Decision making and electing entrepreneurs

In preparation for something else entirely, I have been reading up on decision making. Through that, I’ve come across numerous references to Thinking Fast and Slow by Daniel Kahneman, and the theory discussed within of two cognitive systems employed in decision making.

System 1 is fast, automatic, frequent, emotional, stereotypic, subconscious. It’s the gut feel. System 2 is slow, effortful, infrequent, logical, calculating, conscious. It’s the long hard look. System 1, so the theory goes, is pervasive. Even if you’re deliberately trying to employ System 2 you naturally fall back on System 1.So gut feel governs our decisions far more than we may realise.

I can’t help but consider how this theory applies to the results of the recent US election. Perhaps one of the factors in the Trump campaign’s success was its understanding of the importance of the gut feel and its blitzkrieg communication style, concentrating on emotions, stereotypes and subconscious fears.

Understanding decision making must surely be crucial to understanding entrepreneurship. What is entrepreneurship if not a series of decisions concerning the creation and growth of a business? There are initial decisions to pursue a set of goals, despite the inherent risks. And subsequent decisions about strategies to attain those goals, making smart use of existing resources. Linked together, those decisions form an entrepreneurial chain.

This article here details the similarities between entrepreneurship and moral decision making. It argues that the two share a common set of ingredients: imagination, creativity, novelty, and sensitivity.

The entrepreneur creates something new in society, something novel, that meets a need that is latent in consumers. Successful entrepreneurs have to be attuned to the needs and desires of those who constitute potential markets for their products and services. The entrepreneur has to have imagination in abundance to envision a new product or service and bring it to market. The product entrepreneurs introduce into society is new and its impact on humans and the environment is unknown. It takes imagination to envision the possible impacts a new product may make and develop novel and creative solutions to potential problems that may arise. …these same qualities are crucial for moral decision making, and the issue of moral decision making is critical for entrepreneurship.

I think what this description of entrepreneurship lacks is the element of self-interest. Entrepreneurial decisions might be about a lot of things, but at their core, they are surely about improving the lot of the entrepreneur in question (or at the very least, not damaging that position). Moral decision making does not necessarily need this element; in fact self-interest work against a moral decision making framework.

Not that self-interest is bad. It might be a crucial element which counteracts the level of risk involved in being an entrepreneur. So self-interest might be an essential element of entrepreneurship, and perhaps it permeates all entrepreneurial decisions, in the same gut feel way of System 1.

A bit later in the same article, there’s a small section which brings us back, in a funny way, to President-Elect Trump.

In a society that promotes entrepreneurship, change and newness are highly valued and elevated. Such a society will encourage the desire for new things and a willingness to replace old things. Everything in an entrepreneurial society is open to change and modification, to replacement through various entrepreneurial experiments.

In Trump’s rise, and that of Prime Minister Malcolm Turnbull, we see entrepreneurship communicated as a virtue; that an entrepreneur is a well qualified person to assume high political office. They are seen, I suppose, as people who have made personal decisions which have served them well, and presumably as people who can repeat that trick for their respective nations. This is one of the results of the idolisation of business success, that change and newness are highly valued and elevated. In a society where entrepreneurs are hero worshipped, is it surprising that we choose leaders who embody that breed’s particular strain of change and newness?

And if we have prioritised entrepreneurship over an ability to make decisions within a robust moral framework, let’s hope the two really do have some things in common.

Ref: Buchholz, R.A. & Rosenthal, S.B. 2005, “The Spirit of Entrepreneurship and the Qualities of Moral Decision Making: Toward A Unifying Framework”, Journal of Business Ethics, vol. 60, no. 3, pp. 307-315.

Creative entrepreneurship as a lifestyle choice

Before 10 October this year, I would have been hard pressed to name the federal Education Minister. Turns out it’s Senator Simon Birmingham of the good state of South Australia. In a press release issued on that day, the Senator outlined the tertiary courses “expected to attract funding support under the new … VET Student Loans program.”

As it turned out, a large clutch of creative industries qualifications had been left off that (draft) list. This list itself is heavy with performing and visual arts and digital media courses, but notably also includes a Graduate Certificate in Entrepreneurship for Creatives.

Given the media brouhaha which followed, Sen. Birmingham is probably wishing he’s drawn a red line through these sentences, tapped out by an earnest media officer.

We want to ensure that the courses that Australian taxpayers are subsidising and that we are encouraging students to study, will optimise employment outcomes. Currently there are far too many courses that are being subsidised that are used simply to boost enrolments, or provide ‘lifestyle’ choices, but don’t lead to work.

