Category: Entrepreneurship

Innovation in Everything

What distinguishes the ‘scientific’ economist from all the other people who think, talk, and write about economic topics is a command of techniques that we class under three heads: history, statistics, and ‘theory.’ The three together make up what we call Economic Analysis.

That’s Joseph Schumpeter in Chapter 2 of his famous History of Economic Analysis. He believed that economics programs should emphasize and connect all three of those approaches. Those of us in ECON 405, The Economics of Innovation and Entrepreneurship, have been working to do just that, or at least the history and theory bit. To take a break from immersing themselves in the history of innovation and mathematical models of innovation and entrepreneurship, students have been exploring innovation in a variety of fields, and recording their journeys weekly on a blog. So, you can also learn about theatrical innovationmicrofinance in Pakistan, the habits of the poor, private equity and innovation, innovation in the construction industry, multisided markets, telematics, or big data and consumer goods. Enjoy!

Wisconsin vs. Minnesota – The Battle for Sustainable Economic Growth

In the years after World War II, Wisconsin leveraged its manufacturing base to keep its income per capita above that of its Minnesota rival.  Since the 1960s, however, the pattern has reversed.  Consequently, Minnesota now ranks among the states with income well above the US average while Wisconsin has fallen below this benchmark.  In a recent article, Roger Feldman, University of Minnesota economist, provides  four compelling reasons for this marked change in economic fortune, largely based on growth pattern differences between the Milwaukee Metropolitan Area and the Minneapolis-St. Paul Metropolitan Area

1feldmanONLINE

1. Minnesota diversified its economy more than Wisconsin has.

2. Minnesota did a better job of educating its residents generating fewer high school dropouts and more college graduates.

3. Minnesotans are much healthier than Wisconsinites with, among other factors, lower adult obesity rates and higher spending on parks and recreation.

4. Minnesota located its primary university and state capital in its economic center; Wisconsin chose not to locate these entities in Milwaukee.

For more details on his arguments, check out the article.  In my view, these arguments support the notion that sustained economic growth comes from a vibrant, diverse, urban economy rather than one that tries to preserve economic advantage of past eras at the expense of supporting innovation and entrepreneurship.

LU Alum and Serial Entrepreneur Featured

’97 Lawrence alum Abir Sen is featured in a recent article in Twin Cities Business. Sen recently joined Lawrence’s Board of Trustees and has been an active participant in our Innovation and Entrepreneurship program as both guest expert and member of the advisory committee. See below for his view of the right job for him.

Abir_Sen

“The job I want is the one I have to give to myself because nobody else will give it to me. I have no interest in climbing the corporate ladder—it’s just boring and it’s not cut out for me.”

Sitting with Strangers, Down the Drain, Stiff, Tick-Tock

Those are the titles of the four 10-minute plays that members of Lawrence’s Greyfell Theatre Company wrote and will perform tonight, tomorrow, and Saturday at Björklunden. Watch the teaser on Youtube, and also be sure to check out the rest of their fun videos! Learn more about Greyfell, and check Facebook for updates!

Start-Up Theatre is happening!

Twenty-two Lawrence students and three faculty members (Tim Troy, Gary Vaughan, Adam Galambos) are in day 4 of the two-week Björklunden immersion experience we are calling Start-Up Theatre. Within these two weeks, our students are writing, directing, designing, rehearsing, and performing four ten-minute plays, AND doing the marketing, outreach, grant-writing—everything.

They have now launched and named this new venture. Greyfell Theatre Company is Lawrence University’s newborn student-run theatre company. Its inaugural production is Thresholds — A Celebration of Ten-Minute Plays, to be performed December 12-14 at Björklunden.

Here is the mission statement and the official description:

Mission Statement:

Greyfell Theatre Company crafts performances that transport our audiences to radiant worlds both old and new in the restorative woods of Björklunden. Fearlessly collaborating in a swift production process, we illuminate fresh voices and invigorate the winter with vibrant new works.

Description:

Greyfell Theatre Company is a partnership between the Lawrence University Department of Theatre Arts and the Innovation & Entrepreneurship Program, initiated in the winter of 2013. Each year, a group of committed students arrive at Björklunden vid Sjön, the university’s northern campus in Door County. Greyfell aims to create new works of theatre in an accelerated start-up environment. The theatre derives its name from Greyfell, the swift shining horse of the Norse hero Sigurd whose image is immortalized in Björklunden’s Great Hall. Just as Greyfell was a symbol of vitality, Greyfell Theatre Company strives to invigorate the Door County community and illuminate new voices by building on the theatre-making tradition that the Department of Theatre Arts has cherished since 1930.

