What does the changing economic era mean for entrepreneurs?

What does the changing economic era mean for entrepreneurs?

“The political parties are moving collectively to the left,” Trouw wrote on February 17, 2021. “It is time to act as if our house is on fire, because this is already the case,” Sigrid Cage said a few days before the launch of the D66 campaign.

In fact, the pandemic will almost make us forget how Australia literally caught fire at the end of 2019, and how more than one in five young people have been burned today, as we ourselves continue to burn fossil fuels. The urgency is growing to the point that previous solutions such as the circular, toxic-free economy and energy neutrality – although important – are no longer sufficient. Even the sanctuary of economic growth is starting to falter more and more.

Positive feedback

Paul Schindling and I also noticed this after our article was published in Trouw, in which we argue that green growth is an illusion and that only a smaller economy can solve the problems we face. While we expected a lot of opposition, on the other hand we are awash with the overwhelming amount of positive responses.

Also read: Circular Economy: Not growth, but creating prosperity and peace is the goal

The very small number of arguments against it were not based on objective arguments or only on arguments that could be easily disproved. If this assumes a changing zeitgeist with increasing support for economic development, backed by facts and logic, then what does this mean for entrepreneurs?

Final goal

To answer this question, we will briefly review some of the economic mechanisms. I do so by starting with a quote from Franklin D. Roosevelt, the former president of the United States. On February 12, 1945, he gave a speech before the United States Congress. At the time, there was only one pressing question that needed to be answered: How can we prevent such a devastating global war from starting again?

Roosevelt answered this question by saying that for peace to continue, the world needs “more goods to be produced, more jobs, more trade, and a higher standard of living for all of us.” In other words: the ultimate goal is peace, the sub-goal is a higher standard of living and the means are economic (production, employment, and trade).

Needs motivation is based on dissatisfaction. Discontent, which includes the word peace, cannot be the basis of peace

However, in practice, the means become the sub-goal and the end goal is not achieved. After all, the policy aims to stimulate employment, trade (recently CETA), and production. If economic growth is the goal, then consumption is fuel. Motivating consumption means stimulating needs: making people believe that they need specific products or services. This quality of life is for sale. Needs motivation is based on dissatisfaction. Discontent, which includes the word peace, cannot be the basis of peace.

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Also read: A sustainable entrepreneur and an activist are exactly the same

Only an economy based on enough, on contentment, can guarantee quality of life. This is also supported by experimental data. In addition to the well-known studies in the field of biodiversity and climate, studies of psychology show that the quality of life of people increases with income, but to a certain and very limited level. From this level it stabilizes and then decreases.

Addictive attitude

So more is not always better. This is partly because a high material standard of living can lead to stress and pressure to perform and strain relationships, while nothing makes people happier than good relationships with others. Additionally, the addictive situation occurs without our realization.

The moment we buy things, we develop positive emotions for what we bought, but also negative influences at the moment of purchase. After purchase, negative emotions get bigger, and positive emotions decrease. When negative emotions are greater than positive, hardly anyone concludes that the product has not kept its promises.

Over time, she tries to find happiness over and over again with a newer, more beautiful and innovative model

Instead, we’ll consume it again. This time something newer, more beautiful, or bigger. Because the cycle in which negative emotions become greater than positive emotions gets shorter and shorter, we are consuming more and more: the addictive behavior. Take a car. As a student, you are happy with your dilapidated car. But it is disappointing. And over time she tries to find happiness again and again with a newer, more beautiful and innovative model.

Also read: Optimism about the post-pandemic era is increasing

Sustainable consumption doesn’t solve it, either. Scientific research shows that people who consume less are happier than people who consume more sustainably.

‘Enough economy’

Besides, there are people who are far away. For every Dutch home, nearly two people work full-time in non-Western countries. Much more than in the colonial era, but also more often than not forced to do so because the land and raw materials are owned by Western and Asian companies (land grabbing). The Dutch themselves work less than one full equivalent per household, that is, half the number of people in non-Western countries who work in our economy.

In short, all conclusions point in the same direction: “Sufficient Economy” is beneficial to all life on Earth. But that does not answer the above question. To answer this question, we need to look at what science refers to as sufficiency-driven business models. This form of business model is based on (sufficiency) and really means rethinking the business world.

Also read: Crisis or not, people are spending their money

They are business models that are not based on growth and profit maximization. Instead, they reduce consumer demand through education, consumer engagement, working towards long product life, focusing their marketing on needs rather than needs, have new revenue models and work to create multiple value.

Good for repair

There are examples of companies applying this theory. Think about the outdoor clothing brand Patagonia that advertises “Don’t buy this product” (don’t buy this product). They have repair manuals on iFixit.com and have partnered with Ebay to encourage use of the products for as long as possible. Or think of the Dutch chocolatiers who are fully committed to maximizing value and also using profits to achieve it.

Or jacket manufacturer Joe Merino who works with quality timeless designs. You can even fix jerseys at Joe Merino. FairPhone is a well-known example of a product that can easily be fixed. German startup Sono Motors is designing a car that is fully focused on engagement. Via a smartphone, you can allow someone else to use your car (for a fee) if you don’t need the car yourself. This allows you to create the same mobility value with fewer vehicles.

Just as the arrival of online stores has resulted in a lot of resistance in physical stores, so the emergence of a sufficient economy will also lead to resistance

But could a company exist this way? Also out of a niche? You can earn money from repairs and maintenance. Or think of other benefits: loyal and committed customers, a reliable, but above all, proof of the future. Just as the arrival of web stores has generated a lot of resistance from physical stores, so the emergence of a sufficient economy will also lead to a lot of resistance. But in the long run, the companies that show resistance will not last.

Read also: Opinion: Circular behavior becomes easier when supported by approach

If you can’t stop the changes, you better move on with them or even stay ahead. Think about the European Green Deal. This year there will be the right to repair various universal electronics products and adapters.

In short, the European Parliament wants: longer product life, better repair options, stimulation of flea markets, permanent availability of parts, longer warranty periods and repair guarantee, universal peripheral products like chargers, reduced non-binding marketing and advertising. In November of last year, 395 deputies voted in favor of him, 94 against, and 207 abstained.

In short, future preparation, which in some areas is actually closer than you think, is your best attitude toward future auditing.

Doctor. Matthias Ulther is a lecturer in green logistics at NHL Stenden University of Applied Sciences in Leeuwarden. This article previously appeared on the VNO NCW MKB Noord website, as part of a series of articles on sustainable, forward-thinking and purposeful entrepreneurship.

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