Ahead Of The Game – EPISODE 6: Prof. Fredric Kropp (Entrepreneur Education Part 1)
Welcome to Ahead of the Game, a podcast brought to you by KMT Partners. I am Andrew Montesi. Our next few episodes will be focusing on entrepreneurship education, which is somewhat contentious when a lot of discourse around the topic is built on stories of the ‘self-made founder’, ‘university drop out’ and learning as you go. So, we’re investigating this issue of education with entrepreneurs and business owners, starting with a conversation with Professor Fredric Kropp. Fredric is professor of entrepreneurship and innovation at Middlebury Institute of International Studies in California and also at the University of Adelaide. He also spent 20 years working with consulting firms, specialising in forecasting, marketing and policy analysis. He was educated at Northeastern University in Boston, University of Southern California and University of Oregon.
We talk about key attributes of successful entrepreneurs, key fundamentals for teaching entrepreneurship, the emergence of social entrepreneurship and much more. This podcast is brought to you by KMT Partners. KMT is a leading accounting and wealth management advisory firm in South Australia, assisting you to emerge, renew, grow and build resilience in business, things which are essential to this podcast series. For more information, visit kmtpartners.com.au. Now, enjoy our interview with Professor Fredric Kropp.
Andrew Montesi: [00:01:28] Professor Fredric Kropp, welcome to the podcast.
Fredric Kropp: [00:01:31] Thank you, Andrew. It’s a pleasure to be here.
Andrew Montesi: [00:01:34] Now first thing, maybe a challenging question, maybe not. But how do you define entrepreneurship?
Fredric Kropp: [00:01:41] You know when I first started out teaching, I used to say, it’s like a giraffe. You can’t really define it, but you know when you see it. As I’ve gone on I’ve really kind of gone through that process. It’s where you’re using innovative, proactive techniques. You’re willing to take a risk for reasonable return. You act on your own and you are competitively aggressive.
Andrew Montesi: [00:02:08] Do you think it’s a bit of an overuse term at the moment? It seems like everyone is an entrepreneur these days.
Fredric Kropp: [00:02:13] That’s another good question. It could go back to the giraffe analogy. But there are certain criteria. You have to be willing to take risks and you have to be innovative. So, the traditional mom and pap type story where may add value to the economy, may produce jobs is not really considered entrepreneurship.
Andrew Montesi: [00:02:37] Okay, who are some of the entrepreneurs throughout history or even recent history that you admire and why?
Fredric Kropp: [00:02:47] You know when people ask that question, they look for the big names like the Richard Branson or the Steve Jobs or people of that. But most of the work on entrepreneurship is done by normal everyday type of people. My father was an entrepreneur. Nobody in the world really knows him. My grandfather was an entrepreneur. They’ve traced it as far back as Marco Polo when he was going to China, he borrowed money. Once he paid back the money, he shared in the profits. But if he didn’t make the money back, he would have to pay it back somehow.
Andrew Montesi: [00:03:29] So, that wouldn’t have been called entrepreneurship back then, I wouldn’t have thought.
Fredric Kropp: [00:03:34] No, the word started getting a lot more attraction in the 1960s or 70s. But it really comes from the French concept which goes back 100, 200 years.
Andrew Montesi: [00:03:48] Yeah, but it seems like that depending on the economic climate back throughout history, everyone in business would have been an entrepreneur of sorts because of the risk factor.
Fredric Kropp: [00:03:59] At a given time. There’s all different kinds of entrepreneurs. There’s the normal opportunity based entrepreneurs where someone sees an opportunity and wants to capitalise on it. Then there’s some necessity based entrepreneurs. These are people who don’t have any other option. Then there’s the social entrepreneurs, which is an area I really like working in.
Andrew Montesi: [00:04:25] Absolutely. We’ll definitely come to that. But to then go back, where did this fascination wit entrepreneurship start with you?
Fredric Kropp: [00:04:32] Well, it may in my genes. As I said, my father, grandfather and brother were all entrepreneurs. My speciality, my way of thinking is really kind of on an academic level. So, I thought my strength would be academic. Maybe I could try to explain what entrepreneurship is, how it works and add to the general base of knowledge.
Andrew Montesi: [00:05:00] As a youngster, what were you learning from your father in those early years?
Fredric Kropp: [00:05:09] I think it was a sense of independence. My dad had worked for someone else, but he was never really happy with it. He wanted to be his own boss. He wanted to be creative, innovative. So, I think I probably learned a sense of independence from it.
Andrew Montesi: [00:05:28] That’s right. In your career, you had extensive experience in consulting and forecasting. Looking at the climate now, it seems like forecasting would be pretty difficult.
