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Entrepreneurship
for Everyone
Entrepreneurship
for Everyone
A Student Textbook
Robert Mellor with Gary Coulton, Anne Chick,
Antonia Bifulco, Noha Mellor and Alan Fisher
© Robert B. Mellor 2009
Chapter 11 © Gary Coulton 2009
Chapter 12 © Anne Chick 2009
Chapter 13 © Antonia Bifulco 2009
Chapter 14 © Noha Mellor 2009
Chapter 15 © Alan Fisher 2009
First published 2009
Apart from any fair dealing for the purposes of research or
private study, or criticism or review, as permitted under the
Copyright, Designs and Patents Act, 1988, this publication
may be reproduced, stored or transmitted in any form, or
by any means, only with the prior permission in writing of
the publishers, or in the case of reprographic
reproduction, in accordance with the terms of licences
issued by the Copyright Licensing Agency. Enquiries
concerning reproduction outside those terms
should be sent to the publishers.
SAGE Publications Ltd
1 Oliver’s Yard
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London EC1Y 1SP
SAGE Publications Inc.
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Thousand Oaks, California 91320
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A catalogue record for this book is available from the
British Library
ISBN 978-1-4129-4775-6
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Typeset by C&M Digitals (P) Ltd., Chennai, India
Printed in Great Britain by T J International Ltd, Padstow, Cornwall
Printed on paper from sustainable resources
Contents
About the authors xii
List of abbrevations xiii
Introduction: Why entrepreneurship? 1
Robert B. Mellor
PART I PRINCIPLES 5
1 Developing People and Competencies 7
Robert B. Mellor
Introduction 7
Capitalizing on a bright idea 7
Covering the business side 9
The essential social and business network 11
Building the right strategy 13
Choosing a topic 14
The development of a start-up 15
Chapter summary 16
References 16
Further reading 16
Web links 17
Suggestion for exercises 17
2 The Economics of Entrepreneurship and Innovation 18
Robert B. Mellor
Introduction 18
The evolution of innovation and enterprise 18
Value chains 19
Economic cycles 21
Focus on entrepreneurship 21
Owners, capitalists and entrepreneurs 23
Invention is not innovation 24
Types of innovation 25
Sources of innovation 28
Chapter summary 29
References 29
Further reading 30
Web links 30
Suggestions for exercises 30
3 Promoting Creativity 31
Robert B. Mellor
Introduction 31
Defining creativity 31
The psychological origins of creativity 32
Tools for analysing problems 33
Tools for promoting creativity 34
Creativity focused on the marketplace 36
Evaluating ideas 37
Chapter summary 38
References 38
Further reading 39
Web links 39
Suggestions for exercises 39
PART II PRACTICE 41
4 Gaining Strategic Advantage 43
Robert B. Mellor
Introduction 43
Positioning in the marketplace 43
Tools for analysing the market 45
Successfully inhabiting the market 47
Formulating a mission statement 49
Analysing your products 50
Chapter summary 51
References 51
Further reading 51
Web links 52
Suggestions for exercises 52
5 The Marketing Plan 53
Robert B. Mellor
Introduction 53
Customer segmentation 53
The form of the marketing plan 55
How to do market research 56
vi Contents
The 4Ps and the 4Cs of marketing 57
How to price your goods properly 58
How to place your offerings 59
Promotion – effective advertising 59
People: Task matrices 61
Chapter summary 61
References 61
Further reading 62
Web links 62
Suggestion for exercises 62
6 The Business Plan 63
Robert B. Mellor
Introduction 63
Sources of capital investment 63
Business angels and venture capitalists 63
The form of the business plan 67
The classical 16 sections template 69
Due diligence 74
Chapter summary 75
References 75
Further reading 75
Web links 75
Suggestion for exercises 76
PART III CONTEXT 77
7 Intellectual Capital 79
Robert B. Mellor
Introduction 79
The three types of intellectual capital 79
Patents and other formal IPR 80
Innovation in organizations 82
Human capital, the life-blood of small companies 83
Who is especially innovative? 85
Mixing skills promotes innovation 85
Trickle-down rebound 86
Harvesting human capital 87
Intrapreneurship, or corporate entrepreneurship 87
Technology transfer 88
The ins and outs of strategic alliances 88
Mergers and acquisitions 90
Chapter summary 90
Contents vii
References 91
Further reading 92
Web links 92
Suggestions for exercises 93
8 Knowledge Management 94
Robert B. Mellor
Introduction 94
The knowledge economy 94
The value of knowledge 95
Information, knowledge and learning 96
Human capital revisited: knowledge assets 97
Information systems software 100
Chapter summary 101
References 101
Further reading 102
Web links 102
Suggestion for exercises 102
9 Presentation Technique 103
Robert B. Mellor
Introduction 103
Getting the message across 103
The perception of communication 104
Public speaking 104
Body language 105
Appearance and dress code 106
Getting a feel for the audience 107
Audio-visual aids 107
The structure of a presentation 108
End on a good note 109
Chapter summary 110
References 110
Further reading 110
Web links 110
Suggestions for exercises 110
PART IV SPECIALISMS 111
10 Technical Innovation 113
Robert B. Mellor
Introduction 113
The influence of globalization 113
viii Contents
Company size and industry structure 114
First mover advantage 115
The dominant design 116
Digital innovation 118
Chapter summary 121
References 121
Further reading 121
Web links 122
Suggestions for exercises 122
11 The Biotechnology Revolution 123
Gary Coulton
Introduction 123
Biotech is unique in many aspects 123
Opportunities for biotech entrepreneurs 124
Where do disrupting biotechnologies arise? 129
Opportunities in outsourcing 130
Entrepreneurship for the recent graduate 131
The customer mindset 133
Paradigm shift – the world changes around you 134
Further barriers: the legislative environment 135
Chapter summary 136
References 137
Further reading 137
Web links 138
Suggestions for exercises 138
12 Green Entrepreneurship: A sustainable development challenge 139
Anne Chick
Introduction 139
The imminent discontinuities 139
Green entrepreneurship 140
What is sustainable development? 140
Defining ecopreneurship 141
The development of the green market 143
Are environment and economics opposed? 143
Characteristics of the green marketplace 145
Fostering ecopreneurial behaviour 146
Chapter summary 148
References 148
Further reading 150
Web links 150
Suggestions for exercises 150
Contents ix
13 Enterprise in Health and Social Care 151
Antonia Bifulco
Introduction 151
Social desire and reward 151
Entrepreneurial motivation 152
Market demand is increasing 152
The product can be many things 154
The various customers 154
Knowledge and skill requirements 156
What you need to know 158
Obstacles 158
Social enterprise 160
Not-for-profit organizations 162
Voluntary organizations: social entrepreneurship 162
Chapter summary 163
References 163
Further reading 163
Web links 164
Suggestion for exercises 165
14 Journalism and Media Entrepreneurs 166
Noha Mellor
Introduction 166
Journalism as part of the cultural industries 166
Culture in post-industrial times 167
Why culture is important 168
Media and Porter’s five forces 170
The rewards can be significant 170
The media convergence revolution 171
Innovation and journalism 172
Freelancing, the fastest route to fame 174
The importance of networking 174
Entrepreneurial strategies and success factors 177
Chapter summary 178
References 179
Further reading 180
Web links 180
Suggestions for exercises 181
15 General Characteristics of the Creative Arts 182
Alan Fisher
Introduction 182
Characteristics of the creative arts industry generally 182
x Contents
State support 185
Entertainment market analysis 185
Who buys what? 185
Barriers for the entrepreneur 185
The film industry 188
The music industry 195
Chapter summary 200
References 201
Further reading 201
Web links 201
Suggestions for exercises 202
PART V ACTION 203
16 Growing the Venture 205
Robert B. Mellor
Introduction 205
Innovative is attractive 205
Franchising 206
Business is about selling 207
Marketing and advertising in the small company 208
Leadership and the small company 209
Your professional network 210
Entrepreneurial management 211
Learning from failure 212
Chapter summary 212
References 213
Further reading 213
Web links 213
Suggestions for exercises 213
Glossary 214
Appendix A: The Ten-Dimension Rating Scale 217
Appendix B: Additional Case Studies 222
Appendix C: Some Suggested Project Ideas 229
Index 233
Contents xi
About the authors
Polyglot and polymath Robert B. Mellor holds earned doctorates in various academic disci-
plines including innovation, computing and biology and is amongst the Directors of the
Faculty of Computing, Information Systems and Mathematics at Kingston University,
London. He is author of over 120 scientific publications in reputable journals, including
Nature and has previously written 10 books, including 4 on innovation and entrepreneurship.
His activities include being a successful serial entrepreneur across Europe.
Dr. Gary R Coulton, (Reader in Medical Biomics and Education) has more than 25 years
experience in biomedical research, teaching and knowledge translation in biotechnology. He is
the Director of the St. George’s Medical Biomics Centre and Associate Dean for Enterprise
and Innovation at St. George’s, University of London. He is also a London Technology
Network Business Fellow.
Anne Chick is Reader in Sustainable Design and Director of the Sustainable Design Research
Centre in the Faculty of Art, Design and Architecture at Kingston University. She is Adjunct
Professor in the Faculty of Environmental Design at the University of Calgary, Canada. She
has managed funded research and knowledge transfer programmes worth over £1.5M and
consistently publishes her research.
Antonia Bifulco is Professor of Health and Social Care at Royal Holloway, University of
London and directs the Lifespan Research Group there, researching and publishing for over
25 years on psychosocial risk factors in psychological disorder. She and her research team
undertake commissioned research from health and social services, evaluating service provision
for children and families. In recent years she has become very involved in entrepreneurship,
and she also runs CPO training courses and workshops for practitioners.
Noha Mellor is Senior Lecturer in Media and Cultural Studies, Faculty of Arts and Social
Sciences, Kingston University. She is the author of The Making of Arab News (2005) and
Modern Arab Journalism (2007).
AlanFisher is currently Head of department of Music and Fashion at the University of Westminster,
he qualified as an architect at the University of Sheffield in 1983 and subsequently went on to
sign for Virgin records as part of the seminal electronic group Cabaret Voltaire. He moved into
production, engineering, company directorship, and label management with Fon records work-
ing with artists as diverse as Take That, Bjork, Boy George, Sparks, Inspiral Carpets, and 808
State, succeeding in promoting and engineering numerous top-ten hits, in both the album and
singles charts. He is a Westfocus Fellow working on industry knowledge transfer events such as
the Art of Record Production conference, now in its third year of international delivery.
List of abbreviations
4Cs Consumer wants, Convenience, Cost and Communication
4Ps The 4Ps of innovation: Product, Process, Position and Paradigm, or the 4Ps
of marketing: Product, Place, Price and Promotion
ACE-Chase An action audit tool
A-I Adaption-Innovation
ALUO Advantages, Limitations, Uniqueness and Opportunity
BA Business angel
CDA Compact Disk Audio
CEO Chief Executive Officer
CGI Computer Generated Images
CPS Creative Problem Solving
CSF Critical Success Factor
DoI Diffusion of Innovations
DRM Digital Rights Management
DVD Digital Video Disk
FFF Friends, Family and Fools
GM foods Foodstuffs produced from genetically modified sources
HOTPLOT See SWOTPLOT
IPO Initial Public Offering
IPR Intellectual Property Rights
ISP Internet Service Provider
M&A Mergers and Acquisitions
MALDI-TOF Matrix Associated Laser Desorption & Ionization-Time of Flight
MBA Master of Business Arts
MPG Moving Picture (Experts) Group
MTFC Multidimensional Treatment Foster Care
NGO Non Governmental Organization
NHS National Health Service
OHP Overhead Projector
PCR Polymerase Chain Reaction
PLC Product Life Cycle (not to be confused with plc, public limited company)
PR Public Relations
QoS Quality of Service
R&D Research & Development
RiP Research in Practice
RoI Return on Investment
xiv List of Abbreviations
SDS-PAGE Sodium Duodecyl Sulphate-Poly Acrylamide Gel Electrophorsis
SEARCH Scan, Expand, Adapt, Revise, Create and Harvest
SELDI-TOF Surface Enhanced Laser Desorption & Ionization-Time of Flight
SGM Strategic Group Mapping
SIP Session Initiation Protocol
SLC Social Learning Cycle
SLEPT Social, Legal, Economic, Political and Technological
SME Small and Medium-sized Enterprise
SWOT Strengths, Weaknesses, Opportunities and Threats
SWOTPLOT A development based on SWOT
TBL Triple Bottom Line
TD Trickle Down Theory
TQM Total Quality Management
TROTPLOT See SWOTPLOT
TTM Time To Market
UGC User Generated Content
UNIX Software commonly used as a server platform
USB Universal Serial Bus
USP Unique Selling Proposition
VC Venture Capitalist
VHS Video Home System
VoIP Voice over Internet Protocol
Entrepreneurship gives birth to new commodities, techniques and goods, booting human
progress forward and rendering the old obsolete, leading to the extinction of whole branches
of industry and the creation of new ones. It is the use of innovation that makes many of our
goods today not only better, but also cheaper, than they were even a decade ago. This process
is so powerful that many large corporations are beginning to ask how they can use their
employees’ talents for innovation.
Innovation and the evolution of business
Existing large firms are seldom capable of using innovation, e.g. of the largest (‘Fortune
100’) companies from 1930, only one – General Electric – still exists. New industries
evolve out of start-ups. Few succeed. As new industries arise, they displace the old. The
‘first world’ technologies are being copied globally, meaning that ‘first world’ countries
must constantly improve efficiency and create new industries in order to survive. In order
to succeed, companies must constantly change and innovate; this is not impossible,
but examples are few, e.g. the Preussische Bergwerks und Hutten Aktiengesellschaft
(Prussian Society for Mining and Steel) became tourist giant TUI and the Nokianvirta
Paper Mill became the mobile telephony giant Nokia.
Traditionally, the focus of classical microeconomics is price; capitalists, owners and other busi-
nessmen choose labour-intensive production when labour is cheap and interest rates high, or
capital-intensive production techniques in the opposite circumstances. Guided by price, then
they can choose to make fewer goods, or more. However, they rarely invent new goods or
Introduction
Why entrepreneurship?
Robert B. Mellor
radicalize production; those who use innovation to introduce something new are often called
entrepreneurs. But introducing new products is a risky business; experience shows that less
than 10 per cent of all inventions will result in a product and indeed only 0.5 per cent will
return a significant profit. Clearly this is not an area that interests a manager of any traditional
company, where stability, smooth adjustments and uninterrupted production are of the utmost
priority. Most organizations or individuals do not want to change unless forced to – and log-
ical, rational reasons alone are certainly insufficient to generate and sustain change. It is mostly
the entrepreneurs, following their visions, who are ready to tackle such odds.
If entrepreneurs – using innovation – take this step, then the question may be ‘How can we
get more of them?’. That is the aim of this book – to teach and inform about entrepreneurship
both those who wish to start a business, large or small, and those who wish to work in innov-
ative companies. Fortunately, however, learning entrepreneurship goes further than that;
entrepreneurship training teaches you how to be more enterprising, more creative, more inno-
vative, more commercially aware and more self-motivated. These are skills that can have a pro-
found positive effect on your employability, as well as on your private life.
Some years ago there was a debate among academics about whether entrepreneurs are ‘born
or made’. Obviously, if entrepreneurs became so by virtue of their genes, then there would be
little point in trying to teach it – one cannot teach blue-eyed people to have brown eyes!
However, as I discussed in one book (Mellor, 2005: Chapter 1.4), entrepreneurial behaviour
does not follow Mendelian inheritance patterns and I believe that the data in question (for
review, see Bridge et al., 2002: Chapter 3) can best be explained by social imprinting –
similar to a Pavlovian reflex – from entrepreneurial role models during childhood.
Entrepreneurship during one’s early twenties is also relatively popular; ‘nothing ventured,
nothing gained’ is an attractive philosophy when you have little to lose. However, there is a dip
in numbers of new entrepreneurs in their thirties and forties; risking everything is less attrac-
tive when your house and family are part of the stakes. A relatively recent noted phenomenon
is later-life entrepreneurship among the 45+ age group (‘senior entrepreneurship’). Such
mature people often have some financial resources, but more importantly, they master their
subject with massive competence and expertise, are psychologically very stable and have realistic
expectations. Companies started by entrepreneurs in this category show a higher average success
rate and above-normal growth rates. Indeed, the Australian organization EGC (www.egc.net.au)
specializes in venturing with mature and experienced returning ex-pats.
Thus it can be seen that anybody can be an entrepreneur at any stage in their life and indeed
it could be argued that learning the tools of business creation is a skill that, if learnt now, may
come in useful if not in the immediate future, then perhaps in 20 years time. Indeed, one fac-
tor this book expressly covers is entrepreneurial management; the overlap between entrepre-
neurship and management, in the realization that individuals can shift from one to the other
(Figure 0.1).
