Entrepreneurship – Page 92 – artdiamondblog.com

Individualistic Cultures Foster Innovation

Source of graph: online version of the WSJ commentary quoted and cited below.

(p. B1) Luther matters to investors not because of the religion he founded, but because of the cultural impact of challenging the Catholic Church’s grip on society. By ushering in what Edmund Phelps, the Nobel-winning director of Columbia University’s Center on Capitalism and Society, calls the “the age of the individual,” Luther laid the groundwork for capitalism.
. . .
(p. B10) Mr. Phelps and collaborators Saifedean Ammous, Raicho Bojilov and Gylfi Zoega show that even in recent years, countries with more individualistic cultures have more innovative economies. They demonstrate a strong link between countries that surveys show to be more individualistic, and total factor productivity, a proxy for innovation that measures growth due to more efficient use of labor and capital. Less individualistic cultures, such as France, Spain and Japan, showed little innovation while the individualistic U.S. led.
As Mr. Bojilov points out, correlation doesn’t prove causation, so they looked at the effects of country of origin on the success of second, third and fourth-generation Americans as entrepreneurs. The effects turn out to be significant but leave room for debate about how important individualistic attitudes are to financial and economic success.

For the full commentary, see:
James Mackintosh. “STREETWISE; What Martin Luther Says About Capitalism.” The Wall Street Journal (Friday, Nov. 3, 2017): B1 & B10.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Nov. 2, 2017, and has the title “STREETWISE; What 500 Years of Protestantism Teaches Us About Capitalism’s Future.” Where there are minor differences in wording in the two versions, the passages quoted above follow the online version.)

Case Study of Effects of Closing a Factory

(p. B1) Perhaps the most illuminating business book of the year, for me, is Amy Goldstein’s “Janesville: An American Story.” If you really want to understand what’s going on in today’s real economy — beyond the headlines about new stock-market highs, tax policy or the latest list of billionaires — spend some time with this true tale of what happened in the middle-class town of Janesville, Wis., after General Motors closed a factory there.
Ms. Goldstein admirably shows all sides of this story, capturing in microcosm all of the issues that so many communities across the United States are facing. You will probably be left doing some hard thinking about what is driving the politics of the moment, although Ms. Goldstein brilliantly, and respectfully, paints the book’s characters with such nuance that readers from across the ideological spectrum are likely to arrive at different conclusions about heroes and villains.
In crafting this deeply reported and riveting read, Ms. Goldstein spent considerable time in Janesville. As a result, you get a palpable sense of what life is like there; of the financial and psychological impact that a major plant closing has; and of the knock-on effects such an event has on other businesses and institutions. She paints vivid portraits of characters who include laid-off workers seeking retraining, union officials and local politicians, Speaker Paul D. Ryan among them. If you liked “Hillbilly Elegy: A Memoir of a Family and Culture in Crisis,” J. D. Vance’s best-seller about growing up in Ohio and the decline of the industrial Midwest, I think you’ll find that “Janesville” makes these issues real in a new and compelling way.

For the full commentary, see:
Sorkin, Andrew Ross. “DEALBOOK For a Year Filled With News, A List of Books Worth a Look.” The New York Times (Tuesday, DEC. 26, 2017): B1 & B3.
(Note: the online version of the commentary has the date DEC. 25, 2017, and has the title “DEALBOOK; In a Year of Nonstop News, a Batch of Business Books Worth Reading.”)

The Goldstein book mentioned above, is:
Goldstein, Amy. Janesville: An American Story. New York: Simon & Schuster, 2017.

Mackenzie Was Wrong in Thinking He Was a Failure, but Was Right About the Northwest Passage

