The Financialization Of The Economy Distorts Our Understanding Of The Entrepreneurial Ethic.

We have been led to think of the economy in financial terms: the stock prices of the largest companies, their quarterly earnings reports, trends in GDP, mergers and acquisitions, central bank money-printing and the prices of homes. This phenomenon is a reflection of the expansion of the financial sector of the economy – the investment banks, the brokerage houses, the stock markets, the hedge funds and the ETF platforms. But when the financial sector expands, it does so at the expense of the productive economy. More and more smart and talented people are engaged in trading certificates and designing derivatives and fewer and fewer are engaged in production of real goods and services.

Financialization makes the case that business and management are all about driving stock prices up, conducting arcane financial maneuvers like manipulating debt offerings, and finding new ways to trade financial instruments. It even has its own ideology: maximizing shareholder value.

For example, the notion of stock buybacks has become popular among the high-flying companies of this financialized age. Apple is a prime example. There are years in which Apple has spent more than 100% of its net earnings on buying back stocks from shareholders, thereby providing those individuals with a major cash bonus. Of course, a significant group to benefit from this action are those members of management who hold stock grants or stock options, which they buy back from themselves at a high return. 

Stock buybacks are self-serving stock price manipulation.

As Professor William Lazonick has pointed out, very famously in an article in Harvard Business Review under the title Profits Without Prosperity, but also in many bookspapers, and an open letter to the SEC, this action of stock buybacks undermines capital formation – companies spend their earnings on stock buybacks that help share traders, and underinvest in the capital that makes workers more productive and generates value for customers. Financialization in the form of maximizing shareholder value through dividends and share buybacks has distorted the true purpose of the firm, which is to facilitate value for customers, earn cash flows in return via the customers’ willingness to pay for that value, and to reinvest the earnings (cash flow minus cost) in more capital to facilitate more customer value.

Since it is so lucrative to manage a company that’s traded on a stock exchange, this form of financialization has led to a second-order distortion. Start-up businesses funded by venture capital and private firms seeking to monetize their growth by sprinting toward an IPO, i.e. for their stock to be traded on an exchange. The business model is to grow at a fast pace, at the expense of maturing a business model, or refining the value proposition through customer feedback. These companies “burn cash” – i.e. make operational expenditures far in excess of cash flow from sales to customers – in order to establish a price for their privately traded shares that could be translated to be a successful IPO. Examples like Uber, WeWork and Peloton show the many ways this financialized approach can fail, when growth is not underpinned by true customer value creation.

The True Entrepreneurial Ethic.

The greatest damage that financialization has done to capitalism is to distort our views of the entrepreneurial ethic that underlies the system. Many young people think that capitalism is exploitative and cynical, which is not an irrational view when confronted with corporate executives who award themselves stock grants and then implement stock buybacks to cash in on the stocks they awarded themselves. 

The reputational damage to free market capitalism is worsened by the association of the term “entrepreneurship” to the burn-cash-in-a-dash-to-IPO tactics of startups and Silicon Valley unicorns. Their behavior is not that of entrepreneurs. True entrepreneurship is the identification of a market opportunity defined as an unmet customer need: a customer’s unease about the status quo, the feeling that things could somehow be better than they are, without a specific idea of how to realize that betterment. The entrepreneurial business is the one that comes up with the welcome new way to relieve that unease, and to actually make the customer’s life better, as defined by their own subjective evaluation. If the entrepreneur gets it right, and does so better than any competitor in the eyes of the customer, then they trigger a willingness to pay for value received. Willingness to pay becomes cash flow, and if the cash flow is greater than the entrepreneur’s cost, there is profit to be reinvested in capital for more and even better services in the future. The ethic is to serve customers, and to accept the rewards of the market for doing so. 

If the owners and managers of the entrepreneurial firm get rich, it’s from an abundance of customer satisfaction, not from stock manipulation through share buybacks. They’ll accumulate capital, because capital is defined as assets that produce customer value. The more customer value they facilitate, the greater the value of the entrepreneur’s assets. That’s why entrepreneurial businesses reinvest most of their business’s profits to create more capital value in the future.

