The entrepreneur of the year grossed less than $100,000 in 1986, has no full-time employees, and plans to expand her business from Cleveland to Washington, D.C., because that's where she wants to live.
The entrepreneur of the year grossed less than $100,000 in 1986, has no full-time employees, and plans to expand her business from Cleveland to Washington, D.C., because that's where she wants to live.
The hottest entrepreneur is Betsy Tabac.
It might have been Mike Lieberman, who competes in the personal-computer market against IBM from a leased storefront in Riverton, Wyo., where he assembles computers by hand.
Or Florence Sender, 44, and mother of 14-month-old Boaz.
Or any one of thousands of seemingly unlikely choices -- people who don't remind you of entrepreneurs in the familiar sense of the word at all.
Welcome to the Post-Industrial World, the Age of . . . well, what do we call these people?
They are your customers, suppliers, competitors, and friends; male and female; experienced managers with M.B.A.s; polisci majors out of left-leaning nonprofits; exmoms; naive and slick; 30 or 45-plus; hard, in other words, to characterize -- except for this one overarching distinction: they've all started companies because it was the best way, sometimes the only way, they could get the work they wanted, where they wanted, and on the terms that they wanted.
WHAT EMPLOYER, FOR INSTANCE, was going to hire Barbara Patton as anything but a pleasant, if inexperienced, receptionist?
Not that Patton, 45 now, was looking for a job, although, as she points out, "When I was growing up, people went to work for big organizations."
She's right. For her parents' generation, and their parents', the respectable way to earn a living in twentieth-century America was to get a job. We Americans may celebrate personal independence and fancy ourselves a nation of rugged individualists, but the reality is that for the past 100 years or so we have preferred to depend on someone else for our employment. Self-employment has been on a downhill slide in the lot like Toffler's Third Wave -- the second was industrialism -- has arrived. Consequently, no one should be surprised that these new companies reflect the economic, technological, and cultural changes that are washing over the country.
Economic change, to begin with, has revolutionized the structure, even the concept, of manufacturing. New manufacturing businesses -- Nibbles International Inc. and T.L. Computing Corp. are good examples -- need not be delimited by factory walls. One makes cheese spread, the other computers; one is run by a man, the other by a woman; one is near Route 128 in Massachusetts, the other in remote central Wyoming; one serves a national market, the other a regional; one expects to go public, the other doesn't. (Suggested exercise: match the characteristics just listed to one of the companies, cheese or computer. Then read on to find out how you scored.)
Mike Lieberman, 36, a political science graduate and, for most of his professional life, a social worker, runs 16-month-old T.L. Computing in a Riverton, Wyo., Main Street storefront. He started the company with Randy Tucker, an elementary school history teacher and basketball coach who earlier aspired to be an environmental lawyer. T.L. Computing manufactures and markets IBM-compatible personal computers primarily, but not exclusively, to school districts and local governments in Wyoming and most contiguous states. After 16 months, the company's installed base is approximately 75 machines, about what IBM sells every five minutes.
Florence Sender, a former school volunteer, cofounded and runs Nibbles, also from a storefront, this one in Newton, Mass. "I'm the victim of a liberal education -- well schooled and totally unemployable," she says. Since no company was likely to hire Sender to develop a multimillion-dollar product line for them, she created her own. Nibbles expects gross revenues of $5 million during the current fiscal year from the sale of the all-natural cheese spreads and snacks it sells nationally through supermarket delicatessen and dairy departments. Last year's sales were $2.2 million.
While both companies sell products of their own design, neither, in the conventional sense, actually makes anything. Nibbles's cheese spreads are manufactured and distributed by Beatrice Cheese Inc., in Iowa. T.L. Computing's computers consist of components from Japan, Taiwan, and the United States. In the storefront's back room, Lieberman and two part-time technicians stuff the printed circuit boards and assemble, test, and pack the machines for shipment. The heart of the machine, the programmable chip that gives it its operating characteristics, is Lieberman's copyrighted creation.
