Entrepreneurship – Page 99 – artdiamondblog.com

Income Inequality Makes People Happy When It Gives Them Hope

(p. A19) If the royal family were to utilize Kate’s background to help encourage and spread this culture of entrepreneurship, the effects in Britain–and possibly much of the world–could be incredible. The people of the United Kingdom would be much richer, and not just in material terms. “Earned success gives people a sense of meaning about their lives,” writes the social scientist Arthur Brooks, who is president of the American Enterprise Institute think tank.

Indeed, studies show that in both the U.S. and U.K., many blue- and white-collar workers prefer to have the opportunity to advance, even if this means a less equal income distribution. A study of thousands of British employees by Andrew Clark, associate chair of the Paris School of Economics, found that measures of these workers’ happiness actually rose as their demographic group’s average income increased relative to their own.

These findings suggests that as people see members of their peer group gain wealth–even surpassing them–it gives them hope that they can improve their lot as well. As Mr. Clark put it in his study of British workers, “income inequality . . . need not be harmful for economic growth” if it “contains an aspect of opportunity.”

For the full story, see:
JOHN BERLAU. “The Entrepreneurs’ Princess; For centuries in Britain, commercial activities were looked down upon by the aristocracy, whose wealth lay in landownership.” Wall Street Journal (Thurs., APRIL 28, 2011): A17.

“When We Get ‘Out of Book,’ We Are at Our Most Human”

Source of book image: http://www.turingfilm.com/wp-content/uploads/2011/03/11-3-18-The-Most-Human-Human.jpg

To be an innovative entrepreneur is to “get out of book” in the language well-expressed below.

(p. A17) In chess, computers are strongest in the parts of the game in which human players rely most on memory: the opening and closing sequences. (Serious players learn strategies by rote, and the early stages of even grandmaster games contain few surprises for the cognoscenti.) Knowledge of these tried and tested moves is called “the book.” By the middle section of a game, however, the number of permutations of moves is too vast for memorization to help. Here players need to get “out of book” and act unexpectedly, which is why computers–even Deep Blue–can struggle.

Mr. Christian elaborates on this distinction and applies it to human intelligence in general. For isn’t it precisely when people refuse to get “out of book”–just following orders or playing their role–that we find them least human? Likewise, when we get “out of book,” we are at our most human. Think of the difference between the waiter who runs through the usual routine and the one who responds to your order with a witticism. Remaining alive to what is mechanical or original in our own behavior can preserve a sense of human difference.

For the full review, see:
JULIAN BAGGINI. “BOOKSHELF; More Than Machine; No computer has yet to pass the Turing Test, fooling judges into believing its responses come from a person.” Wall Street Journal (Tues., MARCH 8, 2011): A17.

“The Internet Is Really the Work of a Thousand People”

Paul Baran. Source of photo: online version of the NYT obituary quoted and cited below.

(p. A23) In the early 1960s, while working at the RAND Corporation in Santa Monica, Calif., Mr. Baran outlined the fundamentals for packaging data into discrete bundles, which he called “message blocks.” The bundles are then sent on various paths around a network and reassembled at their destination. Such a plan is known as “packet switching.”

Mr. Baran’s idea was to build a distributed communications network, less vulnerable to attack or disruption than conventional networks. In a series of technical papers published in the 1960s he suggested that networks be designed with redundant routes so that if a particular path failed or was destroyed, messages could still be delivered through another.
Mr. Baran’s invention was so far ahead of its time that in the mid-1960s, when he approached AT&T with the idea to build his proposed network, the company insisted it would not work and refused.
. . .
Mr. Baran was also an entrepreneur. He started seven companies, five of which eventually went public.
In recent years, the origins of the Internet have been subject to claims and counterclaims of precedence, and Mr. Baran was an outspoken proponent of distributing credit widely.
“The Internet is really the work of a thousand people,” he said in an interview in 2001.
“The process of technological developments is like building a cathedral,” he said in an interview in 1990. “Over the course of several hundred years, new people come along and each lays down a block on top of the old foundations, each saying, ‘I built a cathedral.’
“Next month another block is placed atop the previous one. Then comes along an historian who asks, ‘Well, who built the cathedral?’ Peter added some stones here, and Paul added a few more. If you are not careful you can con yourself into believing that you did the most important part. But the reality is that each contribution has to follow onto previous work. Everything is tied to everything else.”