To illustrate its importance, 1,500 colleges and universities in the USA offer some form of
entrepreneurship training. Growth in the UK has been even more explosive, with over 500
courses being offered at over 100 UK universities and interest in entrepreneurship education
spreading to non-business disciplines, where students in engineering, life sciences and liberal
2 Introduction
arts are interested in becoming entrepreneurs, fostering a ‘comparative entrepreneurship’
approach. This module will give you a good grounding in entrepreneurship, regardless of your
background.
A sound mastery of technical fundamentals is needed for success and the core competencies
for new ventures must include the technical skills involved. This has led to a bit of a quandary,
because the Business Schools claim ‘ownership’ regarding the teaching of the commercial
activity called entrepreneurship, but unfortunately the Business Schools – per definition –
are incapable of teaching the wide variety of deeply technical skills needed for successful
entrepreneurship. These technical skills are provided by what I call ‘the ABC Schools’ e.g.
Architecture, Biology, Chemistry, etc., where A, B and C can be any academic discipline.
Thus this book is aimed at technical experts learning technical ‘ABC’ subjects and it is hoped
that the number of disciplines covered will expand with subsequent editions, so ‘A’ may
cover Aerospace, Architecture, Art and Archaeology; ‘B’, Building, Beauty and Biology; ‘C’,
Chemistry, Cloning and Clothing, etc. We call this approach ‘Embedded Entrepreneurship’
and feel that only in this way – offering optional modules as ‘Entrepreneurship & X’ – can we
ensure that aspiring student entrepreneurs possess the required technical background.
Teaching innovation, like innovation itself, flourishes on discontinuities, e.g. sudden unem-
ployment. For final-year students one major discontinuity involves ‘employability’; leaving the
cosy education system behind and graduating into the cold harsh world. Experience shows
clearly that – especially for non-business students – entrepreneurship courses are by far most
effective in the final year, or final semester and this module will help prepare you as a new
graduate for this large discontinuity. The module instructor will guide participants through the
course in such a way that you, upon graduation, will be in a better position to be able to see
more clearly the choices and paths open to you.
Introduction 3
Entrepreneurship
(opportunity-seeking)
Management
(advantage-seeking)
value creation
Figure 0.1 A Venn diagram illustrating that efficient value creation often occurs at the overlap of entrepreneurial
and managerial behaviour (often called ‘strategic innovation’, ‘entrepreneurial management’ or ‘strategic
entrepreneurship’)
This book follows the European concept of ‘course book’, with a chapter for each class
lesson. To Anglo-Saxons this may appear as lecture notes expanded into a standalone text and
indeed optimal value will be gained when you read it during a module where your lecturer uses
the presentations and instructor guides downloaded from the companion web site. The text
itself is divided into four generic parts for all students, and a specialist part. This structure uses
the first three generic parts – Principles, Practice and Context – to introduce concepts com-
mon for students of all disciplines. In Part IV, you then concentrate on the chapter most
related to the discipline you are studying and you may like to read the extra case studies related
to the specialist chapters in Appendix B. The specialist strands re-join in Part V (‘Action’),
which is about the young venture and academically forms a connection between the disciplines
of entrepreneurship and small business research.
There is much to learn, so you must read the appropriate chapter before each class lesson;
first, Chapters 1–9, then the chapter on your specialist discipline, then Chapter 16. If you are
not certain what an acronym stands for, look it up in the list of abbreviations. If you do not
understand a piece of jargon, e.g. ‘market shakeout’, ‘entropy’ or ‘goodwill’, then Google it and
try find out before asking your instructor. The text is sprinkled with ‘think boxes’ containing
cases, definitions, etc. that illustrate the surrounding text and prompt you to investigate the
subject further. This is also the point of the references, the further reading lists and web links
contained at the end of every chapter. It is a challenge, but only by reading around the subject
will you master it!
4 Introduction
P
Pa
ar
rt
t I
I
Principles
Introduction
In this chapter the need for an entrepreneurial team is put forward, as is the need for a
concrete strategy (normally documented in the form of the business plan) and a network.
The latter part of the chapter introduces how these and related topics are further developed
in this book.
Capitalizing on a bright idea
The concept of ‘the entrepreneurial inventor’does not hold much water and indeed only a few of
the classical ‘engineer entrepreneurs’ like Robert Stephenson, Isambard Kingdom Brunel and
Alexander Graham Bell have received both honours and economic reward for their efforts. But
the majority of the great scientific inventive minds have not managed to make a lasting financial
profit (e.g. Curie, Einstein, Marconi, Pasteur and Whittle) and today a pop star probably makes
more money than 50 Nobel Prize laureates (see Chapter 15). Even Thomas Edison, founder of
the Edison Electric Light Company (later to merge with the Thomson-Houston Company and
be called General Electric), like many scientists and engineers, was not a good financial manager
and despite all his incredible energy he managed to bankrupt several – if not most – of his ven-
tures despite the fact that he held 1,093 US patents and 1,239 foreign patents,including those on
the phonograph, motion pictures, the alkaline storage battery and synthetic rubber, as well as the
first practical incandescent light bulb (note that the ‘incandescent filament lamp’was invented by
Joseph Swan, Edison bought the rights and made the process practical).Technical competence –
the ability to make new things – can be plotted against managerial competence – the ability to get
things done and products sold (Figure 1.1).
1
1 Developing People and
Competencies
Robert B. Mellor
In contrast to inventors, the entrepreneurs often mentioned in connection with entrepre-
neurship, e.g. the late Anita Roddick (the Body Shop), Marks & Spencer, Tesco and Richard
Branson (Virgin), achieved fame and fortune not by applying new technological inventions at
all, but by using creative business models.
So having a bright technology-based idea is only the first of several factors needed to form a
successful enterprise.The second factor is the other people involved in the business aspects of a
technical idea and who can bring it forward, while the third factor is most often called ‘the net-
work’. The combination of the second and third factors, judiciously applied, can go a long way
to solving the budding entrepreneurs’ major problem, namely finding finance.
The entrepreneurial inventor
The career of Elmer Sperry offers an excellent example of the entrepreneurial inven-
tor. Sperry was born into a New York family of modest means and after attending pub-
lic schools, decided that he wanted to be an inventor. He tried to learn as much about
electricity as possible from the library and courses, including attending lectures at
nearby Cornell University. Acting on the suggestion of one of the professors there, he
designed an automatically regulated generator capable of supplying a constant cur-
rent when the load on its circuits varied and then immediately started to search for a
financial backer. In 1880, he was taken in by the Cortland Wagon Company, whose
8 Principles
Technical
competence
Technical graduates Very few
Most ordinary people Business school
graduates
Managerial competence
Figure 1.1 Plot of technical versus managerial competence. Very few inhabit the top right quadrant,
although the multi-skilled (e.g. an engineer with an MBA) will tend away from the axes towards the middle and
thus may be more innovative (see Chapter 2)
executives included both inventors and investors and which provided him with the ser-
vices of a patent lawyer, as well as money to live on and a workshop. In this ‘incuba-
tor’ Sperry not only perfected his dynamo, but over the next two years developed a
complete system of arc lighting to go with it. Thus the Sperry Electric Light, Motor,
and Car Brake Company was formed in 1883, with Sperry (who owned a large part of
the company’s stock) serving as ‘electrician, inventor, and superintendent of the
mechanical department’. Although the company was not a financial success, it
launched Sperry’s career. He would go on to write more than 350 patents and found
nearly a dozen companies including – with the help of a wide assortment of financial
backers – the Sperry Electric Mining Machine Company, the Sperry Streetcar Electric
Railway Company, and the Sperry Gyroscope Company. Although Sperry often played
an active role in these companies in their early stages, he typically downgraded his
role to the position of technical consultant and went on to a new project, once they
were reasonably well established.
Sperry focused on ensuring that his inventions were commercially exploited as best
possible and consequently sold many of his inventions to companies better placed to
put them to productive use. Indeed, one of his firms was the Elmer A. Sperry Company
of Chicago, formed in 1888 as a vehicle for his research and development activities
and whose output was patented technology. Interestingly, this firm also advertised its
business as helping inventors ‘develop, patent and render commercially valuable their
inventions’.
(Source: Further researched from Hughes (1971))
How, then, can you combine excellence in technical subjects, with excellence in business?
Clearly it is advantageous if you have a large family consisting of marketing people, lawyers,
accountants, etc. and in the early 1990s it was rumoured that the single largest success factor for
new start-ups was a high-earning spouse! Most individuals wishing to start up, however, are not
in the privileged position of being able to surround themselves with the necessary expertise from
their immediate family. As a consequence of this – and as illustrated in Chapter 6 – investors
strive to surround the inventor with bought-in professionals possessing these skills.
Covering the business side
Another method is to team up with people possessing complementary skills from the start.
This involves teaming up ‘content people’, often real experts in their field, with ‘structure
people’, who can sell – no matter what it is. The right person may not necessarily be someone
Developing People and Competencies 9
already known, or even liked (indeed taking best friends or family on board can lead to excru-
ciating conflicts). It must, however, be someone that the inventor can trust to make good busi-
ness decisions, to be highly motivated and someone who can work towards a common goal.
This mixing factor has been a feature of leading undergraduate courses for some years (e.g. at
the University of Nevada, Reno – see Wang and Kleppe, 2001; and at the IT University of
Copenhagen, Denmark – see Mellor, 2003, 2005).The very positive effect of these synergies is
often called the ‘Hewlett-Packard’ effect after the huge success of the Hewlett-Packard
Company, which combined the technical brilliance of Hewlett with the business brains of
Packard (see Table 1.1).
Entrepreneurship is often wrongly perceived as a solitary activity – this misconception is
actually reinforced by terms such as ‘sole trader’. However, not only the high-profile examples
cited in Table 1.1 but also the results of recent surveys e.g. Entrepreneurship and Local Economic
Development, by the OECD (OECD, 2003) indicate that team-based business start-ups fare
much better than individual start-ups. Specifically:
• In micro enterprises, partnerships exhibit higher rates of survival than individual firms.
• Investors are more likely to approve financing to team-led start-ups in early-stage
venture capital assessments.
• The success of the firm and client satisfaction correlate well with the degree of social
interaction in entrepreneurial teams.
And, indeed, many of today’s leading corporations, like General Motors, DuPont, Coca-Cola
and McDonald’s, were all set up by teams and not by individuals acting alone. Although not all
business ideas will result in a new Hewlett-Packard or Apple, a strong sales team can sell most
things, so investors can expect some Return on Investment (RoI). Unfortunately most new
businesses are weak on the business side; whereas 91 per cent of high-tech start-ups are confi-
dent in their technical ability, only 27 per cent of high-tech start-ups are confident that they
can get their product to the market on time (Mellor, 2003).This lack of proper management is
seen as a major drawback by investors – who invariably know their business very well. It cannot
10 Principles
Table 1.1 Illustrating the ‘Hewlett-Packard’ effect; ‘content’ people team up
with ‘structure’ people to form a winning team
Inventor (Content) Business (Structure)
Bolton and Watt Watt Bolton
Pattern Store and
Erecting Shop
HP Hewlett Packard
Genentech Boyer Swanson
Wolffolins Wolff Olin
The Beatles George, Paul, Epstein
John and Ringo
Apple Wozniack Jobs
be stressed enough that the business objectives are of paramount importance in setting
up a business. One major indicator of the quality of the business acumen is the business plan.
Table 1.2 illustrates that typically only few business plans receive funding and Table 1.3 illustrates
that the reason for rejection is most often a poor management team.
Since usually 100 ideas are needed to generate one business plan, the business plan needs not
only to be excellent but must also address both technical and managerial issues.
The essential social and business network
The third ingredient for success is having a network. Networks are also useful in starting new
companies as they provide a knowledge background. Since growing a company is full of uncer-
tainties, it is not possible in advance to know which expert tips are going to be needed (i.e. het-
erogeneous knowledge is needed).Those entrepreneurs with an extensive network are therefore
in a much stronger position to reply to external threats, changes in the market and similar chal-
lenges. They will be in a stronger position to innovate and overcome obstacles. This is the
social capital that adds value to the company. Such social capital can be accessed formally or
informally, e.g. on the web there exist many networks (communities) specifically to create this
type of social capital, and where membership gives one the ‘right’ to approach others.
Developing People and Competencies 11
Table 1.3 Commonly cited reasons for rejecting business plans
Reason for rejection Number
Weak management 52
Not market driven 38
Timeframe too long 31
Investment too large 25
Lack of patent/protection 15
Lack of technical expertise 12
Other 17
Source: Modified from Mellor (2003).
Table 1.2 Number of business plans receiving funding in some common venture
capital areas
Ideas Plans Funds
US Biotech 1000 100 56
EU ‘Hi-Tech’ 182 20 5
EU Internet 400 25 12
Source: Modified from Mellor (2003).
Network, finance and technical ability:
the case of Silicon Valley
The importance of networking is perhaps best illustrated by the example of Silicon
Valley. Silicon Valley is contained by the San Francisco Bay on the east, Santa Cruz
Mountains on the west and the Coast Range to the southeast. Once – when fruit
orchards predominated - it was called the ‘Valley of Heart’s Delight’. The San
Francisco Bay Area has traditionally been a major site of US Navy work, as well as
the site of the Navy’s large research airfield – including anti-submarine warfare
rockets and torpedoes – at Moffett Field. A number of technology firms had set up
business in the area around Moffett to serve the Navy. However, the Navy moved
its west coast operations to San Diego and, in 1935, Moffett Field came under the
control of the US Army Air Corps and later NASA took over portions of Moffett for
aeronautics research. Many of the original companies stayed, while new ones
moved in. The immediate area was filled with aerospace firms and the Air Force
Satellite Test Center was created adjacent to Moffett. By this time a large pool of
highly skilled knowledge workers were living in the ‘Valley of Heart’s Delight’ and,
despite closures, many wished to stay in the area. Both from changing jobs and
working in large bases, they often knew each other (network), had hard-to-imitate
know-how (expertise) and some had significant cash lay-off settlements from the
Government (finance).
Given the vivid social network and access to capital, the area was already on its
way to becoming a technology hot-spot (the software firm Novell pays tribute to these
early days by retaining a section of the railway track to the military base in the recep-
tion of its Silicon Valley office). But the enormous expertise the area had accumulated
in radio and microwave technology, microelectronics, etc. (and later semiconductors,
the example of Intel is probably the most famous) also made the area attractive
for more established players, who were looking for something in short supply –
competent suppliers. The more established players, however, were having difficulty
moving in due to lack of space. Serendipitously and due to unrelated finance prob-
lems at Stanford University (who own large portions of the estate), Professor Fred
Terman had the idea of building an industrial park and raising finance by leasing land
out to commercial companies. In 1951, Varian Associates signed a lease, and in
1953 the company moved into the first building in the park. Others, including
Eastman Kodak, General Electric, the Admiral Corporation, Beckman Instruments,
Lockheed and Hewlett-Packard, followed suit soon after. Today some 2000–4000
electronics and information technology companies, along with numerous service and
supplier firms, are clustered in the area.
12 Principles
Building the right strategy
But is entrepreneurship only about building a team of at least two, possibly up to four or five
‘core’entrepreneurs with different but complementary skills and experience that will pay atten-
tion to networking? The answer is not so easy. The other side of the coin is working out what
the entrepreneur wants. Common aims for entrepreneurs are:
1 Some wish to open their own business or company immediately and head for an initial
public offering (IPO). This involves writing an excellent business plan and showing a
high degree of business acumen because it entails targeting providers of fairly substantial
amounts of financing.
2 Establishing social enterprises like charities or other forms of ‘social entrepreneurship’;
non-profit and not-for-profit enterprises. Nuffield, Carnegie, Rockefeller and others
(probably including Bill Gates) all returned their enormous profits to society by way of
such constructions. Major differences include tax laws and the use of capital (e.g. social
enterprises often rely on voluntary labour).
3 Some want ‘organic growth’ starting with a micro-business and invest some low level of
resources – like evenings and weekends – to see if the concept will work. Examples include
Lovereading.co.uk and Totstofrance.co.uk. Here a business plan can function as a personal
‘roadmap’but will also be needed to attract investment should the concept begin to take off.
4 Some want to be employed in an ‘innovative company’ (which could be big or small).
Large companies may try to act like a collection of small innovative companies and
working in such an environment has significant differences to working for more tradi-
tional companies. It is becoming more common for employees in innovative companies
to be asked to make a ‘business plan’ concerning proposed reorganizations, new work-
flows, product improvements, etc. Indeed, innovative companies may even put up the
resources needed for employees to spinout their own ideas, like Rob Hamilton did with
‘Instant Offices’.This is often called intrapreneurship or corporate entrepreneurship.
After having read and performed the exercises in this book, you should be in a good position to
prepare the following:
• a business plan;
• a more (or very) concrete ‘central business proposition’;
• an elevator pitch.
Supported, where appropriate, by:
• posters;
• press releases;
• consultancy reports or other presentations.