(p. 10) In the summer of 1789, a young fur trader named Alexander Mackenzie led an expedition in search of a Northwest Passage. He and his voyageurs and Chipewyan guides were attempting, 14 years before Lewis and Clark, to cross North America, paddling birch bark canoes down a river they hoped would pierce the Rocky Mountains. Mackenzie was a businessman who wanted to speed the pace of trade by connecting New York and China via an interior passage through the continent. He did find such a route, without knowing it. Mackenzie died thinking he was a failure, when he was really just 200 years early.
Some ideas are fantastically ahead of their time. In 1636, René Descartes created contact lenses, using glass tubes filled with water; unfortunately, the wearer was unable to blink. Charles Babbage invented digital “difference engines” — essentially modern programmable computers but powered by steam — in the 1820s. And Kodak developed digital cameras in 1974 but discarded the product idea because it thought no one wanted to look at photos on televisions.
In a particularly ill-timed episode, Giovanni Caselli invented the fax machine in 1856. Letter writers could scribble a message onto electrically charged foil, and the portions covered by ink would block the flow of current. The stylus of Caselli’s device then scanned each line of text, transmitting the signal via telegraph lines to a second machine, which would scrawl out a “fac simile” of the letter.
To be practical, the system required a coordinated investment throughout a region, and Napoleon III had plans to modernize all of France with Caselli’s pantelegraph, more than a decade before Alexander Graham Bell’s telephone. But before it could be installed, Napoleon III lost the Franco-Prussian War, his government fell, and Paris descended into the brutal anarchy of the Commune. Caselli faded into obscurity, and his technology was forgotten for a century.
Like the fax machine and computer, Alexander Mackenzie’s Northwest Passage was too forward-looking to be practical or useful. Today the melting Northwest Passage — along the North Slope of Alaska, through the maze of Canadian Arctic islands, then back down along Greenland’s west coast, to the Atlantic — is regularly in the news. A holy grail for generations of explorers is now finally open, because of climate change. Giant cargo and oil tankers regularly ply those seas, and even the Crystal Serenity cruise ship, with 1,700 people onboard (many in black tie), has made the journey the past two summers.
. . .
Ideas do not exist only on their own merits. Timing matters.

For the full commentary, see:
Brian Castner. “The Northwest Passage That Might Have Been.” The New York Times, SundayReview Section (Sunday, March 11, 2018): 10.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date March 10, 2018.)

Castner’s commentary is related to his book:
Castner, Brian. Disappointment River: Finding and Losing the Northwest Passage. New York: Doubleday, 2018.

Pursuit of Slow Hunch Pays Off with Flu Drug

(p. B3) As Americans suffer through the worst influenza outbreak in almost a decade, a Japanese drugmaker says it has developed a pill that can kill the virus within a day.
. . .
“The data that we’ve seen looks very promising,” said Martin Howell Friede, who leads the World Health Organization’s advisory on vaccines, including for influenza. “This could be a breakthrough in the way that we treat influenza.”
. . .
Shionogi scientists began researching a novel flu drug more than a decade ago, shelving almost 2,500 compounds in the process. Then, the 140-year-old Osaka company, which has created blockbuster drugs used to treat HIV and high cholesterol, had a breakthrough.
Shionogi scientists knew from their research that an anti-HIV drug the company had developed with a joint venture of Pfizer Inc. and GlaxoSmithKline Co. worked by blocking a metallic enzyme that HIV uses as a weapon to hijack human cells. They found the flu virus was also exploiting a metallic enzyme.
“So we said, ‘why don’t we build on our HIV knowledge to find a way to treat the flu?’ And we did,” said Takeki Uehara, who led the compound’s development.

For the full story, see:
Preetika Rana. “Drugmaker: Pill Kills Flu in a Day.” The Wall Street Journal (Monday, Feb. 12, 2018): B3.
(Note: ellipses added.)
(Note: the online version of the article has the date Feb. 10, 2018, and has the title “Experimental Drug Promises to Kill the Flu Virus in a Day.”)

Xerox Will Cease to Exist as Independent Firm

(p. A1) When Xerox introduced its popular copying machines in 1959, their wizardry was considered as high tech as the iPhone when Steve Jobs presented it to the world almost 50 years later.
But just as Xerox made carbon paper obsolete, the iPhone, Google Docs and the cloud made Xerox a company of the past.
On Wednesday [January 31, 2018], Xerox said that, after 115 years as an independent business, it would combine operations with Fujifilm Holdings of Japan. The deal signaled the end of a company that was once an American corporate powerhouse.
“Xerox is the poster child for monopoly technology businesses that cannot make the transition to a new generation of technology,” said David B. Yoffie, a professor at the Harvard Business School.
The move offers a stark reminder that no matter how high a company may fly, it is still vulnerable to the next big breakthrough. Xerox joins once formidable tech companies like Kodak and BlackBerry that lost the innovation footrace.
Under the deal, Fujifilm will own just over 50 percent of the Xerox business. There are plans to cut $1.7 billion in costs in coming (p. A11) years. Fujifilm said its joint venture with Xerox would cut its payroll by 10,000 workers worldwide.
How Xerox fell so far is a case study in what management experts call the “competency trap” — an organization becomes so good at one thing, it can’t learn to do anything new.
Xerox traces its origins to the founding in 1903 of the M. H. Kuhn Company. But it was an invention dreamed up in a makeshift Queens lab in the 1930s — a forerunner of the Silicon Valley garages used by the likes of Mr. Jobs — that changed Xerox’s trajectory.
That invention, by Chester Carlson, a patent lawyer, led to the creation of the modern copy machine. He even came up with a term for the process: “xerography.” In 1959, Xerox, which had won the right to explore the technology, offered the office copier that went mainstream.

