My New Entrepreneurship Book

I’m very pleased to announce the launch of my first book in the field of Entrepreneurship: “The Myth of the Idea and the Upsidedown Startup: How Assumption-based Entrepreneurship has lost ground to Resource-based Entrepreneurship”.

http://bit.ly/upsidedownstartup

Book Myth Idea (500Kb)

This brief 150 pages book is addressed to graduate students and practitioners around the globe. Resulting from years of work and observations, the book briefly summarizes what we have seen in the last few decades with regards to the creation of innovative new businesses, including Design Thinking, Effectuation and Lean Startup.

Although I started these observations by watching my father as the founder of many companies and by experiencing myself starting different businesses after that, the book was actually born in 2007, when I started my doctoral studies with a field trip to Haiti in search of clearer relationships between access to scarce resources and entrepreneurial innovation.

The book was written from the point of view of a young Brazilian researcher who had the chance to travel throughout more than 50 countries in the last years, while meeting with aspiring, successful and past entrepreneurs. The main point shown in the book rightly refers to the use of social resources such as contacts, experience, expertise and passions as the triggers of new businesses, edging out “The Idea” as the starting point of the entrepreneurial process.

With the support of FGV (Brazil) and IE Business School (Spain) the book will be launched around the world, with events organized initially throughout Europe and the Americas. You can engage with the book content here and also through these channels:

Facebook: https://www.facebook.com/upsidedownstartup
Twitter: @phdnew

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The Entrepreneurial Process by Alfred Marshall

While working on my book (in which I will talk about the global status of entrepreneurship and innovation today) I came across this extraordinary passage, from the economist Alfred Marshall (1842-1924) in the beginning of the last century. He describes the Entrepreneurial Process brilliantly, in just one paragraph, talking about the role of trust, resources, capital, credit, scale, marketing and innovation on it. Even luck (“assisted by some strokes of good fortune”) is covered, passing almost unnoticed at the beginning of the epic reported:

“An able man, assisted by some strokes of good fortune, gets a firm footing in the trade, he works hard and lives sparely, his own capital grows fast, and the credit that enables him to borrow more capital grows still faster; he collects around him subordinates of more than ordinary zeal and ability; as his business increases they rise with him, they trust him and he trusts them, each of them devotes himself with energy to just that work for which he is specially fitted, so that no high ability is wasted on easy work, and no difficult work is entrusted to unskillful hands. Corresponding to this steadily increasing economy of skill, the growth of his form brings with it similar economies of specialized machines and plants of all kinds; every improved process is quickly adopted and made the basis of further improvement; success brings credit and credit brings success; success and credit help retain old customers and bring new ones; the increase of his trade gives him great advantages in buying; his goods advertise one another and thus diminish his difficulty in finding a vent for them. The increase of the scale of his business increases rapidly the advantages which he has over his competitors, and lowers the price at which he can afford to sell.”

New ranking, book chapter and “crazy” papers

At this moment, exactly 2 years ago, I was finishing my PhD and heading to some great vacations in Iran with my wife. I gave myself these last 2 years of “peace” to think about new intellectual endeavors, after almost 5 years of struggle to keep up with that endless program.

I keep thinking about what to research, despite of not having time to do so. I love reading, thinking and debating about many things but mainly about education, entrepreneurship and emerging economies.

What annoys me most at this moment is that something keeps telling me that I should avoid spending time on traditional social science research. Traditional scientific process leads you to spend years to prove something very close to common sense and unfortunately I don’t have patience for that.

In my opinion, in social sciences, the consequences of this established modus operandi for research are perverse, with millions of dollars and thousands of people researching things that are useless and will probably never be applied at any group of people worldwide.

During the PhD, colleagues and professors kept telling me that I should just “follow the crowd” and try not inventing crazy research topics, methodologies or theories that would invariably lead me to fail in the program.

In summary, I had to learn how to do comprehensible and (mainly) publishable research, not setting myself too much apart from prevailing theories and methodologies. You just have to protect yourself with a “great” respectable theoretical framework and lot of stupid standardized SPSS statistics and everybody will be happy with your research. In my humble opinion, this is just the perfect way to screw with science.

Findings in social sciences are too much limited in time and place to justify the effort of spending years in something not much different from what has been said. In other sciences, when you are able to prove that cell Alfa produces protein Beta if exposed to Gamma rays, you’re clearly advancing in a field. But when you discover that certain human actions have some impact on specific organizations, this finding is very limited to a certain social group in a specific period of time. If it was not, economists, psychologists and sociologists would be able to predict economic downturns, human behavior or wars, for example.

