There Is No Shortage of Opportunity

Where there are problems, there is opportunity. And the more solutions we create, the more our solutions need to be coordinated, which produces new varieties of problems. Infinite problems: infinite opportunity.

In the Edmonton market, there is no shortage of empty space. Our city is replete with swaths of land and buildings that sit vacant and undeveloped. And there is no shortage of money. Where there is a strong real estate asset and a strong tenant, debt and equity are readily available for capital investment.

The most precious resource in the Edmonton economy are those people who are willing and able to carry the weight of leadership and create value from undeveloped capital: our entrepreneurial leaders.

Entrepreneurial Leaders are the Scarce Resource
Entrepreneurial Leaders are the Scarce Resource

Capital is Heavy and Entrepreneurial Leaders are Rare

There are two ways to work and earn income: through labour and through capital. Entrepreneurial leaders work to create value from undeveloped capital to solve problems and build wealth for their communities.

But entrepreneurial leadership is difficult and dangerous. Capital is heavy. Working with capital requires leverage; and working with capital leverage is a good way for a person to get crushed; and unless we are already wealthy, the only safety net is bankruptcy. We live in a capital-intensive economy, but our communities and educational systems are geared to produce labour workers. We are not well-equipped to teach our citizens to work with capital in a safe and responsible manner.

Entrepreneurial leaders are rare because it is simply unreasonable to try to be an entrepreneur in a capitalist system that doesn’t provide opportunities for apprenticeship in capital work. Given the risks of capital work, why would anyone who is not already wealthy even dare to try? We may never find a reasonable answer to this question. Perhaps entrepreneurs all just suffer from some combination of wounded egos and ‘don’t-look-down’ syndrome. Or perhaps we are just persuaded that submitting to earning income solely from labour work could be more miserable than failing as an entrepreneur.

Many of those unreasonable people who have had the courage to try but failed are lying in a ditch somewhere. Those who try are rare, and those of us who manage to pick ourselves up enough times to become competent ‘capital workers’ are rarer still. The person who somehow figures out that being a capital worker is something to be; and manages to come up with a good idea to create value for community and respond to real human need; and musters the courage to try; and acquires some competence; and is able and willing to lead and carry the weight of capital — this person is rare and precious.

Our Economy Needs More Capital Workers

It’s been roughly 250 years since the beginning of the first industrial revolution. Over this period, the productive capacity of capital has grown exponentially and has overwhelmingly outpaced growth in labour productivity. In the 21st century, the vast majority of our economic output is a product of capital as compared to labour. As the productivity of capital increases in importance, our need for entrepreneurial and community leaders who are competent in capital work also increases.

The scarcity of citizen participation in capital work is also a primary driver of wealth inequality. When citizens of a capital-intensive economy are not equipped to work with capital, the control and earnings of capital tend to become concentrated among a small number of people. Citizens who don’t participate in capital work also tend not to participate in capital earnings and instead depend largely on their labour earnings for income. Increasing capital concentrations combined with stagnant wages are a recipe for economic instability and social turmoil.

At the community level, we have an abundance of undeveloped capital and a scarcity of entrepreneurial leadership. At the macro level, we also have exponential growth in the productive capacity of capital, exacerbating our need for capital workers; all the while we have stagnating wages and increasing concentrations of wealth in our economy.

A community that can equip its leaders to work with capital is a community equipped to develop potential, solve problems, and build wealth. An economy that can equip its citizens to work with capital is an economy equipped to develop the potential of its people and resources. And broader participation of citizens in capital work equates to broader participation in capital earnings and wealth distribution.

A Hypothesis:
Community-Coordinated Economic Development

What happens when we recognize the value and scarcity of entrepreneurial leaders? When we consider the infinite opportunity in the undeveloped capital that is sitting there, just waiting for our community to organize the leadership needed to realize its potential?

What if a community can learn to gather its learning, talents, and best practices to build shared resources, services, and assets to support its entrepreneurial leaders? And how can incentives be best aligned to enable a community of stakeholders to participate equitably in the consequences and rewards of bringing undeveloped capital to life?

These questions inform the working hypothesis behind Sparrow’s approach to community-coordinated economic development.

Entrepreneurial Leaders Are the Scarce Resource
As owners and stewards of capital, we can start by simply acknowledging that the value of our capital is defined by the capacities of our entrepreneurial leaders. This is true of undeveloped capital as well as capital investment.

Communities Can Equip Leaders With Shared Tools and Resources
As a community of stakeholders, we can learn to gather our talents and best practices, coordinate shared tools and resources, and build paths of capital apprenticeship to help equip our entrepreneurial leaders to work with capital.

Stakeholder Ownership Coordinates Capital Work
As partners and investors in capital projects, we can develop ownership frameworks that align incentives and enable stakeholders to participate equitably in the consequences and rewards of bringing undeveloped capital to life.

Open Equity Is the Evolution of Stakeholder Ownership
Open Equity is an innovative framework for equitable ownership and stakeholder engagement. It adapts nimbly to a broad range of assets and initiatives, diverse contingency scenarios, and various configurations of stakeholder groups.

Part two of this series, Communities Can Equip Leaders with Shared Tools and Resources, discusses community-coordinated leadership development and the operating functions developed by Sparrow Capital to support entrepreneurial leadership.

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