There is a dual temptation for entrepreneurs as they look back at the experiences of previous generations. They may think that there can be nothing useful to learn from the past, or that everything is somehow relevant. Both are flawed assumptions because, while the underlying activities of entrepreneurs have broadly remained the same, the context is ever changing. So let’s try and extract something useful from this otherwise unhelpful conclusion. First, what has stayed the same: in other words, how can we understand where continuity might lie?
The answer to this is to understand that all entrepreneurs operate in markets. Markets generally tend to follow fairly well-understood patterns of behaviour. Increases in demand lead to price rises, increases in supply to price falls, etc. Entrepreneurs through the ages have had to respond to the competitive pressure of market forces, indeed almost invariably entrepreneurs are themselves agents of competition. So whether it was the slave trade in Roman Britain, or farming in the Middle Ages, or cotton textiles in the Industrial Revolution, or software designers today, entrepreneurial businesses have ignored market forces at their peril. Unfortunately, many start-up businesses fail to learn this basic lesson from the past. As a consequence, small business survival rates remain horrendously low.
If the discipline of competitive forces in markets represents the continuity of entrepreneurial behaviour through the ages, then, perhaps paradoxically, market forces and competition also help us to understand why there is so much change. Competition is never static. Entrepreneurs are always scanning the horizon for the next opportunity. Where those opportunities arise, and an investment is made, the subsequent stream of new goods and services represents a new competitive threat to someone else. That leads to further changes in firm behaviour – some firms grow, while others decline. This is most apparent with the rise of new technologies. Popular songs like ‘Video Killed the Radio Star,’ classic films like Charlie Chaplin’s ‘Modern Times’, and countless management books dwell on the dilemmas of change and the unanticipated consequences of ‘progress’. But these changes don’t simply arise from new technology. A better approach to service delivery, or some additional reputational factor that leads to greater trust from consumers, can also lead to a change in the market. Entrepreneurs are often the agents of change and their actions can destabilise the world, creating all kinds of costs and benefits for society.
History gives us many examples of precisely this kind of change. By investigating how earlier entrepreneurs have interacted with markets and competitors, how they have instigated change, we can explore in detail some of the wider consequences of ‘progress’. For example, consider the sewing machine, one of the technological wonders of the world when it was introduced in the 1850s. This was a machine that reduced almost at a stroke the drudgery of many thousands of tailors and seamstresses in Britain who had previously earned their wages from hand stitching. Switching to the machine, they could stitch much faster, so the price of stitched clothing fell, demand grew, and sewing machinists increased their wages. Everyone gained. That is everyone except those former hand-stitchers of clothing who could not adapt to the sewing machine. For them, the price of technological progress was technological redundancy.
The entrepreneurs who brought this revolutionary machine to market were lauded for their ingenuity and contributions to mankind; and the leading entrepreneurial firms went on to build some of the largest global businesses of the day – Singer was the equivalent of Bill Gates’ Microsoft, or Eric Schmidt’s Google (see references below for more information). For those entrepreneurs who had commercialised the technology and worked out the best way to deliver it to consumers, the subsequent phase of their careers was all about the ordinary mechanics, the ‘nuts and bolts’ - of building a business in a competitive market. Singer, like Google and Microsoft, went on to sell its products around the world. It changed the way people clothed themselves, it stimulated new fashion in garments and, with the rise of sewing-clubs, novelty in people’s pastimes. The echoes with the modern computer and other high technology sectors are telling.
- Andrew C. Godley (2013) 'Entrepreneurial Opportunities, Implicit Contracts and Market Making for Complex Consumer Goods.' Strategic Entrepreneurship Journal, Vol. 7, No. 4, pp.273-287.
- Andrew C. Godley (2006) 'Selling the Sewing Machine around the world: Singer’s International Marketing Strategies, 1850-1920.' Enterprise and Society, Vol. 7, No. 2, pp.266-314.