This entrepreneurial “flywheel” (as it’s characterized at the very entrepreneurial business known as Amazon) can be a virtuous cycle: serve more customers with more and better offerings, receive more cash flow, and reinvest the profits in new capital formation in order to serve more customers in better ways. Entrepreneurship raises all boats, and does so through the explicit purpose of serving customers’ needs.

The financial sector and the stock traders and stock sellers who think of business only in financial terms do entrepreneurial capitalism a great disservice.

191. Allen Mendenhall: Putting Humanness and Ethics Back Into Business Economics

We are living through a particularly bad moment in history for free markets and capitalism. Government, not business, is promoted as the solution to all problems. Young people have never known any other environment, and one of the consequences is the skepticism about capitalism that they learn in school, college, and university. One solution to this problem lies in better business education — shaping how young minds think about business by shedding light on the social and individual benefits of capitalism that might otherwise be deliberately shadowed by misinformation and misdirection.

Allen Mendenhall is leading the way with a new business curriculum at Troy University.

Key Takeaways and Actionable Insights

There are unmerited concerns among young people today about the ethics of capitalism and business.

Business is too often cast as the “bad guy” in the movie of life. Business is portrayed as exploitative and greedy, and businesspeople as self-serving. Historical scandals like Enron and WorldCom are cited as case studies. But this presentation is a caricature; there’s no evidence to support it. Business is the essential component of the capitalist system that has raised standards of living and quality of life all over the globe and especially in the West, where markets are somewhat freer.

Business didn’t have the same bad rap in the past. In the nineteenth century, there was a great celebration of the civilization-advancing commercial republic powered by the protestant work ethic. The image of the businessperson was a positive trope — it was a good role to be a businessperson creating value for others. Businesspeople were the good guys. They innovated, collaborated and served. We’ve lost that imagery.

A lot of the unmerited concern emanates from educational institutions, especially universities.

Who is teaching young Americans to be skeptical about capitalism and business? A large portion of the blame goes to educational institutions, and especially universities. There’s an anti-business and anti-capitalism bias among the teaching profession in higher education that is communicated to students.

In this academic anti-business campaign, there’s a special role for economists, who have dehumanized economics by trying to make it a mathematical science. All their equations and computer models have the effect of taking humanness — the role of subjectivism, individual preference, and individualized emotion — out of economics. They try to reduce human behavior to a predictive data-driven algorithm.

The heritage of economics is humanizing.

The mathematical approach to economics is not the tradition of the Austrian school approach, which embraces a humanizing perspective. Commerce cultivates virtue; the pursuit of honorable profit leads businesses to act with good faith and integrity in joining with partners to produce products and services that are valued and welcomed by customers because they serve their ends in their search for betterment in their lives.

The concept of honorable profit is often alien to students, and requires new learning: that profit is an emergent result of all the detailed interactions of individuals in a market, sending price signals to producers to indicate what society wants them to produce. Profit is a result of these signals indicating that society wants the producers to continue offering their goods and services.

Understanding value is central to understanding the ethics of capitalism.

The emergence of profit is an outcome of the generation of value for customers. Value is central to the ethics of business, and Professor Mendenhall’s new course at Troy University places it squarely in the center. Value is subjectively determined by the customer, and the purpose of business is to help them realize the value they seek with the right products and services responsive to their wants, preferences and goals.

But here’s where the plot twists. The big corporate business community — representing less than 1% of businesses by count but the biggest proportion of GDP by dollar revenues – has been incentivized by Wall Street to pursue shareholder value (goosing stock prices) and stakeholder value (the diversion of value away from customers in favor of non-customer interest groups). Value for customers and even profit now takes a back seat to supposedly serving constituencies such as climate activists, victim groups, and, of course, government. Stakeholder value can act as cover for the CEO who fails to generate profit: they can claim to be focused on socially more important things.