For the full obituary, see:
KATIE HAFNER. “Paul Baran, Internet Pioneer, Dies at 84.” The New York Times (Mon., MARCH 28, 2011): A23.
(Note: ellipsis added.)
(Note: the online version of the obituary is dated March 27, 2011.)

Does Montessori Nurture Creativity?

Ironically, the Montessori educational approach might be the surest route to joining the creative elite, which are so overrepresented by the school’s alumni that one might suspect a Montessori Mafia: Google’s founders Larry Page and Sergei Brin, Amazon’s Jeff Bezos, videogame pioneer Will Wright, and Wikipedia founder Jimmy Wales, not to mention Julia Child and rapper Sean “P.Diddy” Combs.

Is there something going on here? Is there something about the Montessori approach that nurtures creativity and inventiveness that we can all learn from?
. . .
The Montessori Mafia showed up in an extensive, six-year study about the way creative business executives think. Professors Jeffrey Dyer of Brigham Young University and Hal Gregersen of globe-spanning business school INSEAD surveyed over 3,000 executives and interviewed 500 people who had either started innovative companies or invented new products.
“A number of the innovative entrepreneurs also went to Montessori schools, where they learned to follow their curiosity,” Mr. Gregersen said. “To paraphrase the famous Apple ad campaign, innovators not only learned early on to think different, they act different (and even talk different).”
When Barbara Walters, who interviewed Google founders Messrs. Page and Brin in 2004, asked if having parents who were college professors was a major factor behind their success, they instead credited their early Montessori education. “We both went to Montessori school,” Mr. Page said, “and I think it was part of that training of not following rules and orders, and being self-motivated, questioning what’s going on in the world, doing things a little bit differently.”
Will Wright, inventor of bestselling “The Sims” videogame series, heaps similar praise. “Montessori taught me the joy of discovery,” Mr. Wright said, “It’s all about learning on your terms, rather than a teacher explaining stuff to you. SimCity comes right out of Montessori…”
Meanwhile, according to Jeff Bezos’s mother, young Jeff would get so engrossed in his activities as a Montessori preschooler that his teachers would literally have to pick him up out of his chair to go to the next task. “I’ve always felt that there’s a certain kind of important pioneering that goes on from an inventor like Thomas Edison,” Mr. Bezos has said, and that discovery mentality is precisely the environment that Montessori seeks to create.
Neuroscience author Jonah Lehrer cites a 2006 study published in Science that compared the educational achievement performance of low-income Milwaukee children who attended Montessori schools versus children who attended a variety of other preschools, as determined by a lottery.

Source:
Peter Sims. “The Montessori Mafia.” http://blogs.wsj.com/ideas-market/2011/04/05/the-montessori-mafia/ Posted: April 5, 2011, 10:57 AM ET
(Note: ellipsis between paragraphs is added; ellipsis at the end of a paragraph was in the original.)

The reference for the Science article mentioned above is:
Lillard, Angeline, and Nicole Else-Quest. “Evaluating Montessori Education.” Science 313, no. 5795 (September 29, 2006): 1893-94.

Are Small Bets Enough to Get Breakthrough Innovation, Or Do You Usually Need Big Bets?

Source of book image: online version of the WSJ review quoted and cited below.

I am dubious of the main thesis of the book discussed in the review quoted below. But it sounds like an interesting read.

“I’ll be happy to give you innovative thinking,” a bedraggled employee tells his boss in a classic Leo Cullum cartoon. “What are the guidelines?”

Guidelines are what Peter Sims seeks to provide in “Little Bets,” an enthusiastic, example-rich argument for innovating in a particular way–by deliberately experimenting and taking small exploratory steps in novel directions. Some little bets will not pay off, of course, in which case little is lost; but others may pay off in big ways.
. . .
The point is that good (or even just delicious) ideas rarely emerge fully formed, like Athena from the head of Zeus; rather they evolve in a discursive and unpredictable fashion. The challenge is to enable this process rather than squelch it because it is hard to manage or because its results are hard to predict.
Light, bright and packed with tidy anecdotes, “Little Bets” feels at times like a motivational speaker’s presentation. Its claims are often attractive, but the analytical apparatus can be shaky: correlation is confused with causation; counter-evidence is ignored (such as those who put down small bets but never enjoy large returns); the role of circumstance or luck is underestimated; and some facts seem cherry-picked to push the message.

