ENTREPRENEURSHIP AND PHILANTHROPY

My dad worked for the Ford Motor Company at its engine plant on Brookpark Road in Cleveland, Ohio, for 38 years before he retired a few years ago. He did his job, as directed by management and approved by the union, every working day for each of those nearly four decades. In return, he was assured a good wage, benefits and job security. He was among the last of a breed of workers in America.

I recall what that kind of work was like. I did it for a while as I worked my way through college. My job was to tighten three bolts on the engine blocks as they went by every 18 seconds on the assembly line. The worker on my left put the bolts on. I tightened them. And the worker on my right wiped them clean with a cloth. On one occasion, the three of us decided to combine the three jobs into one, so that we worked a half-hour and had an hour off. It was easy to do. Except that we were almost fired for trying this. We thought we were increasing productivity¾having one person do the job of three. The union steward told us we were actually creating a case to eliminate two jobs! So back the three of us went¾putting on the bolts, tightening them, wiping them clean¾for eight hours a day, six days a week.

Neither my dad nor us understood or cared about how our jobs related to the final automobile that left the complex, much less how we impacted the competitiveness of the company that employed us.

We know that that type of workforce is gone forever. But what is replacing it? My college roommate became head of the United Auto Workers union in South Bend, Indiana, a number of years ago. I remember talking to him on one occasion when he was in the midst of a labor-management negotiation for a new contract. His side was arguing for more pay, more benefits, more security. Given the economic environment, he knew, however, that he was unlikely to get them. When I asked what the workers really wanted, he replied, ”Satisfaction!”

My son, Matthew, is nearly 17. He has a very different view of work. He does not believe that a big company will provide job security and sees the large corporation as stifling and limiting to what he wants to do. He does not believe that Social Security will be around when he would be old enough to benefit from it. He likes the idea of being his own boss and having more control over his own destiny. He wants to do something worthwhile. He has already had two entrepreneurial ventures that he started and has written a business plan for a restaurant concept that he developed. He represents a new breed of worker in America.

As I think of the workforce in the American economy, I’m reminded of Charles Dickens’ famous opening line in the Tale of Two Cities, “These are the worst of times; these are the best of times.” For workers, we have a tale of two economies¾the big company economy and the entrepreneurial economy.

On one hand, many workers are experiencing enormous dislocation. Traditional values of job security, seniority and loyalty have been jarred by demands for flexibility, productivity and performance. Driven by international competitiveness, new labor-eliminating technologies, requirements for new kinds of skills and more decentralized, autonomous team approaches to getting the job done, large corporations have dramatically cut employees, changed reward systems and altered management structures.

In 1960, about 15% of American workers got their paychecks from Fortune 500 companies. This percentage grew to a high of about 21% in 1970 and stabilized there for about a decade. In 1980, the number of workers in Fortune 500 companies began a steady decline so that, today, less than 9% of the workforce is in Fortune 500 firms. Taken together, Fortune 500 firms have cut nearly five million jobs in the past decade. For those who were “downsized," these companies would more likely be called the “MisFortune 500.” This was illustrated on the cover of the February 26, 1996, issue of Newsweek magazine. (Sloan, 1996) Under the title of “Corporate Killers” are the photos of four CEOs of Fortune 500 companies. Beneath their names, like serial numbers under mug shots, are the number of jobs they have cut: Digital, 20,000; Scott, 11,000; AT&T, 40,000; IBM, 60,000. CEOs of other major corporations are pictured in the article in a type of rogues’ gallery with the number of layoffs that each has supervised in red beneath their pictures. The subtitle on the cover reads “...the Public Is Scared as Hell. Is There a Better Way?”

Yes, there is. In another sense, these are the best of times for American workers. In the past 15 years, 27 million net new jobs have been created. (U.S. Department of Labor, 1995) So, who’s hiring? Entrepreneurs are hiring. They ar generating their own jobs and creating jobs for others. As a result, we are now in the greatest era of entrepreneurship in American history. I believe that we are seeing an entrepreneurial revolution that reaches from the inner city to the most affluent suburbs in Silicon Valley, that encompasses every ethnic group and both genders, that includes the young and the old and that offers genuine hope and choice to all classes of Americans.

