Thursday, December 22, 2011

My artcile on "Developing Entrepreneurial Ecosystem in India" - published in Business Review India

It is a fact that India is home to some of the best known outsourcing service companies, which have created jobs for thousands of engineers and have fuelled the outbreak of a young middle-class working population. However it is also a fact that in today's world of fast emerging technology, where innovation, creativity and entrepreneurship are the buzz words - we as a society are seen as 'job-doers' and not 'job-creators'. The society and the economy, have supported and nurtured a working population, but have failed to create enough entrepreneurs. Rather the whole idea of entrepreneurship, till about a decade back, was mostly associated with family-run businesses. And others from non-business background, who tried to diverge in these unknown territories of no fixed income (read salary), were not looked up to.

But things have changed in the recent past and entrepreneurship has slowly become 'cool' in our part of the world. We now need an entrepreneurship ecosystem to keep the momentum going and benefit from the trend. Some positive steps have been taken. For instance the decision of IIT Mumbai to allow final year students a chance to re-appear in the regular placement process, even after two years of passing out from the college, and in case where the student tried but was not successful in making her venture work out.

So what exactly is an entrepreneurship ecosystem and who (and why) will be its elements? According to Daniel J. Isenberg, professor of management practice at Babson College and executive director of the Babson Entrepreneurship Ecosystem Project, entrepreneurs are most successful when they have access to the human, financial and professional resources they need, and operate in an environment in which government policies encourage and safeguard entrepreneurs. This network is described as the entrepreneurship ecosystem. He even terms this ecosystem as the 'holy grail' for federal governments, which stand to flourish from these entrepreneurs.

A proxy measure to understand where we as a country stand today, in terms of a developed ecosystem, is our ranking on the ease of doing business index. A higher ranking for a country indicates that starting and doing business there is easy and which could also mean that the entrepreneurship ecosystem is supportive. According to the World Bank's latest disclosed index rankings on July 2011, India stands at 132 (out of 183 nations). The country stands particularly low on two measures which are, dealing with construction permits and enforcing contracts. It is evident that we lack on various parameters and which means that we should try to improve. Improvement measures can be taken across three key facets, which are – institutional, policy and social support systems.

Institutional level measures: The previous point of the IIT Mumbai initiative is an excellent example of institutional level support. Globally some of the highly recognized universities have focused centers for developing and nurturing budding entrepreneurs. One of the most notable ones include the MIT Entrepreneurship Center, which was founded with the objective of commercializing technologies invented by MIT faculty and student labs. The centre has produced lots of success stories in the past and every year MIT graduates establish more than 200 companies. From inception till date the centre has been able to produce 25,800 active companies, creating employment for 33 lakh people! Another case in point is a non-profit organization SCORE, which is a resources partner for the U.S. Small Business Administration and provides free of cost mentoring & advisory services to entrepreneurs.

Policy level measures: Policy is a pretty wide word and can encompass such government actions that can lead to attracting and retaining more entrepreneurial talent in the country. This could mean fiscal benefits such as tax concessions, procedural ease in terms of guidelines and laws to be followed by a fresh startup and or other measures such as change in laws and business rules. A case in point here is the Startup Visa Act of 2011, which was introduced in March 2011, and which proposes amendment to the U.S. immigration law. This Act is primarily being supported by investors who fund startup companies across the globe and are therefore pitching for such immigration rules that instead of such startups being residing in other parts of the world, should permanently be moved to the US, thereby creating jobs and Intellectual Property rights.

Social support measures: And last but not the least we as a society need to promote entrepreneurship culture. We should try building some sort of a social support for the youngsters and others who are trying to break free, have ideas and the ability to take risks and try out new things. It is ok even if they fail; at least they would come out more enriched with an experience of running things firsthand and managing all aspects of a business. Forums like the TED can provide the necessary emotional support and guidance for our budding entrepreneurs. TED was started in 1984 as a conference to bring people together from Technology, Entertainment and Design, to discuss and share new business ideas and connect the ‘thinkers’ with the ‘doers’.

While some of these measures such as institutional support can be implemented pretty fast, others like policy and cultural support may take some more time. In the meanwhile it is great to see that entrepreneurship is slowly getting acceptance as an alternate career choice. The bottom-line here is that the country today needs more and more entrepreneurs who could create jobs and spearhead innovations in technology and business. After all entrepreneurial activity acts as an antibody for the growing economy.

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