The energy and economics of entrepreneurship

Energy

The world transforms through energy and economics. Energy acts as the ignition point and is the fuel, throttle and engine of life and economic activity (Keynes) and the driver of sustainable evolution (Legge).

Energy is the single constant in the Universe. It transcends time, space and matter and travels faster than the speed of light. Energy can be considered in the scientific form which Einstein brought to the world stage or as the human spirit also known as entrepreneurial energy. It is the human spirit which inspires movement towards a shared vision or goal.

The power of human energy originates from passionately focused attention directed to an object of interest – such as a potential lover or a future business opportunity (McCraty). Such attunement of energy creates a channel or tunnel, a communication cable between energy in different places. As energy attracts energy, momentum is created and the speed of development increases in mass and velocity.

Once ignition has occurred, economics step in, which is the mechanics of how the world works.

Economics

The economy is built around markets, which means that based on what people around the world need and want, resources are created to solve problems and fulfil desires. It is usually entrepreneurs who seize these opportunities, or market gaps, creating new businesses to supply goods and services to paying customers for a profit. Governments tend to step in when the market is not willing or able to pay and investors are not interested in investing when their return is small or too risky.

Markets reflect the behaviour of groups of people and there must be three distinct social changes for a new market to emerge:

  1. Entrepreneurs must develop products to satisfy requirements and offer those products for sale.
  2. Customers must learn about and decide to purchase.
  3. Customers must rearrange spending priorities to afford the new product.

Economics in its pure form isn’t for everyone. Let’s take the same concept in a different context.

If we look at human evolution, survival of the species, reproduction… It sees most of us at some stage on a quest for a life partner and family. Those seeking a partner are in-the-market and those already married are off-the-market. If we take the same problem-solution approach, all of us at some point act as the entrepreneur. We may be the person with a desire for a partner, or we may know someone else who is looking for a partner. Either way, there’s a problem!

Problems catalyse opportunity. The ‘new business’ may be reinventing yourself or taking a friend shopping, attending social gatherings with effort and frequency or joining online dating sites.

The ‘customer’ must learn about this person and undergoes a trial before deciding to commit. In the process of commitment the method of exchange is time and energy. Lives must be rearranged to accommodate time and energy on a new focus.

As the human spirit ignites these revolutions on a mini or grand scale, opportunities and resources are required to influence and effect social change, bringing us back to energy and economics – how the world works.

Now for detail.

Perspectives

If there is one thing that can be noted throughout history, it is the constancy of human emotion and behaviour.

Emotion has fuelled revolutions and brought down empires. We’ll get to the heart of emotion in another time. For now, know perspectives are intrinsically linked to emotion.

The speed of evolution catapulted in man’s first communication to another, by way of pointing to an object, today exists in thousands of unique languages each originating from linguistic logic. Cultural differences see words from one language that simply do not translate to another. ‘Toska’ from Russia, the Yagan ‘Mamihlapinatapei’, Indonesian ‘Jayus’, Portuguese ‘Saudade’ and Spanish ‘Duende’ all require contextual stories and experience to truly understand meaning.

When man conceived communication with another, it allowed the first evaluation and development of the world around them, or sharing of perspective.

Today still, ideas originate from a source of inspiration and transpire in a zig zag motion back and forth between people seeking to better the same objective or vision. Have you ever encountered a conversation with someone where it felt as though you were speaking a different language? It may have been English, however, you were both probably coming from completely different perspectives and talking on a different focus.

The evolutionary force of human behaviour is ignited by human energy with attention or awareness from at least one perspective. The trick – to speed up evolution and make for a happier life – is to first establish a shared focus, then acknowledge the different perspectives. New and different perspectives add value – they add new thoughts, new opportunities and new resources.

To understand perspectives more deeply, here’s a scenario Jennifer Goddard and Bill Jarrard took our Creativity & Innovation class through during the Master of Entrepreneurship & Innovation:

Imagine you are standing at the front door of your house.

As you look out, what do you see?

A pathway, letterbox, front gate, a few cars parked in the street. Picture the view from the house or unit where you grew up.

Now turn around and walk to the back door of your house. What do you see as you look out?

Trees, a back fence, perhaps a dog kennel, veggie patch or swing set?

If you took a photograph each out your front and back doors to your house, would the photos be the same?

Of course not - however you are both standing in the same house!

Let’s take a look out the side windows of the house. On one side you may see your next door neighbours’ house and on the other you may see a young teenager with baggy pants and baseball cap on backwards walking towards your house.

If you were an elderly lady, you may immediately react with fear believing that young man may have just broken into a neighbour’s house or is about to break into yours.

If you were a teenager yourself, you’d probably smile and head to the front door to greet your best mate.

It all comes down to different perspectives.