Developing People and Competencies 13
However, reading on its own is not sufficient. For knowledge to be understood and used, the
individual must be involved in its active construction. You must have opportunities to answer
questions, to discuss (heatedly) and debate meanings, strategies and implications, thus
engaging authentic problem solving in near-real situations. Thus your business partner (ide-
ally an inventor, if you are a business person, or a business person, if you are a more technical
person) and your network should become your sparring partners in order to get first-hand
experience of ‘decision-making’ and ‘action’ and thus to gain a real benefit that can be used in
entrepreneurship.
Choosing a topic
The subject of these debates should ideally be a business idea that you and your business part-
ner (or partners,if you have several) have agreed upon.The objection to this is that you may not
have a fully finished idea right now.Those who have the germ of an idea may find the creativ-
ity techniques described in Chapter 3 useful. Using these techniques, your idea can be modified
or polished and thus can be used as a vehicle of entrepreneurship. Those who have no idea
at the present time can choose between those presented shortly below – a fuller description is
included in Appendix C – or your instructor may have created some other examples for you.
• Euroflorida: This involves a scalable model of advertising and selling to other people
over the web. The core is communicating Italian real estate to north Europeans, but
could just as easily be e.g. Trinidad real estate to US Americans and involves globaliza-
tion and legal, as well as trans-lingual, aspects. Furthermore, the idea is scalable, and
could include not only selling retirement-quality estates to ‘grey gold’, but also e.g. inte-
grating early retirees with useful skills into their new community, keeping in contact
(clubs, newsletters), providing them with local services, etc., and thus the ‘product’ can
contain considerable ‘added value’.
• Gnashes: A simple Internet supply chain, trying to extract value from a service (compar-
ison of dentists’prices) by e.g. advertising related goods on the web site or by sponsoring.
Extra spice is added because the service suppliers and service receivers may not share
common interests, i.e. dentists providing high-price services may drop out of the system
unless some motivation is added.
• LP2CD: This involves making a gadget to record CDA and/or MPG-compatible CDs
from LPs. Thus it incorporates technical aspects and would be well suited to those with
IT technical hardware/software patent-like ideas and interested in researching demo-
graphics as well as IPR issues or advertising and distribution channels.
• WFYK Holdings: A simple financial construction concerned with preserving knowl-
edge assets. However, large degrees of complexity can be added, e.g. taxation issues and
the project is aimed at those interested in venture creation, accounting and business
economics.
14 Principles
Your instructor will also give you templates for the confidentiality agreements, etc. that you
should exchange with your business partner(s).
The development of a start-up
In the course of this module you will learn many things. However, covering everything is
not possible. In principle, the stages a classical start-up goes through are: Idea, Proof of
Concept, Strategic Planning and Development, Venture Creation, Business Growth,
Maturity and finally Exit. Your final report (the ‘business plan’) should cover these areas,
although if you are heading for a try-it-and-see ‘organic growth’ strategy, then Exit may not
be very relevant.
In this book we shall cover the ‘Idea’ area in a comprehensive fashion:
• Your motivation and creativity (Chapter 3).
• Fitting your ideas to the market (Chapters 3 and 5).
• Looking at emerging strategy (Chapters 3 and 4).
• Starting your planning and operations (Chapter 7).
• Your abilities and skills (Chapters 7 and 8).
• The resources available to you (Chapter 9).
As for the next stage, proof of concept, we will look into a more detailed marketing plan
(Chapter 5) and the business plan itself (Chapter 6). However, if you have hard-to-imitate
know-how and/or previous relevant experience, then you may wish to include more back-
ground. What this is depends to some extent on your specialist area.
Table 1.5 points out what factors are important for which branch of industry and these,
where appropriate, could be highlighted in the final version of the business plan.
Developing People and Competencies 15
Table 1.5 A matrix plotting the importance of various background factors in the specialist areas covered in
this book
Financial Low-end
Knowledge External and legal High-end IPR IPR
barriers network barriers patents, etc. copyright, etc.
Technical High Low Low High Low
Biotech High Low High High Low
Green Medium Low Medium Low Low
Health & Social Medium Medium Medium Low Low
Journalism Low High Low Low High
Arts & entertainment Low High Low Low High
16 Principles
Chapter summary
Inventors and innovators can experience difficulty in bringing new products to market because
they often lack the business skills needed to introduce new products to the market.
Conversely, management specialists can only rarely invent breakthrough devices. Forming
partnerships between business-minded people and technical-minded people can rectify this.
This is the reason why group work is favoured.
A good marker for possessing a high degree of business expertise is being able to produce a
good business plan. Most business plans fail to attract funding and the major reason is
because they reflect the lack of managerial and business ability of the authors.
Business plans are needed not only by entrepreneurs – including entrepreneurs in the
social sector – but also increasingly often by employees, especially in more innovative
companies.
An extensive network – ‘social capital’ – can help enormously both to produce the business
plan, as well as to realize its aims, including raising finance.
References
Hughes, T. P. (1971) Elmer Sperry: Inventor and Engineer. Baltimore, MD: Johns Hopkins University
Press.
Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe.
Mellor, R. B. (2005) Achieving Enterprise: Teaching Entrepreneurship and Innovation in Business and
Academia. Cologne: Eul Verlag.
OECD (2003) Entrepreneurship and Local Economic Development: Programme and Policy
Recommendations. Available at: www.oecd.org/document/27/0,3343, en_2649_33956792_2502299
_1_1_1_1, 00.html.
Wang,E.L.and Kleppe, J.A.(2001) ‘Teaching invention,innovation,and entrepreneurship in engineering’,
Journal of Engineering Education, October: 565–70.
Further reading
De Bono, E. (1996) Serious Creativity. London: HarperCollins.
Drucker, P. F. (1999) Management Challenges of the 21st Century. Oxford: Butterworth-Heinemann.
Kirby, D. A. (2003) Entrepreneurship. Maidenhead: McGraw-Hill.
McDonald, M. (1999) Marketing Plans. Oxford: Butterworth-Heinemann.
Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe.
Developing People and Competencies 17
Web links
The Financial Times. www.ft.com/businesslife/entrepreneurship
The National Council for Graduate Entrepreneurship: www.ncge.org.uk
Global Entrepreneurship Monitor: www.gemconsortium.org
What’s happening in the EU: http://ec.europa.eu/enterprise/entrepreneurship/index_en.htm
Suggestion for exercises
Google the terms ‘added value’, ‘organic growth’, ‘grey gold’ and ‘elevator pitch’.
Introduction
In this chapter, entrepreneurship is introduced in its economic and academic setting; an
economic theory and practice outside the perimeter of classical input-output economics.
By the beginning of the twentieth century, neo-classical economics had refined the theory
of the capitalist economy to one where the central concept is market equilibrium, and
where market supply equals demand in a perfectly competitive market. In this scheme
there is little place for innovative entrepreneurs and, interestingly, communist theoreti-
cians also belittled entrepreneurs as merely being factors adding to the ‘background noise’
in the grand historical imperative. The benefits of economies of scale, i.e. the supremacy of
the large corporation, remained the dominant theory (see e.g. Galbraith, 1967) for much
of the twentieth century. However, several scholars, including Schumpeter, insisted that
the equilibrium could be radically disturbed by the introduction of innovative products or
services.
The evolution of innovation and enterprise
In the 1960s, uncertainty in the ‘smokestack’ industries led to widespread diversification
among large companies. The strategy was that if you had a finger in many pies, then
nothing much could go wrong. This went so far that many giant corporations ended up
with divisions in rubber, in electronics, in chemicals, in steel, in coal, etc. However, it
soon became obvious that quite different sets of skills were needed to run each division
2
2 The Economics of
Entrepreneurship and
Innovation
Robert B. Mellor
The Economics of Entrepreneurship and Innovation 19
profitably. This led to a process of divestment, where the new mentality dictated ‘do
what you are good at’. This shift meant that each industry had quite a narrow focus. It
was built on the assumption that there only are a certain number of industries and that
therefore understanding and controlling these will lead to optimal performance (for review
see e.g. Mellor, 2003, 2005). Many scholars believe that this break-up of markets –
the so-called ‘post-Fordist era’ – was actually the natural result of the downswing in
the last Kondratieff cycle (Kondratieff, 1935), which introduced a period of ‘creative
destruction’ (Schumpeter, 1942). This process has cast new light on the role of the entre-
preneur, the force that rearranges the market into new and more efficient forms (e.g.
Drucker, 1985).
Value chains
The IT and Internet revolution of the 1990s focused attention on the possibilities of opening
up new business areas, it showed that – against existing dogma – it was possible to make new
business where there no previous industry or business existed: the so-called ‘sunrise’ industries
(e.g. Microsoft). However, it also cast just as much attention on the fact that existing business
process can be recombined to form new ‘value chains’, involving the faster delivery of products
that were both better and cheaper. This is the basis of entrepreneurship. Innovation and
entrepreneurship are often associated with the terms ‘value chain’ and ‘creative destruction’
(note that disruptions are for companies, and that customers should experience progress, not
disruptions). The value chain represents the value of a product in an unfinished state and
increasing in value as it reaches the customer. The expression ‘value chain’ is also used in an
intra-organizational sense, referring to a bundle of factors affecting value, from when a prod-
uct enters the firm, to when it leaves it. Several ‘value chains’ may make up a ‘value system’
(e.g. Porter, 1990). Disruptions or discontinuities in the value chain cause a disturbance in the
manufacturing or marketing equilibrium, leaving previous processes or intermediaries
stranded outside the value chain. This is referred to as disintermediation or ‘creative destruc-
tion’ (Figure 2.1 overleaf).
Entrepreneurship is a topic largely overlooked in classical economics and indeed
Schumpeter (e.g. 1939, 1942) is hardly mentioned in the standard textbooks, probably because
enterprise is not amenable to mathematical modelling, and thus is often regarded by academics
as, at the most, an interesting exception to neo-classical economic theory. However, Joseph A.
Schumpeter introduced entrepreneurship theory and practice and Schumpeter’s book Theorie
der wirtschaftlichen Entwicklung (1912) directed the attention of economists away from static
systems and towards economic advancement. Schumpeterian rents are those arising from
innovation, they are by their nature dynamic and transitory, and occur in the time between the
initial innovation and the rise of imitation. Nevertheless, they may generate high returns for
considerable periods of time.
20 Principles
Traditional process
value chain A)
Innovative
process (value chain B)
Value
(Price)
Progression towards final market
Figure 2.1 In traditional processes, value is added in a series of steps; as illustrated in value chain A a
company may e.g. make pig iron from iron ore (the first triangle) then sell their product on to the next, who
may make steel, then sell their product on to the next, who may make steel sheets, then sell their product
on to the next, who may press sheet steel to car bodies, then sell their product on to the next, who may
make automobiles. This is classically the realm of Input-Output Economics and the value increases as one
progresses along the links of the value chain until a ‘final price’ is reached. In value chain B innovation (e.g.
a new smelting or cheaper rolling process, or novel materials) is used to construct a new value. The old
intermediaries are stranded (‘creative destruction’) while the entrepreneurial innovator can vary the final
height of the stippled line to share more or less of his ‘Schumpeterian rents’ with the final customer
Types of economic returns
In economics, types of economic returns are called ‘rents’ and may sometimes be
synonymous with profits. Some of the major types are listed below:
• Porterian. Named after Michael Porter, these are rents returned from monopo-
lies or monopoly-like situations.
• Ricardian. Named after David Ricardo, these are rents returned by ‘supply and
demand’ trading.
• Schumpeterian. Named after Joseph Schumpeter, these are rents returned
from using innovation and improved techniques.
Schumpeter believed that the innovation practised by entrepreneurs allows economic systems
to avoid repetition; especially repetition of old mistakes, and thus can progress on to more
advanced states.
The Economics of Entrepreneurship and Innovation 21
Economic cycles
Schumpeter (1939) also popularized the work of Nikolai Kondratieff. Kondratieff (1935) devel-
oped the theory that technology stimulates industries in waves lasting approximately 50 to 60 years
(the ‘Kondratieff cycle’). Each cycle consists of around 20 years to perfect and use a series of related
technologies, followed by 20 years where the growth industries appear to be doing well, but what
look like record profits are actually repayments on capital in industries that have ceased to grow.
This perilous situation can turn to crisis, often precipitated by a relatively minor panic, and crash.
There follows a long period of stagnation during which new, emergent technologies cannot gen-
erate enough jobs to make the economy grow again. Completed Kondratieff cycles include the
‘steam and agriculture’ cycle (1820–1870), ‘rail and coal and steel and textile’ cycle (1870–1930)
and the ‘electrical and auto and rubber and petroleum’ cycle (1930–1980). Kondratieff also pre-
dicted that the content of previous cycles couldn’t be repeated, thus earning himself execution at
the hands of Stalin, who had just instigated an ‘agricultural renewal’ in the USSR.
Some believe that the present Kondratieff cycle is based on microelectronics and IT; others add
space travel and biotechnology. Critics point out that IT is just an ‘enabling technology’, and not in
itself a major new industry, and that the new cycle is best characterized by the rise of the service sec-
tor. This sector is centred on the knowledge areas, e.g. architecture, consulting, design, education,
finance, publishing, research, etc., surrounded and supported in turn by communications, distribu-
tion, health, leisure, transport, etc. Conversely some writers believe that the move away from manu-
facturing and towards service industries is merely the result of basic needs being successively met,
and that this development is simply part of the evolution of economies from agrarian to industrial
to service activities. Others argue that this is not a new type of ‘late capitalism’ economy, but that
manufacturers have simply had to contract out services in order to cut costs, increase flexibility and
thus remain competitive. The most correct analysis will probably be published around 2080.
The works of Schumpeter and Kondratieff were popularized by Peter F. Drucker, in his
influential text Innovation and Entrepreneurship (1985). Drucker contrasted the employment
situation in Europe and in the USA, because at that time the USA was booming, while Europe
showed the symptoms of being at the stagnation end of a Kondratieff cycle. While there could
be little doubt that the western economy had entered the ‘post-Fordist’ stage (the end of the
‘smokestack’ industries and beginning of the ‘sunrise’ industries), Drucker argued that the dif-
ference was due to the entrepreneurial culture in the USA, which was more flexible and thus
better able to take advantage of the change. The effect was that within five years most
European governments (and the EU itself) had passed legislation setting up initiatives to pro-
mote innovation and entrepreneurship. Entrepreneurship has been a recognized independent
discipline of management science in the USA since 1987, and since 2000 in the UK.
Focus on entrepreneurship
Classically, economics recognizes three factors in production: raw materials, labour and capital.
All products, both goods and services, are a mixture of these three components. Value is
22 Principles
created by combining these factors in such a way that human needs can be satisfied. Since the
Industrial Revolution this process has taken place in organizations. Under these circumstances,
entrepreneurship is sometimes referred to as the fourth factor, the way of organizing the other
three factors. Thus entrepreneurship (classically) means:
1 Finding new products or combinations in order to satisfy needs (to innovate).
2 Organize resources effectively (to create organizations).
3 Create wealth by adding value (to generate employment).
The word ‘entrepreneur’ comes from the French entre meaning ‘between’. The root of the verb
entreprendre can be traced back to around 1200. By 1500, a noun form appeared and soon
thereafter both the verb and noun entered the English language. Already in 1730, ‘entrepre-
neur’ was used to mean a self-employed person with a tolerance for risk. Already here there
exists confusion between the concept of ‘middle man’ or intermediary (the ‘between’ part) on
one hand and, on the other hand, the concept of an innovative businessperson using superior
managerial ability, new and improved methods, etc., to achieve commercial growth.
As a broad generalization, classical economics focuses on the creation of demand, then satisfy-
ing this with a slightly lower supply (i.e. reaping Ricardian profits, or ‘rents’). This is in contrast to
an entrepreneur, who today would be described as a person who uses innovative methods to
restructure a value chain so as to reap an entrepreneurial (or Schumpeterian) profit, see Figure 2.1.
However, on a note of caution, innovation and enterprise are not equal to exploitation and cap-
italism. Innovation is anti-totalitarian; see, for example, the persecution of innovators like Galileo
through the ages. Indeed, diversity and incremental innovation have their base in solid communi-
ties and helpful personal interactions. Furthermore, the great role of social entrepreneurship can-
not be overlooked and indeed the Peter F. Drucker Foundation (www.pfdf.org) has the express
mission: ‘To strengthen the leadership of the social sector’. Thus innovation and enterprise actively
erode class distinctions and are by nature anti-war. As Mellor (2003) puts it, ‘Innovation is essen-
tial to development and human progress. Innovation builds on education and intellectual free-
dom.’ Indeed, one can pose the question, what would the status of innovation be in a society if that
society were based on a static source like the Bible or the Communist Manifesto?
Enterprise can be defined broadly as activity that raises the capacity (attitude, skills and
competencies) for:
• invention
• innovation
• commercialization
• technology acquisition
• founding new businesses (business creation).
Thus, an enterprising person is:
• creative
• innovative
The Economics of Entrepreneurship and Innovation 23
• commercially aware
• entrepreneurial
• self-motivated.
