Good morning and thank you for having me out today to speak to you on a topic that is of such importance to both our nations. Please allow me to extend special thanks to Dr. Alamsjah and Dr. Oroh for their kind words of introduction.
The faculty and staff of BINUS have been very welcoming. I would also like to extend greetings to the entire BINUS community that I understand is watching this event through the campus CCTV network. It is very good to be able to speak to you all this morning.
Students, I wish I could tell you that today’s event is a chance to escape your classes with an enjoyable morning of just listening, but apparently Dr. Oroh is having none of it. So, there will be a graded quiz at the end of this lecture. Sorry.
I am very glad to see so many students in the audience today, because it is young people like you in colleges and universities like BINUS throughout Indonesia upon whom the economic future of Indonesia depends. I know that sounds hard to believe and maybe a little frightening, but it is true. Let me explain:
In economics and business, the one constant is change. Over time, some things that were very valuable become less so, and other things no one dreamed of before become very lucrative. I will give you some examples.
There was a time in the United States when a person could make a living as a blacksmith, putting shoes on horses. Then along came the automobile, crude and noisy at first. It didn’t seem like much of a threat to anyone other than the drivers.
But within just a few years, no one could keep their family fed as a blacksmith any more. And just after World War II many people made a living as door to door salesmen. Vacuum cleaners, encyclopedias, and many other goods were taken to the homes of America.
Then along came the first computers, big, crude and noisy at first. What salesman back then would ever believe that before long there would be something called the internet, and that it would bring us Amazon, Ali Baba, and Indonesia’s own Tokopedia?
In each of these and many more economic revolutions, government budgets and big businesses were built around seemingly stable economic realities. But then someone brought something new that disrupted and changed the market in fundamental ways. A technical innovation or new way of doing business came along that started small, and then changed the world.
The most obvious recent example is what many of you have in your backpacks: a smart-phone. Smartphones and their apps have disrupted businesses from travel agencies, record stores, mapmaking and lately, taxi dispatch.
And who was responsible for these disruptions? Who caught a glimpse of the future that no one else could see, and then make a way for themselves in the world? It was and always will be entrepreneurs. These are the small business owners who had the vision and courage to follow their dreams, overcome the many failures and obstacles along the way, and keep on working until they achieved their goals.
Now, there are two ways for someone to learn the hard lessons that failure provides. The first way is to try things out for yourself and learn by trial and error what works and what doesn’t, often at great cost to yourself and others.
The other way is to learn about what others have done and the failures they experienced, and do your best to avoid the same mistakes. You can also learn about how others succeeded and do your best to follow their footsteps toward your own goals.
Another word for this way to meet with success is called education, and that is what I am here to talk with you about today: Entrepreneurship education and its role in the economies of the United States and Indonesia.
Let’s start with some statistics that will help us understand just how important entrepreneurship is. In the United States as well as Indonesia, over 50% of our nations’ gross domestic product (or GDP) is generated by small and medium businesses.
It is the small businesses, not the big established firms, which are doing the most hiring, paying the taxes, and growing the whole economy. It is the small businesses that are the most nimble, able to adjust to new market conditions at a speed that the big companies cannot match.
That all sounds really good, but there is another side to this story. In the United States, over half of all small businesses fail within the first 5 years because of mistakes the entrepreneur made. That means not only the businesses owner but all of his employees will need to find new work.
Being small also means that a change in market conditions can make your business unexpectedly not viable. Even more, larger businesses can often use their size to stifle competition from smaller ‘start-up’ companies. There is a risk to living as an entrepreneur that your friends who work for the government or for a large corporation do not have to face. That goes hand in hand with the greater freedom.
The purpose of entrepreneur education is to give you the tools to evaluate that risk, understand completely the challenges and opportunities before you, and allow you to make the best choices possible and stay nimble to give you the greatest chance of success.
Even big companies try to keep ahead by continually investing in innovation. Google for example is investing in next generation ideas for extending the internet.
In the United States, just like here at BINUS, there are major elements of a well-rounded entrepreneur’s education. The most important of these are financial awareness, management skills, and mindset.
I am sure Dr. Oroh has already given you many examples of business leaders with vision that still failed due to a lack of financial awareness. Knowing how to price your goods or services to make ends meet sounds simple but is really hard to learn. Charge too much and you won’t have enough sales, but charge too little and you won’t be able to pay expenses.
Not being able to properly account for your expenses has also brought many small businesses to an untimely end. Are you paying your employees so much that you cannot afford their salaries? Are you paying them so little that your best assets go to work for someone else, taking away vital knowledge and human capital from your company?
If your business is selling things, do you have reliable suppliers? If something happens to one of them, do you have an alternative prepared so you can keep doing business? And what about taxes? When your business is just starting out the tax burdens can seem light.
Start growing, though, and the money you must pay in taxes can choke out your business if you aren’t careful. And then we come to debt. Used properly, debt can allow you to leverage your resources and achieve economies of scale far faster than otherwise possible. But if you take on too much debt, your business will fail while the lender’s business of loaning money succeeds.
Financial awareness is thought of as boring by many entrepreneurs because it involves a lot of details and can be confusing when compared to the leader’s bold vision. In fact, being well versed in these matters creates a framework that is vital for the long term success of your venture.