To appreciate the range and impact of this entrepreneurial revolution, it’s important to recognize that there are different kinds of entrepreneurs¾aspiring, lifestyle and growth.

Aspiring entrepreneurs are the entrepreneur wannabes. They dream of starting a business; they hope for the chance to be their own bosses. But they have not yet made the leap from current employment into the uncertain and potentially terrifying chaos of start-up. There are a lot of aspiring entrepreneurs in our country today:

· Preliminary findings by the Entrepreneurial Research Consortium, a public and privately sponsored research effort directed by Dr. Paul Reynolds at Babson College, indicate that seven million adults are trying to start businesses in the United States at any given time. (Selz, 1996)

· A 1994 Gallup survey of U.S. high school students found that seven out of 10 students wanted to start and own their own businesses in their adult years. (Walsted, 1994)

· Courses in entrepreneurship are now taught at nearly 1,000 colleges and universities, and a national consortium of university- and community-based entrepreneurship centers was formed in 1995.

· Entrepreneurship education programs for youngsters in the K-12 age groups now exist in more than 30 states. The YESS!/Mini-Society entrepreneurship curriculum has been accepted by the U.S. Department of Education’s National Diffusion Network as effective in both knowledge acquisition and in improving attitudes towards school and learning. Lifestyle entrepreneurs are those who have developed an enterprise that fits their individual circumstances and style of life. Their basic intention is to earn an income for themselves and their families. These have been referred to as small businesses or mom-and-pop shops. I don’t like either of the latter terms. “Small business” does not capture the fight for survival, the innovation and the dynamism that are part of any entrepreneurial venture, and “mom-and-pop” seems denigrating to the drive and work that are necessary in any enterprise. Lifestyle entrepreneurs develop ventures that are essential to a community’s well-being. Today, we have more customization, variety and selection than ever before. There are more bakeries, coffee shops, and jewelry stores than ever. There are more breweries, restaurants and grocery stores. There is simply more diversity because of the dramatic increase in the number of lifestyle entrepreneurs:

· A record 770,000 businesses were incorporated in 1995. (Selz, 1996) Since 1990, over 600,000 businesses have been incorporated each year. This compares to 50,000 a year in the 1950s.

· More than 13 million Americans¾25 million if you count part-time entrepreneurs¾are now running their own businesses from home. Roughly half of these home-based businesses are service firms, from consulting practices to graphic design. The rest are: sales (17%), technical and administrative support (15%), repair service (11%) and the arts (5%). (Cheney, 1996)

· In 1994, women-owned companies employed 15.5 million people and generated $1.4 trillion in sales. Womenowned firms with more than 100 employees grew twice as fast as all other companies from 1991 to 1994. They now employ 35% more people in the United States than Fortune 500 companies do worldwide. (Mallory, 1996)

· Between 1987 and 1992, the number of black-owned businesses increased from 424,200 to 620,000, according to the U.S. Census Bureau’s Survey of Minority-Owned Business Enterprises. This was a higher percentage increase than for the total number of U.S. businesses, which increased 26% during the same period, from 13.7 million to 17.3 million. Blacks, who make up 12% of the population, are still underrepresented among business owners, however. In 1987, black-owned companies were 3.1% of the nation’s total; in 1992 they were 3.6%. (Mergenbagen, 1996)

Growth entrepreneurs have both the desire and ability to grow as fast and as large as possible. These firms are the most dynamic job generators in the American economy:

· The gazelles of this entrepreneurial stampede, as David Birch at Cognetics Inc. in Cambridge Massachusetts calls them, are increasing. By his reckoning, there are roughly 300,000 U.S. companies with more than 50 employees that are growing at more than 20% per year. And a smaller percentage, such as Microsoft Corp. and Dell Computer Corporation, are growing even faster and are shaping a very different make-up to the Fortune 500. (Birch et al. 1995)

· Associations and affiliations of growth entrepreneurs have been forming at local, regional and national levels. The American Entrepreneurs for Economic Growth boasts a membership of more than 4,000 firms with more than 1.5 million employees. The 2,100 members of the Entrepreneur Of The Yearâ Institute had revenues of $155 billion and employment of over 1.3 million while growing collectively at an estimated rate of 150,000 jobs per year. (Membership Survey, 1995)

· Roughly 80% of the current Forbes 400 list of wealthiest Americans are first-generation entrepreneurs whose most common characteristic can be summed up as “started with little or nothing and built major enterprises creating enormous wealth.” This entrepreneurial dominance of the list of America’s wealthiest has held true for every year since the magazine started publishing the list in 1982.