A number of commentators in the creative industries arced up. Not just in response to suggestion that these courses would not be eligible for student loans (which, after the Government’s unpopular changes to arts funding, they could be forgiven for seeing as another attack on arts and culture). But also to the fact that he described, albeit indirectly, a career in the creative industries as a “lifestyle choice”.

It’s a loaded phrase. In 2015, then Prime Minister Tony Abbot, described people living in remote Indigenous communities in Western Australia as having made a “lifestyle choice”. He said, “what we can’t do is endlessly subsidise lifestyle choices”.  So Sen. Birmingham managed to suggest that the chance of landing a job in photography, fashion, dance or social media marketing, was as remote as a village in the Kimberley. And neither are worth subsidising.

(What is a “lifestyle choice” anyway? At first, it seems to be something of a passive aggressive slight. “You’ve made a choice that benefits your lifestyle, rather than one which builds something worthwhile, like having smashed avocado for breakfast instead of saving for a deposit on a stratospherically overpriced one-bedder in Camperdown”. But it also has an accusatory air suggesting selfishness; “you’ve brattishly chosen a path whereby you can’t contribute to economic good of the nation. You should have made a different choice, a more constructive choice, like getting an MBA and working for a lobby group and a political party, like Sen. Birmingham. We’d have been happy to subsidise that.”)

It’s seems to be the by-product of a policy mindset which sees entrepreneurship in the creative industries as a pipe dream.  Presumably there are other courses which will attract the student loans which encompass entrepreneurship, just not in creative industries.

Is entrepreneurship in some industries a surer bet than others? Surely the innate qualities of a successful entrepreneur mean that they will find a commercial opportunity in whichever field they choose? What this seems to suggest is a hierarchy of entrepreneurship; from those worth subsidising to those which are not.

Subsequently, the Minister went directly to arts industry website ArtHub to pour oil on troubled waters.

Of the 478 courses that will no longer be supported 119 are in management and commerce, 149 are society and culture courses like the Diploma of Life Coaching and 149 are in health-related fields such as veterinary Chinese herbal medicine. In comparison, 57 arts-related courses did not make our proposed list and 29 of those have no students at all… 

Contrary to the impression given by some commentators, VET Student Loans will support studies across a number of different genres and roles related to the arts, including graphic design and visual arts, screen and media, live production, photography and music industry…

The narrative tactics here are clear. You haven’t had it as bad as management and commerce! (Sure in numbers, but what about as a proportion to the total number of courses?) We’re still subsidising lots of creative things! (Just not performing arts, dance, writing or entrepreneurship for creatives) You wouldn’t want us to fund craziness like veterinary Chinese herbal medicine! (But what if my cat just doesn’t respond to Western pharmaceuticals?)

But later on in the same article we get a sense of what the real problem is.

We know there are job opportunities in the arts for current and future students – but the demand for graduates is not significant enough to justify funding every single arts course, just as it isn’t in many other industries.

It’s the demand for graduates which designates whether something’s a lifestyle choice or not. And in a way, the decision to redirect funding makes perfect sense; why oversupply an industry with graduates it cannot support?

But there’s another implication here; that a career in the creative industries means finding a job, not creating that job for yourself. It’s another tacit indication of that mindset which sees creative entrepreneurship as a fanciful dream.

The clash of two professions

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Works of art, more centrally and nakedly than ever before, are becoming commodities, consumer goods… Now it’s every man for himself, every tub on its own bottom. Now it’s not an audience you think of addressing; it’s a customer base. Now you’re only as good as your last sales quarter. It’s hard to believe that the new arrangement will not favor work that’s safer: more familiar, formulaic, user-friendly, eager to please—more like entertainment, less like art. Artists will inevitably spend a lot more time looking over their shoulder, trying to figure out what the customer wants rather than what they themselves are seeking to say.

I love this article from the Atlantic about the changing role of the artist in society and how it has morphed into the role of the creative entrepreneur. It expresses elegantly the tensions between the two and tries to come to some sort of reconciliation between the two. And it gets there in the end, but never quite shakes off that nagging sense that something isn’t right about this. These two things are fundamentally incompatible.

How does this belief linger so, that making a piece of art and making a buck are inherently different? It may be partly that we are not just talking about the clash of two professions, but the clash of two romanticised professions; the creative and the entrepreneur. And romanticised in ways which are the polar opposite of each other. You’re an artist and you’re poor? Well that makes sense. You’re an entrepreneur and you like profits? Of course! We can’t mix different types of genius.