T.L. Computing is riding a firmly established trend toward industrial disaggregation -- the turning over by large companies of specific manufacturing and support tasks to independent specialists. One consequence of disaggregation is that small startups, like T.L. Computing, can tap the same component suppliers as IBM. As a result, neither IBM nor T.L. Computing enjoys a decisive advantage in actually building the machine. They compete in how they add value to it. IBM's value added is its brand name, reputation, mass distribution, and service network. But mass distribution and service don't work in such places as Wyoming, where the population is sparse and urban centers, such as they are, are widely scattered. (You can't fly from one Wyoming city to another without leaving the state.) So T.L. Computing's value added is the customer hand-holding and service support a mass marketer can't provide. By selling its machines through direct mail and telemarketing, T.L. Computing saves the retailer's markup, which gives Lieberman enough margin to afford delivery, setup, consulting, and warranty repair, if required.
Another consequence of disaggregation is that assembling large amounts of financial capital is no longer a prerequisite to many business start-ups. Lieberman and Tucker split the $900 cost of building their first computer in the fall of 1985. When they sold it, they used the revenue to finance construction of the second machine. Then their banker gave them a $10,000 line of credit, secured by their personal vehicles. When T.L. Computing received a purchase order for one or more machines, it borrowed from its credit line against that purchase order for the components it needed. When those machines were sold, the partners paid the line down until the next order came in. They retained all earnings for working capital.
By past standards at least, companies United States, dropping from 34.1% in 1870 to 24.9% in 1920, to 19.5% in 1950, to 13% in 1960, and to less than half that by the early 1970s.
Individualism, William H. Whyte Jr. told us in The Organization Man, published in 1956, was the business myth, but collectivism was the business reality. When Whyte wrote his classic, it seemed to him, as well as to others, that even the myth of individualism was wearing thin. Postwar college and business-school graduates, overwhelmingly male, couldn't wait to join the country's growing corporations. "[M]ore than any generation in memory," Whyte said, "theirs will be a generation of bureaucrats. . . . They want to work for somebody else." Entrepreneurs were unhappy men, selfish and motivated by greed. Small business was petty business, kept small by nepotism and the owner's rolltop-desk mentality. The young men who wanted to get ahead joined the corporation. A 1969 study by the Institute for the Future, in Menlo Park, Calif., predicted that self-employment would practically vanish in America by 1985.
But it didn't. Instead, judging by the numbers David Birch has collected, Americans have declared their occupational independence at an almost unbelievable rate. In 1985, the Massachusetts Institute of Technology researcher reports, 700,000 new companies were formed, 400,000 new partnerships were created, and 300,000 individuals took up self-employment -- a total of 1.4 million new ventures launched in one year. In 1950, by comparison, Americans started just 90,000 companies. Between 1978 and 1980, for the first time in the United States, self-employment grew at a faster rate than wage- and salary-paying jobs.
Apparently, something quite remarkable has been happening here. Birch calls it the "atomization" of the American economy. While the public's attention and the politicians' adoration have been focused on a few entrepreneurial superstars -- both real ones, like Fred Smith and Steven Jobs, and glitzy, self-promoting imitations, like Lee Iacocca -- millions of ordinary people, sons and daughters, especially daughters, of Organization Man have opted out of the organization. There has been a change in cultural attitudes, first glimpsed when a relative handful of technology-driven Silicon Valley and Route 128 engineers, backed by venture capitalists, breached the corporate walls. "Hey," they shouted back to the rest of us, "it's OK to go out on your own." Patton and a half-dozen others I talked to in a week of airplane hopscotch are part of the much larger and broadly eclectic crowd that got the message and is following them out.
But they are not entrepreneurs in the mold of Jobs or Smith, men who set out to build fast-growth companies in unmapped markets. While entrepreneurs explore and conquer new commercial territories, the people I visited settle and domesticate them. They do business to live; they don't live to do business.