Fredric Kropp: [00:05:41] It’s an understatement. On some levels, when you have a really good, well behaved model, it’s easy to predict. So, if I wanted to predict the demand for refrigerators next year, I could just look at how many were sold, when, how they decayed, how many broke down. But when you’re starting a new venture, and you’re going into unchartered territory, it’s very difficult to predict. Sometimes, it’s just a guess.
Andrew Montesi: [00:06:12] It’s interesting because people starting businesses should be doing some sort of forecasting, I would have thought, to gain a bit of an idea about the market that they are attempting to enter. What are some of the key factors that someone should be looking out for in terms of preparing to enter a new market?
Fredric Kropp: [00:06:34] There’s a number of different things. It almost goes back to the standard type of market analysis. Do you have a competitive advantage? Is there something that you can offer that other people don’t offer? Is there a demand for it? Can you produce a better product or a cheaper product? I think of it, and there’s some businesses where people feel held captive. They are just waiting for somebody else to make them an offer. If you can find those businesses, you have a real competitive chance.
Andrew Montesi: [00:07:12] Interested now to discuss some of the concepts around teaching entrepreneurship, because it always seem to be this perception that it’s embraced by drop outs and charting your own course and all of these stuff. What are your thoughts on that? How do you go about teaching these concepts?
Fredric Kropp: [00:07:34] Well, it’s interesting because the perception you mentioned is probably not the general reality. Most entrepreneurs have university degree. Many have postgraduate degrees. When we look at the icons like Richard Branson who is the rebel, who wanted to accomplish things, we take that icon and then we start to generalise from it. So, back to your teaching question, on the first day when I would start an entrepreneurship course, I would say, can I teach somebody to be an entrepreneur? Then I would say, no. Then I would say, okay, let’s all go home. There will be a moment of silence. Then I will explain myself. I can teach people to act entrepreneurial. If you take a music analogy. I could teach somebody to play the notes. But I couldn’t make them Miles Davis. They have to have some kind of innate capabilities that allow them to master. So, for the entrepreneurship researches, really kind of fragmented. But there are a few agreements on what makes a real entrepreneur. One is a need to achieve. Another is a willingness to take risks. If you don’t have those, you’re going to find it very difficult to be an entrepreneur. You also have to be creative and innovative.
Andrew Montesi: [00:09:11] So, really interesting point you make about teaching people who may not have in their genes like you do, but teaching them to be able to act entrepreneurially. Because it seems like we’re in an era where having those skills whether it’s ingrained in you or not is going to be vital just to actually progress in life.
Fredric Kropp: [00:09:30] Yeah, the world is changing. When my dad came out of school, it was more normal for a person to have one job and to have it for the rest of their lives. Now in the environment we’re at, you’ll have multiple careers. So, part of the teaching is not only the substance of entrepreneurship, but it’s the metacognitive learning. It’s the process. It’s the kinds of things that you have to do. You have to teach someone to be proactive as well as reactive. So, it’s kind of a sense of being as much as it is course content.
Andrew Montesi: [00:10:12] Okay, how do universities kind of review their own performance in terms of effectiveness of teaching, not just universities, but any other type of education provider in this space?
Fredric Kropp: [00:10:28] It’s an interesting and timely question. I just did a review of the major universities entrepreneurship course. I looked at all the classes they were offering, the programs in its entirety, and details at various levels. Again, there’s been a shift over the last 10 years to how the material is taught. When I started teaching, it was kind of the sage on the stage model. I’d stand up. I’d tell you what I knew. If you told me what I knew back, then you get a good grade. Now it’s kind of co-creating knowledge. It’s curating knowledge. So, with the access to the internet, with the access to all other kinds of media, blogs, social media, there’s so much material out there that it’s co-creating knowledge.
Andrew Montesi: [00:11:23] Okay, to come to your specialty of social entrepreneurship, I guess I’m interested to know how you define social entrepreneurship, because having been involved in this space myself, when I see charities looking to move to an innovative space, where do you draw the line? How do you put a bit of a box around it and say, this is social entrepreneurship?
Fredric Kropp: [00:11:51] Okay, great question. I’ve been asked that a lot of times. I try to see if I could come up with a definition that was less than 10 words. Social entrepreneurship is using innovative business techniques to solve social problems.
Andrew Montesi: [00:12:10] Very good.
Fredric Kropp: [00:12:11] So, I got it under 10 words. What is social entrepreneurship is another good question, because you’re bounding the reality of it. Is it everything is social entrepreneurship? Then it has no meaning. So, is it very, very limited? Then you exclude a lot of things. But it’s basically trying to solve social problems, if you look at governments in Australia, North America, Western Europe, you will find that there’s a shortage of resources to do everything that needs to be done. It’s a market failure. So, if I were to ask you, do you have full confidence that the government can solve every social problem. People listening to this can’t see you smiling, but they can hear you laughing. Then if I said, how many do you think non-profits or NGOs can solve everything? It’s that same nod of the head, no. If I ask how many people think business can solve all the problems, the answer is still no. So, basically what it’s evolved into is a public private partnership where the government, NGOs and businesses are trying to attack social problems, sometimes together, sometimes not.
