Is the United States Losing its Entrepreneurial Edge?
March 16, 2009
Color of course would enhance these 
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As I have travelled the world the last year I have been struck more than once by the fact that many other countries seem to exhibit a much hungrier, edgier entrepreneurship than we now see in the United States. Maybe we have gotten complacent and comfortable with our style of entrepreneurship. It strikes me that it is a much more centralized, corporate led brand of entrepreneurship than I have seen elsewhere. I wrote previously of the retail environment in Egypt where it seemed everyone wanted to serve the tourist industry. I experienced the same in Turkey where everyone was a salesperson selling whatever was available.
Handmade shoes selling for $30 (click to enlarge)
I have spent the last month in Buenos Aires and I am seeing the same type of capitalism exhibited in Argentina. In the retail sector, for example there are no large department stores. The retail is highly decentralized and spread throughout the city at street level. There certainly are a few stores of corporate type ownership with multiple locations but largely the retail seems to be Mom and Pop type stores that occupy their 4-6 meters of street frontage and sell clothing, shoes and all manner of retail goods.
Buenos Aries, a city of 13 million people has many of the type shops that design and produce their own goods. An excellent example is 2S doble sentido, a women’s shoe and accessory store that produces one of a kind shoes and jewelry for women. They sell them out of their single location on Paraguay Street. They occupy a 5-meter storefront and the production is done in the basement. I have attached pictures of the shop and some of the stock. The shoes are very artsy and colorful and really unlike any I had seen elsewhere. I talked to the owner and he told me they had been in business for eight years. The first four were spent making shoes in there home and selling them at arts and craft fairs throughout the city. For the last four years, they have occupied the Paraguay St location.
Many other stores do the same type thing only different type products. They produce clothing, shoes on a totally custom basis.
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In my mind, that is a very edgy, risky form of entrepreneurship. The business owner needs to be able to do all things, assess customer demand and needs, manage and maybe do production, sales and marketing.
The type of entrepreneurship we now exercise in the USA seems quite a bit more controlled and less risky. Corporations following a formula that has been proven elsewhere undertake a lot of growth. Consider GAP, Old Navy, Applebee’s, Nordstrom… they have all developed common products and systems and duplicated them throughout the country.
Have we gotten lazy and risk averse in the good old capitalistic USA? Is this just a natural maturation process? Will countries like Argentina and Turkey find that their business interests will consolidate and centralize as their economies mature? That is a definite possibility for a developing country like Turkey but it is harder to consider Argentina an underdeveloped country. It has a much more mature economy than Turkey and capitalism has been practiced there for a long time.
Another example of this trend in Argentina is the restaurant industry. Other than the ever-present McDonalds and Burger Kings, there is very few chain or corporate restaurants. Yet on every block, there are cafes, pizza joints, parillas (Argentinean beef restaurants) and all other manner of eating establishments. There does not seem to be a need for formulaic, franchised restaurants like those that we see in the states. Again, this seems to be a much riskier type of capitalism.
As I write this, I am on a 17-hour bus to Port Iguazu. Iguazu Falls is the largest falls in South America and is a major tourist attraction. This leads to my final example of Argentinean entrepreneurship- the bus lines… There are 162 bus companies in Argentina! Retiro bus station in Buenos Aries is four city blocks long and has over 150 bus parking places. Buses leave there for all parts of South America. Competition has done an interesting thing. The bus companies offer all manner of services and service levels. You can choose from a cama, semi-cama and full cama service. Full cama is a first class service with hot meals, drinks and a seat that reclines fully into a bed. I was even given a bottle of trademark Malbec Argentinean wine to go with my dinner. I got great nights sleep while I traversed the country.
It seems the good old USA would be ripe for this kind of service. Yet, I think we still have two bus companies that offer the same thing- slightly reclining seats with no meal service. Where are the entrepreneurs on that one?
So, are we losing our entrepreneurial edge? Are we getting lazy and losing the creative entrepreneurship that built our country? If we are, what does it mean in the long run? I do not have the answers to these questions, I am just posing them but they are worth pondering. One hundred sixty two bus companies, that’s right, one hundred sixty two…competing in the same station…all manner of decorated buses, wild colors, whitewall tires, fully reclining seats… think about it…that’s competition, that’s entrepreneurship!
Keeping Down Payroll
March 13, 2009
In soft economic times cutting back on payroll usually means laying off employees. As a tactic it works, but this strategy reduces your productivity and can end up costing you in the long run. You will have lost any investment you made in their training, lost their knowhow and will be stuck with the cost of hiring a replacement sometime in the future when business starts to pick up again, so avoid it if you can. If laying off employees is the only option, give careful thought to how you can maintain production and customer service so as not to plunge into a downward spiral of poor service leading to increasing customer desertion. Here are some suggestions for how to slim the payroll burden.
Slim the payroll
Reduce pay and eliminate raises: a reduction in pay won’t be popular but if the alternative is redundancies among the employees they might well agree to go for it. At least they keep their job (and you save on payroll) until business picks up again.
Cut back on work hours: this will reduce payroll without entirely losing the employee. This can be done by decreasing daily hours or reducing days per week or moving to so many days per month. A reduction in hours may be viewed as preferable to having no job whatsoever. Sharing the pain out among employees will be better for morale and you get to keep people on hand for when times improve.
Replace monetary with nonmonetary incentives: offering the use of your vacation home or extra time off in lieu of a money bonus can show that you understand your employee’s disappointment in not receiving a cash bonus but want to reward them for their hard work.
Encourage employees to take time off without pay: canvass employees for those who would be agreeable to taking a period of time off work without pay. The deal must be that they are guaranteed their job back at the end of the specified period.
Incentivize employees to leave: the least unpleasant way to downsize is to let natural attrition take care of the job by not replacing employees who quit or retire. If normal attrition will be too slow to reduce numbers to what you need/can afford, then offer employees an incentive to terminate: grant early retirement with full retirement benefits or offer an attractive severance package. Make clear this is for this occasion only.
Make use of independent contractors: hiring is a long term commitment. Until things improve, soak up extra workload using independent contractors instead of putting on workers.
Insource: maybe some jobs you are currently outsourcing can be economically brought back into the workplace to be done by underutilized employees. Be careful not to breach employee or supplier contracts. Do this only if there is a distinct cost/benefit advantage over the outsourcing deal.
Used with permission from RanOne Inc., McQuaig & Welk, PLL are licensed RanOne Consulting Group Members.