This is thought to mean that enterprising people are continuously employable, even in times of high
unemployment, because an enterprising person would rather be self-employed than unemployed.
This is thought to lead to a sustainable advantage, also at the national economic level (Porter, 1990).
Some important basic definitions
Entrepreneurship is an academic discipline in management and economics. In the
framework of economics, entrepreneurship is an exception to classical input–output
economics. In a social and management framework the entrepreneur is often an
active ‘change agent’. The entrepreneur consciously uses innovation and creativity as
tools to achieve enterprise.
The formalization of innovation into forms that can be patented is a relatively new phenomenon.
Thus the term ‘entrepreneur’ is today used differently from earlier terms like ‘trader’ and ‘mer-
chant’, even though Marco Polo and the other merchants who plied the Great Silk Road were
acting in an entrepreneurial fashion, for their time. These words and their meanings have simply
evolved. Unfortunately many terms are still used interchangeably. These may be enterprise,
invention, innovation and creativity. They may also be owner, entrepreneur and capitalist.
Among the unfortunate lack of clarity when dealing with this topic is that a plethora of names
and definitions abound. For example, there are many people who own their own businesses.
These represent an enormous and hugely diverse range of businesses from being a plumber to
being a lawyer. Clearly all (successful) business are mercantile and thus to some extent must add
value. However, not all of these businesses or owners are entrepreneurial.
Owners, capitalists and entrepreneurs
For this reason the owner of a small business (small and medium sized enterprises, SMEs)
is defined as: ‘an individual who establishes and manages a business for the principal purpose
of furthering personal goals … The owner perceives the business as an extension of his or her
personality, intricately bound with family needs and desires’ (Carland et al., 1984).
Similarly, a capitalist has the will, ability and possibly the technical knowledge to produce
wealth, but this wealth is normally personal, and should preferably be produced at minimal
24 Principles
risk. In contrast to these, Schumpeter saw the entrepreneur as a person who implements new
combinations of the means of production, including:
• creating new products;
• altering the quality of an existing product;
• developing new processes of production;
• opening new markets;
• capturing new sources of supply;
• developing new forms of organization or industry.
Some of the differences between owners, entrepreneurs and capitalists are listed in Table 2.1.
Table 2.1 The mercantile uses of innovation: classification of owner, entrepreneur and capitalist according
to their use of different types of innovation
Owner Entrepreneur Capitalist
Invention Clearly an inventor is an owner The entrepreneur may well May seek to invest in
(they own their inventions) and work closely together with others’ inventions,
may even set up a business on an inventor to bring a new but rarely is an
the basis of this. But a glance product to market, however, inventor
at the Yellow Pages will reveal entrepreneurs are more
that the overwhelmingly vast inventors of e.g. business
majority of small businesses processes and are rarely
are not based on inventors of concrete
technical breakthroughs technological products
Creativity The process of forming a The entrepreneur is May seek to invest in
business is by definition a often creative others’ creativity, but
creative act, and quite often is most often a fairly
the original business idea mechanical profit
from an owner will involve a maximizer rather
reasonable degree of creativity than being creative
(theme restaurant, etc.)
Innovation Owners may well use external The entrepreneur is often May seek to invest in
innovation (the newest tools, highly innovative or open others’ innovations, but
etc.) but will rarely innovate to innovation and it is this is rather a risk-minimizer
or use innovation in systematic innovation, which drives the than an innovator
way to improve their product entrepreneurial process
Invention is not innovation
At this point, it is appropriate to take a closer look at innovation. Often one hears the terms
discovery, invention and innovation used as synonyms, however, they are quite distinct.
Discovery is a new addition to knowledge. These are (normally) in the physical, biological or
The Economics of Entrepreneurship and Innovation 25
social sciences. Theoretical knowledge is obtained from observations and the experimental
testing of hypotheses while practical knowledge is obtained from practice, e.g. the practical
knowledge acquired by a workforce in making new machinery operate well. Invention is a
new device or process. Most inventions are minor improvements and do not qualify as
patents. To qualify as a patent, an invention must pass a test of originality (i.e. is different
from previous inventions). Only a small percentage of patents have any economic value.
Those that do, tend to be those which are immediately applicable. An example of this is the
Phillips screw which made two crosswise grooves in a screw head instead of only one. Robot
arms can grip this screw and this opened whole assembly lines to automation. Innovation is a
better way of doing things. An innovation improves performance in goal-directed behaviour
(e.g. re-election politics, personal lifestyle) as measured by any applicable or relevant criterion
(e.g. profit maximization).
Invention is not innovation. One simple example of this difference could be spreadsheet
programs like Excel. The invention is the computer and its various parts, including the
software (e.g. Excel). However, using spreadsheets to plan hourly work in an office is an inno-
vation. Invention is promoted by discovery (especially in biology) whereas innovation is
promoted by invention (especially in industrial engineering and business). Thus it also
becomes obvious that innovation is time and context dependent; clearly in the eighteenth
century inventing the steam engine and applying it to the cotton industry was an innovation,
but today it would not be so.
Prescott and Van Slyke (1996) refer to ‘Technology Cluster Innovation’, pointing out the
links between discovery and entrepreneurial application (Table 2.2).
Table 2.2 Illustrating that the meta-cluster ‘Aerospace’ can be divided according to the inventive character
(e.g. based on patents) on the left, the mostly innovative in the centre, and the entrepreneurial applications
on the right. Even this superficial overview shows a meta-cluster consisting of three overlapping clusters,
ranging from mostly inventive, through mostly innovative, to almost purely entrepreneurial
Branch Products Application and exploitation
Aerodynamic and engineering Producers (e.g. Boeing) of many Many different airline
research performed at different types of aeroplanes, companies with different
e.g. universities helicopters, rockets, etc. target groups, e.g. Ryanair
Types of innovation
Radical innovation is an intellectual jump, which changes a whole area. An example of this is
the steam engine of the 1770s, which revolutionized industrial production, resulting in the
price of cotton cloth falling to 0.1 per cent of what it had been. Vertical innovation reflects
the mobility of ideas at a systems level, i.e. between the social strata of a society. By 8000 BC,
humans had begun to use agriculture, as opposed to being purely hunter-gatherers. For the
26 Principles
first time people were able to use relatively permanent settlements, and this, together with the
greater productivity of their efforts, enabled them to devote more time to non-subsistence
activities. As the population grows, more hands are available for labour tasks and, as Adam
Smith pointed out, division of labour involves specialization. Specialization leads to greater
efficiency and technological progress. Indeed, pottery, requiring less labour to produce than
stone containers, was in use around 2000 years later. However, hunting, gathering and farm-
ing were complementary activities for many generations. Perhaps migratory bands or hunting
expeditions would replace shelters of skins and tree branches with dugouts or wooden shel-
ters, followed by sod houses and eventually houses of sun-dried mud brick (see e.g. Cameron
and Neal, 2003). Experience in making bricks may have been cross-fertilized with pottery
skills. As potters refined their art, they invented the potter’s wheel, preceding the use of the
wheel for transport. Such invention and innovation progressed by almost-imperceptible
increments. This type of progress is thus called ‘incremental innovation’. In spreading from
farmer to farmer, we can also speak of ‘horizontal innovation’; innovation spread between
peers, i.e. people with common problems, and without large differences in social status.
However, incremental innovation can also be vertical: Henry Ford copied production
processes that he had seen at Chicago meat plants and ‘simply’ applied them in the motor
industry (Chaston, 2000), creating an assembly line out of a disassembly line with huge ram-
ifications (Figure 2.2).
Vertical
Horizontal
Incremental Radical
Henry Ford’s
assembly line
Motor
engines
Everyday
improvements
The
wheel
Figure 2.2 The dimensions of innovation
Some authors refer to the ‘4Ps of innovation’: Product, Process, Position and Paradigm (note
that this is not the same as the ‘4Ps of Marketing’), even constructing 3D relationships. In prin-
ciple, vertical can refer to Paradigm and the assembly line example above to the process part, the
motor engine to the product part. The 4P model suffers from being rather blurred, especially
with respect to services.
The traditional economic perspective of the Schumpeterian hypothesis (see Schumpeter,
1942) addresses the relationship between company size and the efficiency, or productivity, of
The Economics of Entrepreneurship and Innovation 27
the innovative process, especially as to whether there are economies of scale in innovation. For
example, Palmer (2004) reports that L’Oréal have 28,000 patents, Proctor & Gamble have
over 30,000 active patents and that IBM applies for typically more that 3,000 patents each
year. Clearly this is a pipeline production where a few patents more or less may not matter. So
there appear to be economies of scale in invention.
To add to this concept, Utterback (1994) showed that companies often start with a ‘product
innovation’ (possibly invention) but after introduction, the impact of the ‘product innovation’
grows less, and ‘process innovation’ becomes more important (Figure 2.3). An example is the
invention of the light bulb, a great breakthrough where the first light bulbs were produced by
craftsmen using a process involving many hundreds of steps. Clearly ‘process innovation’ was
an important factor in automating this process so as to ensure that satisfactory light bulbs could
be produced to an acceptable price.
Potential start-up
Product innovation
Process innovation
Fluid Transitional Specific
Time
Figure 2.3 Change in type of innovation with time: Ideas in a ‘fluid’ phase crystallize into an innovative
product. If appropriate, a company can be set up at this point. However, the effect of product innovation
decreases and the focus shifts to process innovation in a transitory stage. Eventually the two curves come
closer and parallel, the so-called ‘specific phase’
Source: Modified from Utterback (1994)
Process innovation is often driven by diversity innovation (as opposed to e.g. invention).
Diversity innovation is most often a peer-to-peer phenomenon, i.e. horizontal and incre-
mental innovation. It can be best summed up as ‘sometimes the answer just falls into your
lap’. A typical environment could be simply an informal talk with someone from a different
background.
28 Principles
Sources of innovation
In sum, it appears that significant progress stems from invention, but inventions are few and
far between (look through the Yellow Pages and try to estimate how may companies are
founded on the basis of patents or inventions). New business models can spring from a middle
layer of innovation (‘creativity innovation’), and there exists a layer below, which depends on
the simple diversity existing between humans (‘diversity innovation’) (Figure 2.4). To put it
simply, talking to somebody with a different background may deliver the problems solution
right in your lap, without any significant degree of invention and/or creativity.
However, diversity innovation is hard to provoke and control. Also there cannot be economies
of scale in diversity innovation. Quite the opposite; if x is the number of two-way communication
connections and y the number of nodes (people involved), then x = y * [y-1]/2, or that for a com-
pany with 120 employees, 3,540 communication possibilities exist. Taking 5 minutes each, talk-
ing continuously and without any break, this would take 595 hours or 16 man-weeks of working
time, and this is just for employees to talk to each other for 5 minutes, excluding that any employ-
ees got a chance to repeat conversations or do any work. Each further employee would take 10
man-hours to talk to existing employees for 5 minutes each. This is called the transaction costs
for communication and the consequences of this are discussed further in Chapter 8 (Knowledge
Management).
Invention
Creativity
Diversity
Figure 2.4 Illustrating that innovation can come from three sources, the application of invention, the
application of creativity, and the application of diversity, where the ‘mundane’ diversity is responsible for
the majority of everyday problem solving (incremental innovation) and invention is responsible for the few
radical innovations
The Economics of Entrepreneurship and Innovation 29
Chapter summary
The two classically known sources of innovation are the applications of either invention, or of
creativity. These are important factors in large companies that have e.g. an R&D depart-
ment. However, a third source exists: a kind of mutual inspiration derived from the applica-
tion of diversity. This ‘diversity innovation’ (largely) and ‘creativity innovation’ (to some extent)
are major contributors to ‘incremental innovation’, most often progressing horizontally, but
sometimes vertically. Thus, this third kind of innovation is the most important when companies
are small.
Entrepreneurs are different from owners and capitalists in that they seek to use innovation as
a tool to achieve shorter-term advantage. Improved processes result in ‘creative destruction’
and new value chains being formed.
The result is better products and services – often at lower prices.
References
Cameron, R. and Neal, L. (2003) A Concise Economic History of the World, 4th edn. Oxford: Oxford
University Press.
Carland, J. W., Hoy, F., Boulton, W. R. and Carland, J. A. C. (1984) ‘Differentiating entrepreneurs
from small business owners, a conceptualisation’, Academy of Management Review, 9: 354–9.
Chaston, I. (2000) Entrepreneurial Marketing. London: Macmillan.
Drucker, P. F. (1985) Innovation and Entrepreneurship. Oxford: Butterworth-Heinemann.
Galbraith, J. K. (1967) The New Industrial State. Boston: Houghton Mifflin.
Kondratieff, N. D. (1935) ‘The long waves in economic life’, Review of Economics and Statistics, 17:
105–15 (originally published in 1926 in Archiv für Sozialwissenschaft und Socialpolitik).
Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe.
Mellor, R. B. (2005) Achieving Enterprise: Teaching Entrepreneurship and Innovation in Business and
Academia. FGF Entrepreneurship Research Monographs, 49, Cologne: Eul Verlag.
Palmer, A. (2004) Introduction to Marketing Theory and Practice, 2nd edn. Oxford: Oxford University Press.
Porter, M. E. (1990) The Competitive Advantage of Nations. London: Macmillan.
Prescott, M. B. and Van Slyke, C. (1996) ‘The Internet as innovation’, Industrial Management & Data
Systems, 97/3: 119–24.
Schumpeter, J. A. ([1912]1952). Theorie der wirtschaftlichen Entwicklung, 5th edn. Leipzig: Duncker
and Humblot.
Schumpeter, J. A. (1939) Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist
Process. New York: McGraw-Hill.
Schumpeter, J. A. (1942) Capitalism, Socialism and Democracy. New York: Harper.
Utterback, J. M. (1994) Mastering the Dynamics of Innovation. Boston: Harvard Business School Press.
Further reading
Mellor, R. B. (2005) Sources and Spread of Innovation in Small e-commerce Companies. Copenhagen:
Globe.
Ormerod, P. (2005) Why Most Things Fail. London: Faber & Faber.
Von Stamm, B. (2003) The Innovation Wave. Chichester: John Wiley & Sons, Ltd.
Web links
EU articles on innovation: http://ec.europa.eu/enterprise/innovation/
The Ewing Marion Kauffmann Foundation: www.kauffman.org
Harvard Business School On-line: http://harvardbusinessonline.hbsp.harvard.edu
Suggestions for exercises
1 Explain what a ‘value chain’ is and what is meant by ‘creative destruction’.
2 Look up the Kondratieff cycle. Do Kondratieff cycles drive the whole of society or do a few
industries drive the economy as a whole?
30 Principles
Introduction
New and entrepreneurial companies are formed on the basis of someone having an innovative,
novel or creative idea. This chapter explores what creativity is, starting with some of the more
accepted thoughts on the subject.
Defining creativity
‘Creative’ refers to novel products of value, as in ‘The airplane was a creative invention.’‘Creative’
also refers to the person who produces the work, as in, ‘Picasso was creative.’ ‘Creativity,’ then
refers both to the capacity to produce such works, as in ‘How can we foster our employees’
creativity?’and to the activity of generating such products, as in ‘Creativity requires hard work…’.
(Weisberg, 1993: 4)
‘Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities
that may be useful in solving problems, communicating with others, and entertaining ourselves
and others.Three reasons why people are motivated to be creative are the:
1 Need for novel, varied, and complex stimulation
2 Need to communicate ideas and values
3 Need to solve problems
In order to be creative, you need to be able to view things in new ways or from a different
perspective. Among other things, you need to be able to generate new possibilities or new alter-
natives. Tests of creativity measure not only the number of alternatives that people can generate
but the uniqueness of those alternatives, the ability to generate alternatives or to see things uniquely
does not occur by chance; it is linked to other, more fundamental qualities of thinking, such as
flexibility, tolerance of ambiguity or unpredictability, and the enjoyment of things heretofore
unknown’.
(Franken, 1994: 394–6)
3
3 Promoting Creativity
Robert B. Mellor
The psychological origins of creativity
The origins of research into creativity can be traced back to Max Wertheimer who was one of the
principal proponents of Gestalt theory (i.e. behaviourism). Gestalt theory says that the character-
istics of stimuli received by the brain cause us to ‘group’(structure or interpret a problem) in a cer-
tain way (Wertheimer,1923).The primary factors – called ‘the laws of organization’– determining
grouping are:
1 Proximity – elements tend to be grouped together according to their nearness.
2 Similarity – items similar in some respect tend to be grouped together.
3 Closure – items are grouped together if they tend to complete some entity.
4 Simplicity – items will be organized into simple figures according to symmetry, regularity,
and smoothness.