The generation of value for customers, guided by the confirmation signal of profit, is no longer primary — except in Professor Mendenhall’s Troy University curriculum.

The perspective of entrepreneurship can help students appreciate ethical business.

While young people express disdain and distrust for capitalism, they often have a more positive attitude about the concept of entrepreneurship. They realize that entrepreneurs are problem solvers, and that they add value to people’s lives. People benefit from the risks entrepreneurs take and the personal sacrifice they make. Entrepreneurial innovation makes lives better.

Students appreciate this, and can even identify some corporate CEO’s to whom they are willing to grant ethical approval — individuals such as John Mackey or Richard Branson. And many young people see entrepreneurship as aspirational — they want to start their own businesses and make a lot of money (i.e., profit!). Looking at business from an entrepreneurial perspective generates more positive attitudes, and we can show that all businesses started entrepreneurially, and are sustained by their continuing entrepreneurial performance, i.e., profitably delivering value for customers. If there are questions about corporate ethics, they relate to their non-entrepreneurial functions — such as HR (whence a lot of corporate wokeness emanates), legal (the people who write the opaque and deceptive terms and conditions that justify surveillance), finance (directing activities like stock buybacks that divert value from customers), and compliance (keeping corporations closer to government and more distant from markets).

Part of Allen’s approach to his students is to teach the entrepreneurial mindset — not just for business, but for life in general. He calls it “unleashing the inner entrepreneur” and includes what he calls “the economics of your dreams”, the secret of win-win, the creativity of the market, the entrepreneurial principles of career building, starting a profitable business, and character and leadership.

He also covers personal finance skills — developing knowledge of stocks and bonds and mutual funds and other financial instruments, insurance, retirement planning (even at age 18!), investing, spending, and, of course, personal management of student loans. It’s the entrepreneurial approach to life.

We should develop a new value proposition for business schools as humanness schools.

Business schools today are part of the problem. They don’t focus enough on how business can be the catalyst for positive change. They should be committed to solving problems affecting not just business, but humanity as a whole. But reading business school leaders’ and graduates’ speeches and their books demonstrates that they’re not trying to help humanity as a whole but a few selected businesses and a few particular industries. They’re not dedicated to helping ordinary people, as they should be.

Allen’s new curriculum aims to redress that imbalance.

Additional Resources

“Corporate Wokeness Hurts The Groups It Purports To Help” (AEIR) by Allen Mendhall:

“Troy professor: Students ‘very enthusiastic’ over anti-woke business scholars program” (Yellowhammer News) by Dylan Smith:

Allen Mendenhall on Fox Business—”Ending Wokeism in the Corporate World”:

106. Mauricio Miller: Entrepreneurship as the Path Upwards From Anywhere, for Anyone

Entrepreneurship is the best pathway for all people out of unsatisfactory economic circumstances.

Mauricio Miller, who arrived in the US as a poor immigrant from Mexico, and who also experienced living in some of America’s worst neighborhoods, spent over 20 years running social services for people growing up and living like he did. His conclusion: social services are the worst policy for such people. It is entrepreneurship that will open up the pathway out of the neighborhoods and out of the traps of low income and limited prospects. Entrepreneurship lifts up individuals, families, and communities.

Key Takeaways & Actionable Insights

Job creation programs are not the answer. In the US, people can get jobs, but they are often on a dead-end track that doesn’t generate learning or leverage-able experience — waiter, assistant, security guard, etc. Outside the US, even these jobs might not be available. Often, people with these jobs are entrepreneurs “on the side”, exchanging in the informal economy. This is just another indicator how important entrepreneurship is to upgrading people in low-income situations.

Entrepreneurship is inherent in people.

Is entrepreneurship hard? Is it too daunting for some? Does it require skills that only special people possess? Absolutely not. People have the capacity, the capability and the creativity. They are typically smart and determined. The requirement is simply to let that come out — to remove the constraints. Entrepreneurship is already inherently there.

Furthermore, people are motivated for entrepreneurship. Everyone has a particular talent, or at least their own interests, and they always perform better when they’re working on what interests them. And people want to run their own life, and make their own decisions.

