Productivity and Entrepreneurship

Productivity in Chile has not increased. And faced with this reality, various questions arise. Why are we not making progress? Why did the pandemic have to come to mobilize us? Why can't large companies be more productive in relation to their OECD peers? Only profitability moves us? The step that Codelco is taking in search of competitiveness and sustainability, announcing the exit of historic productivity and operations, shows a movement and concern of the environment in this area.

The answers seem to come from the hand of the culture of entrepreneurship, both at the country and company levels, because this is an instrument of productivity, and that is something that possibly has not been fully capitalized on.  Take a pain and solve it -in all its aspects- for different stakeholders, being able to embrace entrepreneurship to achieve productivity capture.

Even though the relationship between entrepreneurship and productivity is very evident, only 4 years ago the academy began to relate them. The first to confirm its positive correlation – at the country level, were the European professors Erken, Donselar and Thurik, based on OECD data. Later in 2017, Eric Ries pointed out in The Startup Way, that the culture of entrepreneurship adds productivity to the country and to companies.

For this reason, conditions must be created so that the concepts behind entrepreneurship are manifested in the country, and within organizations, allowing for responsible error, making the necessary adjustments as they go along.

By the way, in Chile we still have a long way to go in this area. To increase productivity we must take the challenge from the companies, and break with the paradigm of immediate success. We have a very successful business culture, very unionized, which has taken away degrees of freedom, with vertical organizations, with little entrepreneurship and diversity of knowledge. In short, with a low willingness to risk, and a lot of fear of losing the investment. We have no culture of failure.

That is a step we must take, as confirmed by our empirical experience. If the country and the institutions cultivate an entrepreneurial culture, they will be on the way to being more productive. However, the culture of entrepreneurship is transversal. For SMEs it is part of the model of  subsistence, while for large companies it responds to their culture of sustainability.  

And how to start?, as Ries reflected, identifying the beliefs that can make a venture successful, experimenting with those beliefs as quickly and cheaply as possible. You have to think that this experimentation is a learning opportunity.  And as such, it must be taken to start again, iterating on the solution, and from time to time see if it is necessary to change what has been created or to persevere.

Changes are necessary, and daring to act is an imperative need to be more competitive and steadily increase the country's productivity. This is how we are seeing it and it should be the growing trend.

Francisco Ortuzar

Orca Business Consulting Partner

Original Text in Mining Portal .