What are the most important steps society can take to increase the number of entrepreneurs? It’s a question educators have struggled with for some time. The traditional approach has been to create courses centered on the theory and practice of starting a business. But the Academy for Entrepreneurial Leadership at the University of Illinois has taken a different path, seeking ways to draw out the entrepreneurial spirit in many different departments and academic disciplines.

In a December 2011 Insight Lab, we worked with the Academy’s executive director, Prof. John Clarke, to ask how we could create and recognize more entrepreneurs not just at U of I, but throughout our society. In the following conversation with Labs Content Director Andrew Benedict-Nelson, he reflects on the ideas that emerged from the session and considers how we could bring the entrepreneurial ideal to such unexpected arenas as immigration policy and the prison system.

Andrew Benedict-Nelson: What to you felt like the most significant idea to come out of this session?

John Clarke: I don’t think there was just one – there were lots of significant ideas. It was exciting in that there were different opinions and we touched on a lot of different topics. We went down a few paths that were pretty traditional ways of thinking about this problem, but the Lab was also successful in getting us away from them.

We’re talking about how to change the psyche of a country so that people recognize that entrepreneurship is critical for everyone’s fundamental well-being and standard of living. It is critical to our social well-being, our intellectual well-being, and of course our economic well-being. To me, recognizing that is the big idea, whether we’re talking about the environment or health care or the economy. People are recognizing that entrepreneurship is the way to generate value and to consciously pursue it. And they are recognizing the challenges of being an innovator, taking risks, and accepting failure as a path to success.

We tend to put entrepreneurship in a corner and associate it with people starting businesses. We need to recognize it is much broader than that. It creates value through a process of innovation and disrupting the things that we normally do.

ABN: I am glad that you mentioned disruption. It struck me that at the end of the Lab we were considering two important elements of entrepreneurship that aren’t typically discussed. One was the effects of disruption in society. The other was the value of struggle and hardship to entrepreneurship.

JC: I’m not sure that we really need to put people through hardship to make them entrepreneurs. I’m not sure that you should and I’m not sure that you can, because hardship is such a relative thing. We don’t want forced entrepreneurship.

ABN: Right. But it seems as if there is an organic relationship between a society where we allow disruption to occur and a society where struggle is valued. Even if people aren’t forced into poverty by disruptions, they may not be as well-off as they were before, prompting the struggle that may lead them to become entrepreneurial.

JC: The economist Deirdre McCloskey has studied this effect. She looked at England and the Netherlands shortly before the Industrial Revolution. In those societies, all of a sudden people were allowed to be disruptive and bring innovation to the market and not be dragged off and imprisoned somewhere. Her belief is that once you have that, entrepreneurship could become central to what we do.

Value doesn’t have to come through press-ganging people to do something. The question is how we create an environment where people can see that being an entrepreneur is a good thing to do and they are afforded opportunities to do it. You can’t force people to do it and you don’t want everyone to do it. But we need a certain portion of the population to do it.

ABN: So there are plenty of people who would look at the design principle of making society safe for disruptions who would then say, “Great, we have a free market system that already accomplishes that. Case closed.” Do you think that’s sufficient, or do we need other things?

JC: Well I don’t think you can just say “other things” and know what that is. It can become contentious.

In the Lab, Pablo Montagnes had a really great point. He asked if the bankruptcy laws we currently have are the best they could possibly be in order to foster a culture of innovation. That’s a great example – I don’t know anything about bankruptcy law, so I couldn’t tell you how far we are from the ideal. But just to say you have free markets is not enough – you have to look at it at a much more granular level. 

I was recently in Israel looking at entrepreneurship there. You have a country that is smaller than Illinois, has fewer people than Illinois, and less resources than Illinois, but it creates more startups than Illinois. It has more companies listed on NASDAQ. We found that government was involved in many different ways in creating this environment that was resulting in entrepreneurial activity. It wasn’t just that they had a free market. So I don’t think it’s enough. We have to dig deeper.

ABN: It would seem like this would give you a good criterion to choose between the various flavors of capitalism. You could choose between, say, a more libertarian version or a more Hamiltonian version based on the criterion of making society safe for disruption.

JC: I’ve spent time in South Korea and Singapore. These are small countries that have had a sea change in their economic well-being. Clearly there is an environment in which some of the entrepreneurial qualities we talked about in the Lab have been enabled. But they have to be enabled on a continuum where things are always changing.

For example, we had the consul-general of China here recently speaking to a group of students, and some of them asked him about intellectual property law. They’ve read in the paper that the Chinese don’t respect it. He explained to them that 15 years ago, everyone in China felt that if someone had an idea, everyone should be able to share in that idea and benefit society. That was their IP law. It was also a communist country where it was felt that the state owned all the ideas and the state was free to give them away.