Release the constraints.

The constraints that face them trace to being stereotyped and labeled, and these are barriers to credibility. Reduced credibility makes it hard to institute relationships, establish partnerships, to get loan financing, and generally to build the network support and capital required to advance their businesses. Mauricio says that if we don’t label them, and simply let talent and commitment shine through, all kinds of people can demonstrate entrepreneurial potential and achievement.

Entrepreneurial achievement and success will emerge when people are unconstrained.

How does the entrepreneurial movement get started? Naturally, and without intervention. In any community, there will be one or more individuals who become “leading lights” in the sense of trying something unusual or unprecedented, and succeeding. The definition in sociology and innovation diffusion theory is “positive deviants” — those who deviate from the norm or from history with a successful outcome. Leading lights is a better term.

The leading lights are followed by early adopters, who see a strategy that is successful and copy it or follow it. Then comes community support, which Mauricio characterizes as mutuality — everyone in the community eager to help anyone who can demonstrate success.

In his book The Alternative, Mauricio tells the story of Ted Ngoy, a Cambodian immigrant to the Los Angeles area of California who got a job at Winchell’s donut chain. He quickly absorbed the techniques of donut making and decided to open his own shop. Members of the community pooled savings to provide equity capital to buy equipment. The single store became successful and Ted opened more. The mutuality of the neighborhood was activated and neighbors became delivery drivers and ingredient wholesalers and came together as a supply chain and value creation network.

The word spread across California and Cambodian immigrants in San Francisco and elsewhere started reproducing Ngoy’s strategy. In a more general sense, the learning is: people, whoever they are, can start and run a business and make some money and become independent.

A new mindset: No plan, no policy, no structure, no institutionalization.

Mauricio’s key insight is that any intervention by government or charities or social services that aims to provide a plan or a process or a structure or to configure institutionalized support is not only not needed, it is destructive. It distorts and undermines the natural human motivations and drives that people draw on in entrepreneurship. The opposite approach — or no approach — is the best. Honor the natural preference of communities for self-help and sharing — mutuality as Mauricio has named it — and let them discover the pathways for themselves, find the knowledge, pool the savings, get access to the technology, use their network to connect to the needed skills.

Entrepreneurship is catching.

Once the bright lights shine, once the positive deviants emerge, once the early adopters find follow-on success, once the natural mutuality builds the supply chain and the support network, no intervention or encouragement or policy is required. Stand back and admire.

Additional Resources

The Alternative: Most of What You Believe About Poverty Is Wrong by Mauricio Miller: Buy it on Amazon

Family Independence Initiative:

Community Independence Initiative:

Mutuality Platform: Click Here

The Austrian Business Model (video):

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99. Scott Livengood Reframes Entrepreneurship for New Audiences

Why isn’t everyone an entrepreneur? Perhaps we don’t explain it well enough or in language that lets everyone in on the wonders and the thrills of the pursuit of new economic value.

Scott Livengood chooses reframing — thinking in new and different ways about an established concept — to widen the audience for entrepreneurship.

Key Takeaways & Actionable Insights

Reframing entrepreneurship in the context of popular culture.

Scott recently published a multimedia e-book called The Startup of Seinfeld. In the book he articulates a comprehensive survey of concepts and principles of entrepreneurship, including the entrepreneurial mindset, risk and uncertainty, intellectual property, business models, planning, finance, and many more.

The cultural frame Scott selected is everyday city life as illustrated by the characters and situations and market interactions in 180 episodes of Seinfeld. In Scott’s hands, this is not a show about nothing, but about entrepreneurship.

The multimedia approach is facilitated by a series of links in the e-book to YouTube video clips of short scenes from multiple Seinfeld episodes that are illustrative of entrepreneurial concepts and principles. You’ll find the concepts of economic calculation, opportunity, product design, arbitrage, intellectual property, judgment, planning, uncertainty, and several more. The text accompanying the videos is an exposition of economic principles underlying these concepts.