There are perspectives 360 degrees around your house looking out each door and window that are different, as well as perspectives from the individuals inside the house who have different beliefs established from their life experiences.

Now, rather than imaging your house, picture your venture or ideal job, holiday or partner. Deliberate perspectives are your windows to the world that assist you in gaining a 360 degree view, or a high level perspective of your entire universe.

In order to see a high level perspective, you must first step outside it to see it as a whole and it always begins with the customer, market or problem.

Deliberate perspectives

Edward De Bono’s Six Thinking Hats offers a brilliant way to gain deeper insight and perspective on any focus in life.

Development

Keeping the nature of perspectives in mind, let’s start with a little economic history.

Economics as we know it started with Adam Smith in the 18th Century with theorists striving for numeral accuracy and future predictions that in reality, conflict with the chaotic nature of evolution.

The desire for economic predictability (driven by fear of creating obsolete products, business and jobs) led to the omission in economic development of innovation economics – sustainable social economics (Legge). The Global Financial Crisis proved the neo-classical hypothesis (and countless MBA degrees) defunct. In short, the dynamic and chaotic phenomenon of reality could not be controlled due to human, environmental and other predictions that are impossible to make.

Similarly, when it comes to human intelligence, the conception of consciousness was developed by classical Newtonian followers of science. Mechanistic science reversed and placed the wrong emphasis on the systems involved so that information was distinguished from and took precedence over experience, there was focus on parts rather than wholes, techniques and procedures were favoured over interpretation and even the ideology that cognitive/thought and rational dimensions surpass emotions, intentions and attitudes (Levin).

In philosophy, there are many indisputable ways in which one can view the world. You may be a pragmatist, idealist… PhD research documents specify the author’s philosophical perspective for context.

When it comes to philosophy and perspective it is important to note there is no right or wrong. There are merely beliefs which cannot be disproven, such as religion, as they are a person’s own reality. Beliefs though, are empirically different from the thoughts, theories and actions created thereafter. Smith and Newton’s philosophies are indisputable – the way they see the world. Their theories, however, are another matter.

Some researchers spend their lives disproving theories and journalists disproving facts, while others spend their time creating new investigations which may disprove as a by-product.

If we take the economics of Smith and science of Newton we can relate it to flat earth theory and the context that thought leaders through-out time have steered the course of history by derailing human knowledge and understanding. While achievements were immense from Aristotle and Ptolemy to Einstein, ideas, methodologies and technical know-how develops, as a result of innovation. Times change. What we ‘know’ to be true, the study of epistemology, evolves.

The Matrix Trilogy is a wonderful example of philosophy and of perceiving a new or different reality to which we ‘know’. After all, it could be true, by its idea, methodology and proposed technology we’d have to take the blue pill to find out…

So what do equilibrium economics, mechanistic science and old-world philosophy have in common?

In addition to attempting control over chaos – be it the flow of resources, how things are built and what people are taught about the universe – the constant is that the old-world approach, which we still largely live in, ignores a continuous start and end point. What the world is now learning is that the evolutionary and cyclical nature of life, the earth and its environment, is in fact how everything else works as well. The new way is setting a strong foundation that creates opportunities from chaos. Hockey stick graphs are out.

The outcomes are new solutions, new intellectual capital, new resources, new innovation, new economic development and new quality of life. In day-to-day life that’s new jobs, new technology, new medical advancements, new transportation, new new new!

New, does however, bring an air of fear into the population. Fear will be covered with emotions in a future chapter.

Innovation is evolutionary development. For an innovation to take hold, only a small percentage of the population is needed to adopt. Think of the butterfly effect.

Back to correcting the foundational economic and thinking models… Remember, the world operates through energy and economics and needs a strong foundation to transform opportunities into new value – regardless of chaos or resources currently controlled.

Economists are famous for ‘getting it wrong’. They get it wrong because their thinking and models do not reflect reality.

Schumpeter’s economic model, in contrast to Smith, asserts the ignition point of the economy as entrepreneurs, the entrepreneurial energy we spoke of earlier. As new becomes obsolete there is a constant innovation mechanism – the investment in entrepreneurs and their endeavours, thus creating new jobs, new resources, new technology with full value obtained in society and economic growth.

Capitalism, is by its nature, a form or method of economic change. It can never be stationery, being part of an evolutionary process that is founded on social and natural environments. Change alters the data of economic action and is thus a condition, not its prime mover. Decisions made from data that is no longer relevant creates the destruction mainstream economists seek to avoid. If only career politicians knew this!