MY REAL GOAL AFTER I GOT MAR-ried," Patton was saying about 10 o'clock one morning, "was to be a mother. Not just a mother, but a MOTHER." We sipped coffee from her china cups and nibbled on pumpkin bread in a living room suitable to any white-collar suburb. Only the grand piano in a corner was unexpected. The lady of the house might be anybody's mom, dressed this morning for shopping or for bridge club. "But then my father died the year before I turned 40," she went on, "and my son graduated from high school, and I was rethinking my thinking."
It's good thing Patton didn't want a corporate job, because those who are middle-aged with bachelor's degrees and no business experience don't get them easily. Furthermore, Proposition 13 had wiped out Patton's prospects of full-time music teaching in the public schools. Eventually, she decided to start a business, Snoozy's Room, but it doesn't resemble either example she might have modeled it on.
It doesn't, for one, follow the pattern established by her neighbors. Patton's suburb is Sunnyvale, Calif., deep in the Silicon Valley, where start-ups are by now formulaic: business plan, seed capital, prototype, venture capital, beta test, private placement, rollout, then public offering. Nor does Patton's business resemble the typical craft enterprise -- selling on local consignment just what you can make working afternoons at the kitchen table -- although it shares some of those values. Her original product, Snoo, was a sewed, stuffed child's clown. Patton made the clowns for friends, who urged her to sell them. She decided that her friends were right, that she could sell Snoo -- and other hand-sewed nap-time products, too -- but she wanted a business, not just something to do with her hands.
So, Snoozy's Room, which expects to sell about 2,000 units this year, is different. It's a lot like many of the other companies that these new-style entrepreneurs are starting -- though their products range from computers to cheese spread to advice:
* Their companies are conservatively and internally financed. Patton and her partner (her mother) each put up a couple of thousand dollars. For working capital, many such companies rely on small amounts of infrequently used bank credit to supplement retained earnings. In Patton's case, she has a line of credit available from her bank, which she has never used. "This is not a time for me to take financial risks," Patton explains, "with two kids in school."
* Manufacturing, if any, is contracted out, except when scale economies or other reasons dictate otherwise. Patton uses home workers, paid by the piece, to sew her goods, but she cuts the cloth and handles shipping herself.
* Any business function -- sales, marketing, distribution, design, accounting -- that someone other than the founder can do more efficiently and effectively gets turned over at the earliest opportunity. "I'm not fond of sewing. Purchasing is a pain in the neck. I have no manufacturing background. My ego isn't at stake in delegating authority. I," says Patton, "just want to be the CEO."
* Growth and profit are crucial, but secondary, objectives. Sometimes it's location; sometimes it's choice of work; sometimes, as with Patton, it's time well filled that is the real aim. "There's no point to being in business if you're not making good money," she says, "but there's no way I would give up my family and friends for it."
Bill Wetzel, a professor of finance in the business school at the University of New Hampshire, suggests calling the people who start these companies "lifestyle entrepreneurs." The lifestyle portion of the label has merit, implying as it does that their businesses are means, not ends. But is also suggests a casualness that doesn't fit them. "I can see the company doint $10 to $15 million a year," says Patton, which is the reason that organizations for women who make things at home don't offer her much support. On the other hand, she also tried the local businesswomen's clubs. "'Oh,' they say, 'you do crafts. How nice for you.' The implication," she says, "is than an intelligent and sophisticated woman would be involved in a real business. Snoozy's Room is a real business. We have a computer, pay our bills, keep accurate records, fill out our tax forms, and do all the other things a business has to do. And, we don't 'do crafts' any more than the major soft-goods manufacturers do."
If people think businesses like Snoozy's Room aren't real companies, it's probably because they have outdated notions about what a real company is. Maybe they should reread their Alvin Toffler. While we've been debating the advantages of high tech over smokestack, fighting offshore production, and decrying the growth of service industries at the expense of manufacturing, the leading edge of something that looks a like T.L. Computing and Nibbles are quite sophisticated. Lieberman's company is tiny, but it deals with parts suppliers and agents all over the world, most of whom Lieberman has never personally met. It efficiently distributes and services equipment in a market that, for a tiny manufacturer, is far flung, larger in fact than most countries.