There’s a lot to learn, and it’s fun! A major point to take away is that entrepreneurship is everyday life: people imagining new ways to serve others and meet their needs, and employing design and economic calculation, judgment under uncertainty and marketing and communications to facilitate a valuable exchange.

Reframing the teaching of entrepreneurship and strategy.

The philosophy underpinning the teaching method in the e-book has been forged in the university classes and seminars that Scott teaches, and for which he prepares meticulously and conducts comparative research into learning and teaching effectiveness.

He has found that embedding the principles of entrepreneurial economics and business strategy in cultural iconography illustrated via multimedia technology results in a significant increase in student engagement, participation, learning, and understanding. Humor, for example, is a language and a style that can draw students in, engage them at a deeper level of curiosity, and help to deliver the serious economic message.

This kind of approach helps students think of entrepreneurship as more of a normal life choice for themselves — a life of creative problem-solving. Students can think about their ends and the means open to them in a different way. If they are inclined to “social entrepreneurship”, they can learn that that simply means a distinctive identification of ends, without any attempt to operate outside the profit-and-loss system of sound entrepreneurial practice.

Reframing entrepreneurship for the disadvantaged.

Scott’s ultimate test for reframing entrepreneurship for a different audience in a different culture has been presented by his teaching for Education for Humanity. This is group associated with his university, Arizona State, and dedicated to helping displaced refugees. These students who are displaced from their homelands by war and conflict and find themselves in refugee camps in countries that are alien to them, like Uganda and Lebanon. Their prospects for further education are narrow. What are the pathways out of the poverty and restrictions of refugee camp life?

Scott’s chosen task is to teach them entrepreneurship. Where to start? The basis is empathy — digging deep to understand their situation, circumstances, and context, and understanding them as individuals and identifying their needs and wants. Language becomes critical — using concepts and examples they can relate to.

It’s contextually impractical to teach entrepreneurial finance in terms of bank loans and venture capital. But Scott can teach individual and family budgeting: how to calculate and manage income and expenditures, how to save, how to build up sufficient savings to make a capital purchase, and how to generate an income stream from that capital. The particular capital artifact may be a second cow for a head of household that uses the first one for feeding the family. The family has knowledge and skills in milking and animal husbandry that can be put to use in their new entrepreneurial business of selling milk and dairy products to other families, or bartering for other kinds of nourishment.

Eventually, the family may advance to the use of micro-loans or other forms of micro-finance and expand their entrepreneurial holdings. Scott can now teach about the trust nexus of paying interest and paying back loans, and about return on investment and capital accumulation. Progress comes quickly as a result of starting in the right place.

Entrepreneurial communities.

One of Scott’s realizations has been the power of entrepreneurial communities. In the refugee camps, family entrepreneurs collaborate, learn together, assist each other, and seek to raise the prospects of the entire community. Failure to pay back a loan, for example, would be a setback for the group, and group norms and institutions arise to guard against such a loss of trust.

Scott sees direct application of this learning about normative entrepreneurial community action in other parts of the world, including rural communities here in North and Central America, and in the inner city initiative of Entrepreneur Zones in the US.

By embedding entrepreneurship in culture, the collaborative service ethic emerges more clearly and emphatically.

Free Downloads & Extras From The Episode

Enjoy Scott Livengood’s book about the culture, concepts, and principles of entrepreneurship: The Startup Of Seinfeld: A Multimedia Approach to Learning Entrepreneurship: Get It Here

Read the work of Nobel prize-winner Edmund Phelps, mentioned in the podcast introduction, on Mass Flourishing and economic Dynamism.

“The Austrian Business Model” (video):

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76. S-E-R-V-I-C-E Warriors and the Individual Economy, with Jeff Saperstein

Entrepreneurship is the new strategy – for companies big and small, new and old, for individuals and particularly for regulation-compromised institutions like education and healthcare. Is the language of entrepreneurship adequate to communicate its powerful effect on driving economic growth, creating betterment for all, raising productivity and escaping bureaucratic sclerosis?