We are on Facebook: https://www.facebook.com/greyfelltheatreco; on Twitter: https://twitter.com/GreyfellTheatre/ (with Vine snippets), and check out the blog:  http://www.greyfell.org/blog/. Like us, follow us, talk to us, and come see the shows!

Will the US Economy Continue to Grow at 20th Century Rates? Robert Gordon and Eric Brynjolffson Square Off in a Lively Debate

This week Lawrence will be hosting a TEDx conference on re-imagining liberal education.  Thanks to Professors Galambos and Gerard, and a few other colleagues from other departments, this live discussion will be video streamed for all of us to watch.

Earlier this month, another TED conference took place.  This one featured economist Robert Gordon (Northwestern) and Eric Brynjolffson (MIT).  Some of you will be familiar with the arguments.  Those who took Capital and Growth last year read Gordon’s paper on the headwinds that will drive economic growth back to the level experienced prior to the first industrial revolution in the 18th century in England.   Gordon believes that our most productive innovations are behind us and innovation will be insufficient to enable us to sustain the 2% per capita real growth of the 20th century.

Some of you may recall the discussion we had in one of our reading groups of Brynjolffson and McAfee’s book, Race Against the Machine. In his TED talk, Brynjolffson explains why innovation is far from over and that we have the potential to continue the rate of growth of economic prosperity that we experienced in the 20th century.  Of course, the challenge, as he puts it is: “can we race with the machine?”

View both talks as well as a follow-up debate between these two economists here.

A Third Industrial Revolution: Innovation in Manufacturing

The April 21, 2012 issue of The Economist features a special report on the revival of manufacturing in the so-called developed world.  But this won’t be my father’s or even your father’s world of manufacturing.  As with many areas of our economy, it will require skilled workers who know how to manipulate contemporary machines such as three dimensional printers to create new products and meet existent and new consumer needs.  Traditional laborers with tools such as those portrayed above won’t be featured.  Nor will outsourcing to countries with cheaper labor, the pattern over the past 20 years, be prominent.  The rewards will go to those who can innovate and use their entrepreneurial skills to best meet people’s needs.  I encourage you to read (or listen to) the entire report (accessible here ), sign up for courses in our Innovation and Entrepreneurship Program (posted here), or enroll in the ACM Chicago program on Business, Entrepreneurship and Society.

This transformation of manufacturing is well underway but opportunities abound as those of you who went on this year’s LSB Chicago trip saw and heard (thank you Professor Galambos).  As the Special report concludes:

Millions of small and medium-sized firms will benefit from new materials, cheaper robots, smarter software, and an abundance of online services and 3D printers.

 

Entrepreneurship in Chicago

Thirty of us returned last night from another very successful Lawrence Scholars in Business trip to Chicago. Most of yesterday was “entrepreneurship day.” Before lunch, we went to ICNC, an incubator hosting over a hundred start-ups. We got to visit two of them, Souldier and Element Bars. The latter was a winner on Shark Tank! Our gracious hosts at ICNC were Steve DeBretto and Tom Cassell. Tom teaches the Entrepreneurship Practicum at the ACM Chicago Entrepreneurship program. The deadline for Fall 2012 has been extended, so it’s not too late to think about making this part of your next year. If you liked the two-day immersion experience we got in Chicago, you’ll love the term-long immersion experience you’ll get in the ACM program. Consider taking advantage of this great opportunity. The ICNC is not just a space to practice whatever your craft is, but it is also a community of entrepreneurs, with a strong support network.

After lunch at the Berghoff, we went to the Merchandise Mart to visit the just-launched hot new tech-incubator 1871. If your start-up might need a truck to pull up to your space, ICNC is where you’d want to be. But if you are a software start-up, you’d want to be at 1871, the intersection where the explosion of ideas takes place. Dozens of start-ups, six venture capital firms, four universities, many prestigious sponsors, and a number of mentors come together in a space designed beautifully for creativity.

I&E courses in 2012-13

If you are looking for I&E courses in 2012-13, you might know that you can already enroll in the Pursuit of Innovation (Fall), Entrepreneurship and Finance (Spring), and Financial Accounting and Entrepreneurial Ventures (Winter, Spring)  courses. In addition, two more courses might soon be available: Dean Pertl in the Conservatory is planning The Entrepreneurial Musician, and the Economics Department is probably going to offer Economics of Innovation and Entrepreneurship again next year. Stay tuned for updates!

Don’t miss that famous Chicago trip

The LSB program sponsors an educational trip to Chicago every year.  The purpose of the trip is to provide students an “immersion experience” in one of the country’s financial and entrepreneurial hubs.  The trip will take place during reading period, on May 3rd and 4th.  We will leave at 6:00 a.m. on Thursday, May 3, and return in the evening on Friday.