There’s also something that makes it easier to be a creative entrepreneur the further you away you move from high art. Sculptors are poor, but no one expects the furniture maker to live off an arts grant. Poets are artists, Stephen King is a brand. Somewhere in between is the sweet spot, where explorer and exploiter coexist side by side.

I also like this article’s shrewd observation about the reclaiming of the word ‘artisan’. Sometimes it’s hard to find a photo to accompany these posts, but I knew the stock image search engine would have no trouble with ‘artisan’. (If it had, I could always have tried ‘bespoke’). Artisans make things, rather than create things. They’re allowed to make money from handmaking products which we’ve grown used to having mass produced. Whether it’s baskets or buckets, coffins or cronuts, the word artisan itself has become a stamp of quality. A brand of its own. They’ve found the sweet spot.

 

 

 

Exploring and exploiting: a creative management paradox

This article has the brain bending title Managing exploration and exploitation paradoxes in creative organisations, which might suggest a discussion far removed from the practicalities of running a business in the creative industries. But in fact, it’s talking about a fundamental tension which lies within most, if not all, creative enterprises.

That tension arises from the inherent difference between the concepts of creativity and industry. Creativity is about exploration; producing new products through the creative process. That’s often long, unpredictable and difficult to control.

Industry (perhaps better described as the commercialisation of those products) is about exploitation. Make a product repeatable, divine a business model which generates profit and you have the basis of a sustainable business. The skills needed to manage these two disciplines are both contradictory and necessary. Therein lies the paradox.

I’m familiar with the need to balance the creative and the management aspects of a business through my work with creative industry companies, but I’ve not seen it expressed as neatly as the explore/exploit paradox. Within organisations large enough to employ staff, this paradox is often managed through compartmentalisation of roles (a design studio, for example, may well divide staff between creative, production and sales roles) and recruitment (employing people with the appropriate skills for each). For this reason, creative industry companies can often be melting pots of personality types.

Individual creatives and sole traders though have to manage this paradox by and within themselves. They must be both explorer and exploiter. How do creatives manage this without going mad? (And though I use that term flippantly, I think there is a considerable mental strain in having to be both those very different things).

I think that creatives who build successful businesses procure the management skills they need in certain ways. They can find those skills within themselves, lying latent until employed by necessity. They can acquire those skills through training and personal development. Or they can find others to undertake those tasks for them. But somehow, they must access those skills.

The authors then say there are a “three responses that individual managers can have to paradox: acceptance; differentiation/integration; and accommodation”

Acceptance involves embracing conflict without seeking to resolve it… Differentiation and integration is a cycling process whereby managers iterate between alternative patterns. Differentiation involves delineating alternate domains and serving each one separately, whereas
integration involves re-connecting domains into a meaningful whole… Accommodation reconciles both elements of opposition in “novel, creative synergy”… For example, Rothenberg (1979) suggested that creative artists like Mozart merged paradoxical demands to create new conceptions.

The option which seems closest to what I see in practice is differentiation/integration. Even within large organisations, there’s usually a CEO who started out as a creative (which I talk about here) and who needs to practice the flipping of modes between explorer and exploiter on a personal level all the time. They are, I guess, practicing an internal version of differentiation/integration on an hourly basis. Perhaps that’s one of the hallmarks of creative entrepreneurship.

Ref: Eric Knight , Will Harvey , “Managing exploration and exploitation paradoxes in creative organisations”, Management Decision, Vol. 53 Iss: 4, pp.809 – 827

 

 

 

 

Bridging the creative/financial divide.

I’m preparing to deliver a training workshop at the Artlands conference in Dubbo later this month. It’s a workshop I’ve now delivered many times called ‘Making Money Business’ and it covers business skills for Indigenous artists running creative enterprises. It’s a workshop I’ve gained a lot from and have blogged about it before, on what these Indigenous artists can teach other businesses about sales.

I’m in the middle of redesigning the workshop for its next iteration, so was intrigued to come across this journal article which details the results of “a survey of small creative firms … in the south west UK”. The survey indicated:

…the majority of firms are interested in a lifestyle based on fulfilling creative aspirations. Very few respondents exhibit any interest in participating in training schemes aimed at enhancing business performance.

So that was little discouraging.

This is a space I’ve inhabited for many years. I’ve both organised and delivered training activities for creatives covering a variety of topics. Generally, the feedback from those sessions has been very positive. And usually, these activities are well attended, which would indicate some level of interest in participating.

But as I read through the article, I realised the assertion that creatives aren’t so keen on undertaking business skills training is not the guts of the article. It’s a conclusion drawn from the piece’s central analysis about the motivation driving the owners of creative firms. (Interestingly, he uses an established quantitative model for measuring entrepreneurship.)