Managing education and technology became a profession to me. Studying entrepreneurship – and its father capitalism – became a kind of a hobby: understanding this period of our history. Emerging economies won’t always be there to be researched. At the end, most of the economies of the world will be very similar by 2050. I don’t want to spend 5 years trying to prove that the obstacle X is responsible for the outcome Y in country Z, when this knowledge will certainly become useless in few decades.

Image

We have to produce fast and useful debatable knowledge about this. What’s the downside? That there are not right answers for our questions, I’m sorry. We will have to accept that the right answer doesn’t exist and all we can do is to get the closest we can from the answer, with multiple approaches.

So, for the next 10 months, if I’m lucky to keep healthy, I plan to give these three tiny steps to share with people interest in the subject: create a practical ranking for MBA students interested in investing their resources and careers in emerging economies, collaborate with a book about the Brazilian economy – hopefully with a nice chapter about “Entrepreneurship in Brazil”, and producing a couple of “crazy” papers discussing about two things I’m interested in the field:

–          The positive impact of obstacles to entrepreneurs normally perceived as negative.

–          The death of the idea as the key starting point of an innovative business.

I won’t submit these texts to antiquate 20th century journals; I will simply share them with people interested in the subject – academics and practitioners – and then publish here for critics and consultation. I’m tired of bureaucracy.

ps: I took the picture from: http://delbertbikessouthamerica.blogspot.com.es/

The burden of size

I’m at the Lisbon airport, about to embark back to Madrid, where I’m living. During the last day of my trip around South America I had the opportunity to give an interview to one of the most important journalists of Uruguay, from the local newspaper El Pais. A person of great wisdom, with decades of experience interviewing people from all over the world.

It was truly a great pleasure to talk to him about Economic Sociology, Entrepreneurship and Emerging Economies. Together, we almost got to the conclusion that Uruguay could arguably not be considered an emerging economy, as we discussed about levels of corruption, bureaucracy and freedom to start a business in the country.

At certain point we caught ourselves wondering if violence and corruption in many places of Latin America weren’t easier to get hidden behind the crowds of the large and overpopulated cities. Murders and corrupt politicians (I put them in the same category on purpose) get protected by the anonymity within these large amounts of people, with illegal incidents flooding inefficient courts of justice incapable to solve problems before new ones arrive.

With little more than 3 million inhabitants, Uruguay has an upper class of about 300 thousand people. These people meet each other in theaters, movies and restaurants, knowing easily each other’s family members and actions.

Honor still has its value and people don’t want to see their names used in an inappropriate way. In Uruguay, it is still better to be a respectable medium or upper class citizen than a rich corrupt “ghost” that will have to avoid facing society and have his/her family and history marked.

I was thinking about corrupt and violent countries with small populations (there are plenty) to see if this naïve hypothesis would apply but it doesn’t. So the burden of size and the freedom to do wrong things in anonymity alone unfortunately does not explain these social problems. Religion doesn’t either. Education or lack of huge social inequalities perhaps?

What does religion have to do with Entrepreneurship?

Well, why is all of that religion discussion so important to me? Because you can’t understand most of the underdeveloped or developing economies of the world – and be able to dialogue with people living there – if you don’t consider under which social standards or value systems their logic are based on (I’m assuming you were raised in a western developed country).

What motivate their/our efforts? (I include myself here in the group of developing nations) What makes people to start profit-based or non-profit-based ventures there? If you simply rely on the fact that they/we are as capitalist as you, you will be incurring in a tremendous initial mistake. You won’t get their/our trust, and if you don’t get their/our trust you won’t make good business with them/us.

Here I show few superficial differences in starting ventures in emerging economies. Please, remember that these entrepreneurs were raised in the countries they started their ventures and therefore they were embedded in their local social systems. As an out-comer you would have to interpret their realities, something they did more naturally:

Why I joined the academy

I just gave an interview to the magazine of the business school where I did my Ph.D., FGV-SP Fundação Getulio Vargas de São Paulo. Since the interview will be published in Portuguese and only in São Paulo city, I think I could make it public in advance in English for people interested in some debate on entrepreneurship. Since it is a bit long, I will publish it in two parts: one today and another next week.

