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More on Entrepreneurship

January 12, 2011

Comments on blogs often don’t get read as much as the original posts. I think that’s a shame, because in many cases, when I’m reading a blog, I get as much out of the dialogue following an interesting post as I do from the piece that kicks it off.

So I’m reproducing a comment from Tatjana de Kerros on the last post about Entrepreneurship in the Middle East, as well as my reply. She wrote:

Thank you for sharing this article and discussing the events that occured at the 10th International Entrepreneurship Forum. I think that you’ve raised some very good points, particularly in regards to the lack of representation from Asia, especially Singapour and China. Their influence in the Middle East goes beyond energy and business- many SME incubators, particularly within universtities such as KAUST in Saudi Arabia, have modeled their incubation centers after the highly successful ‘Singapour model’. In addition, the amount of knowledge and tech transfers between both continents is substantial, and has a strong impact on joint venturing and partnerships.

You raise another point regarding the expectation that youth will launch themselves into entrepreneurship upon graduation. It is important that fostering entrepreneurship, and fostering the entrepreneurial mindset are differentiated. The entrepreneurial mindset among youth and graduate should concentrate on providing skills which respond to a skill-set needed within the job market, and shifting the focus away from wishing to work in the public sector to the private sector, whilst instoring a spirit of innovation and contributing to becoming facilitators of change.

As entrepreneurship is about creating value and innovating- entrepreneurship for entrepreneurship’s sake is not the be-end and end-all. At the end of the day, self-employment reduces to a bunch of statistics- but what is the contribution to economic growth and diversification?

I would be interested to hear your opinion to which institutions and programs are best-placed to contribute to SMEs development in the region- do you believe it is private sector organizations, or government-run programs?

I look forward to following your posts and blog!

I suspect that Tatjana knows as much on this subject as me, if not more. But anyway, here’s my reply:

Tatjana, thanks for your feedback and for subscribing to the blog. I agree with your comments, especially the one about fostering an entrepreneurial mindset.

Regarding your question about who is best placed to contribute to SME development, I think it depends on what kind of SMEs you are looking to encourage. The Middle East has strong tradition of trading. If that’s what governments are looking to foster, then I think that the traditional SME incubation models – wherein government sets up structures, removes bureaucracy and provides finance on easy terms – work fine. For all the received wisdom about people in the Middle East preferring the security of working in government to the risks of starting a business, there will always be people who are willing to strike out on their own, especially if they have family members as role models. I often hear young people in Saudi saying that they want to start their own business “like my father did”.

Creating a culture in which people look to start businesses based on invention and intellectual property is another matter altogether. People and governments the Middle East yearn for this. You see more and more references in literature and the media to the Golden Age of Islam. Indeed, when he opened KAUST, King Abdullah explicitly referred back to the Beit Al Hikma – the House of Wisdom established in Baghdad by the Abbasid Caliphs – as the inspiration for the initiative. But with great respect to what the Saudis are trying to achieve with KAUST, without an underlying culture of innovation, research institutes like KAUST are oases in the desert – literally and metaphorically.

And in my humble opinion, to create that culture in the Middle East will take time – certainly way longer than the five years Daniel Isenberg was talking about at the conference. Government has an absolutely indispensible role in making it happen, because, especially in this region, it needs to reinvent the education system. This is what the Saudis and the Bahrainis are trying to do. But it’s a tough task, because there are strong vested interests in both countries (Bahrain less so than Saudi because of its relative cultural liberality) which resist the change.

Bahrain is focused on a 2030 vision – because they believe it will take a generation to change mindsets. I actually think it will take longer than that. Why? Because families in this region are so important. By reforming the education system now you can certainly produce a first generation of inventors. But to get to the point when a youngster (like those Saudis) says that he or she wants to become a software entrepreneur or rocket scientist because “that’s what my mother/father did”, you need the innovation virus to have spread widely enough for there to be any number of role models to inspire the next generation. So I would say that 2050 is a more realistic target date, even though in PR terms that’s not a message likely to capture the imagination of today’s society.

We have to remember that the “West” has a 300-year-old tradition of technological innovation. Also that it took Japan 100 years or so from the ending of their period of isolation really to get into their stride as inventors, rather than replicators of technology. China is getting there faster, but has the benefit of that underlying culture of self-improvement that we discussed earlier. If you didn’t catch it, there was a great article in this week’s Sunday Times by Amy Chua (unfortunately I can’t send a link because of the ST’s subscription policy) in which she talks about the relentless pursuit of excellence on part of Chinese parents – so far from the Western and Middle Eastern child-rearing ethos as to be on another planet.

So is the private sector best suited to lead the way in creating a culture of innovation? Absolutely, but only after government has done the extremely tricky task of laying the groundwork by reforming education. The private sector can only move as fast as government. There are ways of kick-starting the process. The Saudis are trying to do this by sending 100,000 students to foreign universities. As they return home – especially the women – and find limited or unsatisfying employment opportunities – they will create a groundswell of support for change. Joint ventures between foreign and local companies can also help, but these should increasingly focus on R&D that stays in the country in which it takes place.

Maybe I’m being pessimistic about the time it will take. It will be a long haul, but it’s definitely doable.

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