Updated: Sep 19, 2019
"Failure to launch"
Why the new Danish entrepreneurs need to be problem-solving, collaborative ball-breakers
Denmark is a big supporter of entrepreneurs and new ideas. “It’s so easy to start a business here!”, they exclaim! So why do so few start-ups succeed? Despite the Danish focus on teaching entrepreneurship in schools and offering guidance to people with new ideas, making a success of a new business idea is still difficult. Other countries, particularly Sweden, seem to do it better. So what’s the problem? Where is it going wrong, and what can we do to fix it?
*This article was originally published with the title 'Failure to Launch' in Pej Gruppen's Tid & Tendenser, November 2017
The heavy hitting Swedes
It’s easy to draw comparisons with sister countries; the Swedish are known to be very good at growing their businesses, and although there are many more start-ups in Denmark, experts suggest that they aren’t growing, so the subtle cultural differences between nations might actually be having a huge impact.
An Americanised nation with pride in big, heavy industry, Sweden has a different mentality to Denmark. It manufactures goods, registers patents for innovations and sells them all over the world under very familiar household brand names: Ikea, Spotify, H&M, Volvo, Husqvarna. The list goes on.
Sweden’s industrial history almost sub-consciously encourages businesses to grow as big as possible, whereas Danes are more bohemian, seeking creative freedom. To be a business focused creative isn’t a legitimate goal in Denmark: “it’s almost as if it’s ‘cooler’ to let success grow by itself”, says Andreas Jessen, a consultant at Seismonaut, a Copenhagen-based strategic agency.
The curse of the white BMW
I’ve been told about the ‘BMW effect’: someone starts a business in Denmark, they do well and make some money… they pay off their mortgage, buy a nice new car, then the ambition vanishes. Maybe they will buy a house in Spain and run the business from there, or if they are lucky they will sell to a fund - but they only get to a certain level. The ambition, or desire to keep growing, just fades away.
Jante’s Law states that being good, special or different is not to be tolerated, but to start a business, to step out on your own, is bold, and brave, and arguably a token of ‘difference’. Perhaps our good friend Jante is persecuting the entrepreneurial spirit?
It’s a point of pride that it is so simple to start a business in Denmark, but maybe it is too easy?
But it’s cool to be a #boss
A minimal interest in academic business seems odd at first, especially at time when to be your own boss or to start a business is so much of a goal that the trend has its own Netflix series. But it does in fact make sense: the celebrity aspect has been over-played and there has been a lack of attention paid to the behind-the-scenes aspect, and it is a casualty of the trend’s own success. It’s incredibly rewarding, but it’s not easy to start a successful business, and it requires far, far more than just an idea. It would be imprudent for anyone to suggest that it was stress-free, which is inconvenient, as that’s exactly what the filters of social media would have us all believe!
But, as with anything that delivers reward, there is huge appetite for commercial independence right now. ‘Teen Bo$$’ magazine launched very recently in the USA as a quarterly newsstand offering (a physical, printed magazine) from Bauer media. Aimed at girls aged 8-15, it’s designed as part inspiration, part toolkit to help kids get their ideas off the ground, and be what Bauer believe to be the only publication talking business to Generation Z.
With a high cover price ($5.99), no advertising and no website (it is present only on social media), it’s testament to the popularity amongst this age group of being a #boss.
The problem is that there is too much focus on the ‘getting started/getting famous’ part. There is no doubt that entrepreneurs and YouTubers are the new celebrity, but what are we teaching people about the realities of what to do when a business collapses?
Sophia Amoruso, founder of LA-based Nasty Gal clothing empire and the ultimate #girlboss (so much so that GirlBoss is now a media channel in its own right), achieved huge success, then subsequently hit problems and had to step out. Much was written about ‘what we can learn from Nasty Gal’; ‘why Millennials shouldn’t start businesses’ and ‘why you shouldn’t confuse your personal brand and your company’, but what is important for any aspiring entrepreneur to take note of is that she encountered failure; buckled up and took action to fix it; learnt from it and got on with the next thing. It was her ‘growth’ mind-set that enabled her to overcome failure.
Overcoming the fear of failure
A fear of failure is a global problem amongst children and teens, in particular in the UK and Scandinavia, due to over-testing and over-processing. In a world of league tables, comparative charts and lives that are trackable down to the banal minutiae, there is an unhealthy level of scoring, ranking and listing throughout every aspect of our lives – even dating.
