WEEK TWO (RICH KENNEY)
The second week of the NY module provided a different flavor than the first. It showed that entrepreneurs and large firms are run differently for a number of reasons, but also that both need each other. While entrepreneurs, for the most part, start a company from a passionate idea and try to scale from a small team with limited resources (sometimes via local government and universities facilitating or nurturing them), larger companies have larger teams that: are managed differently; have more resources; and do not directly play in the “minor leagues” or need the nurturing. However, the coexistence of entrepreneurs and large firms drives growth and profitability in a number of ways (so the “minor leagues”, or the “playing” that entrepreneurs do, should not be downplayed as “child’s play”). Similary those cultures and authorities (government, companies, university officials, etc.) that understand and accept this will benefit via economic growth and lessor government subsidies to its citizens.
The importance of the coexistence revolves around growth and profits for entrepreneurs and larger companies. The smaller firms need the money of the larger ones (investors) or guidance (in the case of Ernst & Young) to grow whereas the larger ones need the smaller ones to make money. In short, it is a similar to a healthy ecosystem: without grass and water, life becomes difficult.
Similarly the innovation and growth of the entrepreneur or smaller firms eventually dictates that the larger firms become more innovative and adapt or risk becoming irrelevant, and the same holds true for investors.
A smaller takeaway from the week was that it isn’t easy for larger firms to be drivers of innovation because their size can be a detriment to creativity and innovation (some however have tried to change this). A better adaptation to innovation is likely via mergers and acquisitions.
I also accepted that it is important for entrepreneurs to “play” or given the leverage to pursue their worthwhile passions. Essentially it drives innovation and growth for the entrepreneur as well as small and large firms; it is the lifeline for economic growth and reducing unemployment.
A debate happening throughout this module has been whether or not NY’s successes can be replicated in Budapest. And after the second week, I have concluded that this debate is more complicated than a model that says yes or no. I firmly believe that NY changed itself due to the social and economic problems it faced during the 70s, 80s, 90s and early 2000s. Likewise, Budapest will need its social and economic issues to be drivers. More importantly, there are key or common ingredients that could contribute towards the drivers taking hold (and likely a more worthy debate); i.e. (some factors) transparency, reduced corruption, authorities willing to experiment, people challenging the status quo, and acceptance of failure or “playing”. And as an American living in Budapest, I don’t see where this recipe has been embraced.