Friday, 26 April 2013

Millennials less entrepreneurial than their olds. Why?

“The whiz-kid with an idea who vigorously taps out code while hyped up on energy drinks then launches a business to astronomical success is the exception, not the rule.” (David Yanofsky in Quartz)

New data from the Kauffman Foundation in the US shows that in 2012, 20-34 year olds were 30% less likely to start a new business than 35-65 year olds.


The gap’s been steadily widening since 1996, mostly due to increasing entrepreneurial activity by the olds but with a discernable decline amongst the youngsters. Especially in the closing years of the millennium.

There are many possible reasons including comparative lack of available capital amongst the youngsters, and olds needing to create jobs for themselves because they can’t get a job and can’t retire. But a third one, the effect of contemporary schooling on the youngsters, is potentially far more pernicious. 

Over the western world generally major education reforms were introduced in the late 1980s and early 90s.

In New Zealand the reforms were signalled by the 1990 major report on education “Tomorrow’s Schools”.  From that, the movement to de-professionalise teaching and heavily emphasise  qualifications got traction through the new Qualifications Authority (NZQA) that administered the atomisation of knowledge by the Unit Standards based assessment and qualification. New Industry Training Organisations (ITOs) administered the related institutionalisation of apprenticeships. 
By 2003, when I began a stint of teaching in a University Business School, the shocking effect of the reforms was well established.

As University teachers we were warned that secondary school graduates entering university could be expected to demand to know in detail, before they commenced a unit of learning, exactly what they were expected to know as a result, the process by which they would know it, and the reward structure for knowing.

I recall wondering how any of them would learn anything new, unexpected, or surprising with such restriction on insight, or risk.

Even so, I was dismayed and amazed at how risk averse my students were. They seemed to have been trained to expect surety of outcome for their efforts; unable to cope unless the expected result, the process and the reward were fully mapped out beforehand; schooled that such information was their right and anything less, bad teaching.

I refused to comply and pushed them to cope with uncertainty and risk by collaborating. I coached collaboration. The process was nerve wracking at times but the result was widespread joy at experiencing collaborative entrepreneurship. Graduates from that approach proved to be fast learners (effective in employment 3 x faster than conventionally taught grads) and natural leaders in changing contexts and emergent practice.

But my approach  was unusual. The conventional undergraduate teaching methods that predominated,  and still do, are effective  schooling for career corporate-managers and researchers, not entrepreneurs. Post graduate teaching methods are too; maybe that’s how MBAs came to be blamed for the 2008 GFC.

Little wonder perhaps, that entrepreneurship has declined amongst schooled youngsters.

Tuesday, 16 April 2013

20 yrs Advice and Advisors Changed Nothing Much.

There’s no shortage of advice and advisors for Kiwi SME owners: plenty of “should do this” and “should do that”; “should use TOC” or “should do a one-page-plan; “shouldn’t be satisfied with the 3Bs (boat, BMW & batch)”; and “should be aiming to be global magnates”. And why should they do these things? Because NZ needs them to create wealth, that’s why. But 20 years of advice, advisor, mentors, consultants, coaches or whatever hasn’t done the trick. Why? 

At least part of the reason is that SME owners don’t have the time or patience for advice unless it’s immediately, practicably useful. Regardless of how justified, well meaning or authoritative it is, or how virtuous or good, it’s unlikely to have the prescribed effect unless it pops up at the right moment coming from the right person. 

Advice works when, for some reason, the owner is unusually receptive and keen to change, and when it comes from or through someone that the owner trusts to produce the change. It’s an opportunistic, entrepreneurial process. Not a corporate planning exercise.

Trouble is most advisors aren’t business experienced entrepreneurs. They’re more likely ex-corporate executives or experts who, though they think they understand the SME owner, have never experienced actually having their own tender parts on the line; have always spent someone else’s money with only a salary and bonuses at risk. 

And that’s not all. 50% of current SME owners are 55-70 yr old baby-boomers whose success in business is largely due to an exceptional coincidence of market opportunity and technical and entrepreneurial talent. Over 90% of SME start-ups disappear within 3 years. Only about 2% grow to be more that a job for the owner. 

That 2% aren’t successful because they went to university. More likely they left school early. They’re not successful because they read endless business books or adopted every new TQM, Zero Defect, Process Re-Engineering or whatever Management fad that raged virus-like through the corporate world.

They’re successful because of who they are, what they’re naturally good at, what they happened to do, and when they happened to do it. Why would they be keen to change, especially when the advice comes from a stranger claiming to have the answer?

A current example from my experience is a substantial client whom we met through a long trusted agent/advisor of his who is also a trusted business friend of ours. The introduction coincided with the client facing unexpected demand for a new product he’d developed. 

In conversation we learn that although 70 next birthday, he’s tired of being the general and operations manager - at the centre of everything – because he wants to focus on what he loves and is good at – developing new products and processes. He has a list of possible projects. 

I ask him, “In the best of all possible worlds, how many of these projects would you like to take to fruition.” “All of them,” he says.  “What’s stopping you?” I ask. He’s silent for a moment then replies, “No one asked me that before. My bank manager, accountant, solicitor and friends all ask “What would you want to that for (at your age)?”” “Look”, I say, “there isn’t much you don’t know about your industry and we personally know very little. So we're not proposing to teach you to suck eggs. But we do have the skills, knowledge, direct experience and network to help you remove the barriers to achieving your goal; to profitably exit what you don’t like, profitably get into what you do. It’ll take 3-4 years and involve a lot of change, including you.” 

To cut the story short, we’re eight months into the project on his condition: that we complete it in 2 years not 3-4. 

We aren’t “doing TOC” with him per se, or “one-page-plan” or any other “tool” or programme. But we are using those and many other approaches and techniques in a rolling-wave project to achieve his goals. In the process we're engaging with him and his people experientially so that in two years that knowledge and skill will be “built into” the organisation(s). The bits he then sells for a high price will be a great buy for new owners who likely are or want to be global magnates. He can keep the other highly profitable bits he likes. 

The thing is we met him at that right time and through connections he trusts. Notice also that like him we are also baby boomers and like him we are also SME experienced entrepreneurs. Unlike him we have high-level specialist business skills and knowledge that he knows he lacks. He trusts us and we trust him too.