A Matter of Perspective

Innovativeness is a Matter of Perspective

We need greater granularity when we look at entrepreneurship, especially concerning entrepreneurs in the developing world and transition economies. I appreciate the need for macroeconomic indices like GEDI’s (Gender Global Entrepreneurship and Development Index) that characterize infrastructures and environments for entrepreneurship – whether gender-related, or not. But the data needs to look beyond the entrepreneurial capacities for the next Zynga. The criteria should include efforts that may make a measurable impact on the economic development and well being of society. Are the authors of the GEDI report looking for the right results with their criteria that they define as “innovative, market expanding, [and] export-oriented”?

Let me break it down a bit further. I’ll start with the innovative label: What the GEDI report means by “innovative” with regard to “high potential” woman entrepreneurs, is that they are globally competitive based upon innovation. The bias in this definition is that the authors seem to imply technological innovation. My problem with the term, innovation, is that it has a connotation of something being entirely new, without giving appropriate respect to the context – geographical, sectoral, or otherwise. There is too much of a link between innovation and invention.

I am currently in the technology transfer business, dealing in the currency of inventions on a daily basis. Inventions are products of the mind; patentability of inventions is dependent upon novelty on a global scale. Based upon my work as director of technology transfer and innovation, one might expect that I would be biased toward technological innovation. I’m not. People with whom I interact a daily basis are probably tired of hearing me reminding them, that the best technology doesn’t always win.

A Portrait of a Successful Locally Based Entrepreneur

Olga is one such high potential entrepreneur whose ideas are innovative, yet not tied to technology. I worked with her when I ran an agribusiness development fund in a rural region of Russia. Olga requested very small loan to open a bakery in her village. I was dubious about the potential for her to make money with her bakery, because as anyone who has ever been to Russia knows, bread is everywhere. But I listened and learned.

As it turned out, the village where Olga lived was remote and only regularly accessible for bread deliveries from a county center only in the deep winter months when the river froze over. Also, the Soviet Union had also just fallen apart, and with it, the supply chain that included product deliveries, leaving the families in the village without fresh bread. Olga had already organized a buying cooperative, whereby she would travel to the closest town to buy supplies for the community, and she started a general store where she stocked popular goods. But her bi-monthly supply runs left the village without fresh baked goods.

What I learned 20 years ago was that geography matters, a factor Olga already understood. I met recently with a senior economist at the World Bank whose focus is private sector development in the Middle East and North Africa. She reminded me that entrepreneurs know what they need and that it is important to listen. It was so refreshing to hear an expert reflecting my own observation, that true entrepreneurs need a sounding board and people asking thoughtful questions, not providing canned, cookie-cutter solutions.

I remember how absorbed I was in a complex spreadsheet trying to work out the details of how to adjust our loan portfolio to the hyperinflationary situation and currency devaluations in the country in 1993, when Olga came to meet with me about her loan. She came into the office teary-eyed to ask for an extension on the repayment of principal, explaining that the pegged interest rate was exceeding the pace of the devaluation of the currency and the prices she could charge. We were a development program, not loan sharks, and we reached an agreement without undue deliberation.

As a result of our good working relationship, Olga connected me with a number of other entrepreneurs who were contemplating getting into the dairy, heirloom meat-processing, and beverage businesses. These individuals eventually took the entrepreneurial leap and brought prosperity to their communities.

One of my proudest moments was when my program was visited by the Russian Minister of Agriculture and the U.S. Secretary of Agriculture. I co-hosted the joint delegation with the Governor of the region, setting up an exhibition of all of the agribusiness entrepreneurs and their wares. The magnitude of the impact became apparent as table after table was filled with smoked sausages, fresh baked goods, myriad dairy products, and heirloom cheeses that commanded top “ruble” for their quality. A whole entrepreneurial ecosystem had grown-up around Olga and others like her.

In my book, Olga meets the definition of a high potential entrepreneur in that she exhibited:

• Perseverance and vision. Olga had a vision based upon being firmly rooted in the market with knowledge of her customers, and she held steadfastly to her business despite adversity.
• Adaptability. Olga continually adapted her business to meet the evolving needs of her clientele, and she was always open to new ways of doing things, and to change.
• Trust and trustworthiness. Olga “paid it forward,” by connecting like-minded entrepreneurs with others like myself and our partners who could form mutually beneficial relationships.

But was Olga’s business innovative? There wasn’t anything particularly new and different about how she baked bread. However, the market for bakery products in the Soviet Union had been dominated by industrial-scale producers. What Olga did was revive the tradition of proprietor-bakers on a local level. Unlike the factories, she didn’t cut corners or compromise on top-quality ingredients, and she provided fresh bread in underserved markets.

She wasn’t the only one who was doing this at the time. In fact, such devolution of food processing enterprises remade the entire landscape in Russia. I had to smile when I saw a similar trend, years later when I returned to the US: in the Washington DC area the ‘locovore’ movement was in full swing and farm cooperatives had multi-year waiting lists for membership. But in Russia, Olga was the only one who did it in her community, and she inspired others with similar ideas to act. Innovation needs to be defined in a context to be meaningful. The innovativeness of Olga’s bakery business may be small, but that shouldn’t preclude Olga from be considered a “high-potential female entrepreneur.”

I feel innovation should be defined in a local context and should be expanded to include business model and process innovation. I often am called upon to judge business plan competitions, and I’m sure that mine is often a dissenting opinion precisely because I look at local market appropriateness more heavily than innovative content in the traditional sense.

Olga’s venture wouldn’t meet the “market expanding” or “export orientation” of the GEDI definition, either, so there’s more of an issue here than innovativeness, alone.