Wertheimer was especially concerned with problem-solving and, in 1959, he provided a Gestalt
interpretation of problem-solving episodes of famous scientists (e.g.,Galileo,Einstein) as well as
children presented with mathematical problems where he explained that the essence of success-
ful problem-solving behaviour is being able to see the overall structure of the problem:
‘A certain region in the field becomes crucial, is focused; but it does not become isolated. A new,
deeper structural view of the situation develops, involving changes in functional meaning, the
grouping, etc. of the items. Directed by what is required by the structure of a situation for a crucial
region, one is led to a reasonable prediction, which like the other parts of the structure, calls for
verification, direct or indirect.Two directions are involved: getting a whole consistent picture, and
seeing what the structure of the whole requires for the parts’.
(Wertheimer, 1959: 212)
Gestalt principles: parallelograms
The classic example of Gestalt principles provided by Wertheimer is children finding
the area of parallelograms. As long as the parallelograms are regular figures, a stan-
dard procedure can be applied (making lines perpendicular from the corners of the
base). However, if a parallelogram is provided which has a novel shape or orientation,
then the standard procedure no longer works and the children are forced to solve the
problem by a different method, which they can only do if they understanding the true
structure of a parallelogram i.e., the figure can be bisected anywhere if the ends are
joined.
Source: Adapted from Wertheimer (1959)
32 Principles
Thus, the principles of creative problem solving were postulated to be:
1 The learner should be encouraged to discover the underlying nature of a topic or problem
(i.e., the relationship among the various elements).
2 Gaps, incongruities, or disturbances are an important stimulus for learning.
3 Instruction should be based upon the laws of organization: proximity, similarity, closure
and simplicity.
The relationship between creativity and other human characteristics like intelligence has been a
central concern of psychology for some time (see e.g. Guilford, 1950) and much effort has been
devoted towards the semi-quantitative measurement of creative potential (e.g. Guilford, 1986;
Torrance, 1979).Taylor and Williams (1966) provide a survey of the relationship between creativ-
ity and instruction and there have also been many attempts to increase creative behaviours (e.g.,
Osborn,1953; Parnes,1967).Popular questions include: is there one kind of creativity,or is creativity
specific to a medium? For example, are good painters also good musicians? What are the work
habits of extremely creative people and can these be emulated so others can be more creative?
Arising from this intensive research, there is general agreement that the creative process
involves the application of past experiences or ideas in novel ways. One example is the Creative
Problem Solving (CPS) Model, based upon the work of Osborn and of Parnes (Osborn, 1953;
Parnes, 1967; Van Gundy, 1987) and which refines the ‘laws of organization’ as suggested by
Werthheimer to five major steps:
1 Fact-finding
2 Problem-finding
3 Idea-finding
4 Solution-finding
5 Acceptance-finding.
However,the situation is complicated by the general acknowledgement that social processes play
a major role in the recognition of creativity (e.g. Amabile, 1983) and that certain cognitive skills
that may either be instilled at an early age, or learned later, seem to underlie creative behaviour.
These include fluency, flexibility, visualization, imagination, expressiveness, and openness.
Edward De Bono, like the behaviourists, argues that the characteristics of stimuli received by the
brain cause us to ‘group’ (structure or interpret a problem) in a certain way and that this process
involves the application of past experiences, i.e. that when looking at a phenomenon, the subcon-
scious locates how this was handled in the past, and – assuming that the past experience was not so
disastrous as to have impinged upon the consciousness – will try to process the new input in the same
way.This appears a reasonable argument since the converse, constantly trying to find new processes
for routine problems,would quickly lead to a nervous breakdown or similar overload situation.
Tools for analysing problems
Several methods exist for structured problem identification and analysis. The most common
are the Pareto analysis (sometimes known as the 80/20 rule), cause-and-effect (also known as
Promoting Creativity 33
fish-bone or Ishikawa) diagrams and cognitive mind-mapping.Pareto analyses plot the cause of a
problem against frequency, e.g. companies often have to deal with dissatisfied customers; there
may be five causes of dissatisfaction but analysis typically shows that the frequency of complaints
is not equally spread and that only one (i.e.20 per cent of the potential causes) accounts for 80 per
cent of complaints. This has led to companies recording and storing customer complaints for
data-mining exercises. Cause-and-effect diagrams consist of a few simple steps and are a way of
refining the search further – to arrive at a tighter shortlist of potential problems and solutions.
Mind-mapping (more for individuals) and the related technique of cognitive mind-mapping
(more often for groups of stakeholders) may be useful techniques to uncover hidden assumptions.
This area borders on the discipline of decision-making and many software tools (‘Decision
Support Systems’) have been developed to aid these processes.
Tools for promoting creativity
De Bono’s best-known creative method – lateral thinking – uses Wertheimer’s second law of
organization (‘gaps, incongruities, or disturbances are an important stimulus’) to get a different
perspective on a problem by breaking the elements up and recombining them in a different way
(sometimes even randomly!). The actual process of lateral thinking then uses feedback itera-
tion, or a ‘harvesting’ step, to take the idea through the stages 2–5 as proposed by the Creative
Problem Solving Model (although note that De Bono does not acknowledge any theoretical
antecedents for his lateral thinking technique).
De Bono goes on to identify four critical factors associated with lateral thinking:
1 The recognition of the dominant ideas that polarize the perception of a problem.
2 Searching for different perspectives – different ways of looking at the case (‘thinking out
of the box’).
3 The relaxation of the ‘normal’rigid control of thinking, i.e. relaxing the process pathways
used for the routine handling of input.
4 Encouraging the use of chance to encourage other ideas (chance, because lateral thinking
involves ideas of such low probability that they are unlikely to occur in the normal course
of events).
An example of lateral thinking
A merchant (Mr A) who owes money to a moneylender (Mr B) is unfortunately insolvent
and thus agrees to settle the debt based upon the random choice of two stones – one
black, one white – picked by Mr A’s daughter from a money bag. If Mr A’s daughter
chooses the white stone, the debt is cancelled; if she picks the black stone, then the
moneylender gets the merchant’s daughter.
34 Principles
However, the moneylender tries to ‘fix’ the outcome by putting two black stones in the
bag. The daughter sees this and when she picks a stone out of the bag, she immedi-
ately drops it onto the path full of other stones. She then uses logic to point out that the
stone she picked must have been the opposite colour of the one remaining in the bag.
That is, the one she did not pick is now revealed as black; ergo she must have picked
the white one. Unwilling to be unveiled as dishonest, Mr B the moneylender must agree
and cancel the debt.
The daughter has solved a seemingly-intractable problem through the use of lateral
thinking.
(Source: Taken from De Bono 1967) Reprinted with permission from the author.
Lateral thinking applies to all human problem-solving and involves (typically) a deliberate
provocation – like a negation or wild over-exaggeration – to ‘heave’the input out of the normal
thinking or thought-processing pathways. For example, the statement ‘cars cost money’ could
be negated with ‘cars are free’or ‘the customer comes to the pizzeria’is negated by ‘the pizzeria
comes to the customer’. However, ideas at this mid-point are typically of little use. From there
a second round of creativity is applied to ‘heave’ the input into a new and innovative channel
(‘cars are free, if you only buy your petrol from me’ or the concept of a mobile pizzeria on
a truck).One often-cited example of creativity is George de Mestral’s observation of how cockle-
burs attach to clothing, which led him to invent the hook-and-loop fastener known as Velcro®.
He transformed a common nuisance into a useful product. Another is Dell computers who
have created the software and service for networked printers to automatically order new ink
cartridges on-line when they are running low. When one looks back in time to analyse how a
creative act was made, one often finds that creators made a novel interpretation of a well-
known fact or occurrence, often involving converting a disadvantage into an advantage.
Another commonly cited example of creativity is Art Fry’s development of Post-It® remov-
able notes at 3M Corporation in 1974. Conventional wisdom states that all adhesives must be
strong, but another 3M scientist had developed a polymer adhesive which takes years, if ever, to
set. Fry wanted a better bookmark for his church hymn book, so he used a bookmark smeared
with the weak adhesive. By ignoring the conventional wisdom, Fry developed a highly success-
ful office product by redefining the problem (i.e. to finding a use for a weak adhesive). However,
not only did he need to develop the idea, but he also had to sell the idea to his management and
marketing departments (points 4 and 5 of the Creative Problem Solving Model).
De Bono has discussed the application of lateral thinking both to management development
and in some of his recent work,on schools (e.g.,De Bono,1991).Visit the De Bono website for
up-to-date information on lateral thinking and related techniques like brainstorming and ‘six
thinking hats’.
From the above, it would appear that to enhance innovation anyone could simply apply
creativity exercises. This idea has been important in spreading the works of Edward De Bono.
For example De Bono’s book Serious Creativity (1996) starts with the words ‘If I were to sit
Promoting Creativity 35
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between Jehovah and the Israel of the monarchy was finally closed,
and no penal balance was carried over to stand against the restored
community.
The last portion of this chapter is so important that we must reserve
it for separate treatment, but we may pause for a moment to
consider the prophecy of the restoration of Ephraim from two points
of view—the unity of Israel and the return of the ten tribes.
In the first place, this chapter is an eirenicon, intended to consign to
oblivion the divisions and feuds of the Chosen People. After the fall
of Samaria, the remnant of Israel had naturally looked to Judah for
support and protection, and the growing weakness of Assyria had
allowed the Jewish kings to exercise a certain authority over the
territory of northern tribes. The same fate—the sack of the capital
and the deportation of most of the inhabitants—had successively
befallen Ephraim and Judah. His sense of the unity of the race was
too strong to allow the prophet to be satisfied with the return of
Judah and Benjamin, apart from the other tribes. Yet it would have
been monstrous to suppose that Jehovah would bring back Ephraim
from Assyria, and Judah from Babylon, only that they might resume
their mutual hatred and suspicion. Even wild beasts are said not to
rend one another when they are driven by floods to the same hill-
top.
Thus various causes contributed to produce a kindlier feeling
between the survivors of the catastrophes of Samaria and
Jerusalem; and from henceforth those of the ten tribes who found
their way back to Palestine lived in brotherly union with the other
Jews. And, on the whole, the Jews have since remained united both
as a race and a religious community. It is true that the relations of
the later Jews to Samaria were somewhat at variance both with the
letter and spirit of this prophecy, but that Samaria had only the
slightest claim to be included in Israel. Otherwise the divisions
between Hillel and Shammai, Sadducees and Pharisees, Karaites,
Sephardim and Ashkenazim, Reformed and Unreformed Jews, have
rather been legitimate varieties of opinion and practice within
Judaism than a rending asunder of the Israel of God.
Matters stand very differently with regard to the restoration of
Ephraim. We know that individual members and families of the ten
tribes were included in the new Jewish community, and that the
Jews reoccupied Galilee and portions of Eastern Palestine. But the
husbandmen who had planted vineyards on the hills of Samaria were
violently repulsed by Ezra and Nehemiah, and were denied any part
or lot in the restored Israel. The tribal inheritance of Ephraim and
Manasseh was never reoccupied by Ephraimites and Manassites who
came to worship Jehovah in His Temple at Jerusalem. There was no
return of the ten tribes that in any way corresponded to the terms of
this prophecy or that could rank with the return of their brethren.
Our growing acquaintance with the races of the world seems likely
to exclude even the possibility of any such restoration of Ephraim. Of
the two divisions of Israel, so long united in common experiences of
grace and chastisement, the one has been taken and the other left.
Christendom is the true heir of the ideals of Israel, but she is mostly
content to inherit them as counsels of perfection. Isaiah[422] struck
the keynote of this chapter when he prophesied that Ephraim should
not envy Judah, nor Judah vex Ephraim. Our prophet, in the same
generous spirit, propounds a programme of reconciliation. It might
serve for a model to those who construct schemes for Christian
Reunion. When two denominations are able to unite on such terms
that the one admits the other to be the first-born of God, His darling
child and precious in His sight, and the latter is willing to accept the
former's central sanctuary as the headquarters of the united body,
we shall have come some way towards realising this ancient Jewish
ideal. Meanwhile Ephraim remains consumed with envy of Judah;
and Judah apparently considers it her most sacred duty to vex
Ephraim.
Moreover the disappearance of what was at one time the most
flourishing branch of the Hebrew Church has many parallels in
Church History. Again and again religious dissension has been one of
the causes of political ruin, and the overthrow of a Christian state
has sometimes involved the extinction of its religion. Christian
thought and doctrine owe an immense debt to the great Churches of
Northern Africa and Egypt. But these provinces were torn by the
dissensions of ecclesiastical parties; and the quarrels of Donatists,
Arians, and Catholics in North Africa, the endless controversies over
the Person of Christ in Egypt, left them helpless before the Saracen
invader. To-day the Church of Tertullian and Augustine is blotted out,
and the Church of Origen and Clement is a miserable remnant.
Similarly the ecclesiastical strife between Rome and Constantinople
lost to Christendom some of the fairest provinces of Europe and
Asia, and placed Christian races under the rule of the Turk.
Even now the cause of Christians in heathen and Mohammedan
countries suffers from the jealousy of Christian states, and modern
Churches sometimes avail themselves of this jealousy to try and oust
their rivals from promising fields for mission work.
It is a melancholy reflection that Jeremiah's effort at reconciliation
came too late, when the tribes whom it sought to reunite were
hopelessly set asunder. Reconciliation, which involves a kind of
mutual repentance, can ill afford to be deferred to the eleventh hour.
In the last agonies of the Greek Empire, there was more than one
formal reconciliation between the Eastern and Western Churches;
but they also came too late, and could not survive the Empire which
they failed to preserve.
CHAPTER XXXIII
RESTORATION—IV. THE NEW COVENANT
xxxi. 31-38: cf. Hebrews viii.
"I will make a new covenant with the house of Israel and the
house of Judah."—Jer. xxxi. 31.
The religious history of Israel in the Old Testament has for its epochs
a series of covenants: Jehovah declared His gracious purposes
towards His people, and made known the conditions upon which
they were to enjoy His promised blessings; they, on their part,
undertook to observe faithfully all that Jehovah commanded. We are
told that covenants were made with Noah, after the Flood; with
Abraham, when he was assured that his descendants should inherit
the land of Canaan; at Sinai, when Israel first became a nation; with
Joshua, after the Promised Land was conquered; and, at the close of
Old Testament history, when Ezra and Nehemiah established the
Pentateuch as the Code and Canon of Judaism.
One of the oldest sections of the Pentateuch, Exodus xx. 20-xxiii. 33,
is called the "Book of the Covenant,"[423] and Ewald named the
Priestly Code the "Book of the Four Covenants." Judges and Samuel
record no covenants between Jehovah and Israel; but the promise of
permanence to the Davidic dynasty is spoken of as an everlasting
covenant. Isaiah,[424] Amos, and Micah make no mention of the
Divine covenants. Jeremiah, however, imitates Hosea[425] in
emphasising this aspect of Jehovah's relation to Israel, and is
followed in his turn by Ezekiel and II. Isaiah.
Jeremiah had played his part in establishing covenants between
Israel and its God. He is not, indeed, even so much as mentioned in
the account of Josiah's reformation; and it is not clear that he
himself makes any express reference to it; so that some doubt must
still be felt as to his share in that great movement. At the same time
indirect evidence seems to afford proof of the common opinion that
Jeremiah was active in the proceedings which resulted in the solemn
engagement to observe the code of Deuteronomy. But yet another
covenant occupies a chapter[426] in the Book of Jeremiah, and in
this case there is no doubt that the prophet was the prime mover in
inducing the Jews to release their Hebrew slaves. This act of
emancipation was adopted in obedience to an ordinance of
Deuteronomy,[427] so that Jeremiah's experience of former
covenants was chiefly connected with the code of Deuteronomy and
the older Book of the Covenant upon which it was based.
The Restoration to which Jeremiah looked forward was to throw the
Exodus into the shade, and to constitute a new epoch in the history
of Israel more remarkable than the first settlement in Canaan. The
nation was to be founded anew, and its regeneration would
necessarily rest upon a New Covenant, which would supersede the
Covenant of Sinai.
"Behold, the days come—it is the utterance of Jehovah—when I will
enter into a new covenant with the House of Israel and the House of
Judah: not according to the covenant into which I entered with your
fathers, when I took them by the hand to bring them out of the land
of Egypt."
The Book of the Covenant and Deuteronomy had both been editions
of the Mosaic Covenant, and had neither been intended nor
regarded as anything new. Whatever was fresh in them, either in
form or substance, was merely the adaptation of existing ordinances
to altered circumstances. But now the Mosaic Covenant was declared
obsolete, the New Covenant was not to be, like Deuteronomy,
merely a fresh edition of the earliest code. The Return from Babylon,
like the primitive Migration from Ur and like the Exodus from Egypt,
was to be the occasion of a new Revelation, placing the relations of
Jehovah and His people on a new footing.