For the full commentary, see:
DAVID A. SHAYWITZ. “BOOKSHELF; Where the Action Is; Taking small exploratory steps and ‘prototyping,’ as when Chris Rock tests out jokes at obscure comedy clubs.” The Wall Street Journal (Fri., APRIL 22, 2011): A11.
(Note: ellipsis added.)

The book under review is:
Sims, Peter. Little Bets: How Breakthrough Ideas Emerge from Small Discoveries. New York: Free Press, 2011.

“If We Actually Want to Change Anything–Dedicate Our Lives to It–We Need to Make Money Doing It”

“The underground market seeks to encourage food entrepreneurship by helping young vendors avoid the costs — including for health permits and liability insurance — required by legitimate farmers’ markets. Neil Davidson prepared part of a Hawaiian breakfast dish for a customer.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) SAN FRANCISCO — . . .
. . .
At midnight, the smell of stir-fried pork bellies was wafting through the Mission district. There was live music, liquor, bouncers, a disco ball — and a line waiting to sample hundreds of delicacies made mostly on location, among them bacon-wrapped mochi (a Japanese rice paste) and ice cream made from red beets, Guinness and chocolate cake.
In a sense it is civil disobedience on a paper plate.
The underground market seeks to encourage food entrepreneurship by helping young vendors avoid roughly $1,000 a year in fees — including those for health permits and liability insurance — required by legitimate farmers markets. Here, where the food rave — call it a crave — was born, the market organizers sidestep city health inspections by operating as a private club, requiring that participants become “members” (free) and sign a disclaimer noting that food might not be prepared in a space that has been inspected.
. . .
(p. A12) Where psychedelic drugs famously transported another self-conscious San Francisco generation, the rebel act of choice by Valerie Luu, 23, a first-generation Vietnamese chef, is deep-frying string cheese in a cast-iron pan.
“When I was their age I was doing drugs and going to rock shows,” said Novella Carpenter, an urban farmer and author who recently got into a spat with the City of Oakland for selling chard and other produce at a pop-up farm stand without a permit. “That’s not their culture,” she continued. “Their culture is food — incredible yummy-tasting food.”
. . .
The underground market here, which also has a less chic daytime component, was started by Iso Rabins, 30, the founder of ForageSF, a company that began with foraging walks and dinners featuring dishes like wild nettle soup with crème fraiche.
He started in 2009 from a private home after observing that many friends could not afford to sell at farmers markets, which requires business and product liability insurance (around $250), space rental ($40 to $55 a day), yearly member fees (around $110), and a health and safety permit (about $500). The use of commercial kitchens would cost an additional $45 to $75 an hour, Mr. Rabins noted, and making jam can take eight hours or more. “The small-batch economics just don’t work,” he said.
The goal is to be an incubator for culinary start-ups, and be a profit-making venture. Vendors pay $50 to reserve a cooking space and return 10 percent of sales over $500 to ForageSF. “The feeling in the food community is that if you’re making money, it’s not something you’re passionate about,” Mr. Rabins said. “But if we actually want to change anything — dedicate our lives to it — we need to make money doing it,” he said.
Amateur cooks around the country are pushing to have the right to sell unlicensed goods directly to consumers. So-called “cottage food” laws that allow products considered nonhazardous, like pies and cookies, exist in 18 states, with five more considering similar legislation.

For the full story, see:
PATRICIA LEIGH BROWN. “They Gather Secretly at Night, and Then They (Shhh!) Eat.” The New York Times (Weds., April 15, 2011): A1 & A12.
(Note: ellipses added.)
(Note: the online version of the story is dated April 14, 2011.)

