What role can entrepreneurs play in the current crisis? Dr Matthew McCaffrey, Lecturer in Enterprise, writes about the topic in his latest blog.
Perhaps the greatest challenge of the COVID-19 crisis is the overwhelming uncertainty it has created in every part of our lives. In addition to threatening our physical health, the virus and its fallout have thrown into doubt our ability to work, socialise, care for loved ones, and ultimately, engage in every part of life that makes it worth living. And in doing so, the crisis has also revealed the fragility of many of our most trusted social and political institutions. Yet although uncertainty makes it difficult for us to plan for the future, it also hints at a powerful social force that will help us to weather both the crisis and its aftermath: entrepreneurship.
Entrepreneurs are known as innovators, visionaries, and even revolutionaries, but at its heart, entrepreneurship is much simpler and less dramatic than any of these things. Entrepreneurs are the people whose job it is to deal with uncertainty. It is sometimes said that entrepreneurs ‘bear’ uncertainty; in other words, they shoulder it like a burden so that the rest of us don’t have to. In fact, entrepreneurship can best be thought of as a kind of special decision-making in response to uncertainty. It’s a kind of judgment about how to use society’s scarce resources to provide for the future.
Viewed in this light, it’s easy to see why we need entrepreneurs now more than ever. Many things that we often ignore or take for granted—from everyday products like groceries to advanced medical tools like ventilators—are now in short supply in places where they are most urgently needed. However, entrepreneurs, in their roles as business leaders, are already in a position to meet these uncertainties and scarcities head-on. Where others see challenges, entrepreneurs see opportunities.
And this is exactly what we’ve been witnessing during the current crisis: in just a few short weeks, entrepreneurs have converted manufacturing facilities to produce hand sanitiser instead of alcohol, and face masks instead of clothes, while eager inventors are testing new ventilator designs. Other entrepreneurs are throwing their financial weight behind businesses producing essential goods and services, or are funding enterprises that are busy preparing to distribute crucial goods like vaccines as soon as they become available. All of these involve entrepreneurs confronting the radical uncertainty that surrounds us, and putting their wealth and reputations on the line to do so. It is exactly this spirit of problem-solving that will see us through the current crisis.
Nevertheless, as important as entrepreneurs are during the crisis, they will be even more vital after. National economies are in a state of shock, and as the crisis passes there will be both a massive surge in demand for goods and services and sadly, many people urgently seeking employment.
Yet even unemployment can represent an opportunity. For some people, a crisis is the right time to ‘take the leap’ and start a business. For example, a commonly cited statistic holds that 50% of Fortune 500 companies were started during hard economic times. The reason is obvious: when things are at their worst, entrepreneurs are at their best. Potential founders are on the lookout for ways to improve consumers’ lives, and crises reveal countless ‘pains’ for entrepreneurs to treat by risking it all in the marketplace. Necessity is the mother of invention, but also of innovation.
So while it’s true that the economic uncertainty generated by the crisis seems overwhelming, we still have reason to be hopeful about the future. As the economist, Frank Knight said, “Like a large proportion of the practical problems of business life, as of all life… [the problem of entrepreneurship and of] dealing with unforeseeable situations involves paradox and apparent… impossibility of solution. But like a host of impossible things in life, it is constantly being done.”