When Ezra and Nehemiah established, as the Covenant of the
Restoration, yet another edition of the Mosaic ordinances, they were
acting in the teeth of this prophecy—not because Jehovah had
changed His purpose, but because the time of fulfilment had not yet
come.[428]
The rendering of the next clause is uncertain, and, in any case, the
reason given for setting aside the old covenant is not quite what
might have been expected. The Authorised and Revised Versions
translate: "Which My covenant they brake, although I was an
husband unto them";[429] thus introducing that Old Testament figure
of marriage between Jehovah and Israel which is transferred in
Ephesians and the Apocalypse to Christ and the Church. The margin
of the Revised Version has: "Forasmuch as they brake My covenant,
although I was lord over them." There is little difference between
these two translations, both of which imply that in breaking the
covenant Israel was setting aside Jehovah's legitimate claim to
obedience. A third translation, on much the same lines, would be
"although I was Baal unto or over them";[430] Baal or ba'al being
found for lord, husband, in ancient times as a name of Jehovah, and
in Jeremiah's time as a name of heathen gods. Jeremiah is fond of
paronomasia, and frequently refers to Baal, so that he may have
been here deliberately ambiguous. The phrase might suggest to the
Hebrew reader that Jehovah was the true lord or husband of Israel,
and the true Baal or God, but that Israel had come to regard Him as
a mere Baal, like one of the Baals of the heathen. "Forasmuch as
they, on their part, set at nought My covenant; so that I, their true
Lord, became to them as a mere heathen Baal." The covenant and
the God who gave it were alike treated with contempt.
The Septuagint, which is quoted in Hebrews viii. 9, has another
translation: "And I regarded them not."[431] Unless this represents a
different reading,[432] it is probably due to a feeling that the form of
the Hebrew sentence required a close parallelism. Israel neglected to
observe the covenant, and Jehovah ceased to feel any interest in
Israel. But the idea of the latter clause seems alien to the context.
In any case, the new and better covenant is offered to Israel, after it
has failed to observe the first covenant. This Divine procedure is not
quite according to many of our theories. The law of ordinances is
often spoken of as adapted to the childhood of the race. We set
children easy tasks, and when these are successfully performed we
require of them something more difficult. We grant them limited
privileges, and if they make a good use of them the children are
promoted to higher opportunities. We might perhaps have expected
that when the Israelites failed to observe the Mosaic ordinances,
they would have been placed under a narrower and harsher
dispensation; yet their very failure leads to the promise of a better
covenant still. Subsequent history, indeed, qualifies the strangeness
of the Divine dealing. Only a remnant of Israel survived as the
people of God. The Covenant of Ezra was very different from the
New Covenant of Jeremiah; and the later Jews, as a community,[433]
did not accept that dispensation of grace which ultimately realised
Jeremiah's prophecy. In a narrow and unspiritual fashion the Jews of
the Restoration observed the covenant of external ordinances; so
that, in a certain sense, the Law was fulfilled before the new
Kingdom of God was inaugurated. But if Isaiah and Jeremiah had
reviewed the history of the restored community, they would have
declined to receive it as, in any sense, the fulfilling of a Divine
covenant. The Law of Moses was not fulfilled, but made void, by the
traditions of the Pharisees. The fact therefore remains, that failure in
the lower forms, so to speak, of God's school is still followed by
promotion to higher privileges. However little we may be able to
reconcile this truth with a priori views of Providence, it has analogies
in nature, and reveals new depths of Divine love and greater
resourcefulness of Divine grace. Boys whose early life is
unsatisfactory nevertheless grow up into the responsibilities and
privileges of manhood; and the wilful, disobedient child does not
always make a bad man. We are apt to think that the highest form
of development is steady, continuous, and serene, from good to
better, from better to best. The real order is more awful and
stupendous, combining good and evil, success and failure, victory
and defeat, in its continuous advance through the ages. The wrath
of man is not the only evil passion that praises God by its ultimate
subservience to His purpose. We need not fear lest such Divine
overruling of sin should prove any temptation to wrongdoing, seeing
that it works, as in the exile of Israel, through the anguish and
humiliation of the sinner.
The next verse explains the character of the New Covenant; once
Jehovah wrote His law on tables of stone, but now:—
"This is the covenant which I will conclude with the
House of Israel after those days—it is the
utterance of Jehovah—
I will put My law within them, and will write it upon
their heart;
And I will be their God, and they shall be My people."
These last words were an ancient formula for the immemorial
relation of Jehovah and Israel, but they were to receive new fulness
of meaning. The inner law, written on the heart, is in contrast to
Mosaic ordinances. It has, therefore, two essential characteristics:
first, it governs life, not by fixed external regulations, but by the
continual control of heart and conscience by the Divine Spirit;
secondly, obedience is rendered to the Divine Will, not from external
compulsion, but because man's inmost nature is possessed by entire
loyalty to God. The new law involves no alteration of the standards
of morality or of theological doctrine, but it lays stress on the
spiritual character of man's relation to God, and therefore on the fact
that God is a spiritual and moral being. When man's obedience is
claimed on the ground of God's irresistible power, and appeal is
made to material rewards and punishments, God's personality is
obscured and the way is opened for the deification of political or
material Force. This doctrine of setting aside of ancient codes by the
authority of the Inner Law is implied in many passages of our book.
The superseding of the Mosaic Law is set forth by a most expressive
symbol,[434] "When ye are multiplied and increased in the land, 'The
Ark of the Covenant of Jehovah' shall no longer be the watchword of
Israel: men shall neither think of the ark nor remember it; they shall
neither miss the ark nor make another in its place." The Ark and the
Mosaic Torah were inseparably connected; if the Ark was to perish
and be forgotten, the Law must also be annulled.
Jeremiah moreover discerned with Paul that there was a law in the
members warring against the Law of Jehovah: "The sin of Judah is
written with a pen of iron, and with the point of a diamond: it is
graven upon the table of their heart, and upon the horns of their
altars."[435]
Hence the heart of the people had to be changed before they could
enter into the blessings of the Restoration: "I will give them an heart
to know Me, that I am Jehovah: and they shall be My people, and I
will be their God: for they shall return unto Me with their whole
heart."[436] In the exposition of the symbolic purchase of
Hanameel's field, Jehovah promises to make an everlasting covenant
with His people, that He will always do them good and never forsake
them. Such continual blessings imply that Israel will always be
faithful. Jehovah no longer seeks to ensure their fidelity by an
external law, with its alternate threats and promises: He will rather
control the inner life by His grace. "I will give them one heart and
one way, that they may fear Me for ever; ... I will put My fear in
their hearts, that they may not depart from Me."[437]
We must not, of course, suppose that these principles—of obedience
from loyal enthusiasm, and of the guidance of heart and conscience
by the Spirit of Jehovah—were new to the religion of Israel. They are
implied in the idea of prophetic inspiration. When Saul went home to
Gibeah, "there went with him a band of men, whose hearts God had
touched."[438] In Deuteronomy, Israel is commanded to "love
Jehovah thy God with all thine heart, and with all thy soul, and with
all thy might. And these words, which I command thee this day, shall
be in thine heart."[439]
The novelty of Jeremiah's teaching is that these principles are made
central in the New Covenant. Even Deuteronomy, which approaches
so closely to the teaching of Jeremiah, was a new edition of the
Covenant of the Exodus, an attempt to secure a righteous life by
exhaustive rules and by external sanctions. Jeremiah had witnessed
and probably assisted the effort to reform Judah by the enforcement
of the Deuteronomic Code. But when Josiah's religious policy
collapsed after his defeat and death at Megiddo, Jeremiah lost faith
in elaborate codes, and turned from the letter to the spirit.
The next feature of the New Covenant naturally follows from its
being written upon men's hearts by the finger of Jehovah:—
"Men shall no longer teach one another and teach
each other, saying, Know ye Jehovah!
For all shall know Me, from the least to the greatest—
it is the utterance of Jehovah."
In ancient times men could only "know Jehovah" and ascertain His
will by resorting to some sanctuary, where the priests preserved and
transmitted the sacred tradition and delivered the Divine oracles.
Written codes scarcely altered the situation; copies would be few
and far between, and still mostly in the custody of the priests.
Whatever drawbacks arise from attaching supreme religious
authority to a printed book were multiplied a thousandfold when
codes could only be copied. But, in the New Israel, men's spiritual
life would not be at the mercy of pen, ink, and paper, of scribe and
priest. The man who had a book and could read would no longer be
able, with the self-importance of exclusive knowledge, to bid his less
fortunate brethren to know Jehovah. He Himself would be the one
teacher, and His instruction would fall, like the sunshine and the rain,
upon all hearts alike.
And yet again Israel is assured that past sin shall not hinder the
fulfilment of this glorious vision:—
"For I will forgive their iniquity, and their sin will I
remember no more."
Recurring to the general topic of the Restoration of Israel, the
prophet affixes the double seal of two solemn Divine asseverations.
Of old, Jehovah had promised Noah: "While the earth remaineth,
seedtime and harvest, cold and heat, summer and winter, day and
night, shall not cease."[440] Now He promises that while sun and
moon and stars and sea continue in their appointed order, Israel
shall not cease from being a nation. And, again, Jehovah will not
cast off Israel on account of its sin till the height of heaven can be
measured and the foundations of the earth searched out.[441]
CHAPTER XXXIV
RESTORATION—V. REVIEW
xxx.-xxxiii.
In reviewing these chapters we must be careful not to suppose that
Jeremiah knew all that would ultimately result from his teaching.
When he declared that the conditions of the New Covenant would be
written, not in a few parchments, but on every heart, he laid down a
principle which involved the most characteristic teaching of the New
Testament and the Reformers, and which might seem to justify
extreme mysticism. When we read these prophecies in the light of
history, they seem to lead by a short and direct path to the Pauline
doctrines of Faith and Grace. Constraining grace is described in the
words: "I will put My fear in their hearts, that they shall not depart
from Me."[442] Justification by faith instead of works substitutes the
response of the soul to the Spirit of God for conformity to a set of
external regulations—the writing on the heart for the carving of
ordinances on stone. Yet, as Newton's discovery of the law of
gravitation did not make him aware of all that later astronomers
have discovered, so Jeremiah did not anticipate Paul and Augustine,
Luther and Calvin: he was only their forerunner. Still less did he
intend to affirm all that has been taught by the Brothers of the
Common Life or the Society of Friends. We have followed the Epistle
to the Hebrews in interpreting his prophecy of the New Covenant as
abrogating the Mosaic code and inaugurating a new departure upon
entirely different lines. This view is supported by his attitude towards
the Temple, and especially the Ark. At the same time we must not
suppose that Jeremiah contemplated the summary and entire
abolition of the previous dispensation. He simply delivers his latest
message from Jehovah, without bringing its contents into relation
with earlier truth, without indeed waiting to ascertain for himself
how the old and the new were to be combined. But we may be sure
that the Divine writing on the heart would have included much that
was already written in Deuteronomy, and that both books and
teachers would have had their place in helping men to recognise and
interpret the inner leadings of the Spirit.
In rising from the perusal of these chapters the reader is tempted to
use the prophet's words with a somewhat different meaning: "I
awaked and looked about me, and felt that I had had a pleasant
dream."[443] Renan, with cynical frankness, heads a chapter on such
prophecies with the title "Pious Dreams." While Jeremiah's glowing
utterances rivet our attention, the gracious words fall like balm upon
our aching hearts, and we seem, like the Apostle, caught up into
Paradise. But as soon as we try to connect our visions with any
realities, past, present, or in prospect, there comes a rude
awakening. The restored community attained to no New Covenant,
but was only found worthy of a fresh edition of the written code.
Instead of being committed to the guidance of the ever-present
Spirit of Jehovah, they were placed under a rigid and elaborate
system of externals—"carnal ordinances, concerned with meats and
drinks and divers washings, imposed until a time of reformation."
[444] They still remained under the covenant "from Mount Sinai,
bearing children unto bondage, which is Hagar. Now this Hagar is
Mount Sinai in Arabia, and answereth to the Jerusalem that now is:
for she is in bondage with her children."[445]
For these bondservants of the letter, there arose no David, no
glorious Scion of the ancient stock. For a moment the hopes of
Zechariah rested on Zerubbabel, but this Branch quickly withered
away and was forgotten. We need not underrate the merits and
services of Ezra and Nehemiah, of Simon the Just and Judas
Maccabæus; and yet we cannot find any one of them who answers
to the Priestly King of Jeremiah's visions. The new Growth of Jewish
royalty came to an ignominious end in Aristobulus, Hyrcanus, and
the Herods, Antichrists rather than Messiahs.
The Reunion of long-divided Israel is for the most part a misnomer;
there was no healing of the wound, and the offending member was
cut off.
Even now, when the leaven of the Kingdom has been working in the
lump of humanity for nearly two thousand years, any suggestion
that these chapters are realised in Modern Christianity would seem
cruel irony. Renan accuses Christianity of having quickly forgotten
the programme which its Founder borrowed from the prophets, and
of having become a religion like other religions, a religion of priests
and sacrifices, of external observances and superstitions.[446] It is
sometimes asserted that Protestants lack faith and courage to trust
to any law written on the heart, and cling to a printed book, as if
there were no Holy Spirit—as if the Branch of David had borne fruit
once for all, and Christ were dead. The movement for Christian
Reunion seems thus far chiefly to emphasise the feuds that make
the Church a kingdom divided against itself.
But we must not allow the obvious shortcomings of Christendom to
blind us to brighter aspects of truth. Both in the Jews of the
Restoration and in the Church of Christ we have a real fulfilment of
Jeremiah's prophecies. The fulfilment is no less real because it is
utterly inadequate. Prophecy is a guide-post and not a mile-stone; it
shows the way to be trodden, not the duration of the journey. Jews
and Christians have fulfilled Jeremiah's prophecies because they
have advanced by the road along which he pointed towards the
spiritual city of his vision. The "pious dreams" of a little group of
enthusiasts have become the ideals and hopes of humanity. Even
Renan ranks himself among the disciples of Jeremiah: "The seed
sown in religious tradition by inspired Israelites will not perish; all of
us who seek a God without priests, a revelation without prophets, a
covenant written in the heart, are in many respects the disciples of
these ancient fanatics (ces vieux égarés)."[447]
The Judaism of the Return, with all its faults and shortcomings, was
still an advance in the direction Jeremiah had indicated. However
ritualistic the Pentateuch may seem to us, it was far removed from
exclusive trust in ritual. Where the ancient Israelite had relied upon
correct observance of the forms of his sanctuary, the Torah of Ezra
introduced a large moral and spiritual element, which served to bring
the soul into direct fellowship with Jehovah. "Pity and humanity are
pushed to their utmost limits, always of course in the bosom of the
family of Israel."[448] The Torah moreover included the great
commands to love God and man, which once for all placed the
religion of Israel on a spiritual basis. If the Jews often attached more
importance to the letter and form of Revelation than to its
substance, and were more careful for ritual and external
observances than for inner righteousness, we have no right to cast a
stone at them.
It is a curious phenomenon that after the time of Ezra the further
developments of the Torah were written no longer on parchment,
but, in a certain sense, on the heart. The decisions of the rabbis
interpreting the Pentateuch, "the fence which they made round the
law," were not committed to writing, but learnt by heart and handed
down by oral tradition. Possibly this custom was partly due to
Jeremiah's prophecy. It is a strange illustration of the way in which
theology sometimes wrests the Scriptures to its own destruction,
that the very prophecy of the triumph of the spirit over the letter
was made of none effect by a literal interpretation.
Nevertheless, though Judaism moved only a very little way towards
Jeremiah's ideal, yet it did move, its religion was distinctly more
spiritual than that of ancient Israel. Although Judaism claimed
finality and did its best to secure that no future generation should
make further progress, yet in spite of, nay, even by means of,
Pharisee and Sadducee, the Jews were prepared to receive and
transmit that great resurrection of prophetic teaching which came
through Christ.
If even Judaism did not altogether fail to conform itself to Jeremiah's
picture of the New Israel, clearly Christianity must have shaped itself
still more fully according to his pattern. In the Old Testament both
the idea and the name of a "New Covenant,"[449] superseding that
of Moses, are peculiar to Jeremiah, and the New Testament
consistently represents the Christian dispensation as a fulfilment of
Jeremiah's prophecy. Besides the express and detailed application in
the Epistle to the Hebrews, Christ instituted the Lord's Supper as the
Sacrament of His New Covenant—"This cup is the New Covenant in
My blood";[450] and St. Paul speaks of himself as "a minister of the
New Covenant."[451] Christianity has not been unworthy of the claim
made on its behalf by its Founder, but has realised, at any rate in
some measure, the visible peace, prosperity, and unity of Jeremiah's
New Israel, as well as the spirituality of his New Covenant.
Christendom has its hideous blots of misery and sin, but, on the
whole, the standard of material comfort and intellectual culture has
been raised to a high average throughout the bulk of a vast
population. Internal order and international concord have made
enormous strides since the time of Jeremiah. If an ancient Israelite
could witness the happy security of a large proportion of English
workmen and French peasants, he would think that many of the
predictions of his prophets had been fulfilled. But the advance of
large classes to a prosperity once beyond the dreams of the most
sanguine only brings out in darker relief the wretchedness of their
less fortunate brethren. In view of the growing knowledge and
enormous resources of modern society, any toleration of its cruel
wrongs is an unpardonable sin. Social problems are doubtless urgent
because a large minority are miserable, but they are rendered still
more urgent by the luxury of many and the comfort of most. The
high average of prosperity shows that we fail to right our social evils,
not for want of power, but for want of devotion. Our civilisation is a
Dives, at whose gate Lazarus often finds no crumbs.