Italy’s Dynastic Capitalism “Is Built Around Loyalty, Not Performance”

“Carlo Altomonte, an economist, says that “Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 6) “I know that in the States, all Mediterranean countries get lumped together,” says Carlo Altomonte, an economist with Bocconi University in Milan. “But Italy’s problem isn’t that we have a lot of debt. It’s that we don’t grow.”
. . .
“There is no sense of what a market economy is in this country,” says Professor Altomonte. “What you see here is an incredible fear of competition.”
. . .
FIVE years ago, Francesco Giavazzi needed a taxi. Cabs are relatively scarce in Milan, especially at 5 a.m., when he wanted to head to the airport, so he called a company at 4:30 to schedule a pickup. But when he climbed into the cab half an hour later, he discovered that the meter had been running for more than 20 minutes, because the taxi driver had arrived soon after the call and started charging for (p. 7) his time. Allowed by the rules, but to Mr. Giavazzi, utterly unfair.
“So it was 20 euros before we started the trip to the airport,” recalls Mr. Giavazzi, who is an economics professor at Bocconi University. “I said, ‘This is impossible.’ ”
Professor Giavazzi later wrote an op-ed article denouncing this episode as another example of the toll exacted by Italy’s innumerable guilds, known by several names here, including “associazioni di categoria.” (These are different from unions, another force here, in that guilds are made up of independent players in a trade or profession who have joined to keep outsiders out and maintain standards, as opposed to representing employees in negotiations with management, as a union might.) Even baby sitters have associations in Italy.
The op-ed did not endear Professor Giavazzi to the city’s cab drivers. They pinned leaflets with his name and address at taxi stands around Milan and for the next five nights, cabs drove around his home, honking their horns.
“This is a country with a lot of rents,” says Professor Giavazzi, sitting in his office one recent afternoon, . . . “You need a notary public, it’s like 1,000 euros before you even open your mouth. If you’re a notary public in this country, you live like a king.”
For Mr. Barbera, as is true with every entrepreneur here, the prevalence and power of Italy’s guilds explains much of what is driving up costs. He says he must overspend for accountants, lawyers, truckers and other members of guilds on a list that goes on and on: “Everything has a tariff, and you have to pay.”
. . .
Italians, notes Professor Altomonte, are among the world’s heaviest consumers of bottled water. “Do you know why? Because the water in the tap comes from the government.”
The suspicion of Italians when it comes to extra-familial institutions explains why many here care more about protecting what they have than enhancing their wealth. Most Italians live less than a mile or two from their parents and stay there, often for financial benefits like cash and in-kind services like day care. It’s an insularity that runs all the way up to the corporate suites. The first goal of many entrepreneurs here isn’t growth, so much as keeping the business in the family. For a company to really expand, it needs capital, but that means giving up at least some control. So thousands of companies here remain stubbornly small — all of which means Italy is a haven for artisans but is in a lousy position to play the global domination game.
“The prevailing management style in this country is built around loyalty, not performance,” says Tito Boeri, scientific director at Fondazione Rodolfo Debenedetti, who has written about Italy’s dynastic capitalism.

For the full story, see:
DAVID SEGAL. “Is Italy Too Italian?” The New York Times (Sun., August 1, 2010): 1 & 6-7.
(Note: ellipses added.)
(Note: the online version of the article is dated July 31, 2010.)

“The clothier Luciano Barbera in his family’s “spa for yarn,” where crates of thread rest for months. Economists fear that such small-scale artisanship cannot sustain Italy’s economy forever.” Source of caption and photo: online version of the NYT article quoted and cited above.

If Countries Have Souls “Then America’s Is the Patent System”

Source of book image: http://yourbooksworld.com/images/Biographies/mr-gatlings-terrible-marvel.jpg

(p. 46) [Julia Keller] discusses Lincoln’s little-known interest in personally testing new Army weapons and, in a brilliant passage, rhapsodizes about creativity and the Patent Office: “If a country can be said to possess a soul, then America’s is the patent system: the simple, fair method of staking claim to a new idea and getting the chance to make money from it.”

For the full review, see:
MAX BYRD. “The Bullet Machine.” The New York Times Book Review (Sun., November 9, 2008): 46.
(Note: bracketed name added.)
(Note: the online version of the review is dated November 7, 2008.)

Book reviewed:
Keller, Julia. Mr. Gatling’s Terrible Marvel: The Gun That Changed Everything and the Misunderstood Genius Who Invented It. New York: Viking, 2008.