So why are we in the midst of this phenomenon of entrepreneurial activity? I think for some very practical reasons. In a period that presents both disturbing economic dislocation and remarkable opportunity, entrepreneurship is proving to be a truly egalitarian avenue to self-sufficiency and a better life for many. One does not need to be accredited, certified or degreed to start a business. And entrepreneurship can exist in non-profit organizations as well as for-profit enterprises. Nonprofit does not have to mean non-revenue generating. Indeed, we are beginning to see the emergence of what Bill Shore of Share Our Strength calls Community Wealth Enterprises. These Community Wealth Enterprises pursue their nonprofit missions entrepreneurially and in the process generate wealth for the communities they serve. (Shore, 1996)

In addition, a combination of pushes and pulls are spurring individuals to try the entrepreneurial route. The pushes may be a loss of job, dissatisfaction with current employment, or the now-or-never feeling that can nag at one’s brain. The pulls involve the availability of a market opportunity, the desire for independence, or the influence of role models who have done it successfully.

What do entrepreneurs do? What defines entrepreneurial behavior? What makes an entrepreneur entrepreneurial? Entrepreneurship is a doing, a practice; it requires that one act. But what practices uniquely characterize the effective entrepreneur? If the definition of an entrepreneur focuses on what he or she does, then, for me, the effective entrepreneur is a person who:

Entrepreneurs recognize and pursue opportunities. An idea is always at the center of an opportunity, but not all ideas are opportunities. An opportunity is customer-driven. It is rooted in meeting a real need in the marketplace, solving a real problem, or filling a real niche within a reasonable time. Thus, there is a “window” to every opportunity.

For the entrepreneur, opportunity is based on innovation. As Peter Drucker points out, “Innovation is the specific function of entrepreneurship ... It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.” (Drucker, 1985) Innovation requires a prepared mind. Noble Laureate Herbert Simon argues that the most creative and innovative individuals develop “chunks” of knowledge (Simon, 1985). These are sets of patterns and relationships that develop over time that allow one to see solutions to problems¾to make connections between events and actions. This reflects the truth in the adage that “chance favors the prepared mind.” And it indicates why most entrepreneurs start businesses in a field with which they are already familiar. One can actually work to develop a prepared mind. This is what the entrepreneur does in assessing market need by getting customer feedback, tracking trends, synthesizing information, and monitoring the competition.

Entrepreneurs also seize opportunity through “bisociation”¾a phenomenon historian Arthur Koestler observed in the creative process (Koestler, 1990). Bisociation is the ability to relate two seemingly unrelated things to produce that “ahha” sensation in the marketplace. Michael Dell combined computers and mail order to launch Dell Computer Corporation; Fred Smith related mail and overnight delivery to start Federal Express; and Debbie Fields linked cookies and information technology to build Mrs. Fields Cookies.

I’m reminded of the story of the Texas rancher who’s visiting with a Missouri farmer. Their conversation soon gets to the size of the property that each owns, and the Texas rancher asks the Missouri farmer to tell him how big his farm is. The farmer points and says, “Well, if you go from the edge of my house, go over to the oak tree, then cut across to that creek, then go up the hill to the stone wall, then come around to that big rock over there, then circle over to the barn and then back to the edge of my house, that’s my farm.” The Texas rancher, looking rather proud, says, “Well, in Texas, I can get in my car at dawn, travel all day long, and at nightfall, I’m still not at the other end of my property.” To which, the farmer replied, “You know, I used to own a car like that!” The farmer was making a bisociative connection between cars and property.