We worry about finding the right language to stimulate the newest generation to a life of entrepreneurship, and we experiment with some options.

Key Takeaways

There is a group of innovative thinkers in economics calling themselves i4j: innovation for jobs. They focus on an economic theme they refer to as the People-Centered Economy. When many innovators are exploring how to automate jobs and replace human with technology — especially the software called A.I. — they are exploring how to design the structures and incentives to make people even more engaged in the economic process of wealth creation, rather than less.

When thinking about the future of jobs and the people centered economy, we should think of entrepreneurs. In the future, everyone will be an entrepreneur. Entrepreneurship is the people-centered economy, or what we call practical economic humanism.

Is our language right?

Entrepreneurship is a tough word for young people to deal with. What does it mean? What exactly is entrepreneurship? What might be more inspiring for them is to focus on the ethic of entrepreneurship. That ethic is service to one’s fellow man — service that is designed to improve their lives. Customers indicate whether or not the entrepreneur is successful in improving their lives by buying or not buying. And it is through the lens of ethical service that they can understand the role of profit. Profit is not the reason people become entrepreneurs — it’s the emergent result. Profit is the signal that society judges that the entrepreneur is allocating scarce resources well. Without profit, the entrepreneur does not continue the service. Service without profit is unsustainable. The ethic of service to others and the emergence of profit as an outcome — a signal of approval — go hand in hand.

In this podcast, we experimented with a new language of entrepreneurship via the acronym S-E-R-V-I-C-E.

S stands for Service: practical economic humanism is entrepreneurs serving others and doing so for profit. It’s the Austrian version of service: I serve you because it is good for me, in every way (purpose, meaning and autonomy). Profit is the signal from the marketplace that the act of serving is positively viewed by customers.

E stands for Empathy. In order to serve, one needs to understand the subjective needs of others and to understand how to meet those needs on the user’s terms. Subjective preferences are idiosyncratic, inconsistent and emotionally based. Empathy recognizes this, and treats everyone’s preferences with respect. Empathy is the number one skill of the entrepreneur.

R stands for Resourcefulness — to meet others’ needs in ways that are new, different and better, the entrepreneur assembles resources and persuades others to contribute to the initiative — financiers, employees, partners, vendors. An assembler of scarce resources must convince others that this is the best use that could be made of them — make a business case. There’s a self-reliant resourcefulness in the virtuous character of the entrepreneur.

V stands for Value — creating value and facilitating a valuable experience for customers is the point of entrepreneurship. Value is in the mind of the person who experiences it — it’s a feeling, a satisfaction, the kind you get when a promise is kept. Taken together, all the people whom the entrepreneur serves constitute the market and the market is the judge of what is valuable. Firms and entrepreneurs don’t create value or add value, they make it possible for customers to experience value.

I = Investment, the action of sacrificing in the current time period in order to produce greater value in the next time period. Investment is the opposite of hedonism. It requires the long term view — if I make this sacrifice now, or this investment now, I am giving up alternative current uses of that money or those resources, but I am willing to do so because I see the possibility of a return in the future. Society needs entrepreneur-investors to create the future.

C = Collaborativeness; entrepreneurship requires the assembly and molding of a team, and synthesis of team ideas and contributions; finding the right way to collaborate by maximizing individual talents and perspectives. A supply chain is a collaboration. A factory is a collaboration. A beauty salon is a collaboration. A construction site is a collaboration. Man is naturally collaborative in bringing value experiences to others.

E = Ethical: successful entrepreneurship is moral action, with pure intentions. Any other approach will fail. The idea of exploitation in capitalism is so far wrong and it doesn’t withstand scrutiny. The entrepreneur needs the approval of customers and markets, including the market for labor and for partners. It makes no commercial sense to be unethical.

Perhaps we could communicate the acronym S-E-R-V-I-C-E and the cogent set of ideas behind it, the integrated concept of what entrepreneurs do and what entrepreneurship is.