U.S. Holds “Edge in Its Openness to Innovation”

Source of book image: http://www.tower.com/tycoons-how-andrew-carnegie-john-d-rockefeller-jay-charles-r-morris-paperback/wapi/100346776?download=true&type=1

(p. 24) Judging by Charles R. Morris’s new book, “The Tycoons,” it takes about 100 years for maligned monopolists and “robber barons” to morph into admirable innovators.

Morris skillfully assembles a great deal of academic and anecdotal research to demonstrate that Andrew Carnegie, John D. Rockefeller, Jay Gould and J. P. Morgan did not amass their fortunes by trampling on the downtrodden or ripping off consumers – . . .
. . .
Though Morris only hints at it, the truth is that the real heroes of the American industrial revolution were not his four featured tycoons, but the American people themselves. I don’t mean this to sound like a corny burst of patriotism. In the 19th century, the United States was still young. Most families had either been booted out of Europe or fled it, and they didn’t care about tradition or the Old Guard. With little to lose, they were willing to bet on a roll of the dice, even if it was they who occasionally got rolled. Europe was encrusted with guilds, unions and unbendable rules. Britons took half a day to make a rifle stock, because 40 different tradesmen poked their noses into the huddle. American companies polished off new rifle stocks in 22 minutes.
The United States still holds an edge in its openness to innovation. In 1982, French farmers literally chased the French agriculture minister, Edith Cresson, off their fields with pitchforks because she suggested reform. By contrast, back in the late 1850’s, Abraham Lincoln was a hot after-dinner speaker. Was he discussing slavery? No. The title of his talk was “Discoveries and Inventions.” The real root of economic growth is not natural resources or weather or individual genius. It’s attitude, not latitude. The Austrian economist Joseph Schumpeter called innovations gales of “creative destruction.” Americans, not Europeans, had the gall to stare into those gales – with optimism.

For the full review, see:
TODD G. BUCHHOLZ . “‘The Tycoons’: Benefactors of Great Wealth.” The New York Times Book Review (Sun., October 2, 2005): 24.
(Note: ellipses added.)
(Note: the online version of the review has the title “‘The Tycoons’: Benefactors of Great Wealth.”)

Book under review:
Morris, Charles R. The Tycoons: How Andrew Carnegie, John D. Rockefeller, Jay Gould, and J. P. Morgan Invented the American Supereconomy. New York: Times Books, 2005.

In Greece It Is Illegal for Brewers to Produce Tea

“Demetri Politopoulos at his microbrewery in northern Greece. He says Greek leaders need to do more to make the country an easier place to do business.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. 1) DEMETRI POLITOPOULOS says he has suffered countless indignities in his 12-year battle to build a microbrewery and wrest a sliver of the Greek beer market from the Dutch colossus, Heineken.

His tires have been slashed and his products vandalized by unknown parties, he says, and his brewery has received threatening phone calls. And he says he has had to endure regular taunts — you left Manhattan to start up a beer factory in northern Greece? — not to mention the pain of losing 5.3 million euros.
Bad as all that has been, nothing prepared him for this reality: He would be breaking the law if he tried to fulfill his latest — and, he thinks, greatest — entrepreneurial dream. It is to have his brewery produce and export bottles of a Snapple-like beverage made from herbal tea, which he is cultivating in the mountains that surround this lush pocket of the country.
An obscure edict requires that brewers in Greece produce beer — and nothing else. Mr. Politopoulos has spent the better part of the last year trying fruitlessly to persuade the Greek government to strike it. “It’s probably a law that goes back to King Otto,” said Mr. Politopoulos with a grim chuckle, referring to the Bavarian-born king of Greece who introduced beer to the country around 1850.
Sitting in his office, Mr. Politopoulos took a long pull from a glass of his premium Vergina wheat beer and said it was absurd that he had to lobby Greek politicians to repeal a 19th-century law so that he could deliver the exports that Greece urgently needed. And, he said, his predicament was even worse than that: it was emblematic of the web of restrictions, monopolies and other distortions that have made many Greek companies uncompetitive, and pushed the country close to bankruptcy.

For the full story, see:
LANDON THOMAS Jr. “What’s Broken in Greece? Ask an Entrepreneur.” The New York Times, SundayBusiness Section (Sun., January 30, 2011): 1 & 5.
(Note: the online version of the article is dated January 29, 2011.)