For the entrepreneur, pursuing an opportunity is often like riding a roller coaster. One must endure constant and unseen ups and downs, turns and twists. The ability to deal with the unexpected and handle the unknown¾to tolerate ambiguity¾is part and parcel of the entrepreneurial process. Not knowing whether one can make payroll or facing the loss of a primary customer or needing to find capital for growth and survival puts physical and emotional strains on the entrepreneur. The person who needs routine, who expects assurances, who counts on guarantees is likely to find the entrepreneurial process an extremely disquieting experience. This difference toward ambiguity was demonstrated in a very funny film of a few years ago, The Inlaws, which matched an orderly, conservative, strictly by-the-book dentist with an unconventional, off-the-wall, make-it-up-as-you-go-along government agent. The two found themselves in a life-threatening situation in which they faced a crazed South American dictator. Just before meeting the dictator, the dentist asked, “What should we do?” The agent told him, “Go with the flow.” To which the dentist replied, “What flow?” One had a comfort with ambiguity; the other was distraught over it.

Perhaps the most observed phenomenon of the entrepreneurial process is the passion of the entrepreneur. To me, passion is the enthusiasm, joy and zeal that come from the energetic and unflagging pursuit of a worthy, challenging and uplifting purpose. In the entrepreneur, it is described as drive¾the determined, optimistic and persistent desire to succeed at one’s own venture. It is the “fire in the belly” that makes the improbable possible. It is the well-spring of the entrepreneur’s “Ripkinesque” stick-to-itiveness to always, always, show up for the game.

But what is passion? What is its common cause? Where does it come from? Passion is intrinsic. Its locus is inside each one of us. So it does not have to be¾in fact cannot be¾instilled or motivated into somebody else. It must only be given the freedom and opportunity to emerge. A sausage manufacturer in Kansas City beams when talking about the quality and taste of his sausage; a software developer in Austin, Texas, radiates when describing her product; and a young designer of CD-ROMs in San Diego glows when showing off his latest innovation. Each has found his or her own passion that gives purpose to what they do. George Bernard Shaw provided the essential insight about one’s purpose. He said, “This is the true joy in life¾the being used for a purpose recognized by yourself as a mighty one...” (Shaw, 1903)

Passion can take an unconventional but very practical form in entrepreneurial ventures. Jack Stack, chairman and CEO of Springfield ReManufacturing Corporation in Springfield, Missouri, and the other 119 employee-owners of the company translated their passion into a clear, concise and convincing purpose for SRC when they took over a company in desperate straits in 1983. Faced with an 89:1 debt-to-equity ratio, a labor-versus-management mindset, and an environment of uncertainty and doubt, they told each other in their mission statement, “Don’t run out of cash and don’t destroy from within.” (Stack, 1992) They never have. Their shared passion has built a culture of ownership, education, open information about all financials, teamwork and performance that has made SRC a $100 million per year company and one of the 100 best companies to work for in America.

It’s one thing to have purpose and passion; it’s another to do something about them. Entrepreneurship ultimately depends on performance. Entrepreneurs who perform demonstrate Steven Covey’s first habit of highly effective people¾to be proactive. Proactivity, according to Covey, means that our behavior is a function of our decisions, not our conditions 5 (Covey, 1989). We have the initiative and responsibility to make things happen. Reactive people are driven by their circumstances; they make excuses about what prevents them from doing something. I’m reminded of the story of the boy who came home with 5 Fs and a D on his report card, showed it to his father, and asked, ”Well Dad, is it the genes or the environment?” Proactive people, on the other hand, are “response-able.” Rather than let a situation determine how they would act, proactive people act to change their situation.

Imagine that you are in the following situation. You are walking up a timbered mountainside with a group of other people. Suddenly and unexpectedly, a huge firestorm erupts in the forest and begins to sweep uphill towards you. The flames are a hundred feet high and a hundred yards deep. An inferno engulfs the entire side of the mountain below you. The heat is so intense that whole trees explode into burning torches in an instant. You and the others turn and begin to run up the steep mountainside. It is a race for your lives--reaching the crest of the mountain means safety. But the fire is faster than you are. You know that you cannot outrun the fire, that you cannot reach the top of the mountain before the fire reaches you. What do you do?