Reporter: Why did you decide to join the academy?
Newton Campos: Because I was dissatisfied with the loss of focus on the intellectual journey that I was having after the MBA. The MBA is an eminently practical training, but that indirectly makes you think too much in the development of capitalism worldwide. I started reading authors each day more interesting and more complex, but could not follow an investigative line that could kill my doubts, I felt I needed guidance to facilitate my intellectual evolution and realized that the academic career would be one of the few which would value this type of questioning. So I started the doctoral program in 2006.

Reporter: What was your research question? I wanted a brief summary of your dissertation.
Newton Campos: My research was directed to the social context that surrounds the entrepreneurs during the development of their businesses in Latin countries. As “social context” one may consider the entire network of contacts established or used for business success. I need to clarify that I do not consider entrepreneur those who own small businesses or companies, these are micro or small business owners to me, which eventually may even become entrepreneurs. The research tradition that I follow considers entrepreneur only that person or group of people who innovate during the process of building a project or an organization. Plus, this innovation has to be considered socially or financially successful, otherwise we neither would be talking about an entrepreneur yet. Moreover, much of the existing literature on entrepreneurship in 2006 also put the entrepreneur in a “developed” social context, usually the U.S. or Europe, where the “rules of the game” (market rules and institutional ones) are established in a specific manner, usually very different from the rules that exist in different parts of the world. It was from this observation that I got my research question: How does the social context influences the entrepreneurs at the beginning of their enterprise in a developing country? But the claim was only one stage in the search for this response. During the search, before I even started the dissertation I made a trip to pre-earthquake Haiti (in 2007) to see if it would be possible to observe innovative entrepreneurs in a social context as politically and socially unstable as in a country like Haiti, which was already at that time among the 10 world’s poorest countries. To my surprise I found many innovative entrepreneurs, some even known throughout the Caribbean. Amazingly, the market innovation was there, present in one of the most miserable places on earth. After that, in the thesis itself, I did a comparative study between two countries relatively similar from a cultural standpoint, but different in terms of social and institutional development: Brazil and Spain.

In the next part of interview I will talk about findings and theoretical contributions of my research.

Can you teach and learn entrepreneurship?

I always felt bizarre within this emerging “industry” of entrepreneurship. After all, I consider myself a practitioner without much success up until now (up until now). Practitioners do not believe much in business academics and academics think they can explain, at least partially, the phenomenon. Actually, in my point of view, anyone can explain, at least partially, a social phenomenon, even if you use the most rigorous method available. I particularly like taxi drivers’ partial explanations of social phenomena, for example. So, I tend to give more credit to practitioners because at least they tried the things they say. I have met a lot of business people during the last 15 years and there is a justified controversy in the possibility of teaching and/or learning anything about entrepreneurship.

Academics, of course, must justify their salaries by swearing that it is possible to teach such a thing, or at least sparking the entrepreneurial spirit in people, whatever that means. I partially agree with them (here it comes this damn “partially” again). This very same dilemma is found on professors or speakers that teach people on how to make money in the stock exchange, for example. After all, if they know how to do that, why don’t they make money on the stock exchange instead of teaching?!?

Well, the answer is not that easy, like most of the things in life but is not encouraging as well. Last year, I went to an academic meeting about entrepreneurship and a very funny discussion came along. What do professors of entrepreneurship should answer if students question their ability to teach something they never did? That is a very pertinent question because 90% of the professors of entrepreneurship in the world never had a business in their lives (I already had 3, yeees! but I they were not innovative businesses and I barely made money with them, noooo!). Well, some may have worked as consultants for companies but I do not consider that a work, that is just a noble self-employed experience (anyone can give advice don’t you think?). Some professors had that answer on the tip of their tongues. According to them, the best golf player in the world may not be the best golf professor in the world. On the contrary, he may end up being a regular professor while another person, who studied and compared the movements of the best golf players ever but was never a good player himself can be a great professor. Good answer! Recently, I heard a much funnier version of this story told by a late Brazilian sports commentator who was also a great writer, Armando Nogueira. In fact, that is why I remembered this story in the US. According to him, “the sports commentator is like an eunuch in the harem: he knows everything about the sport but do not know how to play it”. Ahahahahah, that is a great and very Brazilian definition of this kind of situation!

I have to agree with these guys, their arguments are good, but still not enough I think, because it is frightening knowing that as an entrepreneur you can lose everything, injure people, degrade nature, etc, due to bad decisions you make. And this kind of things are very difficult to explain (although not impossible).

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