At Nibbles, Sender operates an estimated $5-million national snack-food company with fewer than a dozen employees, a telephone, a computer, a Federal Express account, and easy access to Boston's Logan Airport. "Beatrice does the manufacturing," says Sender, "and they also handle distribution, which gets me trailer-load prices, and I handle none of those problems. We call in orders, get delivery verification so we can bill, and that's our daily contact with Beatrice. We get monthly reports from an independent lab we hired to test each batch of cheese." Independent food brokers, backed by a few Nibbles salespeople, sell the products. Sender designs her own packaging, which is crucial to her marketing strategy.
With this sort of arrangement, Sender retains more personal control over her product and its design, manufacture, distribution, and marketing than she would if she brought all those functions in-house. Think about it. Instead of working through multiple tiers of managers -- whom she would have to hire, motivate, promote, and otherwise administer -- Sender gets the information she needs, and only the information she needs, directly. She can act on it just as directly. Someone else worries about the foreman's hangover and the union grievance committee. Sender spends her time mostly on cheese spreads and new products.
What one notices about her, as well as Lieberman, Patton, and the others, is how matter-of-factly they accept the notion that they can manage these complex companies. The very idea of building a manufacturing enterprise from many parts that are not contained within four factory walls, but are instead linked across state and national boundaries through information channels, was practically unimaginable to their fathers. Why is it so unremarkable now, a generation later?
Improved technology, obviously, is one reason. Communicating is easier today than 20 or 30 years ago, whether by microwave, Telex, Fax, Federal Express, phone mail, or modem. But more important than the improved technology itself is people's level of comfort with it. Alan Kay, who developed in the 1960s the concepts that became the personal computer of the '80s, claims that it takes an entire generation for people to become comfortable with technology. That sounds about right. I was six when we got our first television. For me, television was, and to a lesser extent continues to be, an astounding phenomenon. But TV was part of my children's received world, no more remarkable than trees.
The second change, which has also taken a generation to be absorbed into the culture, may be a technology, although we don't usually think of it as one. Peter Drucker does, however. Indeed, the writes in his current book, The Frontiers of Management, that the "biggest factor in the entrepreneurial explosion -- and the one truly new technology -- is probably a managerial breakthrough: the development since World War II of a body of organized knowledge of entrepreneurship and innovation."
Drucker, not given to modesty, credits himself with having created modern management. "Look," he said in an INC. interview (October 1985), "if you can't replicate something because you don't understand it, then it really hasn't been invented; it's only been done." Management was invented, he says, when first he and then others analyzed, codified, and wrote down the principles of management. "[W]hen Aunt Mary has to give that nephew of hers a high school graduation present," Drucker said, "and she gives him In Search of Excellence, you know that management has become part of the general culture." Or, as Barbara Patton said about starting Snoozy's Room, "You don't have to know how to do anything. It can all come from books. When I was starting my business, the library was my second home." The most important capital resource for the post-industrial entrepreneur isn't skill, and it isn't money. "In an age in which information is becoming the organizing energy," says Drucker, "the capital resource is knowledge."
HIGH-TECH ENTREPRENEURS OF the '60s and '70s were pioneers in the sense that they alerted a generation of Americans to a whole new set of possibilities: you can leave the organization and go out on your own. But most of the companies those pioneers created were not substantially different from the classic business model, the corporations many of them left: a hierarchical management structure whose objective was to grow the company as large as possible as quickly as possible. The people they influenced, the post-industrial entrepreneurs of the '80s, enthusiastically buy the possibilities, but not the model.