This situation actually happened. In his profound and deeply moving book, Young Men and Fire, Norman MacLean recounts the great Mann Gulch fire of August 1949. Sixteen smoke jumpers from the U.S. Forest Service were trapped on the side of a mountain when the blow-up occurred. As they started their race for life, Wag Dodge, the head of the crew, did something remarkable; he invented an escape fire¾he actually started his own fire in the face of the inferno, laid down in the burnt out area, and then let the firestorm roar over him. He was proactive in the extreme. He tried to get the others to join him, but each refused and continued running up the hill, all but two to their deaths (MacLean, 1992). Dodge acted to change the situation, rather than let the situation dictate his response. That’s what entrepreneurs do.

There’s a lesson here too about the nature of risk-taking in the entrepreneurial process. MacLean points out that Dodge’s action took “as much guts as logic.” In other words, both are necessary. But I would suggest that they are viewed quite differently by those inside and by those outside the entrepreneurial process. What we see often depends on where we’re standing.

Entrepreneurs are usually referred to as risk-takers. But I don’t think this is quite accurate, if we mean by that the gambler who is willing to bet everything on one role of the dice and then prays that is comes up seven or eleven. A better analogy would be the chess player, who may make a bold move, but also understands the parameters of the game and anticipates the possible counter moves. In this sense, the entrepreneur prefers the odds to be stacked in his or her favor. More importantly, the entrepreneur seeks to secure those odds by acquiring superior knowledge or a competitive advantage about the domain in which the risk is taking place. For example, Ewing Kauffman, when he was deciding to quit his lucrative job as a salesman for a pharmaceutical firm to start his own company, first went to his three best customers and asked them if they would continue to buy from him if he provided the same quality at the same price. When each agreed to do so, he launched Marion Laboratories (Morgan, 1995).

Consequently, the entrepreneur tends to see the logic rather than the guts of his or her actions. He or she is willing to take calculated risks because he or she has come to terms with the possible ramifications of their actions, and thus feels comfortable with the uncertainty--that is, the riskiness--of the situation.

At the same time, the opportunity to act can never be entirely separated from the opportunity to fail. Statistics vary widely on failure rates because entrepreneurs don’t like to talk about or record failures. The Small Business Administration estimates that half of all businesses fail in the first four years. Others, including myself, would estimate the failure rate to be much lower. But this we know: companies fail. What we also know is that for many, failure is not an end but a learning experience that contributes to success in later ventures.

Thus, to the person on the outside, the entrepreneur can appear to be taking enormous risk, to be making a leap of faith into unknown territory. The person on the outside of the entrepreneurial process tends to see the guts rather than the logic of entrepreneurship. So, the perception of risk is at the very heart of what entrepreneurship is all about because it is so entwined with the element of change and action. If we ask ourselves, what is it that entrepreneurs do? Then one answer is that they act to create and manage change--in their own lives and in the organizations they build.

Usually, the entrepreneur pursues his or her venture with minimal or limited resources. The entrepreneurship faculty at the Harvard Business School has thus defined entrepreneurship as “the pursuit of opportunity beyond the resources one currently controls.” (Stevenson & Gumpert, 1985). This definition applies to non-profit enterprises as well as for-profit ones.

One key resource is capital, but it’s not the only critical resource. Every dynamic process needs to be fueled. The fuel for the entrepreneurial process is capital. Capital is the catalyst in the entrepreneurial chain reaction, the lifeblood of emerging and expanding enterprises. In business, it is the sine qua non of a new product, an innovative service, or a compelling opportunity. To make progress with little actual cash in hand requires entrepreneurs to utilize “sweat equity” and bootstrapping to get what they need “for free or better!” They would usually rather control resources than own them and thus favor borrowing, renting or leasing where possible. Entrepreneurs thus constantly seek to leverage resources for maximum use.

Just as importantly, every entrepreneur must develop and/or acquire the skill and expertise to run an enterprise. This involves the practical but essential ability to manage change both personally and organizationally. Personal know-how involves skills such as leading, communicating, listening, and negotiating. Organizational know-how involves marketing, finance, accounting, production and manufacturing.

Successful entrepreneurship requires quantitative information and qualitative insights. One springs from data, the other from experience; one relies on numbers, the other on judgment; one demands objectivity, the other personal involvement and commitment.

