Traditional Definition
Listening to the video lecture by Dr. Russell Sobel was quite interesting and intriguing for me. When thinking about what entrepreneurship is most people tend to go to the general definition that it is those who organize, manage and assume the risks of a business. I believe that we see people run to this definition as it is the most common thing we see today. Small mom and pops shops fall under this category. For as long as one can remember and becoming especially popular after the covid pandemic, we are seeing more people that fall in this definition as they are starting their own businesses trying to grow them to the next level. In the south we have seen this for many years, family farms that are operating are working without secured funding from investors. They are relying on the products that they sell yearly to keep their businesses afloat.
The Narrow Definition of Entrepreneurship
Dr. Sobel defines the narrow definition of entrepreneurship as “an innovator who introduces new, disruptive, combinations of goods and resources into the marketplace within a new for-profit business venture in which they control and have secured funding.” I feel as if Dr. Sobel was spot on when he gave his example of this. Elon Musk, this is a prime example of someone who is constantly innovating products with secured funding that he has either gotten from investors, and or has funded himself. In some ways I feel that this is great for the people. With the constant innovations that he is making we are seeing great effects from.
Israel Kirzner Beliefs
As Dr. Sobel stated in the lecture that Kirzner believes “an entrepreneur is someone who discovers previously overlooked or unknown profit opportunities.” As Dr. Sobel mentioned in the lecture “Discovery is incentivized profit” why is it that when there is profit to be made, we see more innovators in action? I believe that this is due to the great idea that they can turn a larger profit. For example, we see car companies that make small improvements that catch their customers eye and make them want purchase. This would include car manufactures making their tail gates automatic or making the radio screen on a car stretch across the entire dashboard. Innovators are taking previous inventions and recreating them into something that is more up to date with the world we live in today. By doing this they are not only innovating, but they are making more money.
Innovation vs. Invention
We are seeing many inventors coming out with new inventions today, but to be successful they must be innovative in the market. A prime example of this would be the example Dr. Sobel gave, “James Spangler invented the modern upright vacuum, and had it patented, he later sold the patent to his cousin who innovated the product and made it into what it is today.” Unfortunately, we see many products in the market today that do not fit the market. This is largely due to it not being as resourceful to people as other products. This does not mean it is not a good product, just that it is not profitable to make, or consumers do not find the value in purchasing it.
Profit and Loss System
During the lecture Dr. Sobel talked about how the profit and loss system keeps the innovative market alive. Many innovations are made by taking an existing product and trying it with a new resource to make something new, where does the Profit and loss system play a role in this at? I believe that the profit and loss system come into play in this aspect as to when it is released the consumers are the ones who decide what a company will do. For example, if McDonalds released a new hamburger and people did not purchase it, this would help the company know that it should not be worth selling and to not move it to all locations. This system will help show that not all combinations used in innovating are a good thing.
Creative Destruction
I feel that creative destruction is a good and bad thing. Creative destruction is when an advanced product is released and runs the previous business into the ground. Without this process the advances we see today would not be here. The example Dr. Sobel gave of “cars replacing the horse and buggy” was an amazing example to explain with. With out the invention of the car we would not be able to live life the way we do today. Horses cannot compete with cars; they can travel the same distance that cars can. While the bad thing to come from this was people losing their lively hood of raising and selling the horses and building the buggies leads me to bring up Dr. Sobel’s next point. According to Schumpeter “Creative destruction is our main form of progress.” We are better off today by letting this happen, why? If this did not happen, we have no technological advancements that would evolve the way people live their lives. We would still be utilizing horses and buggies and not having the freedom to travel as we do today without these advancements.
Incremental Innovations
This is the process of evolving something in a slow way that it is not done all at one time. I feel as if we find this done in this way is due to large companies being able to keep people coming back to purchase their products. For example, I feel if apple made all kinds of innovations to their products at one time, they would not be able to release products as often as the older models would have a majority of the same features and people would not be interested in purchasing the new products.
Conclusion
As one can see inventions and innovations come with many ups and downs. The ups are that they bring updated features into our lives, and some take jobs away from hard working people. The way people are constantly innovating brings new life to the world at one time, while others bring it over a long period of time.