We will have a full schedule, visiting the following organizations: Chicago Mercantile Exchange, Madison Dearborn Partners, The Northern Trust Company, Deloitte, LBC Credit Partners, Industrial Council of Nearwest Chicago, Ennis Knupp + Associates, and the Chicagoland Entrepreneurial Center.

The costs of the trip are covered by the LSB program. The trip is open to all students. This trip is a great opportunity to learn about the business world up-close, in a way that you couldn’t do on your own. If you would like to join, register through LUworks.  Deadline to register and pay $20 refundable deposit is April 25.

Abundance, not Stagnation, Characterizes the Future

If you believe that Tyler Cowen has appropriately declared the end of serious economic growth in the so-called “developed world,” check out the work of Peter Diamandis.  If you fervently disagree with Cowen’s view, also check out Diamondis.  In Abundance, the Future is Better than You Think, Diamondis (with co-author Steven Kotler) calls upon human ingenuity and innovation as the drivers of future abundance.  No Peak Oil here.  He reminds me of Julian Simon (the Ultimate Resource ) who challenged Paul Ehrlich (The Population Bomb) in a famous 1980 bet on the price of various metals and natural resources.  Spare the 16 minutes it takes to watch Diamandis give a Ted talk.

The Future of College Admissions

Every year, thousands of students enroll at thousands of colleges in the US. Is the outcome of that process efficient? Or could students and colleges be matched in a way that makes everyone better off? Companies like ConnectEDU are building their business model on the answer being “Yes.” A recent article in the Washington Monthly ponders the future of the college admissions scene.

In 2009, the former Princeton University president William Bowen documented the pervasive problem of “under-matching” in higher education. Bowen examined a group of North Carolina high school students from across the income spectrum whose grades and SAT scores were good enough to get them into a top-tier university. Seventy-three percent of wealthy high performing students actually enrolled in such a university.

Only 41 percent of low-income high-performing students did the same. The under-matching rates for minority students and those whose parents never graduated from high school were similarly low. And under-matched students were significantly less likely to earn a college degree.

There are a number of reasons for this. Bad high schools usually lack the guidance counselors and visiting college recruiters that well-off students take for granted. Parents who haven’t been to college can’t use their experience to guide their children toward higher education. Plus, elite colleges are often very expensive and are becoming more so every year.

But there’s another culprit at work: the college admissions process itself. If you want to buy shares of stock, bid on antiques, search for a job, or look for Mr. Right in 2011, you will likely go to a marketplace driven by the electronic exchange of information. There will be quick, flexible transactions, broad access to buyers and sellers, and powerful algorithms that efficiently match supply and demand. If you are a student looking for a college or a college looking for a student, by contrast, you’re stuck with an archaic, over-complicated, under-managed system that still relies on things like bus trips to airport convention centers and the physical transmission of pieces of paper. That’s why under-matching is so pervasive. The higher education market only works for students who have the resources to overcome its terrible inefficiency. Everyone else is out of luck.

Though the article is a bit too long and meandering, it raises some very interesting questions, and it is not difficult to believe that the college admissions process is inefficient. How would it impact colleges if this process became much more efficient, and if information became much more easily available and usable? Would colleges become much more responsive to consumer needs?

The Washington Monthly also publishes rankings of colleges, based on three (equally weighted) criteria: “Social Mobility (recruiting and graduating low-income students), Research (producing cutting-edge scholarship and PhDs), and Service (encouraging students to give something back to their country).” Lawrence University comes in 99th overall (well below Beloit and Ripon), but ranks 46th in producing PhD’s (well ahead of Beloit and Ripon).

HT: Market Design

Coming Saturday: “The World Schumpeter Made”

Historian David Hounshell from Carnegie Mellon University will be on campus this weekend to deliver a talk, “The World Schumpeter Made: Innovation, Entrepreneurship, and the New Economy.”  Professor Hounshell has deep knowledge of the U.S. innovation system, and the talk will touch on who funds R&D and why it matters. If you would like to see him in action, here is a talk he gave at the Kaufman Foundation last year: “Innovation and the Growth of the American Economy.”