We have killed creativity with incessant analyses: no imagination is needed to pass a maths exam. This has grown to such an extent that children are anxious when confronted with a creative project, because there is no right or wrong answer against which to be assessed.
This apprehension around failure and an unhealthy obsession with perfection is proven to breed anxiety and mental health problems, which authorities are now tackling at school level with mindfulness classes and yoga sessions.
There has been little time allowed for play, resulting in a slew of kickstarter-style innovations that combine learning with fun: a move along from STEM based coding toys to games, toys and even public spaces that encourage good old-fashioned play, freedom and joy. The delight is that when children are encouraged to be creative, parents see visible ‘growth’ of their social and academic capabilities. So how do we make that creative approach a natural part of everything we do?
Self-awareness for toddlers
Mind the Future, run by Anette Bjerregard and Anita Ousen, two school teachers, launched their innovation consultancy in 2015 to serve the needs of the new school reforms that made entrepreneurialism and innovation a part of the Danish curriculum. Their approach helps students to develop an entrepreneurial, innovative and creative approach to all school subjects and all challenges in life.
When they encounter children who are anxious or frustrated by a problem they don’t know how to handle, they help them to deal with it by providing them with the tools to do so. These tools are centred around self-awareness, the ability to give yourself advice based on that understanding of your own aptitude, and the development of a strategy to deal with obstacles.
MBTI style personality awareness is typically introduced at adult career stage, which is, in reality, too late. It happens just in time for you to realise that you’ve picked the wrong job, the wrong company, the wrong lifestyle. Encouraging this self-awareness earlier on in life would benefit the growth and development of entrepreneurial attitudes, but whilst consultancies including Mind The Future have tried, they are at the mercy of teachers who are also being tested and have to justify the allocation of their time.
Cultivating a different mind-set
Carol Dweck’s Mind-set Theory highlights the importance of transferring from a fixed mind-set to one of growth. Dweck, a professor at Stanford University in America, discovered that our brain actually grows when we accept that through time and effort, we can achieve more.
Dweck coined the terms fixed mind-set and growth mind-set to describe the underlying beliefs people have about learning and intelligence. When students believe they can get smarter, they understand that effort makes them stronger. Therefore, they put in extra time and effort, and that leads to higher achievement. The two mind-sets are clearly distinguishable, and it’s easy to see how the success of an entrepreneur could be linked to their frame of mind: whether they see intelligence as static (fixed) or something that can be developed (growth).
“Children are being taught to see the positivity and value in trying new, difficult things, instead of just working to show that you’re good at something. Failure is constructive, and the best way of demonstrating this is through exposure to real world examples from real companies; challenging yourself and putting yourself through the experiences”, say Bjerregaard and Ousen.
Banishing the ‘academic’/’creative’ divide
Creatively focused entrepreneurs need exposure to the tools and approaches for dealing with the gaps in skill sets, as children are taught to develop in school years. Improving self-awareness and providing training and development that makes the ‘business’ side of business less terrifying and more exciting to a more ‘creative’ person. This is about taking things out of their ‘creative’ or ‘academic’ boxes, and reframing concepts and approaches to make them more attractive. The way that coding got sexy is a poster-kid for this; even supermodel Karlie Kloss has got involved through her ‘Kode with Klossy’ summer camp programme for girls aged 13-18.
The retail obstacle course
You could easily be put off by the challenges to be faced along the path to market. Manufacturers want high minimum volumes, and they have such huge demand thanks to an increasingly fast global market that they don’t need to entertain the small players looking for a few samples to get started.
Retailers, equally, can throw obstacles in the way: they are increasingly risk-averse, given the very crowded marketplace, so they want proven concepts. Therefore, start-ups who don’t have a proven idea jump straight online and sell direct, which is also a very crowded place to be. You need a loud, clear and alluring voice to hook in the right customers, and that requires a whole different skill-set to developing an idea.
Navigation and success in the online marketplace requires consumer understanding, future relevance and a concept with longevity: being too trend-led doesn’t work.
The essentials for success
Every business and entrepreneurship expert I have spoken to throughout my research has agreed unanimously that the success of a start-up lies in three things:
- Business experience
- Specialised skills
- ‘Domain’ knowledge: of your field, future needs, and your consumers
The ‘experience’ aspect is not about category experience: the start-ups in Denmark that succeed are started by people with experience from outside the category they are moving into. They see the consumer problems that can be fixed; the gaps in the market, and they put all the pieces together to solve the puzzle.