In this regard, entrepreneurs are exceptional learners. The most successful learn to fail cheaply and quickly! They learn from everything. They learn from customers, suppliers and especially competitors. They learn from employees and associates. They learn from other entrepreneurs. They learn from experience. They learn by doing. They learn from what works and, more importantly, from what doesn’t work.

As an enterprise grows, entrepreneurs learn that they can’t do everything themselves. Consequently, team building becomes a critical way to acquire know-how by complementing and extending the skills of the lead entrepreneur. The entrepreneurial development team usually has an extremely strong affinity for the entrepreneur and a commitment to the integrity of the entrepreneur’s business vision. The team engages in entrepreneurially innovative and proactive applications of its group skills to scale up the venture’s resources, processes and performance (Kourilsky, 1995).

For the entrepreneur, team building requires more than the ability to bring in complementary skills or additional expertise. It demands that one learn how to tolerate strength in others. For me, therein lies the crux of successful or failed team building. Ironically, there is a paradox at work here. The entrepreneur must confront his or her fear of letting go, of being out of complete control. Holding on too tightly to anything actually risks losing everything. So the practical issue for the entrepreneur is to learn how to let go but hold on at the same time.

There is another important way that entrepreneurs leverage resources in seeking to get things for “free or better”¾the creation and utilization of fluid, ad hoc networks that are essential to entrepreneurial success. Research on the sociology of entrepreneurship (Aldrich & Zimmer, 1986) has shown that entrepreneurship is facilitated or constrained by linkages between entrepreneurs, resources and opportunities, and by the social relationships through which entrepreneurs obtain information, resources and social support. Thus, entrepreneurship is embedded in networks of continuing social relations. The more extensive, complex and diverse the web of relationships, the more the entrepreneur is likely to have access to opportunities, the greater the chance of solving problems expeditiously, and ultimately the greater the chance of success for the venture. The fewer, less dense and more homogeneous the web of relationships, the less likely it is for a new venture to succeed. Networking thus allows entrepreneurs to leverage human, financial and technological resources that they might not otherwise be able to afford.

Why would anyone choose the life of an entrepreneur? Why would anyone consciously want to work long hours for low pay, perhaps give up the security (perceived or real) of employment in government, a large corporation or even a university, willingly walk the tightrope of success and failure, and tolerate constant ambiguity by wondering where the next investment will come from or how to make payroll?

Entrepreneurship offers the opportunity to create value that is both tangible and intrinsic. Entrepreneurs create value for customers by providing products and services that people really want and need. They create value for suppliers and vendors who benefit from interaction with their firms. They create value for employees by providing performance-based jobs and in many cases by sharing equity in the company. And they create value by generating wealth for themselves and for the investors in their ventures. But there is more to this than the visible risk-reward equation.

Entrepreneurs believe in the future. I’m reminded of the entrepreneur who had not succeeded at several ventures and was now seeking money from an investor for yet another enterprise. The investor, in trying to be kind, remarked that the entrepreneur had a number of blemishes in her past, to which the entrepreneur replied, “That may be true, but my future is spotless!”

In observing entrepreneurs, I have seen something remarkable and universal. In fact, it is the only characteristic, I believe, that applies to all entrepreneurs without exception. Every entrepreneur believes that his or her company will succeed. Think about that. No business plan ever predicted failure. No entrepreneur ever told a potential investor that he was sure to lose his shirt on this one. No projection of revenues ever presented an upside down hockey stick. I think this is why so many entrepreneurs seem to do the impossible. They are convinced that the future has to be better than the past and will certainly improve upon the present. We need to encourage and support this type of optimism, this faith in the possible.

From my observation, people also become entrepreneurs because it can be such an effective way to leave a legacy--to be able to point to a significant accomplishment done well. Thus, entrepreneurship is intertwined with human achievement.

One’s legacy, it seems to me, is the outcome of the convergence of competence and character -- the coming together of how we do something with who we are. Competence demands performance. It involves one’s ability to do something well; it marks achievement. Character reflects the degree to which one demonstrates integrity and honorable conduct.