For the full story, see:
STEVE LOHR and CARLOS TEJADA, “Xerox, Tech Icon That Became a Verb, Is Suddenly Past Tense.” The New York Times (Thursday, Feb. 1, 2018): A1 & A11.
(Note: bracketed date added.)
(Note: the online version of the article has the date JAN. 31, 2018, and has the title “After Era That Made It a Verb, Xerox, in a Sale, Is Past Tense.” The online version says that the New York edition also had title “After Era That Made It a Verb, Xerox, in a Sale, Is Past Tense.” My copy was the “National Edition.”)

FDA Regulations Stop Vape Shop Innovations

(p. A19) After Kimberly Manor lost her husband to lung cancer, she was inspired to make a dramatic career change. Kimberly now owns and operates Moose Jooce in Lake, Mich., a “vape shop” that sells various electronic nicotine devices. These products use battery-powered coils to vaporize liquids, with differing levels of nicotine or none at all. Thus, vapers may inhale nicotine without the tar or other harmful chemicals in tobacco smoke, since there is no tobacco and no combustion. Scientific evidence suggests this is a much safer alternative to smoking.
Ms. Manor estimates that her business has helped more than 500 people quit smoking, most of them longtime smokers in their 50s or older. Yet the Food and Drug Administration is discouraging more such enterprises. In a regulation issued in 2016 known as the “deeming rule,” the agency ordered that vaping products would be subject to the same regulations developed for the cigarette industry under the Tobacco Control Act of 2009.
The deeming rule has been devastating to businesses like Ms. Manor’s. To give just one example, vape shop owners frequently experiment by mixing new flavors for the liquid “juice.” Now, each separate creation requires its own prohibitively expensive application for FDA approval, which means that vape shops have been forced to stop innovating.

For the full commentary, see:
Todd Gaziano and Tommy Berry, “Career Civil Servants Illegitimately Rule America; Leslie Kux has never been elected or confirmed by the Senate. She’s issued nearly 200 regulations.” The Wall Street Journal (Thursday, March 1, 2018): A19.
(Note: the online version of the commentary has the date Feb. 28, 2018.)

Independent Snapchat Entrepreneurs Turned Down Facebook’s Three Billion Dollars

(p. A17) Snap Inc. provides a remarkable story, not only because it has accumulated so many users so rapidly but also because it has remained an independent company in the shadow of Facebook, which in 2012 acquired Instagram, also photo-centered, for $1 billion. A year later, noticing Snapchat’s power to attract young users, Facebook offered Snap’s founders $3 billion for the company, a figure that the book’s publisher has rounded down for the title. Mr. Spiegel, the chief executive, said “no,” and Snap’s current market capitalization, around $23 billion, would seem to be sweet vindication. But Snap has yet to figure out how to convert its many users into net profits, and Instagram has shown no compunction about copying Snapchat features and has grown even faster.
. . .
In Mr. Spiegel’s view, sharing snaps–of anything–was enjoyable because the images were ephemeral and didn’t have to be composed for posterity. “It seems odd that at the beginning of the internet everyone decided everything should stick around forever,” he said.

For the full review, see:
Randall Stross. “BOOKSHELF; A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.” The Wall Street Journal (Monday, Feb. 12, 2018): A17.
(Note: ellipsis added.)
(Note: the online version of the review has the date Feb. 11, 2018, and has the title “BOOKSHELF; Review: A Startup in Focus; Snapchat was born when casual photos replaced text messages among Stanford students. It now boasts 187 million daily users.”)

The book under review, is:
Gallagher, Billy. How to Turn Down a Billion Dollars: The Snapchat Story. New York: St. Martin’s Press, 2018.

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

Decline in Startups Reduces Labor Market Dynamism

Source of graphs: online version of the NYT commentary quoted and cited below.

