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The role of entrepreneurship in The role of entrepreneurship in the growth of the network the growth of the network

societysociety

Terrence BrownTerrence Brown IT-University/KTH School of ICTIT-University/KTH School of ICT

15th March 200515th March 2005

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Image the opportunities, ifImage the opportunities, if

1.1. Computing power was unlimitedComputing power was unlimited2.2. Bandwidth was ubiquitous and unlimitedBandwidth was ubiquitous and unlimited3.3. Storage was unlimitedStorage was unlimited

4.4. All of the aboveAll of the above

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ICT a key roleICT a key role

Information and Communication Technologies Information and Communication Technologies (ICT) play a key role today in spawning new (ICT) play a key role today in spawning new ideas, methods, processes, products and ideas, methods, processes, products and organizational change. It is, however, the organizational change. It is, however, the commercialization of these new ideas, methods, commercialization of these new ideas, methods, and processes that create the value for users and processes that create the value for users and customers, owners and society in general. and customers, owners and society in general. Therefore, ICT is inextricably linked to Therefore, ICT is inextricably linked to entrepreneurship. entrepreneurship.

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EntrepreneurshipEntrepreneurship

Entrepreneurship can be defined as the process Entrepreneurship can be defined as the process of coordinating resources that exploit of coordinating resources that exploit opportunities that exist in the environment or that opportunities that exist in the environment or that are created through innovation in an attempt to are created through innovation in an attempt to create value.create value.This process is therefore not limited to small This process is therefore not limited to small firms or large firms, young firms or older firms, firms or large firms, young firms or older firms, for profit firms or non for profit firms. for profit firms or non for profit firms.

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Explosion?Explosion?

Because of the level of communication, Because of the level of communication, interconnectedness and empowerment the interconnectedness and empowerment the network society should bring, there should network society should bring, there should also be a virtual explosion of also be a virtual explosion of entrepreneurial activities, including but not entrepreneurial activities, including but not limited to, a significant increase in new limited to, a significant increase in new venture creation, which should further venture creation, which should further drive the needs and wants of growing and drive the needs and wants of growing and demanding economies. demanding economies.

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PurposePurpose1.1. To present a possible vision of entrepreneurship in a networked To present a possible vision of entrepreneurship in a networked

society. society. 2.2. Secondly, as we move closer to a network society there should be Secondly, as we move closer to a network society there should be

many questions that arise. Therefore the seminar will also to start a many questions that arise. Therefore the seminar will also to start a discussion that it is hoped will illuminate some of the key questions and discussion that it is hoped will illuminate some of the key questions and begin the process of answering some (perhaps). Some of the begin the process of answering some (perhaps). Some of the questions include: questions include:

a) How will government and business interact? a) How will government and business interact? b) Will, in fact, a network society facilitate or hinder b) Will, in fact, a network society facilitate or hinder entrepreneurship? entrepreneurship? c) How will entrepreneur benefit from a network society? c) How will entrepreneur benefit from a network society? d) How will consumers benefit? d) How will consumers benefit? e) Will a network society change the source of value created by e) Will a network society change the source of value created by entrepreneurship? entrepreneurship?

3.3. At the end of seminar participants should leave not with a sense of At the end of seminar participants should leave not with a sense of closures, but rather with a sense of the possibilities.closures, but rather with a sense of the possibilities.

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Network Society DefinedNetwork Society Defined1.1. Information EconomyInformation Economy2.2. Global EconomyGlobal Economy3.3. Networked EnterpriseNetworked Enterprise4.4. Flexible workFlexible work5.5. Weak Social Inclusion or safetyWeak Social Inclusion or safety6.6. The Culture of Real VirtualityThe Culture of Real Virtuality7.7. Politics: Media and Political MarketingPolitics: Media and Political Marketing8.8. Timeless timeTimeless time9.9. Space of flowsSpace of flows

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Citizen-centricCitizen-centric

Citizens build their own futureCitizens build their own futureThe power of the nation state is declining. It is The power of the nation state is declining. It is becoming more and more difficult for becoming more and more difficult for governments to uphold the law, collect taxes and governments to uphold the law, collect taxes and develop new technology. At the same time the develop new technology. At the same time the need to protect public interests, preferences and need to protect public interests, preferences and domains is increasing and there is a domains is increasing and there is a considerable need for a vigorous and varied considerable need for a vigorous and varied public domain.public domain.

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Nation StateNation StateThe nation state is part of a process of transnationalism The nation state is part of a process of transnationalism There is also a visible loss of political power and the There is also a visible loss of political power and the direct democracy becomes stronger, amongst others as direct democracy becomes stronger, amongst others as a result of ICT. a result of ICT. Decision-making processes are more frequently being Decision-making processes are more frequently being decentralized and that increasingly more tasks are being decentralized and that increasingly more tasks are being brought closer to the level of implementation. brought closer to the level of implementation. Hierarchical conception of the public domain may be Hierarchical conception of the public domain may be rejected, thereby leading to an intense socialization of rejected, thereby leading to an intense socialization of the nation state in which the government is an actor in the nation state in which the government is an actor in the midst of many others.the midst of many others.