Legacy was evidenced in the final principle that Ewing Kauffman and his 3,400 associates at Marion Laboratories developed as part of their entrepreneurial credo for the firm, which they called Foundations for an Uncommon Company. They wrote, believed in and lived the following:

“We have a responsibility for excellence and innovation. We do all that we do to the very best of our ability and with the strongest enthusiasm we can generate. It is the very nature of our business to do things that have never been done before and for which there are always reasons they cannot be done. Success for us requires the ability and the spirit to find a pathway through any obstacle, even when no pathway is visible at the start.”

This same attitude motivated our Foundation to develop a programmatic thrust in entrepreneurship. Over the past four years, we have been learning how we can link the social and economic dimensions of philanthropy through our support of initiatives to accelerate entrepreneurship in America. I’d like to share some ways that we believe philanthropy can contribute to the social and economic well-being of our country by creatively promoting and sustaining entrepreneurial activities.

The problems that plague our inner cities, frustrate displaced workers and beset our economy are profound and complex. There are no simple solutions. Entrepreneurship is certainly not a panacea, but I am convinced that it is one effective and proven avenue to self-sufficiency for many Americans. Philanthropies can play a critical and creative role in making this avenue available to more people who elect to pursue this as a viable alternative to their current economic and social situation.

From our experience, philanthropies can have a positive impact in four areas: education/training, economic development, support systems, and public policy awareness.

When I ask entrepreneurs if entrepreneurship can be taught, most will say “no.” They will argue that one is born to be an entrepreneur, that there is something in the marrow that separates the entrepreneur from others. But there is no DNA gene marked with an “E” for entrepreneur. And from the statistics, we see that lots of people have both the desire and the ability to be entrepreneurs. If I ask entrepreneurs if entrepreneurs can learn, then the answer is always a resounding “yes!” They wish that they knew things about company building sooner, that they had known more so that they would have made fewer mistakes, and that they have a lot that they still need and want to learn about.

In fact, we know a great deal about the entrepreneurial process, about what helps and hinders company growth, and about techniques, attitudes and skills that can help entrepreneurs succeed. Thus, we can help entrepreneurs anticipate what is coming and see patterns in the directions of their companies.

There are education and training initiatives that are proven effective and need to be disseminated further. There are also curriculum efforts underway that need to be developed and further refined and tested. Our Foundation, for example, has helped developed a program called FastTrac, a curriculum designed for aspiring and life-style entrepreneurs. FastTrac is actually a multi-session, multi-week entrepreneur development program now taught in about 30 states that helps someone determine the difference between an idea and an opportunity, shows individuals in what areas to be proactive, provides direction on leveraging resources, and in the process helps entrepreneurs create value. Last year, 3,700 entrepreneurs “graduated” from the program with a business plan; this year, 5,600 will graduate; and we hope to train 10,000 entrepreneurs a year by 1998.

Other examples of worthwhile initiatives that merit support are new efforts to develop culturally appropriate entrepreneurship curriculums in Indian Country at Haskell Indian Nations University Center for Tribal Entrepreneurial Studies in Lawrence, Kansas, Salish Kootenai Tribal College in Montana, and the Oregon Native American Business and Entrepreneurship Network in Portland, Oregon. In addition, the National Black Business Trade Association has developed the Black Entrepreneurial Success Training (B.E.S.T.) program for dissemination nationally through its Black Expo conferences in major cities.

At the college and university level, we have initiated an entrepreneurship internship program and awarded $1.2 million in grants for internships to 26 colleges and universities who agreed to match the funds. Unfortunately, we had to turn down over 50 additional worthwhile requests for internship funding. The American Indian Business Leaders, a university student association of Native Americans, is now trying to start an entrepreneurship intern program to introduce Indian youth to entrepreneurship in tribal communities.

In the K-12 arena, our Foundation has developed and is now disseminating the YESS!/Mini-Society curriculum for grades K-6 and a New Youth Entrepreneur curriculum for junior high students. We have also successfully piloted a Mother and Daughter Entrepreneurs in Teams (MADE-IT) program, and conducted an Invention Society competition for 3-6 graders who have prepared business plans around inventions that they have created.