(p. B1) . . . a broad sweep of statistics reveals a peculiar weariness spreading through the economy. Belying breathless headlines about the fabulous opportunities that technology is about to bestow on society, it suggests that many rich market democracies have lost much of their dynamism. Their companies are getting old, and their labor markets are getting stuck. Productivity growth has slumped. And many workers in their prime are peeling off from the labor force.
. . .
(p. B4) . . . , the economy’s ability to generate and support new businesses — agents of creative destruction that bring new products and methods into the marketplace — appears to be faltering across the world. In the United States, the rate of company formation is half what it was four decades ago. And it is slowing in many industrialized countries.
. . .
In a study published on Tuesday [February 6, 2018] by the Hamilton Project at the Brookings Institution, Jay Shambaugh, Ryan Nunn and Patrick Liu explore what economists have figured out about the American economy’s inertia and the fallout for wages and living standards.
The evidence paints a distinct picture of decline: Fewer start-ups mean fewer new ideas and fewer young, productive businesses to replace older, less productive ones. Researchers have found that the decline in companies entering the market since 1980 has trimmed productivity growth by about 3.1 percent.
The dearth of new businesses is also cutting off one of the main paths to workers’ advancement: the outside job offer. Changing jobs allows workers to shift to positions in which they are more productive, and better paid. But labor market fluidity — job switching, creation and destruction — has been declining since the 1980s.
Clear though the pattern may be, the researchers acknowledge that we haven’t yet figured out what is holding the economy’s dynamism back. “This is one of those big, economywide trends,” Mr. Shambaugh told me. “There is room for a lot of stories.”

For the full commentary, see:
Porter, Eduardo. “ECONOMIC SCENE; What to Worry About: Decrease in Start-Ups Is a Sign of Stagnation.” The New York Times (Wednesday, February 7, 2018): B1 & B4.
(Note: ellipses, and bracketed date, added.)
(Note: the online version of the commentary has the date FEB. 6, 2018, and has the title “ECONOMIC SCENE; Where Are the Start-Ups? Loss of Dynamism Is Impeding Growth.”)

The paper by Shambaugh, Nunn, and Liu, that is mentioned above, is:
Shambaugh, Jay, Ryan Nunn, and Patrick Liu. “How Declining Dynamism Affects Wages.” In Revitalizing Wage Growth Policies to Get American Workers a Raise, edited by Jay Shambaugh and Ryan Nunn, Washington, D.C.: Brookings, 2018, pp. 11-23.

Blockchain May Bring Property Rights to the Poor

(p. A15) The great economic divide in the world today is between the 2.5 billion people who can register property rights and the five billion who are impoverished, in part because they can’t. Consider what happens without a formal system of property rights: Values are reduced for privately owned assets; wages are devalued for workers using these assets; owners are denied the ability to use their assets as collateral to obtain credit or as a credential to claim public services; and society loses the benefits that accrue when assets are employed for their highest and best purpose.
. . .
Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.
If Blockchain technology can empower public and private efforts to register property rights on a single computer platform, we can share the blessings of private-property registration with the whole world. Instead of destroying private property to promote a Marxist equality in poverty, perhaps we can bring property rights to all mankind. Where property rights are ensured, so are the prosperity, freedom and ownership of wealth that brings real stability and peace.

For the full commentary, see:
Phil Gramm and Hernando de Soto. “How Blockchain Can End Poverty; Two-thirds of the world’s population lacks access to a formal system of property rights.” The Wall Street Journal (Friday, Jan. 26, 2018): A15.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date Jan. 25, 2018.)

Rival Retailers Failed in Effort to Cut Off Ikea’s Supplies

(p. B5) Ingvar Kamprad, born on a farm in the rock-strewn Swedish region of Småland, got his start as a merchant at around age 5 by buying matches in bulk and reselling them to neighbors.
He went on to pull off a rare feat: Creating a global retailing powerhouse, the furniture chain IKEA, with over 400 stores, in a business that generally has defied globalization. IKEA’s furniture has delighted bargain seekers for decades and made millions of dorm rooms and first apartments habitable, despite maddening the many customers who found the assembly instructions baffling.
. . .
One of his most successful notions was that furniture could be shipped and warehoused much more cheaply in disassembled form.
. . .
Rival retailers in Sweden, shocked by IKEA’s low prices, pressured furniture makers to cut off supplies to Mr. Kamprad’s company. That served only to make IKEA stronger as Mr. Kamprad found he could buy furniture much more cheaply from Polish plants. The search for foreign suppliers also helped IKEA turn itself into an international company.
. . .
Mr. Kamprad remained a penny-pincher, flying economy class and lecturing his employees that waste was sinful, according to “Leading by Design,” a 1999 biography by Bertil Torekull.

For the full obituary, see:
James R. Hagerty and Saabira Chaudhuri. “IKEA’s Founder Dies at 91.” The Wall Street Journal (Monday, January 29, 2018): B5.
(Note: ellipses added.)
(Note: the online version of the obituary has the date Jan. 28, 2018, and has the title “Ingvar Kamprad Built Global IKEA Chain From a Single Furniture Store in Sweden.”)

The autobiography of Kamprad, mentioned above, is:
Kamprad, Ingvar, and Bertil Torekull. Leading by Design: The Ikea Story New York: HarperCollins, 1999.