Here in the U.S., we have a different system of intellectual property law that is based on the system from the U.K. And by the way, when the U.S. broke away from the U.K., it was convenient for them not to worry about international patent law for a little while.

But now we have this system of intellectual property, and many assume that it is the right way and it is the way that we will do it forever. But I don’t believe that’s true. In another ten years the way intellectual property is viewed and managed will be different, as it will be in China. Who knows, we may be moving toward the middle or we may be moving toward some new, other place.

My point is that these things are not static. We have to accept that they are dynamic, and therefore we should try to influence how they will change in the future in order to create an environment that supports entrepreneurship.

ABN: People talk about the notion of “defending” the open market or capitalism or entrepreneurship. But it seems as if the problem of trying to do that within our existing political economy is that whoever is going to stand up on behalf of business necessarily represents the existing companies, the existing industries, the status quo. But it seems to me that you would also need a way of standing up for all the future potential companies that might exist if the rules were different. Perhaps your idea that we need to think of our system as dynamic helps solve the problem.

JC: You also solve the problem by having lots of different groups of people who value the entrepreneurial process at a grassroots level. Government would respond to that kind of groundswell movement. And some of those people could even be inside the institutions that don’t want to change. That’s the importance of broadening the audience for this conversation

ABN: What sort of actions do you think people could take to contribute to an entrepreneurs’ movement right away?

JC: They could start to bring this conversation into their own communities, whether they’re a judge who has a say about the Illinois prison system or someone running a veterinary association. They can ask how they can enable people to innovate and disrupt in their own communities.

ABN: If you can figure out how to get the prison system to be entrepreneurial, that would be quite a feat.

JC: Surely we need all these people who are stuck in prison to understand how they can be more worthwhile. You could do that with an entrepreneurial approach.

ABN: Well, by definition anyone in a prison was willing to create some degree of disruption in society. When you think about the people who attempt to help prisoners – preachers, educators, social workers – very few of them speak to that trait. But an entrepreneur might be able to say to them, “Look, we’re not so different. I wanted to get ahead in a faster, more interesting way than working at a convenience store. But my way was legal.” I would think a lot of criminals would respond positively to that.

JC: Perhaps. We could bring the knowledge and skills of people who are entrepreneurs to these people who have lost their way.

ABN: I’m picturing rows of inmates learning Ruby on Rails instead of making license plates.

JC: We’ve assumed that certain skills need to be learned and exercised in a cube in an office. But you don’t need a college degree for many of those skills.

ABN: So another idea that we were left with at the end of the Lab was that our conversation about entrepreneurship is missing a certain kind of respect for struggle and overcoming adversity. It feels like this is the flip side of the coin from the disruption point, doesn’t it? After all, you can’t have a society where there are frequent disruptions without also respecting the adversity people go through as a result.

JC: Of course, people shouldn’t have to starve or relocate their families as a result of disruption. They shouldn’t have to be forced into labor camps or any number of bad things that have happened in the past. But disruption does create social problems that need to be addressed with new disruptions. Health care might have to get really, really expensive before someone comes up with an idea to break the system. 

Right now we have a certain level of unemployment associated with the recession we went through. Is that unemployment a necessary evil that results from innovation? It could be so.

ABN: In the Lab, Howell Malham asked how we could build a society where getting laid off would be perceived as a positive event, an opportunity. It sounds like you’re almost scaling that up to imagine a society where the level of unemployment could be a measure of the health of innovation. A country with low unemployment might be perceived to be unhealthy.

JC: We view unemployment as a result of recessions, and we view recessions as bad. But what actually happened was that when companies downsized their workforces, they made innovations that helped them to run their companies with a lot less people. Now that there has been something of a turnaround, of course those companies have not gone out to hire all those same people. They’re now creating more value with less people.

ABN: So let’s say we’ve magically changed society, and now when you turn on NPR they say, “Ten percent unemployment – ain’t that swell? America sure is doing something right.” It would seem that the corollary would have to be this other thing Howell was talking about – you’d have to have a society where getting laid off was the beginning of a great new adventure, rather than an indication that you’re a worthless human being. How do we build that?

JC: Well, unemployment is an interesting figure. The number is so manipulated that it is meaningless without more data, which is rarely presented. How long have people been unemployed? Where are they? Who are they? In order to view it as a positive statistic, you would need to look at it in much more detail. You’d need to be able to say, “We had too many people trained in this industry, now we need to train them in this other industry.” Right now there’s not a lot of insight in the number.

ABN: At one point in the Lab, Jeff Leitner turned to Pablo Montagnes and asked what one policy change he thought would most increase the raw number of entrepreneurs in this country. His answer was to “open the floodgates” of immigration. What did you make of that? Did it surprise you?

JC: No, I would totally agree with that. This country has been built on immigrants who come here hungry. There’s all kind of data on immigrants and the impact that they have.

