In the current issue(April 13, 2009) of BusinessWeek, the following letter appears, responding to an article by Vivek Wadhwa:
PUT AMERICAN ENGINEERS TO WORK FIRST
As an engineer with a graduate degree, I take exception to "America's Immigrant Brain Drain" (Outside Shot, Mar. 16).
The spirit of entrepreneurship existed in Silicon Valley well before the influx of H-1B immigrants. It's insulting to hear the author repeat the claim that there aren't enough qualified engineering and science grads in the U.S., while many of my colleagues find themselves out of work.
If companies truly believe this, they should lobby Congress to use some of the stimulus money to help graduates of American universities pursue advanced science degrees.
The author is confusing entrepreneurs and employees. He says that his colleagues find themselves out of work and says that the solution is more spending on advanced science degrees. I disagree.
Mr. Wadwha wrote that "[a]lthough [immigrants] represent just 12% of the US population, they have started 52% of Silicon Valley's tech companies". That is fascinating -- and a vital part of US competitiveness. (The point of his essay is that closing our visa process turns away people who are critical to our economy.)
That statistic can be rephrased -- the market for new capital has decided to invest 52% of its assets in companies led by people born and raised overseas and coming to the US to realize economic opportunity through business creation. (Mr. Wadwha's research also shows that immigrants contributed to more than 25% of US global patents, make up 24% of science and engineering workers with bachelors degrees and 47% of PhDs. This would indicate that they are making substantial contributions to new business creation in existing firms as well as startups.)
This raises an interesting question in my mind -- does the US education process churn people through a system where they graduate from college optimized to be traditional employees?
For most of the last century, the US economy was dominated by corporations, large and small. That worked -- up through the 90's. The pace of technological change accelerated at that point, and (to dramatically oversimplify things) the existing corporations couldn't keep up. New business creation exploded, and Mr. Wadwha's research shows who led the charge.
Further, if you were to read Mr. Wadwha's original piece, nowhere does he say that there is a lack of "qualified engineering and science grads in the US". There are many (of all nationalities) and they are highly skilled. However, it appears that there is a greater opportunity for those who create new businesses rather than are hired by them. (Note that I don't say "start a company".)
The old phrase "Get a Job" (with a song by the same name made popular by the Silhouettes in 1957) might be better transformed in today's economy into "Create a Business". As a student, consultant, and practitioner of entrepreneurial activity, my working definition of entrepreneurship -- applied at every level of business activity from start-up to intrapreneurial behavior inside a large corporation -- is the transformation of a concept into cash flow.
In 1999, Proctor and Gamble fundamentally changed their approach to product development, embracing a concept known as “Open Innovation” where new ideas are found both inside and outside the company. (Please read Henry Chesbrough’s excellent book of the same name for more information.) The $50 billion company realized that in order to grow by 10% per year, it needed to create a new, $5 billion company out of thin air every single year. That is a daunting task, and it requires not only open innovation, but people who can create new businesses.
That requires key business skills and knowledge, calculation of risk and return, identification of opportunity -- and the ability to craft a business strategy to capture that opportunity. This is not what our educational system teaches - we teach the skills geared toward creating employees. That may have been appropriate in the last century, but it doesn't fit the demands of this century.
Fact: People who create businesses, create jobs. They do so regardless of nation of origin. If more people from overseas are willing to create business in the US -- start-up or inside the Fortune 500 -- more power to them. Let's welcome them with open arms and help them succeed!
In addition to being a question of immigration policy, I think this is something that needs to enter the ongoing conversation on educational strategy, starting at the high school and community college levels and continuing on through graduate school and internal corporate education programs.
Do we want to produce employees, or Creators of Business?