The author’s survey tested the how strongly the participants leant towards creative satisfaction or financial gain from their work. The results were mapped on the matrix above. He finds that the participants value the creative benefits more highly than monetary ones and so…

… it seems rather unlikely that one could persuade them to dramatically alter their artistic
philosophy to the point where they now wish to participate in business growth support
programmes…

For the creatives I’ve worked with, and for the participants in the Making Money Business workshops, I’d argue that this is not a binary choice. Most creatives I engage with want to be creatively fulfilled and financially successful. Sometimes the dream of making a living out a creative passion is unfeasible – an insurmountable mismatch between an artist’s labour of love and the market demand for that work.

But where there is a market demand to be met (and Indigenous art is a good example here) and an artist can tread the line between making fulfilling art and art that fulfils a customer’s order, then there’s a mutually beneficial transaction to be made. Which can be useful if you want to both make art and pay the rent. For me, it’s not so much about dramatically altering an artistic philosophy, but about seeking to improve the chances of being able to do both those things.

 

 

 

 

 

Is bricolage a thing? And do creatives own it?

I had to consult dictionary.com for this one. Bricolage is “a construction made of whatever materials are at hand; something created from a variety of available things”. And this paper says that there’s an entrepreneurial bricolage which is employed by creative industries ‘actors’ which distinguishes their efforts. The author defines it as:

“something that is available at a given time which can be tapped into as needed to access diverse talents and resources to create what could not be otherwise possible …in a resource and institutionally constrained environment” … People working in the creative industry seem to naturally adopt a sub-form of bricolage, namely collaborative bricolage. Therefore, collaborative bricolage is defined as a relationship where people work with each other to make the most of what is available, but it transcends the short-term goal of getting the job done for one specific project.

There is some parallel here between the creative process (which involves the juxtaposition of a variety of elements available to hand to produce something new) and the process of running a creative business (often characterised by holding the whole thing together with both hands and sticky tape).

But I’m not sure that this is unique to creative industries. Wouldn’t any number of entrepreneurs feel they their lives are full of bricolage? Which of those ‘non creative’ business owners feel they have 100% of the skills, resources and opportunities to achieve what they want to?

This makes me recall a long running yet never concluded conversation between me and another business adviser about preciousness – the tendency for creative industries to see themselves as different from other industries. Are they really? Aren’t they all just businesses and business people? Does this prevailing preciousness get in the way of the creative industries generating the same attention and respect as other industry sectors?

Bricolage is an interesting element, and I suspect an experience common across many industries and many other walks of life. But to me, what makes a creative business distinct from its non-creative counterparts is that it generates profits (well, that’s the plan) from products and services out of original creative IP. How does entrepreneurialism express itself in that environment? Which parts of this are widespread and which parts are particular to creative industries?

I am just full of questions tonight.

 

 

 

 

Hey, this could be a play AND a conference paper.

This is an odd piece. Two academics sit down to write a short play for a conference, to demonstrate their theories on entrepreneurship. Through the course of that conversation, they have a business idea of their own. This exchange then becomes their short play. Which they then present and comment upon in this journal article. There’s something going on here about unfulfilled theatrical ambitions.

What they’re seeking to demonstrate through their play is that entrepreneurialism is often seen as set of personal traits within people lucky enough to be gifted with the ability to spot and convert opportunity. The reality, they say, is that the emergence of business ideas is far more complex, and more iterative. One idea builds on another. Elements of the idea are explored, discard and developed depending on who you’re talking to and where and when.

This rings true to me and chimes with my experience of helping people develop and realise their business ideas. There’s also something weirdly meta about these academics creating narrative versions of themselves which express their own foibles; teaching but not living entrepreneurship, growing tired of their jobs, gently niggling at each other throughout.

But it is also familiar territory for me as a playwright. The central concepts for my own plays are often a combination of ideas. Often one is not sufficient to sustain an entire plot, but the juxtaposition of two or three key ideas can present something novel and intriguing.

So if the process of being entrepreneurial is similar to the process of narrative construction (unpredictable, piecemeal, gradual, collaborative), then perhaps all we’re talking about is the iterative process of developing any idea? The single sole lightning flash of perfect inspiration is probably rare. The slow development of an idea bit by bit over time, with input from a range of people and stimuli, might be the standard.

In any case, I think the dialogue could do with a little tightening up. But my favourite line is this one, which might betray a prejudice about the prospects of a career in the creative industries:

I’ve never settled into what you call ‘a proper job’ but, as you keep observing, I do have talents with photography, video and music.

Yeah, don’t call us. 😉