Some inner city youth have demonstrated entrepreneurial skills in black market activities or illegal trades. This type of entrepreneurship, however, is destructive of communities. Initiatives like the National Foundation for Teaching Entrepreneurship in New York and the Temple University Youth Entrepreneurial Training Program in Philadelphia are working to channel the skills of inner city youth into productive entrepreneurial activities that benefit their communities.

All of these efforts seek to apply to entrepreneurship the old adage that it is better to teach somehow how to fish than to give him fish.

Jobs follow the creation of viable enterprises. Only when companies are sustainable, are the jobs within them sustainable. This approach is at the heart of Michael Porter’s experiment, the Initiative for a Competitive Inner City. He has recognized that it is a myth that there are no entrepreneurs in the inner city. Inner cities have shown a demonstrated capacity for entrepreneurship, and this capacity needs to be expanded by creating a climate for others to build for-profit businesses that can become meaningful employers and that create wealth. He persuasively argues that the inner city has competitive advantages, and that by providing support, assistance and training, entrepreneurs can maximize those advantages.

A national micro-lending movement is underway to provide capital to disadvantaged and low-income entrepreneurs. Programs like the First Step Fund in Kansas City and the Lakota Fund on the Pine Ridge Indian Reservation combine peer lending with training to help people reach self-sufficiency. The Mott Foundation has provided important insight about the micro-lending process. The Enterprise Corporation of the Delta, with the assistance of the PEW Foundation and others, has set up a bold experiment in one of the poorest regions of our country to provide capital, training and mentoring to promising entrepreneurs in the Delta.

A variety of community-based organizations are providing innovative and effective ways to support entrepreneurship activities in their regions. Groups like the Pittsburgh Enterprise Corporation, the Council for Entrepreneurial Development in Research Triangle Park, CONNECT in San Diego, and the Midwest Entrepreneurship Education Center in Indianapolis are linking business, government and academia in support of entrepreneurship by conducting educational programs, setting up networks of mentors and advisors, providing access to professional expertise, and facilitating access to capital for entrepreneurs in their communities.

Some programs are focused on specific groups, such as the Women’s Initiative for Self Employment in San Francisco, which works with low-income women; the Association of Black Women Entrepreneurs in Los Angeles; the Clallam County Economic Development Council in Port Angeles, Washington, that works with displaced timber and fishing industry workers to help them start business ventures that will provide an income for them; and the American Indian Enterprise Development Center in Mesa, Arizona, that works with Native American entrepreneurs.

Foundations can also help to raise public awareness about the role and impact of entrepreneurship in America. By supporting research, sponsoring policy-related seminars, and funding innovative and experimental community-based initiatives, foundations can bring together the social and economic dimensions of philanthropy. In addition, raising the level of public awareness through television, such as we are trying to do with our first show for PBS this Fall, and through radio, with a series such as we are supporting with National Public Radio, is a valuable way to educate the public and policy makers about entrepreneurship.

In a recent speech, Peter Drucker made the provocative statement that the role of philanthropy today is to “civilize the city.” He argued that cities have always been dangerous, threatening places in which it has been difficult and at times impossible for communities to evolve. (Report, 1996) As I have reflected on this idea, I’ve become convinced that healthy communities and civilized cities require self-sufficient people to live in them. And self sufficiency requires economic as well as social well-being. This is the unique challenge and opportunity that foundations face today¾to merge the economic and social dimensions of philanthropy. Nurturing, supporting and accelerating entrepreneurship in America is one important way to do just that.

This article needs to be read through several times and your critial thinking skills applied.

There appears to be a lot of common elements between conservatism and entreprenuership.

Excellent article. I know one of the top entrepreneurs in the world, and I'll send it to him.

but they are right about support structures. Starting a business from ground zero is tough and so is the big city. People don't want a nursemaid, but it's a shame when someone with heart and a great idea, who works like hell, fails due to missing some very basic knowledge or opportunity that a mentor could have told them about.

I have read and reread this article several times. I still wonder how entreprenuership is encouraged successfully. And how important it is to to conservatism.

Is entrepreneurship something all conservatives can agree on????

There appears to be a lot of common elements between conservatism and entreprenuership.

,,, one of the elements commonly drawn on is common sense. Thanx for posting this - it's "bookmarkable". I'll take your advice and read it thru carefully.

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