Society will shape and determine the entrepreneur we know in the future. Today we have a new kind of problem. One consequence of the so-called information age, is that perfect information--once only a necessary (but operationally impractical) assumption of neoclassical economics--is approachable in many more sectors in major world economies.
As a result of this advance, and a global movement toward free trade, world-wide competition is an ever-expanding reality. Global competition, in combination with virtually perfect information in many sectors, means a more "perfect" market. But, a perfect market does not mean economic security. What we are seeing in today is a paradox.
For the players in the economic game, perfect markets turn out to create economic insecurity. Imperfect markets are the ones that yield a greater measure of economic security. Here's why. In a perfect market, the forces of supply and demand drive an economy toward maximum efficiency. Where there is too much demand, prices rise, thus attracting new players into the economic game. Where there is excess supply, prices fall, until a sufficient number of new buyers enter the market to eliminate the condition of over-supply. A perfect market thus drives an economy toward equilibrium--the equality of supply and demand. Unfortunately, where there is maximum efficiency, there is no profit.
In fact, it is only through market imperfections that profit opportunities occur. Market imperfections may be succinctly described as: Demand without supply, and Supply without demand. That is, where prices rise because of too much demand, but new players cannot get into the game to provide the extra supply needed, the existing players can make a profit (buy low--sell high). Or, where prices are falling because of excess supply, but new demand is discovered or created, a profit opportunity is also available to the discoverer or creator (also, buy low--sell high). More on this as it applies to entrepreneurship later.
Unfortunately for individual economic job security, the ascendence of free markets is eliminating many of the market imperfections that for years have provided predictable profits and jobs. For example, in the two decades immediately following World War II, both the German and the Japanese economies were in ruins. Consequently, the market imperfection (demand without supply) provided an unparalleled opportunity for the robust and unscathed economy of the United States and Canada to profitably and securely (but less efficiently) provide goods and services to these and other world markets--without much competition.
Today, the game has changed. With a more efficient market, economic players must respond with ever faster reaction times to shifts in the supply-demand calculus. Hire and fire decisions are made within a much narrower time window. Individuals who have depended upon large organizations for a job, are finding that "downsizing" and "right-sizing" mean less security for them. What, then, is needed?
With a more efficient market, comes the need for more efficient recognition and utilization of market imperfections, since market imperfections mean economic opportunity. The capacity to discover opportunity is the hallmark of the entrepreneur. What is needed is more entrepreneurial discovery. It seems clear that only through more entrepreneurship--where a new class individuals can become skilled at recognizing and responding profitably to the opportunities available in a more perfect market--will individual economic security (albeit on a different foundation) be experienced on the scale that existed in the two decades following World War II.
These new entrepreneurs must understand both the ground rules and nuances of creating and growing business ventures in order for security in a more-perfect-market to be possible. What, specifically, must be done to foster the rise and success of this group of new entrepreneurs? First, we need the right kind of market imperfections, and second, we need a change in our way of thinking.
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Dr. Ronald K. Mitchell is a specialist in entrepreneurial cognition, global entrepreneurship, and venture management. He developed the Entrepreneur Assessment which won the acclaimed Heizer Award for this groundbreaking research. Find out more entrepreneurs at http://www.venturecapital.org/
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