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Rise of PostModernismRise of PostModernism

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Power of the mindPower of the mind

In the words of Manuel Castells: “The In the words of Manuel Castells: “The promise of the information age is the promise of the information age is the unleashing of unprecedented productive unleashing of unprecedented productive capacity by the power of the mind. I think capacity by the power of the mind. I think therefore I produce.” therefore I produce.” According to Castells, those who possess According to Castells, those who possess social competences and understand the art of social competences and understand the art of trustworthy cooperation will survive in the trustworthy cooperation will survive in the information ageinformation age A unique environment for entrepreneurshipA unique environment for entrepreneurship

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Changes in Production are Changes in Production are opportunities for entrepreneursopportunities for entrepreneurs

Mass production to Mass production to FlexibleFlexible production production– Global Production: Just-in-Time (Dell) and Global Production: Just-in-Time (Dell) and – Targeted products: Key example is the internet and culture (an audience Targeted products: Key example is the internet and culture (an audience

of one) of one) – From broadcast to narrowcast, from three channels to 500From broadcast to narrowcast, from three channels to 500– Large and small firms combined in networks or productionLarge and small firms combined in networks or production

Not one dominant form, but a mix of forms:Not one dominant form, but a mix of forms:– KeiretsuKeiretsu– SubcontractingSubcontracting– Regional ModelRegional Model– Global/Regional: Global firms with strong regional tiesGlobal/Regional: Global firms with strong regional ties

Key reflections of this are:Key reflections of this are:– Global business alliancesGlobal business alliances– Technology tools to manage global productionTechnology tools to manage global production– Global business competitionGlobal business competition– State transformed: partner, supporter, advocateState transformed: partner, supporter, advocate

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Changes in Technology are Changes in Technology are opportunities for entrepreneursopportunities for entrepreneurs

Semi-conductors and ComputationSemi-conductors and Computation– Moore’s Law: Every 18 to 24 months power of computing Moore’s Law: Every 18 to 24 months power of computing

doublesdoublesNetworked technology: The Packet WorldNetworked technology: The Packet World– Linking computationLinking computation

Increasingly embedded everywhere, and linking everything Increasingly embedded everywhere, and linking everything Binary Logic and Algorithms: 0s and 1s, and algorithmsBinary Logic and Algorithms: 0s and 1s, and algorithmsAnd now the convergence: Bio, Info, NanoAnd now the convergence: Bio, Info, Nano– Algorithms and binary logics everywhere!Algorithms and binary logics everywhere!

Two Key Points:Two Key Points:1.1. Tech as an enabler for the globalization and networked Tech as an enabler for the globalization and networked

organization, but not the cause of themorganization, but not the cause of them2.2. New Digital ArchitecturesNew Digital Architectures: All technology, but especially : All technology, but especially

information technology, has social beliefs and norms built information technology, has social beliefs and norms built into them.into them.

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EntrepreneurshipEntrepreneurshipBringing together Ideas, People, Money to solve problemsBringing together Ideas, People, Money to solve problems– Rules of thumb to Rules of thumb to Clarify, Pitch, Detail, Simplify, PromoteClarify, Pitch, Detail, Simplify, Promote : :

Define your ideaDefine your ideaCommunicate your visionCommunicate your visionGather resourcesGather resourcesCreate partnersCreate partnersImplement sustainable solutionsImplement sustainable solutions

Five Questions for any entrepreneurial project:Five Questions for any entrepreneurial project:– What is the problem?What is the problem?– What is the solution?What is the solution?– Why should anyone care?Why should anyone care?– Is it doable?Is it doable?– Can you do it?Can you do it?

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Transparent EconomyTransparent Economy

In the Internet-driven network society In the Internet-driven network society anyone can find out anything. anyone can find out anything. Companies must adapt quickly to a Companies must adapt quickly to a system that may lead to one of nearly system that may lead to one of nearly perfect global competition. perfect global competition. The only certain winner is the The only certain winner is the consumer. How?consumer. How?

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ResourcesResources

If information is available ?If information is available ?Production can be managed ?Production can be managed ?If technology can be managed ?If technology can be managed ?If capital can be managed ?If capital can be managed ?What is left? What leads to competitive What is left? What leads to competitive advantage?advantage?

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Innovation as a Network activityInnovation as a Network activity

Innovation is thus the result of numerous Innovation is thus the result of numerous interactions by a community of actors andinteractions by a community of actors and

Institutions, which together form what are termed Institutions, which together form what are termed national innovation systems. national innovation systems. Increasingly, these innovation systems are Increasingly, these innovation systems are extending beyond national boundaries to extending beyond national boundaries to become international. become international. The interactions within this system influence the The interactions within this system influence the innovative performance of firms and economies.innovative performance of firms and economies.