Collaborate or die
One person cannot know or provide everything; we all need collaborators and/or coaches with different skill-sets to us. We are now in a time when collaboration is encouraged: primed by the sharing economy, younger generations in particular expect to work together on projects with a shared end goal, and they expect brands to do the same.
The grit and determination of the founding entrepreneur is, of course, the driving force behind a successful start-up. Any entrepreneurial magazine or blog article will tell you this. It’s not new news. But it’s also, crucially, about their connections: their spider web of contacts. Denmark is a people focused country when it comes to business: it’s about who you know, and the strength of your network. This is unquestionably a key component in determining the success of a new venture.
Matchmaking consultancies are emerging: to connect start-ups with corporates who need the agility and perspective of a nimble, risk-taking entrepreneur. Independents United in the UK, and Valuer in Denmark are two such pioneers.
This year Sanne Moth, a fashion designer by trade, launched Co-Create; a platform that connects people and their ideas with skilled collaborators. Inspired by the wealth of talent in the co-working space in Vejle where her studio is based, she sought to help bring people’s ideas to life by helping people link up with the resources and skills they didn’t have, but needed.
Knowledge talks, not money
Most of the experts I spoke to confirmed the fact that start-ups have more success when partnered with corporates than when connected with angel investors, because they offer knowledge and experience, not just cold, hard cash. However, the investors are rarely the big brands, as they don’t want any competition in the market, which is disappointing, as competition creates diversity and hunger, which in turn improves quality.
So, perhaps it’s a blessing that a non-linear perspective on the brains you bring in is a good thing: Daniel Laursen of Valuer believes that there should be more open-mindedness around the people who are involved in a start-up, bringing on board experience and a viewpoint from beyond the specifics of what the business is focusing on.
However, it’s the knowledge around your ‘domain’ that’s crucial. You have to really know your category; have a clear picture of how the world is going to look in the future and the relevance of your idea, and a deep understanding of what your customer actually wants. These are the factors that divide the ‘whimsical fancies’ from the ‘well-considered, genius innovations’.
Shifting the focus to ‘scale-up’
The stage of growth between ‘start-up’ and ‘scale-up’, like adolescence, is awkward. There is plenty of help and support for those starting, and it’s easy to actually get going, but when it comes to growth and scale, we hit walls.
Daniel Laursen of Valuer, a start-up x corporate matchmaker, confirms that technology and heavy industry attract more attention, and accelerator hubs that set out to coach and help entrepreneurs and SME’s are heavily focused in these areas. Apparel and lifestyle aren’t as well supported, so they have to think differently, if they want the incubation and funding.
Entrepreneurs need to be problem solvers
The businesses that will succeed in the future are those that solve real problems; social and environmental. It is absolutely not about making more versions of the same things we already have.
“Fashion For Good” is an initiative based in Amsterdam that sets out to make all fashion ‘good’ by working with a Silicon-valley based start-up accelerator. The companies they support are all innovators; seeking to “change the way that fashion is designed, made, worn and re-used”.
Carcel was one of several companies to receive funding from them in 2016, and was started by someone without a fashion background. A handmade knitwear label based in Copenhagen, Carcel provides paid work to female Peruvian prisoners, who are mostly incarcerated because of poverty. By providing them with a fair wage, in turn they produce the garments and develop skills that could support them once they are integrated back into society.
To succeed: take risks and fail
Not only do we need to continually encourage the entrepreneurial mind-set from a young age, but also inspire entrepreneurs themselves to take more risks and make mistakes. Based on the findings from the Global Entrepreneurship Monitor, the Swedish Entrepreneurship Forum published a study into entrepreneurial dynamics. They advocate flexibility and easy access to support as a way of emboldening the concept of failure.
Perhaps the last word should go to a Swede…
“The system in which entrepreneurs operate is important… incentive structures that encourage risk taking, and there should be tailored packages to incentivise entrepreneurship, through easy access to finance, favourable tax regulations, less red tape, and more flexible rules for stock options and bankruptcy.” - Pontus Braunerhjelm, research director at the Swedish Entrepreneurship Forum
*This article was originally published in Pej Gruppen's Tid & Tendenser, November 2017