Trends Influencing Entrepreneurial Development

By Michael T. Childress and Michal Smith-Mello; Peter Schirmer

Change offers us a choice. We can rail against it or make it work for us. We can resign ourselves to its unceasing consequences, or we can, as Heraclitus suggested, take the road up. To prosper in the years ahead, we cannot view change solely as the unsettling and uncomfortable force it often is. Rather, we must see in it the chance to transform our economy, to repair its inequities and to create enduring prosperity. Regardless of the sector in which we work—public, private or nonprofit—we must wrest as much public good and private profit from change as is possible. To do so, we must anticipate what lies ahead. We must, as Peter Drucker suggests in his 1995 book, Innovation and Entrepreneurship, listen carefully, ask questions, watch for opportunities and act nimbly and quickly when they appear. In short, we must become more entrepreneurial in all that we do.

Here we look at but a few of the trends that will influence our ability to cultivate an entrepreneurial economy in Kentucky. They include larger economic and demographic trends that are well underway, the expansion of the World Wide Web, and a rising commitment to microenterprise development.

"The Future That Has Already Happened"(1)

As Drucker suggests, some forces that are already very much with us will have a predictable effect on our future. About what lies ahead, some things are virtually assured. Global trade—for better or worse—will continue to exert profound influence on our lives. The intense competition it has fostered will continue to force organizational rethinking and restructuring, which, in turn, will scatter more people into the marketplace and will likely continue fueling the trend of decentralization now so evident in employment patterns. A growing number of responsibilities once assumed by employers, from retirement planning to health care choices, are being transferred to individuals, creating entrepreneurial opportunities and compelling individuals to bring a new level of personal engagement and knowledge to life choices. Central to the challenge of development is preparing people for these new demands through workforce training and education that will enable ready adaptation to change.

All the while, technology will continue to produce dramatic, even revolutionary change. Regardless of where we live, it will alter virtually everything in the world around us, as certainly as it created the World Wide Web of communications that now knits the planet together. Gradually, this web will become the marketplace of the world, just as the tools driving it have become the engines of our economy. Computers are the field of a remarkable 36 percent of the fastest growing companies in the United States as identified by Inc. magazine for its 1997 Inc. 500 list; another 9 percent are in telecommunications.(2) Today, many argue that information technology will fuel virtually limitless economic growth in the years to come, spreading prosperity and advancing human development at a remarkable pace. Clearly, information technology is democratizing entrepreneurship, extending the possibility of business ownership and success to all who bring creativity and innovation to the marketplace.

Because more and more businesses, large and small, rely on access to a high-quality technology and communications infrastructure, it has become as central to the work of development as highways and water and sewer lines, particularly in those rural areas that are often left behind. Indeed, a state-of-the art electronic infrastructure opens a window to new markets, ideas and innovations, competitive sources of supplies and services, cost-saving electronic exchanges, and more. Further, it allows many rural enterprises to become players in the larger economy despite the "distance penalty" often imposed by traditional physical infrastructure.

Like globalization and technological advancement, widely anticipated demographic changes will continue to alter the face of our population, as well as the circumstances of our lives. In turn, business will also change. As Baby Boomers move into their retirement years, they will create new consumer demands as well as entrepreneurial opportunities to meet them. At present, unexpected population growth due largely to migration into Kentucky, particularly among retired natives of the state, and sustained economic health, are buoying even rural economies.

If the return-of-the-native demographic trend holds, it bodes well for entrepreneurial opportunity throughout much of Kentucky. Retirees as well as other demographic groups are creating new markets in the state, a possible forerunner of the "demographic Balkanization" University of Michigan Professor William Frey predicts.(3) Frey suggests that regions will become magnets for particular demographic groups, creating distinctive marketplaces and business opportunities. As examples, he suggests already emerging multilingual immigrant ports and locales that attract "middle-class domestic relocators seeking more suburban family lifestyles,"(4) a regional identity that parts of Kentucky have arguably already assumed. As distinct regional identities emerge, market demands unique to the socio-economic status of their residents will increase as well, creating identifiable business niches and opportunities. Indeed, many advise would-be entrepreneurs to look first to their home community for business ideas.

Because older, less risk-inclined people are generally not likely candidates for entrepreneurship, Kentucky’s aging population might be expected to dilute entrepreneurial energy. But the dynamics of aging are changing. Older citizens are more educated, in better health and more active than ever before. While the vast majority (82 percent) of 1997 Inc. 500 CEOs were under 50 years of age, 13 percent were between the ages of 51 and 60, and 5 percent were 61 or older.(5) As employment patterns continue to decentralize, the replacement population of youth declines nationally, and more shortages of skilled workers emerge, the knowledge and experience that older citizens bring to the marketplace are likely to become increasingly valuable commodities. Aided by the benefits of accumulated wealth and skill, more older citizens are likely to assume entrepreneurial roles in the years to come. Still others, the Kentucky State Data Center finds, are remaining in or returning to the labor force beyond retirement age due to the inadequacy of retirement provisions,(6) a trend that is likely to persist and broaden. RAND demographer Peter Morrison predicts, "The elderly will live much longer lives—outliving their retirement savings."(7) For many, entrepreneurial ventures will supplement retirement income.

In addition to the aging of our population, the growing predominance of time-pressed, two-wage-earner households is expected to continue driving a high demand for products and services that enable greater convenience. Eating and drinking establishments are predicted to create more than 1,000 jobs a year in Kentucky between 1994 and 2005 for waiters and waitresses alone.(8) Many of these low-wage, service industry workers will join the lower half of an economically divided population that has emerged, with a "cost-is-no-object" group on one end and a "cost-is-the-object" group on the other. Consequently, entrepreneurs who create desirable, unique and costly products and services will likely find a market. At every income level, however, consumers will continue to make more refined decisions, enabled by information and motivated by the desire for products of quality that will last. Cost and quality will matter more and more.

Our willingness to understand these trends and many other forces influencing our future and to respond to them nimbly will ultimately determine whether Kentucky lifts itself out of a century-long tradition of economic disadvantage or remains anchored to a past of poverty and underdevelopment.

  Back to Outcomes—Entrepreneurial Products

  Ahead to Doing Business on the World Wide Web

Footnotes

1. Peter F. Drucker, "The Future That Has Already Happened," Harvard Business Review Sept.-Oct. 1997: 20. Return to text.

2. Inc., "A Statistical Tour." Return to text.

3. Altobelli and Hopkins, "The Next Big Things," The State of Small Business 1997 (Inc. Magazine): 146. Return to text.

4. Altobelli and Hopkins. Return to text.

5. Inc., "A Statistical Tour." Return to text.

6. Charles Wolfe, "Lack of Money Keeping More Older People in Work Force," The Lexington Herald-Leader 24 Oct. 1997: B4. Return to text.

7. Altobelli and Hopkins. Return to text.

8. Employment Services 12. Return to text.