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Hierarchy of NetworksHierarchy of Networks

The economy becomes a hierarchy of networks, The economy becomes a hierarchy of networks, driven by the acceleration indriven by the acceleration inthe rate of change and the rate of learning. What the rate of change and the rate of learning. What is created is a network society, where theis created is a network society, where theopportunity and capability to get access to and opportunity and capability to get access to and join knowledge- and learning-intensivejoin knowledge- and learning-intensiverelations determines the socio-economic position relations determines the socio-economic position of individuals and firmsof individuals and firms

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Core ActivitiesCore Activities

It is an economy where strategic networks It is an economy where strategic networks are important. Due to nearly perfect are important. Due to nearly perfect competition, companies should seek out a competition, companies should seek out a core activity where they are ‘best-in-class’ core activity where they are ‘best-in-class’ and should network strategically with and should network strategically with complementary firms, which are best-in-complementary firms, which are best-in-class in their part of the value chain. class in their part of the value chain. Outsourcing, insourcing, right sourcing, Outsourcing, insourcing, right sourcing, bestsourcingbestsourcing

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Distributed CompaniesDistributed Companies

We have barely begun our evolution into a We have barely begun our evolution into a network society, as sociologist Manuel network society, as sociologist Manuel Castells labels it, where the autonomous Castells labels it, where the autonomous production units and even individual production units and even individual employees of many companies can easily employees of many companies can easily be scattered and coordinated across the be scattered and coordinated across the globeglobe Does this lead to . . . Does this lead to . . .

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Distributed GovernmentDistributed Government

The monopoly of government based on The monopoly of government based on geographical territories is increasingly geographical territories is increasingly challenged by the new logic of transnational challenged by the new logic of transnational economic organization. Law enforcement, sales economic organization. Law enforcement, sales taxation, consumer and privacy protection and a taxation, consumer and privacy protection and a host of other issues in the borderless world of host of other issues in the borderless world of the Internet no longer can be solely addressed the Internet no longer can be solely addressed within the geographical context of the nation within the geographical context of the nation state, let alone the jurisdictions of state or local state, let alone the jurisdictions of state or local government.government.

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Public/Private CompetitionPublic/Private Competition

Government is generally perceived to move Government is generally perceived to move much slower than the commercial world. much slower than the commercial world. Everyone talks derogatorily about red tapEveryone talks derogatorily about red tapeeMeeting the new rising organizational Meeting the new rising organizational expectations of citizens will be the ultimate expectations of citizens will be the ultimate challenge that governments face. challenge that governments face. Leading to Leading to Perhaps slow and delibrate for a reason?Perhaps slow and delibrate for a reason?Consequences ?Consequences ?

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Network Society’s ImpactNetwork Society’s Impact1.1. New Economy is based on possibilities of New Economy is based on possibilities of

productivity growthproductivity growth• New space for entrepreneurial activityNew space for entrepreneurial activity• Growth is real and possibleGrowth is real and possible• Question is regulation and distributionQuestion is regulation and distribution

2.2. Decline in state power has increased corporate Decline in state power has increased corporate power and control of informational resourcespower and control of informational resources• Intellectual propertyIntellectual property

3.3. Digital divide is a real concern and issue, but in Digital divide is a real concern and issue, but in what sense?what sense?

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Industrial vs. InformationalIndustrial vs. InformationalIndustrial SocietyIndustrial Society Informational SocietyInformational Society

GeographyGeography TerritoryTerritory SpaceSpace

ResourcesResources Physical (Land, Labor, Physical (Land, Labor, Capital) Explicit Capital) Explicit

KnowledgeKnowledge

Informational, Informational, Knowledge/Innovation Knowledge/Innovation

Tacit KnowledgeTacit Knowledge

OrganizationOrganization Bureaucracy, Rule-Bureaucracy, Rule-based, Hierarchical, based, Hierarchical,

Defined PositionDefined Position

Networks, Relationship-Networks, Relationship-based, Horizontal, based, Horizontal, Flexible, changing Flexible, changing

positionposition

Dominant InstitutionsDominant Institutions GovernmentGovernment MarketMarket

CultureCulture Mass, GeographicMass, Geographic Individual, Behavior-Individual, Behavior-focusedfocused

GovernmentGovernment Nation-State, Nation-State, Government BasedGovernment Based

Local, Regional, Local, Regional, National, Global, National, Global,

States, Markets and States, Markets and NGOsNGOs

Funding/ProjectFunding/Project National controlled, National controlled, Bureaucratic, LargeBureaucratic, Large

Private, Companies, Private, Companies, VCs, Local, TargetedVCs, Local, Targeted

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Image the opportunities, ifImage the opportunities, if

1.1. Computing power was unlimitedComputing power was unlimited2.2. Bandwidth was ubiquitous and unlimitedBandwidth was ubiquitous and unlimited3.3. Storage was unlimitedStorage was unlimited

4.4. All of the aboveAll of the above