. The best of global entrepreneurship is yet to come. The race is on.

The writer is President and CEO, Kauffman Foundation.

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