LETTER | Creative entrepreneurship vs technical education
Written by Dr Carmelo Ferlito, CEO, Center for Market Education
First published in Malaysiakini on 16 April 2023
LETTER | In a recent article published by Malaysiakini, Minister of Economy Rafizi Ramli observed the existence, in Malaysia, of what he called an interesting paradox: while the country is among the most digitally savvy countries in the region (Our mobile and internet penetration, online shopping pervasiveness, digital payments maturity, and social media usage are one of the highest in the world. We are even considered “digital life leaders” and not merely followers, writes Rafizi), we rank low on innovation and creativity.
Rafizi appropriately emphasised the role of a proper institutional framework in creating an ecosystem conducive to innovation; but he also touched on another crucial aspect, which I want to quote here in its entirety: The first step of innovation is simply looking at a day-to-day problem and asking, “How can I make this better?”.
The matter could have not been better presented: in fact, the question “How can I make this better?” is the true foundation of innovative processes.
Surely, those processes need to find responsive institutions and adequate financial support, but indeed, without the emergence of that question, institutions and money would be like water on unfertile soil.
How does a mentality that challenges common wisdom (how can I make this better?) eventually emerge? In this regard, I would like to develop two points which I hope will enrich, rather than contradict, Rafizi’s argument.
The first is the difference between technical experts and entrepreneurs. A common misunderstanding is that, for a technologically oriented venture to emerge, a technologically trained mind is the necessary precondition.
This is wrong and the argument can be extended to any industrial sector. A simple example can clarify: you do not need to be able to cook a good pizza to generate a successful pizzeria (pizza shop).
We need to call to our aid the distinction, developed mainly by the Austrian School of Economics, between technical knowledge and entrepreneurial knowledge.
In the case of the pizzeria, possessing technical knowledge means knowing how to make a pizza. This kind of knowledge, usually, is available to many, centralised, expressed in formulas (or processes and principles), exists before an economic venture, and can be “easily” communicated via a process of formal teaching and learning.
However, if you want to be a successful pizza entrepreneur, you do not really need to possess technical knowledge; what you need is entrepreneurial knowledge, or what Nobel laureate FA Hayek called the “knowledge of the conditions of time and place”.
Elusive entrepreneurial knowledge
The entrepreneur does not need to be able to answer the question “How do I make a pizza?”, but rather he needs to face a totally different set of questions: which kind of customers should I target? At which price should I sell? How many people should I hire? Is this the right location? Which kind of raw materials should I buy?
While the answer to a technical question is usually given, the answers to the other questions often present an element of risk (they are uncertain).
Entrepreneurial knowledge, thus, is subjective and practical, exclusive, dispersed throughout the minds of all men, tacit (not expressed in words), created ex nihilo (from nothing, precisely through the exercise of entrepreneurship), and it can be transmitted, for the most part unconsciously, via extremely complex social processes (price mechanism), the study of which is the object of research in economics.
Technical knowledge can be hired for a fee, while entrepreneurial knowledge is emergent through the exercise of human creativity. And, indeed, Rafizi’s question is the essence of creativity.
How can education support and nurture the development of creative entrepreneurship, then? From what I have written so far it should be clear that we do not need more technical training, but rather strengthening the teaching of those disciplines that can support the development of critical thinking.
While mathematics and engineering are important disciplines to provide students with technical skills, they are not enough to nurture that critical thought which is so much needed in order to awaken a domestic and creative answer to the challenges posed by the present scenario; the history of that disciplines shows precisely how history is important for sciences too. We need a bigger role for humanities!
History and geography expose students to the evolution of the conditions of time and place, in order to grow in their understanding of where we are now.
At the same time, the knowledge of literature and philosophy put pupils in close touch with those authors that, over centuries, built not only our culture but also our very system of thought: although unconsciously, we all use thought categories which were grounded by Plato and Aristotle more than 2300 years ago.
If you wish to challenge the common way to do things, how can you ignore the works of those who have accomplished this before you? Such an approach is key to awakening domestic creative entrepreneurship.
The latest BN manifesto mentioned the importance to rebalance the role of humanities in the national curriculum. Fulfilling that election promise can be, only apparently surprisingly, the key to the question posed by Rafizi.