Andrew Montesi: [00:13:36] How far has social entrepreneurship come? I mean I think about when I first co-founded a social startup 5 years ago, no one was really throwing around the term social entrepreneurship. There were certainly less funding. People didn’t understand what we were trying to achieve, both in a social and commercial space. Has it progressed a lot in recent years?
Fredric Kropp: [00:14:00] The quick answer is yes. There’s some universities like Harvard, where the majority of their people want to do social good. So, I think social entrepreneurs want to do good and they want to do well at the same time. It’s exploding. It’s a big phenomenon now.
Andrew Montesi: [00:14:21] What are some of the challenges, roadblocks or what have you that exist at the mind of the social entrepreneurship?
Fredric Kropp: [00:14:27] Well, if you think about your own venture, very often the people who need the services, the target of your services can’t afford to pay for it. So, right there, there’s an imbalance in the market system. People have to raise funds elsewhere. Sometimes, it’s government grants. Sometimes it’s donors. Sometimes it’s revenue based activities of the ventures. So, there’s a much bigger stakeholder problem. You have to serve many different stakeholders. Another part of it is that sometimes people are very well intentioned to solve social problems, but don’t really have the business background. If your venture isn’t financially sustainable, you’re not going to be there to help solve the problems. So, people talk about it as a cripple bottomline where it’s the financial aspect, it’s the social aspect, and the environmental aspect. So, there’s a much bigger level of complexity.
Andrew Montesi: [00:15:37] Is there a bit of PR issue as well, in that some people appear to be uncomfortable with social ventures making money?
Fredric Kropp: [00:15:50] For most of the social ventures, they are not on a for profit basis. So, when they make ‘profits’, they are really generating revenue to help fulfil their mission and to either serve a targeted group of people or to serve society as a whole. In general, people don’t get rich from social ventures. In fact, you may wind up being your own biggest funder.
Andrew Montesi: [00:16:21] Yeah, absolutely. So, what does the future look like, maybe I guess in a perfect world. We touched on government not being able to solve all the problems, that charities not for profits, certainly not. What is a balanced ecosystem look like between all of the parties involved?
Fredric Kropp: [00:16:43] Well, it’s still evolving. It really is a function of what the citizens of a particular country want. So, without getting too political here, I live in a country that has recently changed presidents. There’s a very different version and vision from the previous president and the current president. Does that reflect society as a whole? In the last decade, there have been a number of changes in government in Australia, both within and between parties. Each of the leaders have different visions. So, part of it is maybe a function of how active citizens are in trying to create the world they want.
Andrew Montesi: [00:17:33] Are there, I guess case studies of cities or countries that are leading in social entrepreneurship? What are some of the factors that are setting them apart?
Fredric Kropp: [00:17:46] There is data collected every year from an organisation called the Global Entrepreneurship Monitor, GEM to be brief. I forget how many countries they collect data. But it’s somewhere around 80, maybe it’s less, maybe more. They look at each of the different countries. They look at the percentages of people involved in social entrepreneurship. I may be wrong, but I think in Malaysia, it’s less than one percent, where in some of the African countries, it’s 20 to 30 percent. So, it really does vary by what the economy needs, the government and the perceptions of the citizens.
Andrew Montesi: [00:18:38] Okay, Fredric, thanks so much for sharing your insights. I think we’ve love to get you back at some point, and pick out a topic and go into a lot more detail, because there a lot of fascinating stuff there. But thanks so much for sharing a little bit about what you’ve learned on your journey so far.
Fredric Kropp: [00:18:55] Thank you, Andrew. It’s been an absolute pleasure to do this.
Thanks for listening to our interview with Professor Fredric Kropp. Ahead of the Game brings you real business stories that will inspire and help you grow. Please subscribe to our show and find out more by visiting kmtpartners.com.au. At our website, you can also find out more about KMT’s accounting and wealth advisory service which supports individuals, their families and their businesses with accounting, business management, growth, compliance and advisory services. Get in touch at kmtpartners.com.au.
This podcast is brought to you by KMT Partners. KMT is a leading accounting and wealth management advisory firm in South Australia, assisting you to emerge, renew, grow and build resilience in business, themes which are central to this podcast series. For more information visit KMTpartners.com.au
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This podcast is hosted and produced by Andrew Montesi from Apiro Consulting apiroconsulting.com