Professor Hounshell is a pretty good source for this type of insight. He literally wrote the book on the  genesis and evolution of the U.S. industrial system with From the American System to Mass Production, 1800-1932.  Murray Rothbard himself had this to say about Hounshell’s influence:

Until recent years, the history of technology used to be written, and taught, for its own sake and almost completely isolated from economic and social history…

This tiresome tradition came to a sudden end with the arrival of the fascinating and crucially important work of David A. Hounshell, From the American System to Mass Production, 1800-1932, which created a new paradigm dominating the field of American technological history.  Hounshell’s achievement was to integrate technological with economic and social history, and bring us, for the first time, a genuine history of the development of mass production.  Thus, for example, in his pioneering history of the bicycle industry of the 1890s, Hounshell showed that the bicycle was, in two ways, a critical prelude to the invention and development of the automobile because, (1) the bicycle taught consumers the possibility and the joy of individual mobile transportation (in contrast to the mass transportation between fixed points essential to the railroad; and (2) it taught bicycle makers the technology of the wheel, the tire, and the axle. It is no accident that the first automobiles were made in bicycle shops.*

In addition to the opus on mass production, Professor Hounshell is also steeped in studying industrial research and development, including a definitive piece on DuPont:  Science and Corporate Strategy: Dupont R&D, 1902-1980.  This work chronicles corporate strategy and innovation, and has been described as “one of the most comprehensive business history books ever written.”

Of course, he continues to keep busy, and his talk Saturday will incorporate some of his current work on the evolution of industrial innovation.  I am looking forward to hearing what he has to say.

Professor Hounshell’s talk is at 4:30 in the Warsh Campus Cinema.  We hope to see you there.

Schumptoberfest is here

This year’s turbocharged Schumptoberfest is also known as the ACM workshop on Innovation and Entrepreneurship in the Liberal Arts Curriculum. You can find the program online at www.schumptoberfest.com, or click on the posters below. The keynote address is open to the public, and you wouldn’t want to miss it if you are on campus. If you are interested in some of the other sessions, talk to Professor Gerard or Galambos.

Blooming entrepreneurship

If you’d like to find a shining example of an entrepreneur who is a Lawrentian (and an Economics major to boot), I suggest you google Abir Sen. The most recent news item that will show up is this Bloomberg report announcing that WellPoint, the largest insurer, is buying most of Bloom Health, which Abir founded and has been leading as CEO. Before this venture, he co-founded RedBrick Health, another innovative health care company. But wait, there is more. From the Bloom Health website:

Before co-founding RedBrick Health, Abir co-founded Definity Health and was part of the team that invented the Personal Care Account, the predecessor to the Health Savings Account. Abir has also worked as an advisor to Fidelity Investment’s Health and Welfare Business, where he helped launch Fidelity’s benefit consulting business. He began his career at Deloitte Consulting, where he advised large managed care organizations and integrated delivery systems on M&A and turnaround strategies.

Abir has a B.A. in Economics from Lawrence University and an M.B.A. from the Harvard Business School. Other than health care, Abir’s interests include aviation, border collies and U2.

Those of you who have had the chance to meet him on campus know that he is a great guy to talk to. He is a great believer in the liberal arts education, which he has been able to apply to solving problems in the world. If we’re lucky, we might see him on campus again this year, so look for his name on this channel.

Innovation and Entrepreneurship Ride to the Rescue

Although there is some disagreement amongst economists, many argue that traditional monetary and fiscal policy will not take the US economy from its current relatively stagnant state to the robust growth needed to employ many of the 8 million who were unemployed during the recent recession as well as the new entrants into the labor force.  As those in Intermediate Macroeconomics learned, since we add roughly 1.5 million people to the work force each year, we need about that number of jobs just to keep  unemployment from worsening.

As several studies from the Kauffman Foundation have shown, the vast majority of new jobs created in the United States come from new firms (that is firms that are five years old or younger),  not from large firms or small firms and not from governments.  In recent years, fewer new firms have been created than  in the past, and each of these firms has generated fewer jobs than in the past.  The Kauffman Foundation has put together a non-partisan “Startup Act Proposal” to jump start the economy.  It is entitled “Access to Capital: Fostering Job Creation and Innovation Though High-Growth Startups.”   The four key provisions are as follows:

1.  Provide a permanent capital gains exemption to investment in startups held for at least five years.

2.  Reduce the corporate tax burden for new companies in the first three years they have taxable income. (This may be already doable under subchapter S of the corporate tax code.)

3.  Reduce Sarbanes-Oxley requirements for firms with less than  $1 billion in market capitalization.

4.  Subject federal regulation to 10 year sunset.

Carl Schramm and Robert Litan, on behalf of the Kauffman Foundation also argue for removing the caps on skilled immigrants and immigrant driven entrepreneurial ventures.

These are intriguing ideas.  They should encourage Lawrence students to sample our Innovation and Entrepreneurship courses.  Check out Schramm and Litan’s presentation last week to the National Press Club.