Again Christ's Kingdom of the New Covenant has brought about a
larger unity. We have said enough elsewhere on the divisions of the
Church. Doubtless we are still far from realising the ideals of chapter
xxxi., but, at any rate, they have been recognised as supreme, and
have worked for harmony and fellowship in the world. Ephraim and
Judah are forgotten, but the New Covenant has united into
brotherhood a worldwide array of races and nations. There are still
divisions in the Church, and a common religion will not always do
away with national enmities; but in spite of all, the influence of our
common Christianity has done much to knit the nations together and
promote mutual amity and goodwill. The vanguard of the modern
world has accepted Christ as its standard and ideal, and has thus
attained an essential unity, which is not destroyed by minor
differences and external divisions.
And, finally, the promise that the New Covenant should be written
on the heart is far on the way towards fulfilment. If Roman and
Greek orthodoxy interposes the Church between the soul and Christ,
yet the inspiration claimed for the Church to-day is, at any rate in
some measure, that of the living Spirit of Christ speaking to the
souls of living men. On the other hand, a predilection for Rabbinical
methods of exegesis sometimes interferes with the influence and
authority of the Bible. Yet in reality there is no serious attempt to
take away the key of knowledge or to forbid the individual soul to
receive the direct teaching of the Holy Ghost. The Reformers
established the right of private judgment in the interpretation of the
Scriptures; and the interpretation of the Library of Sacred Literature,
the spiritual harvest of a thousand years, affords ample scope for
reverent development of our knowledge of God.
One group of Jeremiah's prophecies has indeed been entirely
fulfilled.[452] In Christ, God has raised up a Branch of Righteousness
unto David, and through Him judgment and righteousness are
wrought in the earth.
EPILOGUE
CHAPTER XXXV
JEREMIAH AND CHRIST
"Jehovah thy God will raise up unto thee a prophet from
amongst thee, of thy brethren, like unto me; unto him shall ye
hearken."—Deut. xviii. 15.
"Jesus ... asked His disciples, saying, Who do men say that the
Son of Man is? And they said, Some say John the Baptist; some,
Elijah: and others, Jeremiah, or one of the prophets."—Matt.
xvi. 13, 14.
English feeling about Jeremiah has long ago been summed up and
stereotyped in the single word "jeremiad." The contempt and dislike
which this word implies are partly due to his supposed authorship of
Lamentations; but, to say the least, the Book of Jeremiah is not
sufficiently cheerful to remove the impression created by the linked
wailing, long drawn out, which has been commonly regarded as an
appendix to its prophecies. We can easily understand the
unpopularity of the prophet of doom in modern Christendom. Such
prophets are seldom acceptable, except to the enemies of the
people whom they denounce; and even ardent modern advocates of
Jew-baiting would not be entirely satisfied with Jeremiah—they
would resent his patriotic sympathy with sinful and suffering Judah.
Most modern Christians have ceased to regard the Jews as monsters
of iniquity, whose chastisement should give profound satisfaction to
every sincere believer. History has recorded but few of the crimes
which provoked and justified our prophet's fierce indignation, and
those of which we do read repel our interest by a certain lack of the
picturesque, so that we do not take the trouble to realise their actual
and intense wickedness. Ahab is a by-word, but how many people
know anything about Ishmael ben Nethaniah? The cruelty of the
nobles and the unctuous cant of their prophetic allies are forgotten
in—nay, they seem almost atoned for by—the awful calamities that
befell Judah and Jerusalem. Jeremiah's memory may even be said to
have suffered from the speedy and complete fulfilment of his
prophecies. The national ruin was a triumphant vindication of his
teaching, and his disciples were eager to record every utterance in
which he had foretold the coming doom. Probably the book, in its
present form, gives an exaggerated impression of the stress which
Jeremiah laid upon this topic.
Moreover, while the prophet's life is essentially tragic, its drama lacks
an artistic close and climax. Again and again Jeremiah took his life in
his hand, but the good confession which he witnessed for so long
does not culminate in the crown of martyrdom. A final scene like the
death of John the Baptist would have won our sympathy and
conciliated our criticism.
We thus gather that the popular attitude towards Jeremiah rests on
a superficial appreciation of his character and work; it is not difficult
to discern that a careful examination of his history establishes
important claims on the veneration and gratitude of the Christian
Church.
For Judaism was not slow to pay her tribute of admiration and
reverence to Jeremiah as to a Patron Saint and Confessor. His
prophecy of the Restoration of Israel is appealed to in Ezra and
Daniel; and the Hebrew Chronicler, who says as little as he can of
Isaiah, adds to the references made by the Book of Kings to
Jeremiah. We have already seen that apocryphal legends clustered
round his honoured name. He was credited with having concealed
the Tabernacle and the Ark in the caves of Sinai.[453] On the eve of
a great victory, he appeared to Judas Maccabæus, in a vision, as "a
man distinguished by grey hairs, and a majestic appearance; but
something wonderful and exceedingly magnificent was the grandeur
about him," and was made known to Judas as a "lover of the
brethren, who prayeth much for the people and for the holy city, to
wit, Jeremiah the prophet of God. And Jeremiah stretching forth his
right hand delivered over to Judas a sword of gold."[454] The Son of
Sirach does not fail to include Jeremiah in his praise of famous men;
[455] and there is an apocryphal epistle purporting to be written by
our prophet.[456] It is noteworthy that in the New Testament
Jeremiah is only mentioned by name in the Judaistic Gospel of St.
Matthew.
In the Christian Church, notwithstanding the lack of popular
sympathy, earnest students of the prophet's life and words have
ranked him with some of the noblest characters of history. A modern
writer enumerates as amongst those with whom he has been
compared Cassandra, Phocion, Demosthenes, Dante, Milton, and
Savonarola.[457] The list might easily be enlarged, but another
parallel has been drawn which has supreme claims on our
consideration. The Jews in New Testament times looked for the
return of Elijah or Jeremiah to usher in Messiah's reign; and it
seemed to some among them that the character and teaching of
Jesus of Nazareth identified him with the ancient prophet who had
been commissioned "to root out, pull down, destroy and throw
down, to build and to plant." The suggested comparison has often
been developed, but undue stress has been laid on such accidental
and external circumstances as the prophet's celibacy and the
statement that he was "sanctified from the womb." The discussion of
such details does not greatly lend itself to edification. But it has also
been pointed out that there is an essential resemblance between the
circumstances and mission of Jeremiah and his Divine Successor, and
to this some little space may be devoted.
Jeremiah and our Lord appeared at similar crises in the history of
Israel and of revealed religion. The prophet foretold the end of the
Jewish monarchy, the destruction of the First Temple and of ancient
Jerusalem; Christ, in like manner, announced the end of the restored
Israel, the destruction of the Second Temple and of the newer
Jerusalem. In both cases the doom of the city was followed by the
dispersion and captivity of the people. At both eras the religion of
Jehovah was supposed to be indissolubly bound up with the Temple
and its ritual; and, as we have seen, Jeremiah, like Stephen and Paul
and our Lord Himself, was charged with blasphemy because he
predicted its coming ruin. The prophet, like Christ, was at variance
with the prevalent religious sentiment of his time and with what
claimed to be orthodoxy. Both were regarded and treated by the
great body of contemporary religious teachers as dangerous and
intolerable heretics; and their heresy, as we have said, was
practically one and the same. To the champions of the Temple, their
teaching seemed purely destructive, an irreverent attack upon
fundamental doctrines and indispensable institutions. But the very
opposite was the truth; they destroyed nothing but what deserved to
perish. Both in Jeremiah's time and in our Lord's, men tried to
assure themselves of the permanence of erroneous dogmas and
obsolete rites by proclaiming that these were of the essence of
Divine Revelation. In either age to succeed in this effort would have
been to plunge the world into spiritual darkness: the light of Hebrew
prophecy would have been extinguished by the Captivity, or, again,
the hope of the Messiah would have melted away like a mirage,
when the legions of Titus and Hadrian dispelled so many Jewish
dreams. But before the catastrophe came, Jeremiah had taught men
that Jehovah's Temple and city were destroyed of His own set
purpose, because of the sins of His people; there was no excuse for
supposing that He was discredited by the ruin of the place where He
had once chosen to set His Name. Thus the Captivity was not the
final page in the history of Hebrew religion, but the opening of a
new chapter. In like manner Christ and His Apostles, more especially
Paul, finally dissociated Revelation from the Temple and its ritual, so
that the light of Divine truth was not hidden under the bushel of
Judaism, but shone forth upon the whole world from the many-
branched candlestick of the Universal Church.
Again, in both cases, not only was ancient faith rescued from the
ruin of human corruption and commentary, but the purging away of
the old leaven made room for a positive statement of new teaching.
Jeremiah announced a new covenant—that is, a formal and
complete change in the conditions and method of man's service to
God and God's beneficence to men. The ancient Church, with its
sanctuary, its clergy, and its ritual, was to be superseded by a new
order, without sanctuary, clergy, or ritual, wherein every man would
enjoy immediate fellowship with his God. This great ideal was
virtually ignored by the Jews of the Restoration, but it was set forth
afresh by Christ and His Apostles. The "New Covenant" was declared
to be ratified by His sacrifice, and was confirmed anew at every
commemoration of His death. We read in John iv. 21-23: "The hour
cometh, when neither in this mountain, nor in Jerusalem, shall ye
worship the Father.... The hour cometh, and now is, when the true
worshippers shall worship the Father in spirit and truth."
Thus when we confess that the Church is built upon the foundation
of the Prophets and Apostles, we have to recognise that to this
foundation Jeremiah's ministry supplied indispensable elements,
alike by its positive and in its negative parts. This fact was manifest
even to Renan, who fully shared the popular prejudices against
Jeremiah. Nothing short of Christianity, according to him, is the
realisation of the prophet's dream: "Il ajoute un facteur essentiel à
l'œuvre humaine; Jérémie est, avant Jean-Baptiste, l'homme qui a le
plus contribué à la fondation du Christianisme; il doit compter,
malgré la distance des siècles, entre les précurseurs immédiats de
Jésus."[458]
Printed by Hazell, Watson, & Viney, Ld., London and Aylesbury.
FOOTNOTES:
[1] For spelling see note, page 4
[2] Cf. Preface.
[3] We know little of Nebuchadnezzar's campaigns. In 2 Kings
xxiv. 1 we are told that Nebuchadnezzar "came up" in the days
of Jehoiakim, and Jehoiakim became his servant three years. It
is not clear whether Nebuchadnezzar "came up" immediately
after the battle of Carchemish, or at a later time after his return
to Babylon. In either case the impression made by his hasty
departure from Syria would be the same. Cf. Cheyne, Jeremiah
(Men of the Bible), p. 132. I call the Chaldean king
Nebuchadnezzar—not Nebuchadrezzar—because the former has
been an English household word for centuries.
[4] xi. 19.
[5] xvi. 2.
[6] 2 Kings xxiii. 30-32.
[7] Cf. xxii. 26.
[8] xxii. 10-12.
[9] Ezek. xix. 3, 4.
[10] The expression is curious; it usually means all the cities of
Judah, except Jerusalem; the LXX. reading varies between "all
the Jews" and "all Judah."
[11] See especially the exposition of chaps. vii.-x., which are
often supposed to be a reproduction of Jeremiah's utterance on
this occasion.
[12] The Hebrew apparently implies that the discourse was a
repetition of former prophecies.
[13] vii. 12-14. Even if chaps. vii.-x. are not a report of
Jeremiah's discourse on this occasion, the few lines in xxvi. are
evidently a mere summary, and vii. will best indicate the
substance of his utterance. The verses quoted occur towards
the beginning of vii.-x., but from the emphatic reference to
Shiloh in the brief abstract in xxvi., Jeremiah must have dwelt
on this topic, and the fact that the outburst followed his
conclusion suggests that he reserved this subject for his
peroration.
[14] v. 31.
[15] Acts xxi. 27-30.
[16] 2 Kings xv. 35.
[17] Mark xiv. 58.
[18] Acts vi. 13, 14, vii. 48.
[19] 2 Kings xviii. 4, xxiii.; Isa. xxxvi. 7.
[20] vii. 4.
[21] Micah iii. 12. As the quotation exactly agrees with the
verse in our extant Book of Micah, we may suppose that the
elders were acquainted with his prophecies in writing.
[22] Psalm xxxi. 13-15, 18, 19. The Psalm is sometimes
ascribed to Jeremiah, because it can be so readily applied to
this incident. The reader will recognise his characteristic phrase
"Terror on every side" (Magor-missabib).
[23] This incident cannot be part of the speech of the elders; it
would only have told against the point they were trying to
make. The various phases—prophesy, persecution, flight,
capture, and execution—must have taken some time, and can
scarcely have preceded Jeremiah's utterance "at the beginning
of the reign of King Jehoiakim."
[24] Assuming his sympathy with Deuteronomy.
[25] 2 Tim. iv. 3.
[26] See Cheyne, Giesebrecht, Orelli, etc.
[27] R.V. "against." The Hebrew is ambiguous.
[28] So Septuagint. The Hebrew text has Israel, which is a less
accurate description of the prophecies, and is less relevant to
this particular occasion.
[29] Jeremiah (Men of the Bible), p. 132.
[30] Cf. Chap. V. on "Baruch."
[31] Verses 5-8 seem to be a brief alternative account to 9-26.
[32] 1 Chron. xx. i.
[33] 'ĀCÛR: A.V., R.V., "shut up"; R.V. margin, "restrained." The
term is used in xxxiii. 1, xxxix. 15, in the sense of "imprisoned,"
but here Jeremiah appears to be at liberty. The phrase 'ĀC̦ ÛR W
ĀZÛBH, A.V. "shut up or left" (Deut. xxxii. 36, etc.), has been
understood, those under the restraints imposed upon
ceremonial uncleanness and those free from these restraints,
i.e. everybody; the same meaning has been given to 'ĀC̦ ÛR
here.
[34] xxvi. 2.
[35] So Cheyne; the Hebrew does not make it clear whether the
title "scribe" refers to the father or the son. Giesebrecht
understands it of Shaphan, who appears as scribe in 2 Kings
xxii. 8. He points out that in verse 20 Elishama is called the
scribe, but we cannot assume that the title was limited to a
single officer of state.
[36] Cf. xxvi. 10.
[37] Isa. lviii. 3-8.
[38] Micah vi. 6-8.
[39] So Orelli, in loco.
[40] Hebrew text "to Baruch," which LXX. omits.
[41] In verse 18 the word "with ink" is not in the LXX., and may
be an accidental repetition of the similar word for "his mouth."
[42] The A.V. and R.V. "all the words" is misleading: it should
rather be "everything"; the princes did not recite all the
contents of the roll.
[43] The English tenses "cut," "cast," are ambiguous, but the
Hebrew implies that the "cutting" and "casting on the fire" were
repeated again and again.
[44] One is called Jerahmeel the son of Hammelech (A.V.), or
"the king's son" (R.V.); if the latter is correct we must
understand merely a prince of the blood-royal and not a son of
Jehoiakim, who was only thirty.
[45] For verses 29-31 see Chap. VI., where they are dealt with
in connection with xxii. 13-19.
[46] The supposition that Jeremiah had written notes of
previous prophecies is not an impossible one, but it is a pure
conjecture.
[47] Cf. Orelli, in loco.
[48] Num. vi. 2.
[49] xix. 94.
[50] Scott, Legend of Montrose, chap. xxii.
[51] The term "house of the Rechabites" in verse 2 means
"family" or "clan," and does not refer to a building.
[52] Eight Jeremiahs occur in O.T.
[53] Literally "sons of Hanan."
[54] Jeremiah, according to this view, had no interview with the
Rechabites, but made an imaginary incident a text for his
discourse.
[55] ii. 10, 11.
[56] Matt. xi. 21, 22.
[57] Ch. Hist., ii. 23.
[58] Antt., x. 9, 1.
[59] xxxvi. 26, 32.
[60] In order of time, ch. xxxvi.
[61] xxxii.
[62] xliii.
[63] Antt., x. 9, 1.
[64] Bissell's Introduction to Baruch in Lange's Commentary.
[65] So LXX., which here probably gives the true order.
[66] The clause "I am weary with my groaning" also occurs in
Psalm vi. 6.
[67] The concluding clause of the verse is omitted by LXX., and
is probably a gloss added to indicate that the ruin would not be
confined to Judah, but would extend "over the whole earth." Cf.
Kautzsch.
[68] Hist. of Israel, iii., 293.
[69] 2 Kings xxiii. 34-xxiv. 7.
[70] iii. 274.
[71] xxii. 30.
[72] R.V., "Ah my brother! or Ah sister!... Ah lord! or Ah his
glory!" The text is based on an emendation of Graetz, following
the Syriac. (Giesebrecht.)