Lieberman has turned down offers of venture capital. His banker talks about taking T.L. Computing public, but Lieberman has no interest. "I'm addicted to working with computers," he says, "and I needed a way to make a living at it. . . . I've got no interest in growing the company so big that I can't do the things that I started it to do."
This does not mean, however, that these individuals are interested in replicating the traditional Main Street and gasoline alley mom-and-pop businesses. Sender started her business by supplying birthday cakes to Boston restaurants and soon opened a gourmet food store in Brookline, Mass. "We made 40 items fresh every day," she recalls, "including 15 to 20 salads. It was constant hard work and repetition. I was working 80 hours a day. If the baker didn't show up, I was the baker. If the dishwasher didn't show up, I washed dishes. You couldn't franchise it. My accountant finally told me, 'You're gonna work your ass off and never make any money."
Ma-and-pa enterprises fail if the owners don't work hard enough. Businesses like Nibbles and T.L. Computing, in contrast, fail if their founders don't have the requisite sophistication -- a knowledge of where the markets are and how to get to them, for instance.
Ralph Whitehead, a University of Massachusetts teacher interested in workplace trends -- he coined the label "new-collar worker" to describe the yuppies' workingclass cousins -- draws the distinction another way. The difference between buying a gas station and, say, starting a snack-food company, he says, is the difference between "buying a job and inventing a role. At a gas station, you know what your job will be before you buy it. When people begin to invent a role, it's not so clear what they will be doing."
Another writer, Tony Jones, refers to the "New Autonomy," the crux of which, he says, is the "growing opportunity for people to shape their lives according to inner impulse or conviction."
WHEN HE WAS YOUNGER, PAUL DICK-son, author of On Our Own: A Declaration of Independence for the Self-Employed, landed a writing job at a magazine. It was exhilarating, he writes in his book, but there was "a corporate assumption that I did not share. It was that I would eventually rise to an executive job as a bureau chief or senior editor. I was told that my destiny was to become a boss and that with any luck I would soon be working on vacation schedules and writing fine memos on the importance of getting expense accounts submitted before the 10th of the month. . . . What I began to realize was that . . . my interests and those of the company were vastly different."
That partly explains why Dick Torre, a rising young (41 now) executive with a large asset-based lending company, left to create his own firm, Torwest Capital Markets Group Inc., in Irvine, Calif. He didn't like formulating employee vacation policies. But he left for another reason, too: security.
What irony. It's now more secure to be outside the organization than inside. "With the deconglomerating and restructuring of corporations," says Torre, "there is no longer any security in being with a big company, so one traditional reason for staying evaporates." Torwest is a service business whose only asset is what its founder carries between his ears.
So is the Sterling-Rice Group Inc., a newproduct consulting firm in Boulder, Colo., and cofounder Rick Sterling, 39, is aware that his decision to go outside the organization involves limits, even a dark side. There are limits, as with Torre's investment-banking boutique, to the size of firm he can have if he insists on avoiding management, and to the amount of equity he can build. "It's not the kind of business you start up and sell," he concedes, "but that's OK. To build equity, I'd have to do some things I don't want to do."
The dark side of just doing the things one wants to do is that, at the very least, it can get to be a bore; or it can be exhausting. "We took as our specialty the hardest part of marketing," Sterling says, "and it's a burnout situation; it's a killer. I can't imagine myself doing this when I'm 50. I worry about that . . . but not too much."
That is one of the telling differences between Organization Man and his offspring. For the parents of today's entrepreneur, security loomed large, often foremost, among all career objectives. "This," says Sterling, "is where I can really get into an argument with my father. To me, work ought to be fun. 'Fun,' my father says, 'What's that got to do with earning a paycheck?"
When Judith Turof, 43, a registered investment adviser in New York City, was fired by a major Wall Street brokerage house after 20 years in the industry, she told her dad she was thinking of starting her own business. "If I were in your predicament," he wrote back, "I would grab the first decent job I could get."
