A recent article in the Harvard Business Revenue (HBR) has me thinking about the push and pull theories of entrepreneurship a little differently. The HBR article explores how entrepreneurs and innovators in Africa are breaking through long-standing barriers of corruption, flawed infrastructure, skills shortage, and a mistaken belief that the country’s middle class provides the most promising market segment to achieve successes where global corporations could not (Christensen, Ojomo, & Van Bever, 2017). The authors suggest that entrepreneur’s desires “push” a product or service, while “pull” responds to the specific needs of the market (Christensen, Ojomo, & Van Bever). The authors argue the push approach is what has prevented the global corporations from being successful in Africa, yet the pull approach is resulting in a good many smaller wins because of a more thorough understanding of the customer needs.
In a previous post, we discussed the decline in entrepreneurship in the United States over the last twenty-five years or so. Over that time, there have also been gradual changes in culture and society that affect how we engage and interact. Since 2001, we have seen a significant rise in multiculturalism and a decline, for the first time in history demographers report, of the dominant racial group and it appears that minorities are likely to be driving America’s economic and population growth into the next century (Morello & Mellnik, 2013). Yet, minorities face greater barriers to entrepreneurship, including lack of access to education, business networks, and capital (Bradley, 2016). One has to wonder if the decline in entrepreneurship in the United States has to do with these facts: changing demographics, shifting culture, and lack of access for minority entrepreneurs.
It seems clear that if a business is creating products or services that without a solid understanding of the marketplace and customer needs, and then attempting to force those goods and services into a market, it will not be as successful as it might be if it were to align with those needs. The pull approach takes it further, suggesting that products and services created to meet the current needs and struggles of particular segments—even micro-segments—of consumers can have a high degree of success, but not much breadth of the market (Christensen, Ojomo, & Van Bever, 2017). This approach would be true in any market, not just in Africa. In fact, I would argue this happens regularly throughout the world. Still, I wonder if something bigger is not at play as it relates to entrepreneurial activity in the United States. Does growing multiculturalism influence entrepreneurial growth?
With demographic and cultural changes happening so quickly, it may be that the established entrepreneurial networks are out-of-touch with market needs. Rather than focus on micro-segments, as is now being done in Africa, it could be that many new entrepreneurs in the United States target larger market opportunities. This might create a “push strategy” of a product or service that misaligns with current needs and struggles of minority market segments. That failure to find an audience often means the entrepreneurial venture dies. Increased business failures due in part to product/market misalignment and inadequate access to capital and business support networks by prospective minority entrepreneurs would seemingly dampen entrepreneurial growth.
Tom Peters argues companies that keep focused on the customer need, that is those that insist the customer remain at the center of the business, are those that enjoy the greatest success (Peters, 1994). The United States Census Bureau expects the minority population to grow to fifty-six percent (56%) of the total population by 2060 (Bradley, 2016). More than ever before it is critical for entrepreneurs to be emersed in their market and not just have a broad understanding of it given the extent and speed at which culture and society are changing. Prospective entrepreneurs—minority or not— as well as government and business networks, must begin to shift their focus and investment toward these rapidly growing, yet still underserved market opportunities. This shift is critical if we are to stem the declines in entrepreneurship in the United States.
Do you agree that a lack of understanding of minority marketplaces by the established entrepreneurial networks contributes, in part, to the slowdown in entrepreneurial activity in the United States?
Bradley, M. (2016, February 10). Investing in Minority Entrepreneurs: An Economic Imperative for the U.S. Retrieved February 21, 2017, from kauffman.org: http://www.kauffman.org/blogs/growthology/2016/02/investing-in-minority-entrepreneurs-an-economic-imperative-for-the-us
Christensen, C., Ojomo, E., & Van Bever, D. (2017, January – February). Africa’s New Generation of Innovators. Harvard Business Review, 95(1), 128-136.
Morello, C., & Mellnik, T. (2013, June 13). White deaths outnumber births for the first time. Retrieved February 21, 2017, from washingtonpost.com: https://www.washingtonpost.com/local/white-deaths-outnumber-births-for-first-time/2013/06/13/3bb1017c-d388-11e2-a73e-826d299ff459_story.html?utm_term=.c59c5ad4a656
Peters, T. (1994). The Pursuit of Wow! Every Person’s Guide to Topsy-Turvy Times (1st ed.). New York: Vintage Books.
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2 thoughts on “Multiculturalism and Entrepreneurial Growth”
Excellent article, it was a great read. Understanding the market that a business is situated in is so important to success. I feel like trying to push a product into a market that doesn’t want or need it is a surefire plan for failure. Instead, seeking out ways to get that “pull” effect from the market is much more desirable.
Thank you, sir. While it has always been important, I agree that the pull effect will become increasingly necessary as culture and society become more multicultural.