Venturing Processes Globalization
Our Motivation
Regional high standards of living are a direct result of global trade; in fact, every new job can be traced back to an expanding trade relationship. The more trade relationships a region establishes, the more jobs the region develops, and the more wealth accumulates around those that control those relationships. A dense network of global trade interactions, centered in any given region, results in steady levels of employment, rising incomes and accumulation of wealth; the key elements of a stable society that supports high standards of living.
Conversely, regions lagging behind others in economic development either respect of those either in their immediate vicinity or somewhere abroad, are simply evidencing the fact that such a region has not been able to organize a dense enough network of global trading patterns due to lack of entrepreneurial intensity or trade relations development frictions.
There are many reasons that can be used to explain differential failures including lack of regional investable capital pools; not enough leading edge innovations; limited access to markets; weak educational system; corrupt governments; weak support infrastructure and adverse taxation regimes.
Logically, the central question of regional economic success becomes what mechanism creates these trading relationships and how can any given region enhance them?
The primary generation engine of trading relationships is the private enterprise. Healthy development of active trade relationships requires an entrepreneurial culture, successful products, global markets access, government transparency, strong property rights, individual freedoms to create, organize and trade; and an effective legal system that effectively protects ideas, inventions and agreements.
Since all job opening are created by the expansion of existent businesses, by the entrepreneurial processes leading to the formation of new businesses, by expansion of the government workforce and by displacement of retired workers; it becomes critical to understand which factors contribute the most to these job creation processes.
Government expansion as a mechanism of jobs creation is highly undesirable since it result in increased taxation or growing public indebtedness; and early retirement of workers is only desirable as long the retirement system can accommodate them without greatly limiting quality of life. Accordingly, we are left only with two desirable mechanisms for jobs creation, mainly; expansion of the existent business base and formation of new business ventures.
Data indicates that a well organized economy, performing around its operating optimum, generates a much larger number of jobs through entrepreneurial processes than through any other form of workforce expansion. Among the many entrepreneurial business processes, there is one source of jobs creation that is most desirable because it delivers high numbers of better quality jobs, mainly high productivity entrepreneurial businesses capable of very high rates of sales growth in its early years, typically its first 10. Every innovative technology generates a few of these high growth companies, which quickly establish supra-regional trade relationships and position themselves for market dominance.
Successful regions, those that participate early in emerging innovation trends, most often through the risk taking of visionary entrepreneurs’, quickly develop products and services exploiting new discoveries and new technologies. These innovations result in transient acceleration on the rate of growth of human productivity; promptly recognized and seized by entrepreneurs. The natural obsolescence processes we observe around us, are trailing indicators or historical evidence of a maturing evolutionary trend that has already generated a few entrepreneurial winners somewhere in the world.
It is possible to argue that every new industrial segment originates a very limited number of these high growth companies. These are the companies that become promptly recognized as the business leaders of the particular business space. Recent examples are Google and Amazon; less recent ones are Apple, Microsoft, Intel and Oracle; and even farther into the past are companies such as Ford Motors, General Electric, Boeing, TWA, US Steel and others. All these companies experienced in their early years above average rates of growth in their, at first, very crowded business spaces; that soon get reduced to just a handful of global competitors through consolidation and failure.
However, established successful businesses rarely participate directly in a rapidly emerging business space. Initially the new ventures risk far outweighs the reward as perceived by established company executives. Eventually, established companies that fail to recognize an evolutionary trend may either fail or be forced to acquire entrepreneurial ventures using valuations perceived as highly exaggerated, a costly catch up strategy that often provides a windfalls for the founders and backers of entrepreneurial organizations.
This virtuous process of innovation followed by entrepreneurial activity results in wealth creation, accumulation of investable assets, high paying jobs and a regional workforce that is more intense on R&D professionals and on new product developers. This process is continuously reinforced by the efforts of entrepreneurs and R&D professionals, the scouts that early on lead entire regions into this emerging business spaces. Furthermore, region wide entrepreneurial processes also result in formation of large pools of investable capitals that can be deployed in additional ventures either in the same business space or in another one; most often in the same region.
Paradoxically, regions that aggressively pursue products and services innovation, experience high rates of early stage business failures, and yet, tend to discover most new markets and secure ownership of some of these new high growth and high productivity entrepreneurial businesses. The accelerated growth of that follows dwarfs the collective losses; and the region that nurture them, wins in securing further high growth opportunities through the same virtuous process.
The coexistence and continuous reinforcement of the unique elements of entrepreneurial activity is a distinctive characteristic of a region supporting high standards of living; high rates of new companies’ formation and failure; and high rates of reinvestment in newly formed companies.
These are the processes that Novatempo® seeks to accelerate on a global scale.