"You're onto something here," Paul Leinberger, an organizational psychologist and management consultant, told me by telephone from St. Paul, Minn., where he is writing a book on the demise of Organization Man. "It's a combination of social, psychological, economic, and technological circumstances that have come together that allows this to take place," he said, "and it's not just a fad."
The children of Organization Man, Leinberger explained, "have grown up in affluence. It's expanded their choices, and they have taken different experiences into their decisions. You can have the father and son, or daughter, standing at the same decision point. The father will say, 'You have nothing to rely on, nothing to fall back on. Where are you going to work if you fail?' And the son says, 'But I won't fail.' Dad says, 'That's unrealistic.' His son says, 'Dad, you just don't recognize opportunity when you see it.'
"This generation has turned optimism into a resource." And, Leinberger added, just as Organization Man was what the country needed after World War II, "this second generation is exactly what we need to revitalize America. They take chances; they have no loyalty to old organizations; they've merged their family and their work lives; and they are comfortable with technology."
Alas, he has no name for them. "The best I can do," he said, "is to say that we're in a transition from the social ethic of Organization Man to an enterprise ethic."
THE HOTTEST ENTREPRENEUR OF the year, I started out to say a few pages back, is Betsy Tabac. Not because her company, Tabac & Associates, is the biggest, fastest-growing, or most sophisticated or because it is unique in any category or contest. Those aren't the criteria by which you'd judge her business, or other postindustrial enterprises, anyway. Tabac is the hottest just because she mebodies so many of the characteristics and motives that typify this next generation of entrepeneurs.
She is, first, a woman. It was assumed that women, who headed off to business schools in unprecedented numbers during the past decade, would make their mark in business through the corporations that sought them out and hired them. But for reasons that authors Sarah Hardesty and Nehama Jacobs begin to explore in their recently published book, Success and Betrayal: The Crisis of Women in Corporate America, women climbing the corporate ladder have bumped into a glass ceiling. "Does corporate culture betray women the closer they get to the top?" the book asks. A University of Michigan survey, noted in The Wall Street Journal recently, found that of the corporate executives promoted to the rank of vice-president and above in 1985, only 2.6% were women, down even from the scant 3.1% reported in 1984. While everyone has been preoccupied with Mary Cunningham's rise and fall, women have moved solidly into business -- but not in the corporate organization. Women now own nearly one-quarter of all small businesses in the country, according to 1982 U.S. Census Bureau data, and women are starting businesses at three times the rate of men. Some of them are beauty salons and day-care centers, but some of them aren't. Women, dare I say it, are leading the new entrepreneurial wave.
Second, Tabac sees the leverage that technology affords her. There are a large number of home-based businesses owned by women, Alvin Toffler wrote in 1983, that have been operated without any technological support. "That's been a little undiscovered island in the economy. . . . Now, suddenly, give it cheap computers, cheap telecommunications, video equipment, and the like, and I believe it will explode." It has. "Without this computer," says Tabac, standing in one of the two bedrooms given over to her business, "this business wouldn't be. For $3,000, it's as if I have two or three more people than I do. . . . Car telephones will allow me to do without middle-management layers. I can be in touch myself any time I need to."
And Tabac, 44, is a liberal who, though a bit old for Woodstock, was nonetheless caught up in the antiwar activism of the '60s and the feminism of the '70s. In 1971, she cofounded a pre-Roe v. Wade abortion-referral service in Cleveland and stayed with the organization, at a politically correct paltry wage, as it moved through the feminist issues of that decade. She left in 1980, got a master's degree in public administration, and went through vocational counseling and a good deal of self-examination. "I guess," she said over dinner, "I got more pragmatic. I also got used to the fact that I have a right to a decent standard of living, that there's no intrinsic good in being poor. I used to think there was, but I was poor then."
Tabac staffs her policy research and writing firm -- "We'll research and write any business communications: manuals, newsletters, speeches" -- with part-time independent contractors. As her Cleveland business grows, she's looking into creating similar firms in Washington, D.C., and in North Carolina's Research Triangle, places where she may want to live and retire, respectively.