Take advantage of every opportunity to learn this subject. Take as many classes in this area as you can. If you truly do not have the ability to understand finances, make sure that someone you trust that is very good in this area is part of your team.
Hand in hand with financial awareness is the area of personnel management skills. The unwise business owner thinks of his people as assets only, to be brought on board or tossed aside at his whim. The wise business owner treats his employees and staff as investments for the future of his business.
By the way that is also true for an Ambassador of a large Embassy. My employees are my most precious assets so I spend a lot of my time to making sure they feel valued, that they receive the pay they deserve, that top performers are rewarded and recognized and poor performers receive counseling on how we can help them do better.
When people are made to feel that they are part of the team rather than a part of a machine, they will work with loyalty and dedication. Business owners who are not skilled in this area often wonder why things “never work out” with their staff, why they never perform unless they are being frightened, and why so many quit and go to work for the competition.
Those who are develop long term employees that grow into managers in their own right. The peace of mind that having a trusted staff can bring is invaluable. Eventually, the business owner will create something that outlives him if he chooses and manages his staff well. Do not neglect management courses in your education!
This brings me to the third key ingredient: mindset. When our embassy recently convened a group of government, university, social organizations and entrepreneurs to look at the stumbling blocks for Indonesia reaching its potential in entrepreneurship, the number one problem mentioned was lack of entrepreneurial mindset. This concern was mentioned more often than even access to capital and markets. But what does that even mean?
According to this group, parents in Indonesia do not see opening their own business as a highly desirable choice for their children. Instead, the safety and stability of a job in government or a large corporation is more highly valued. Have any of you ever felt that sentiment from your own parents (raise hand)? And if a business does fail, in many cases the loss of face causes the entrepreneur to never try again.
In the United States, attitudes are different. In our culture, the story of the person who made their own way against all odds is very popular, especially if they overcame failures and times when it seemed like success would never happen.
The stories are legendary: Thomas Edison tried and failed 10,000 times before he finally succeeded in inventing the lightbulb. Steve Jobs was actually forced out of Apple but then returned in triumph and led Apple to some of its greatest successes like the I-Pad.
When entrepreneurs whose business has failed are asked if they take it personally, most say no. When asked if they are likely to try to run their own business again, they say yes. Now, sometimes these people are so unskilled that they really should learn to take no for an answer. But you can’t say that it’s a failure of mindset.
So, for an entrepreneur, the proper mindset would be one of optimism leavened with realism, and being focused and stubborn about reaching one’s goals while also being open minded enough to learn from one’s own mistakes and others’.
The proper mindset is one that hopes for the best outcomes but understands failures and setbacks will come. And an entrepreneur is someone who is willing to lead the way and pursue a vision but is also confident enough to recognize his weaknesses and surround himself with quality people to address those.
Where can you go to learn about these vital topics and use entrepreneurial education to finances, management, and mindset? You are in one of those places right now.
When I look at the courses being offered here, and the quality of the faculty at BINUS, I can recognize BINUS as an institution dedicated to the formation and growth of the entrepreneurial class here in Indonesia. The facilities are modern, the faculty possesses an excellent background in the subject, and the student body is dedicated to their learning.
But where is the best place you can go to build on the foundation of what you are learning here at BINUS? Given my job, I think you already know what I am going to say. But no matter what country I was from, if I was looking to go to the place where I could learn the most about entrepreneurship, there is really only one choice: the United States.
The United States is home to the finest universities in the world. And those universities produce graduates that are among the most successful business people in the world.
We take students in from around the globe, students from every nation, religion, and culture that want to come and learn from the best. And those students then go home and improve the business environment and lives of the people in their own countries.
Now, if only there were some examples of Indonesians I could give you. Hmm. How about your very own Dean Dr. Firdaus Alamsjah, holder of a Master of Science and PhD from the University of Houston?
And of course your professor, Dr. Nicolaas Oroh, who obtained an MBA from U.S. International University in San Diego. How about the Minister of Finance Bambang Brodjonegoro who went to Illinois or the Coordinating Economic Minister Djalil who attended Tufts, or Minister of Education Baswedan? All of them credit their studies in the United States.
How can you know whether you should go to the United States to continue your studies? Just look around.
I was happy to see on my way in today brochures and information regarding opportunities to study in the US. If you want to know more, our embassy has a cultural center called @america in Pacific Place mall that is always staffed by someone who can help you pursue your dreams through an education in the United States.
Today, 96% of Indonesian students applying for a visa have those visas approved, usually within 3 days.
There are a range of scholarship opportunities. In short there has never been a greater time to study in the U.S. to prepare for what many predict will be a tech boom here in Indonesia.
And our embassy will continue to work with BINUS to establish exchanges of faculty and students between our countries.
The future of our countries’ economies depends on the innovation and skill of our entrepreneurs. Increased opportunities in the global marketplace like the advent of the ASEAN Economic Community and international trade agreements present great challenges and huge opportunities to those who know how to take advantage of them. Pursuing a course of education in entrepreneurship both here and in the United States is one of the best ways I know to prepare our future economic leaders.