I worked for Accenture in Chicago. They actually profiled partners and found that the vast majority of them were first-generation immigrants. They drove the recruiting policy. They looked at the behavior of people who were first-generation immigrants and used those criteria in the interview process for the next set.

So immigration is a really interesting topic for discussion. There is a perception that it will create a disruption that is negative: “These people will take our jobs.” “We mustn’t let them cross the border.” “We must build a wall and keep them out.” But it’s a really interesting place to talk about entrepreneurship and public policy.

ABN: What I was thinking when he made that statement was, “Well, the immigration debate in the United States is ‘about’ a lot of things – the rule of law, race, language, culture, economics. But right now, entrepreneurship isn’t one of them.” The debate could look really different if we all understood that our main goal was to create the most entrepreneurial society possible.

JC: Sure. Right now we have students with visas who come here from China and earn a PhD, but then there is no incentive for them to stay, so they take all that intellectual property and walk right back to China. It’s a terrible situation. We should be welcoming them with open arms and encouraging them to stay, since they are people who will create value in the entrepreneurial ecosystem.

ABN: A related idea developed in the Lab was that you could have some sort of institution – a university or otherwise – where struggle or overcoming adversity would be the main selection criterion. What did you make of that?

JC: It’s a difficult one to implement, because it assumes that the people who had the hardest time getting in are the most worthy. It’s interesting to think that they might be. But I don’t know if I could if you could use it as a recruiting requirement. But you could do something like Accenture did, going back to the group you’re interested in, seeing what traits they exhibited as a result of overcoming hardship, then looking for more of the same.

This idea that to make entrepreneurs we need to recruit certain types of people who have what we need – that is valid. Whether it is the people who had the hardest time getting here – that’s not always going to work. But it’s a good thing to think about.

ABN: You might have to look for the specific types of hardship that make people more entrepreneurial.

JC: In our classes on entrepreneurship at U of I, we look at the knowledge, skills, and attitudes we want students to have at the end of the class. Knowledge is perhaps the easiest thing to transmit. Skills you can build and develop. But attitudes are really important and really difficult.

ABN: I suppose that you could try to admit people who were pre-disposed to attitudinal change. Right now we mainly select for people’s ability to acquire knowledge through means such as standardized tests. I would imagine that a university built around people’s ability to adopt new attitudes would be very different.

JC: That’s right. I look for that quality when I interview people to participate in our entrepreneurship program. I assume that the intellectual horsepower required to get a good GPA at the University of Illinois is not a limit for anyone I would look at, so I look at more than that.

I’m interesting in being involved with kids who create their own learning objectives for the courses they take, in addition to the learning objectives that the faculty have. I’m interested in the kids who have the hunger to take advantage of all of the resources available to them.

So anyway, when it comes to this attitudinal thing, I do think you can teach for it. I don’t know that you have to put people in hardship in order for them to learn it. There is a lot of focus on knowledge in education, but there are also many educators who are interested in changing attitudes through the subjects that they teach.

ABN: If you could take one idea from this Lab and plug it into everyone who self-identifies as an entrepreneur, what would it be?

JC: I go back to where we started, the notion that entrepreneurship is fundamental to society.

ABN: It’s funny – I wonder if the people who understand that best might not be our most successful entrepreneurs. It might be the small bookstore owner, you know?

JC: Well, many of those are “lifestyle” entrepreneurs who just want to do one thing. An individual may be able to run one restaurant but can’t translate it into a new chain of restaurants. We want them to think about how they could be doing something much bigger. We want them to innovate at the level of concept.

ABN: So let’s change the audience – if you could take one idea from this session and plug it into the brain of every U of I student, what would it be?

JC: Not only would I want them to know that entrepreneurship is critical to the success of the society in which they live, but I would want them to see that each of them have the option of becoming successful entrepreneurs. You don’t go to college just to get a job at a Fortune 500 company and work in a cube. That can be the way that you contribute to society, but there are many other opportunities that are available through an entrepreneurial process, and they can take advantage of it. There is no student on this campus who could not take that path, but many students who won’t because they think it is not available for them.

ABN: I like those words “for them.” I had a friend who worked in a retail job that she just hated. But she made it through by taking notes on all the things they were doing wrong so she could do it better someday. It feels like knowing you have the option to be an entrepreneur could be a sort of coping mechanism to deal with the status quo, even if you can’t change it immediately. I think that would be helpful for young people, particularly if they’re having trouble finding the kind of job they want.

JC: I agree. They should know there is another option for them. There is another path. And we need some of them to take that path for us to be successful overall.

ABN: And it takes that person who couldn’t get a job for two years after college and says, “Hey, it’s not that you were failing for two years. We needed you to go through that in order to save our economy in the future.”

JC: We needed you to consider options you might not have considered if you’d gotten that job.

ABN: Is there anything else you’d like to add for anyone who is interested in the Lab and might read this?

JC: Get involved in the conversation. Propagate the conversation. If you think this is important, get involved.