The mental model is that of SERVICE WARRIORS. Energetic committed people, combating need and want and dissatisfaction. Organizing people and resources in the fight to establish new improved value, to raise standards, to lead the way to a better place.

Models to Graphically Communicate Complex Ideas and Concepts

Another part of my discussion with Jeff Saperstein concerned the design of simple visual models to clarify complex processes and concepts. One example to which we referred was that of the Individual Economy. With today’s technology, any individual can become a Service Warrior entrepreneur, integrated into the larger ecosystem of economic services through interconnectivity, networks and global exchanges and supply chains. The idea of the individual economy is explained in Chapter 2 of our book, The Interconnected Individual: Seizing Opportunity in the Era of AI, Platforms, Apps, and Global Exchanges (Check it out on Amazon). See also the action model of “The Individual Economy”. It identifies a process and a journey, with a starting point, key structural elements, relationships and dynamics. That’s a complex system about which authors could write white papers and books — but a simple graphic can capture its essence in one page.

Each week at Economics For Entrepreneurs, we offer such knowledge graphics and models as free downloads. Recently, for example, Dr. Mark Packard offered his groundbreaking theory of marketing for the 2020s in a series of five podcast lessons. We captured the essence of his “Value Learning Process” in one process map: View/Download PDF.

Trini Amador presented the essence of three decades of learning about how to build and nurture powerful and effective brands for any kind of business: Listen Here. We captured this expertise in our “Brand Uniqueness Blueprint” – View/Download PDF.

74. Raushan Gross on The Inspiring Life and Beneficial Impact of Entrepreneurs

Raushan Gross is one of the outstanding writers on the subject of entrepreneurship. In his latest e-book, The Inspiring Life and Beneficial Impact of Entrepreneurs, he establishes the ground rules of the complex system of entrepreneurial innovation in seven principles.

Key Takeaways & Actionable Insights

1) Consumer dissatisfaction is transformed into innovation by alert entrepreneurs.

The fuel that powers the engine of innovative progress is consumer dissatisfaction. The creativity of entrepreneurs transforms the fuel into the energy of innovative ideas, positive change and economic growth.

2) The engine keeps running because entrepreneurs continuously compete for customer approval.

Consumers and customers accept the latest innovation and keep seeking the next one. This relentless search inspires entrepreneurs to out-do each other in trying to bring the next improvement to market. We call it competition, but it’s really the entrepreneurial engine that never stops.

3) Entrepreneurs are empowered by their continuous learning from a constantly changing marketplace.

Some call the entrepreneurial process “trial and error”. Error should not be viewed as a negative concept — it’s learning. The entrepreneur gets smarter with every learning occasion. Learning is continuous because the market is constantly changing.

4) Entrepreneurship is the foundation of a productive society.

A productive and progressing society is the result of consumers seeking betterment and entrepreneurs seeking to serve them via innovation and improvement. There’s no alternative, if what we want is progress. All regulation and intervention impede the system. The worst kind of intervention — socialism — destroys it entirely.

5) Entrepreneurship flourishes most where there is a supportive history and culture.

To preserve and encourage entrepreneurship and to avoid the descent into a sclerotic interventionist economy, we need to weave recognition of the role of the entrepreneur into our culture and institutions. We need to teach it in our K-12 schools and discuss it around the family dinner table.

6) A world without entrepreneurs would be pretty grim.

Economics often sheds light via thought experiments. Here’s one: imagine a world without entrepreneurs. No innovation. No progress. No automobiles and no iPhones. It doesn’t take long to realize the losses we would suffer and the quality of life we would lose.

7) The post-pandemic world is the perfect time to observe the impact of spontaneous agility and adaptiveness.

There is a tendency for us to focus on the destruction that resulted from the pandemic and the politicians’ misguided imposition of lockdowns. Raushan Gross looks in the other direction: what an opportunity to marvel at entrepreneurial adaptiveness at work in the economic recovery.

Free Downloads & Extras From The Episode

To download Raushan’s latest ebook, The Inspiring Life and Beneficial Impact of Entrepreneurs, visit

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