Micro-entrepreneurship: Engaging in job creation

Posted on March 27, 2013 by Tara Thiagarajan in Inside Out, Writing. Comments Off on Micro-entrepreneurship: Engaging in job creation

Less than 50 million people are employed in the formal economy. That’s less than 5 percent of India’s population. What this means is that most of the country operates in the informal economy and most are by definition ‘poor’.

When we speak of the formal economy, which accounts for almost all of our GDP, we often throw around terms like value creation, entrepreneurship and job creation and the like. But when it comes to the majority of India’s populace, we flip the paradigm to ‘income generation’ and ‘livelihood creation’ and use this interchangeably with micro-entrepreneurship, which it is not.

It may seem logical, that after all, poverty is the lack of income and most of India has little of that. So, it is best to rush out to generate some income to feed yourself. Except that it’s not.

Value creation
The wealth of a country, and largely organizations and individuals within it, depends on the value it creates. Wealth is not money printing. It is about how well we engage our resources to build new possibilities—make things better, faster or cheaper, and enhance our own capability as human beings. Grand stuff, all that; but it matters because for a healthy economy the money supply must track this—our collective value. It, therefore, makes for ineffective and potentially ugly economics if everyone is simply rushing to grab a piece of a fixed pie.

Generate income
The unfortunate paradigm of income generation is to begin with some sort of hand skill—basket weaving, tailoring, mushroom cultivation and the like—with the expectation that someone (a non-profit or failing which, God or government maybe) must come along and compensate them for the energy expended. A belief we relentlessly perpetuate through government schemes and non-profit is that hard work and sacrifice should be rewarded by someone, regardless of whether it is effective or useful. No matter that there may not be an accessible market or any market at all for the product. No matter that they are cost inefficient. No matter that the product may be of too poor a quality to be of value to anyone. Such income generation schemes are not empowering because they work inside out.

They begin with a skill and search for a market rather than the other way around and are littered with bad economics, disappointment and shattered expectations. This is the inverse of entrepreneurship which begins with identifying a need and creating value that serves that need.

If we believe in the human potential of our populace, then our goal should be to empower people with the tools of entrepreneurship, to seek value paradigms that begin outside in. And if we must help, we should do this by exposing people to markets, standards and competition.

Failure—the better teacher
Hand-held ‘income generation’ schemes are more gentle and assuring of income in the short-term. ‘Make and we shall support you’ (at least until we run out of donor money). Genuine entrepreneurship comes with little assurance and is littered with failure. But it is in the failure that we learn our most significant lessons; the ones that teach us what can go wrong and how to rise above. The failures sow the seeds for something better, raising the overall standards and productivity of the system. So, let’s go from income generation to micro entrepreneurship, flipping the paradigm from inside out to outside in.

This article appeared in Entepreneur Magazine (India) in March 2013

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