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Friday May 20, 2022

Ditching upstarts

January 26, 2022

LAHORE: There is a lack of ideas among businessmen and entrepreneurs, and most have been accumulating wealth through favours, cartels and twisting rules. They are oblivious to the fact that resources are not essential for growth in modern times. It is the mind that triggers growth.

We have seen countries with low or no resources making their mark in global economies by nurturing entrepreneurship and imparting knowledge amongst the youth. Countries are poor not because of the resource gap, but because of a lack of ideas.

Our planners are still not supporting the knowledge economy. The desire of rulers to ensure quick but unsustainable growth during their tenure leads to fiscal mismanagement, forcing the economic planners to look for short-term solutions instead of putting the country on a sustained growth path.

This is the reason that the economic growth accelerates when external resources are available and stagnates when there is a squeeze in foreign inflows.

The dilemma of Pakistan’s lopsided economic growth would remain unresolved, if instead of long-term strategy, planners continue to prefer short-term growth objectives, encouraging investors over entrepreneurs.

Development strategies in Pakistan are based on the wishes of the elected members of the ruling parties. They waste huge resources on petty developments in their constituencies, which in fact is the domain of the local governments.

Education is given lip service and its allocation accounts for less than 2 percent of our GDP. Even in that the allocations for knowledge-based learning and skill development institutes are less than 0.2 percent.

Economists now agree that entrepreneurs cannot do it alone. They are looked at as swashbuckling and maverick.

Although this image is very romantic and widely believed. Recent studies have shown that it is completely misleading.

It is true that entrepreneurship drives economic development, innovation, and job creation.

But entrepreneurship cannot be developed through pure government initiatives. It gets impetus from successful entrepreneurial peers who guide and patronise budding entrepreneurs.

This is the reason government efforts the world over have failed to create another Silicon Valley. The Malaysian government unsuccessfully invested to establish the Bio Valley with an investment of $150 million, but ended up launching only a handful of biotech companies.

Similarly, an investment of $2 billion in Moscow on IT incubators did not bring a major startup. We in Pakistan are investing peanuts in incubation centres in Lahore and Karachi without any worthwhile success.

It is very rare that startups after scaling up to become successful entrepreneurs try to encourage the next generation of startups with entrepreneurial spirit. Entrepreneurial ecosystems are not developed in Pakistan.

It is essential to develop entrepreneur networks. These networks don’t start with gleaming facilities or government guarantees. They also do not spring spontaneously from successful companies.

The educational system in Pakistan is tilted towards producing white collar workers. At an introductory class on entrepreneurship at a leading University in Lahore the professor asked each student on what profession they would adopt after completing their studies.

Only one student out of 35 said that he would do business. The rest said they would seek a job or would sit in superior services exam. The student who expressed the desire to do business was in fact from a business family.

The influence of high-impact entrepreneurs runs much deeper as their early success gives them all the three capitals -human, social, financial to reinvest in aspiring entrepreneurs.

Next generation leaders get the inspiration to invest in the generation after that. Entrepreneurship doesn’t just spread on its own.

More experienced entrepreneurs actively cultivate the growth of those around them. Even the most brilliant idea cannot succeed without the right approach.

Experienced entrepreneurs help aspiring founders to see the cracks in their businesses and the strategy to revamp revenue model, human resource, and marketing plan. Moreover, initial success does not ensure a long-time success.

Initial success is important, but young upstarts need guidance against the treacherous process of scaling up. Global studies indicate that entrepreneurship blossoms in communities where older entrepreneurs didn’t just sprinkle some goodwill and angel investing and then disappear, rather they stuck around to help their younger colleagues navigate tricky growth decisions.

Societies where business collaborations are rare, existence of an entrepreneurship ecosystem is not possible. This is the reason that we find a dearth of entrepreneurs in Pakistan.

The first Pakistani IT company listed at NASDAQ failed to create ripples, while after the success of Infosys, Indian entrepreneurs not only dominate Silicon Valley, they have created a replica in their own country as well.

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