"Ten years ago," she says, "I would have died before going into business. It's not an egalitarian decision-making situation; I wish it were. I don't employ any blacks; I should. I don't pay people enough; I wish I did. I guess it's not possible to run a business that's politically correct. . . . You know, I don't see things in black and white anymore, and I hate being on the fence.
"Most people have the idea that people start businesses because they're profit oriented. I'm not sure. Money may be the way I keep score, but I started the business for other reasons."
A lifestyle entrepreneur . . . the new autonomy . . . the enterprise ethic . . . new wave . . . post-industrial.
By any name, the sizable group that Tabac represents are the hottest entrepreneurs of the year.
Sadly, however, they are not the solution to the country's excess labor problems. And, as a class, they present enormous challenges to advertisers and suppliers, to economic-development efforts, and to the management of existing business firms.
Despite occasional newspaper reports of laid-off factory workers creating machine shops in their garages, the new-style entrepreneurship that Tabac, Torre, Sender, and Patton are practicing is, by and large, a middle-class, white-collar phenomenon. Semiskilled assembly-line workers rarely have the managerial experience Torre had, or even the cultural exposure to management that Mike Lieberman got as a social worker. These are, after all, post-industrial enterprises, relying for their success not upon what their founders can do with their hands, but upon what they know -- upon how well they can manage information. Few factory workers made redundant by technology or offshore production will find employment as post-industrial entrepreneurs.
Nor, for similar reasons, will the new enterprises themselves be employing many laid-off laborers and factory hands. If it grew as large as Lieberman could imagine within its regional market, T.L. Computing would never hire more than a couple dozen people -- and those would be skilled assembly, test, and service technicians. Nibbles will never create many new jobs directly, although, because it procures services (manufacturing, distribution, testing, and so on) from other companies, it will always have an indirect effect on employment. Some cheese maker and some truck driver at Beatrice have jobs only because Beatrice makes Nibbles' products.
The new autonomy produces macroeconomic pluses and minuses, according to Robert Reich, a professor at Harvard University's John F. Kennedy School of Government. "On the plus side," he says, "small groups of people can be more innovative and flexible. So, if you fragment the large organization and replace it with networks of people, that is probably a good thing for an economy that can no longer base itself on high-volume, standard products." On the negative side, he points out, with networks, "everything is retail. Transaction costs may be relatively high since lots of people are contracting with the unknown and will want more comprehensive contracts."
The challenge to advertisers and sellers of business goods and services lies in the large number of these new enterprises and their individually tiny size. John West, president of Cimlinc Inc., in Elk Grove Village, Ill., recalls that when the price of the computer-aided design workstations Cimlinc makes was high, marketing was simple. He'd talk to a few huge companies like General Motors Corp. and Deere & Co. Now, with the price at $15,000 or less, within reach of just about anyone, his potential market is huge. Cimlinc has had to learn and use direct-mail, telemarketing, and other selling techniques it never needed before.
The economic development challenge is, likewise, perplexing. State and local government officials for years thought prosperity would come if only they could lure large manufacturers into their areas with promises of tax subsidies and new highway interchanges. Only recently did they discover the entrepreneur and switch to more appropriate carrots -- venture capital funds and small industrial park developments. Promoting the development of post-industrial enterprises will be even more difficult. What do these people need? Lieberman wanted no part of venture capital, but he needed, and found, a flexible banker in Riverton. Peer-group acceptance is crucial. The idea of starting his own business was not a hurdle for Rick Sterling. He'd seen others start their own. "Boulder's that way. All your neighbors have done it," he says.
And as Leinberger's enterprise ethic supplants the old collective social ethic that bound employees to organizations, the challenges to managers of existing companies, large or small, are compounded. If talented individuals see that they, like others, can easily leave the group and prosper, what's to keep them inside the organization? The ambitious employee will quit, Peter Drucker has warned, and the drones will retire on the job.