In a sustainable society, the fundamental economic ignition comes from entrepreneurs creating:

  • new consumer goods
  • new methods of production or transportation
  • new markets
  • new forms of industrial organisation

Price is irrelevant, rather serving as a method of exchange in resources. Similar to relationships where time and energy is exchanged – not money. Money, as we saw with Gordon Gekko, changes motivation, therefore focus and is another culprit in the derailing of society. Money is certainly important for survival in today’s world, however, there is far greater power in value held that is not money. So much so, there’s an entire section dedicated to the topic!

Economic and social issues are usually visualised in how capitalism administrators existing structures.

Rather, it relates to how capitalism creates and destroys and how the large firm and the entrepreneur driving innovation can align and leverage their positions in a sustainable evolutionary process.

Did you know that 80 per cent of economic growth originates through innovation, with only 20% explained by saving and population growth? Few politicians and Board members seem to know this fact. Immigration, savings, price and allocation, the thinking from which Australian Government policy is founded, is directing attention and resources away from its core growth opportunity.

Furthermore, expenditure rather than investment allocation of resources, sees a misaligned government focus against its core policy objective of economic growth and increased quality of life. The greatest contributor to job creation are entrepreneurs creating new businesses.

Economic growth in old-world equilibrium thinking sees two main agents: firms that make products and employ people; and people who earn wages and spend them on the things made by firms. There is no investment and no profits, with an active pursuit to avoid creative destruction (obsolete products and jobs), at the opportunity cost of social and economic sustainability. The investment cycle is ignored.

Evolution favours variants that have overcome resistance and are better adapted for future survival.

Evolutionary economics in Post-Darwinian biology identify three fundamental components (Hodgson, 1995):

  • sustained variation among members of species or population
  • mechanism through which individual characteristics are passed through generations
  • natural selection and struggle for existence

The genes, or routines by which a business operates, see the firm, or organism, act as a vehicle competing for survival amidst change and chaos.

Large firms have been demonstrated to hold advantage in pursuit of product innovations through incremental process improvements relating to cost and quality, however, the strength of their resource base has shown to lose advantage in the radical domain that leverages intellectual property values. (Cohen & Klepper, 1996)

The complex landscape from which successful evolutionary or quantum leaps are made, require the introduction of new perspectives to find new scenery from which to build new foundations for speciation. (Kauffman, 1993)

Capitalism does not allocate resources to ‘their best and highest use’. Nor are markets efficient. Economic thinking based on these assertions, which dominates Australian Government policy, omits chaotic reality, in turn creating the destruction it seeks to avoid.

Capitalism provides an environment in which innovation thrives and obsolete products and services are eliminated.

What is needed is policy that encourages, supports and facilitates innovation from creation through destruction.

Now for the science on human energy!

Consciousness is now understood with holistic science. Rather than considering a range of scientific components that fit together to form a whole (aka mechanistic), instead it is reversed to think of the whole being in every part, or every piece of energy. Similar to DNA where the smallest sample of saliva or hair contains the entire coding structure that makes you, you.

Think of life and your reality as a projected hologram. Holograms provide an entirely new way of understanding the ‘economics’ of the universe and its constant, energy. There is a second order level of the universe and your conscious mind. The primary is beyond our traditional five senses which Newtonian science observes and the secondary is the actual which we all know about.

Where this gets exciting is the phenomenon of synchronicity. Those seemingly random events that occur in life, at the right time, in the right place. When you ‘know’ something or someone is meant to be. It just fits.

The holistic approach considers the universe to be one giant, connected, living system.

Further called trans-disciplinarity, there is emphasis on ‘the complex, interdependent, and co-evolving nature of and relations within, physical, biological, psychological, and ecological systems, recognising not only that natural environments shape human beings intellectual, emotional, physical, social and spiritual dimensions, but also that the body, mind and spirit influence each other and the natural environment.’ (Levin)

McCraty has written that ‘we can no longer ignore that the communication of information is the result of the inherently interconnected nature of the quantum world, with Pribram adding ‘neural impulses are only relaying information from one part of the brain to another, the processing of information occurs in the energy frequency.’

Levin stated: ‘…it is important to realise that neither the brain activities nor the heart produce mental operations. The biological heart and brain are the physical or mechanical foundation of consciousness, whereas the soul and mind are the mental-spiritual basis, and it is the mental or tacit that manifests in the explicit - the "within" that is expressed through physically and potentially visible operations.’

If we are to view the world through a new paradigm, one that accepts the new knowledge we have about energy and economics, we can then establish a development framework for living that is relevant and sustainable, applicable to any living focus.

What we now know

  • The world operates according to chaos – not an equation.
  • Sometimes, what we ‘know’ is not reality.
  • Natures’ process of evolution is cyclical – as is everything in the universe.
  • Government policy is needed that encourages, supports and facilitates innovation.
  • Neither the brain activities nor the heart produce mental operations.
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