[73] Chap. xiii.
[74] Jude 9.
[75] Apc. vi. 10.
[76] xxii. 17. The exact meaning of the word translated
"violence" (so A.V., R.V.) is very doubtful.
[77] Hist., etc., iii. 266.
[78] Rawlinson, Ancient Egypt (Story of the Nations).
[79] Dan. iv. 30.
[80] I have followed R.V., but the text is probably corrupt.
Cheyne follows LXX. (A) in reading "because thou viest with
Ahab": LXX. (B) has "Ahaz" (so Ewald). Giesebrecht proposes to
neglect the accents and translate, "viest in cedar buildings with
thy father" (i.e. Solomon).
[81] According to Giesebrecht (cf. however the last note) this
clause is an objection which the prophet puts into the mouth of
the king. "My father enjoyed the good things of life—why
should not I?" The prophet rejoins, "Nay, but he did judgment,"
etc.
[82] Isa. lvii. (English Versions).
[83] Macc. ii. 59, ix. 10.
[84] iii. 269.
[85] P. 142.
[86] Also called Coniah and Jeconiah.
[87] Considerable portions of chaps. i.-xx. are referred to the
reigns of Jehoiakim and Jehoiachin: see previous volume on
Jeremiah.
[88] i. 18.
[89] The Chronicler's account of Jehoiakim's end (2 Chron.
xxviii. 6-8) is due to a misunderstanding of the older records.
According to Chronicles Jehoiachin was only eight, but all our
data indicate that Kings is right.
[90] In LXX. of 2 Chron. xxxvi. 8, Jehoiakim, like Manasseh and
Amon, was "buried in the garden of Uzza": B, Ganozæ; A,
Ganozan. Cheyne is inclined to accept this statement, which he
regards as derived from tradition.
[91] xxxvi. 30.
[92] So A. B. Davidson in Cambridge Bible, etc., by a slight
conjectural emendation; there have been many other suggested
corrections of the text. The Hebrew text as it stands would
mean literally "he knew their widows" (R.V. margin); A.V., R.V.,
by a slight change, "he knew their (A.V. desolate) palaces."
[93] Ezek. xix. 5-7.
[94] 2 Kings xxiv. 8-17.
[95] 2 Kings xxv. 27-30; Jer. lii. 31-34.
[96] The Hebrew verbs are in 2 s. fem.; the person addressed is
not named, but from analogy she can only be the "Daughter of
Zion," i.e. Jerusalem personified.
[97] Identified with the mountains of Moab.
[98] R.V. margin, with LXX., Vulg., and Syr.
[99] Milman's Latin Christianity, vi. 392.
[100] 1 Chron. iii. 17 mentions the "sons" of Jeconiah, and in
Matt. i. 12 Shealtiel is called his "son," but in Luke iii. 27
Shealtiel is called the son of Neri.
[101] xxxvii. 2.
[102] 2 Kings xxiv. 18-20.
[103] 2 Chron. xxxvi. 10 makes Zedekiah the brother of
Jehoiachin, possibly using the word in the general sense of
"relation." Zedekiah's age shows that he cannot have been the
son of Jehoiakim.
[104] Ezek. xvii. 13, 14.
[105] xxiv.
[106] vii.-xi.
[107] viii.
[108] Gen. xlix. 24, J. from older source. Micah v. 5.
[109] ix.-xi., xiii. 7-9.
[110] Ezek. xxxiv. 2-5.
[111] Zech. x. 3, xi. 5.
[112] xxv. 34-38.
[113] Froude, i. 205.
[114] LXX. See R.V. margin.
[115] Possibly, however, the insertion of this passage in one of
the books may have been the work of an editor, and we cannot
be sure that, in Jeremiah's time, collections entitled Isaiah and
Micah both included this section.
[116] xxvi. 20.
[117] So LXX. and modern editors: see Giesebrecht, in loco.
R.V. "What burden!"
[118] vii. 14; but cf. R.V.; "I was," etc.
[119] Zech. xiii. 2-5. Post-exilic, according to most critics
(Driver's Introduction, in loco).
[120] Froude, ii. 474.
[121] The close connection between xxvii. and xxviii. shows
that the date in xxviii. 1, "the fourth year of Zedekiah," covers
both chapters. "Jehoiakim" in xxvii. 1 is a misreading for
"Zedekiah": see R.V. margin.
[122] 1 Kings xxii. 11.
[123] The rest of this verse has apparently been inserted from
xxvii. 6 by a scribe. It is omitted by the LXX.
[124] xxii. 15-25.
[125] Doubts have been expressed as to whether this verse
originally formed part of Jeremiah's letter, or was ever written
by him; but in view of his numerous references to a coming
restoration those doubts are unnecessary.
[126] The Hebrew Text inserts a paragraph (vv. 16-20)
substantially identical with other portions of the book, especially
xxiv. 8-10, announcing the approaching ruin and captivity of
Zedekiah and the Jews still remaining in Judah. This section is
omitted by the LXX., and breaks the obvious connection
between verses 15 and 21.
[127] Smith's Assurbanipal, p. 163.
[128] 2 Macc. vii. 5.
[129] lii. 24; 2 Kings xxv. 18.
[130] Ecce Homo, xxi.
[131] li. 59, Hebrew Text. According to the LXX., Zedekiah sent
another embassy and did not go himself to Babylon. The
section is apparently a late addition.
[132] xvii. 15.
[133] xxvi. 2.
[134] Ezek. xxi. 21.
[135] xxv. 1-7.
[136] xxi. 1-10. The exact date of this section is not given, but
it is closely parallel to xxxiv. 1-7, and seems to belong to the
same period.
[137] xxi. 1-10.
[138] Deut. xv. 12. Cf. Exod. xxi. 2, xxiii. 10.
[139] xxxiv. 14.
[140] xxxiv. 13.
[141] 2 Kings xxiii. 3.
[142] xxxiv. 15.
[143] xxxiv. 9.
[144] Gen. xv.
[145] xxxiv. 19.
[146] Ezek. xvii. 17.
[147] Hosea vi. 4.
[148] Milman's Latin Christianity, viii. 255.
[149] Cf. xxxii. 6-8.
[150] xxxvii. 12; so R.V., Streane (Camb. Bible), Kautzsch, etc.
[151] xxvi. 10.
[152] xxxviii. 1.
[153] Cf. Renan, iii. 333.
[154] Gen. xxxvii. 22-24.
[155] xxxix. 15-18.
[156] So Giesebrecht, in loco; A.V., R.V., "third entry." In any
case it will naturally be a passage from the palace to the
Temple.
[157] Chapter lii. = 2 Kings xxiv. 18-xxv. 30, and xxxix. 1-10 =
lii. 4-16, in each case with minor variations which do not
specially bear upon our subject. Cf. Driver, Introduction, in loco.
The detailed treatment of this section belongs to the exposition
of the Book of Kings.
[158] Literally "the house"—either Jeremiah's or Gedaliah's, or
possibly the royal palace.
[159] lii. 6, 12.
[160] Pulpit Commentary, in loco. Cf. the previous volume on
Jeremiah in this series.
[161] The sequence of verses 4 and 5 has been spoilt by some
corruption of the text. The versions diverge variously from the
Hebrew. Possibly the original text told how Jeremiah found
himself unable to give an immediate answer, and Nebuzaradan,
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Entrepreneurship For Everyone A Student Textbook Dr Robert Mellor

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    Entrepreneurship for Everyone A StudentTextbook Robert Mellor with Gary Coulton, Anne Chick, Antonia Bifulco, Noha Mellor and Alan Fisher
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    © Robert B.Mellor 2009 Chapter 11 © Gary Coulton 2009 Chapter 12 © Anne Chick 2009 Chapter 13 © Antonia Bifulco 2009 Chapter 14 © Noha Mellor 2009 Chapter 15 © Alan Fisher 2009 First published 2009 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, this publication may be reproduced, stored or transmitted in any form, or by any means, only with the prior permission in writing of the publishers, or in the case of reprographic reproduction, in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers. SAGE Publications Ltd 1 Oliver’s Yard 55 City Road London EC1Y 1SP SAGE Publications Inc. 2455 Teller Road Thousand Oaks, California 91320 SAGE Publications India Pvt Ltd B 1/I 1 Mohan Cooperative Industrial Area Mathura Road, Post Bag 7 New Delhi 110 044 SAGE Publications Asia-Pacific Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763 Library of Congress Control Number: 2007942373 British Library Cataloguing in Publication data A catalogue record for this book is available from the British Library ISBN 978-1-4129-4775-6 ISBN 978-1-4129-4776-3 (pbk) Typeset by C&M Digitals (P) Ltd., Chennai, India Printed in Great Britain by T J International Ltd, Padstow, Cornwall Printed on paper from sustainable resources
  • 10.
    Contents About the authorsxii List of abbrevations xiii Introduction: Why entrepreneurship? 1 Robert B. Mellor PART I PRINCIPLES 5 1 Developing People and Competencies 7 Robert B. Mellor Introduction 7 Capitalizing on a bright idea 7 Covering the business side 9 The essential social and business network 11 Building the right strategy 13 Choosing a topic 14 The development of a start-up 15 Chapter summary 16 References 16 Further reading 16 Web links 17 Suggestion for exercises 17 2 The Economics of Entrepreneurship and Innovation 18 Robert B. Mellor Introduction 18 The evolution of innovation and enterprise 18 Value chains 19 Economic cycles 21 Focus on entrepreneurship 21 Owners, capitalists and entrepreneurs 23 Invention is not innovation 24 Types of innovation 25 Sources of innovation 28
  • 11.
    Chapter summary 29 References29 Further reading 30 Web links 30 Suggestions for exercises 30 3 Promoting Creativity 31 Robert B. Mellor Introduction 31 Defining creativity 31 The psychological origins of creativity 32 Tools for analysing problems 33 Tools for promoting creativity 34 Creativity focused on the marketplace 36 Evaluating ideas 37 Chapter summary 38 References 38 Further reading 39 Web links 39 Suggestions for exercises 39 PART II PRACTICE 41 4 Gaining Strategic Advantage 43 Robert B. Mellor Introduction 43 Positioning in the marketplace 43 Tools for analysing the market 45 Successfully inhabiting the market 47 Formulating a mission statement 49 Analysing your products 50 Chapter summary 51 References 51 Further reading 51 Web links 52 Suggestions for exercises 52 5 The Marketing Plan 53 Robert B. Mellor Introduction 53 Customer segmentation 53 The form of the marketing plan 55 How to do market research 56 vi Contents
  • 12.
    The 4Ps andthe 4Cs of marketing 57 How to price your goods properly 58 How to place your offerings 59 Promotion – effective advertising 59 People: Task matrices 61 Chapter summary 61 References 61 Further reading 62 Web links 62 Suggestion for exercises 62 6 The Business Plan 63 Robert B. Mellor Introduction 63 Sources of capital investment 63 Business angels and venture capitalists 63 The form of the business plan 67 The classical 16 sections template 69 Due diligence 74 Chapter summary 75 References 75 Further reading 75 Web links 75 Suggestion for exercises 76 PART III CONTEXT 77 7 Intellectual Capital 79 Robert B. Mellor Introduction 79 The three types of intellectual capital 79 Patents and other formal IPR 80 Innovation in organizations 82 Human capital, the life-blood of small companies 83 Who is especially innovative? 85 Mixing skills promotes innovation 85 Trickle-down rebound 86 Harvesting human capital 87 Intrapreneurship, or corporate entrepreneurship 87 Technology transfer 88 The ins and outs of strategic alliances 88 Mergers and acquisitions 90 Chapter summary 90 Contents vii
  • 13.
    References 91 Further reading92 Web links 92 Suggestions for exercises 93 8 Knowledge Management 94 Robert B. Mellor Introduction 94 The knowledge economy 94 The value of knowledge 95 Information, knowledge and learning 96 Human capital revisited: knowledge assets 97 Information systems software 100 Chapter summary 101 References 101 Further reading 102 Web links 102 Suggestion for exercises 102 9 Presentation Technique 103 Robert B. Mellor Introduction 103 Getting the message across 103 The perception of communication 104 Public speaking 104 Body language 105 Appearance and dress code 106 Getting a feel for the audience 107 Audio-visual aids 107 The structure of a presentation 108 End on a good note 109 Chapter summary 110 References 110 Further reading 110 Web links 110 Suggestions for exercises 110 PART IV SPECIALISMS 111 10 Technical Innovation 113 Robert B. Mellor Introduction 113 The influence of globalization 113 viii Contents
  • 14.
    Company size andindustry structure 114 First mover advantage 115 The dominant design 116 Digital innovation 118 Chapter summary 121 References 121 Further reading 121 Web links 122 Suggestions for exercises 122 11 The Biotechnology Revolution 123 Gary Coulton Introduction 123 Biotech is unique in many aspects 123 Opportunities for biotech entrepreneurs 124 Where do disrupting biotechnologies arise? 129 Opportunities in outsourcing 130 Entrepreneurship for the recent graduate 131 The customer mindset 133 Paradigm shift – the world changes around you 134 Further barriers: the legislative environment 135 Chapter summary 136 References 137 Further reading 137 Web links 138 Suggestions for exercises 138 12 Green Entrepreneurship: A sustainable development challenge 139 Anne Chick Introduction 139 The imminent discontinuities 139 Green entrepreneurship 140 What is sustainable development? 140 Defining ecopreneurship 141 The development of the green market 143 Are environment and economics opposed? 143 Characteristics of the green marketplace 145 Fostering ecopreneurial behaviour 146 Chapter summary 148 References 148 Further reading 150 Web links 150 Suggestions for exercises 150 Contents ix
  • 15.
    13 Enterprise inHealth and Social Care 151 Antonia Bifulco Introduction 151 Social desire and reward 151 Entrepreneurial motivation 152 Market demand is increasing 152 The product can be many things 154 The various customers 154 Knowledge and skill requirements 156 What you need to know 158 Obstacles 158 Social enterprise 160 Not-for-profit organizations 162 Voluntary organizations: social entrepreneurship 162 Chapter summary 163 References 163 Further reading 163 Web links 164 Suggestion for exercises 165 14 Journalism and Media Entrepreneurs 166 Noha Mellor Introduction 166 Journalism as part of the cultural industries 166 Culture in post-industrial times 167 Why culture is important 168 Media and Porter’s five forces 170 The rewards can be significant 170 The media convergence revolution 171 Innovation and journalism 172 Freelancing, the fastest route to fame 174 The importance of networking 174 Entrepreneurial strategies and success factors 177 Chapter summary 178 References 179 Further reading 180 Web links 180 Suggestions for exercises 181 15 General Characteristics of the Creative Arts 182 Alan Fisher Introduction 182 Characteristics of the creative arts industry generally 182 x Contents
  • 16.
    State support 185 Entertainmentmarket analysis 185 Who buys what? 185 Barriers for the entrepreneur 185 The film industry 188 The music industry 195 Chapter summary 200 References 201 Further reading 201 Web links 201 Suggestions for exercises 202 PART V ACTION 203 16 Growing the Venture 205 Robert B. Mellor Introduction 205 Innovative is attractive 205 Franchising 206 Business is about selling 207 Marketing and advertising in the small company 208 Leadership and the small company 209 Your professional network 210 Entrepreneurial management 211 Learning from failure 212 Chapter summary 212 References 213 Further reading 213 Web links 213 Suggestions for exercises 213 Glossary 214 Appendix A: The Ten-Dimension Rating Scale 217 Appendix B: Additional Case Studies 222 Appendix C: Some Suggested Project Ideas 229 Index 233 Contents xi
  • 17.
    About the authors Polyglotand polymath Robert B. Mellor holds earned doctorates in various academic disci- plines including innovation, computing and biology and is amongst the Directors of the Faculty of Computing, Information Systems and Mathematics at Kingston University, London. He is author of over 120 scientific publications in reputable journals, including Nature and has previously written 10 books, including 4 on innovation and entrepreneurship. His activities include being a successful serial entrepreneur across Europe. Dr. Gary R Coulton, (Reader in Medical Biomics and Education) has more than 25 years experience in biomedical research, teaching and knowledge translation in biotechnology. He is the Director of the St. George’s Medical Biomics Centre and Associate Dean for Enterprise and Innovation at St. George’s, University of London. He is also a London Technology Network Business Fellow. Anne Chick is Reader in Sustainable Design and Director of the Sustainable Design Research Centre in the Faculty of Art, Design and Architecture at Kingston University. She is Adjunct Professor in the Faculty of Environmental Design at the University of Calgary, Canada. She has managed funded research and knowledge transfer programmes worth over £1.5M and consistently publishes her research. Antonia Bifulco is Professor of Health and Social Care at Royal Holloway, University of London and directs the Lifespan Research Group there, researching and publishing for over 25 years on psychosocial risk factors in psychological disorder. She and her research team undertake commissioned research from health and social services, evaluating service provision for children and families. In recent years she has become very involved in entrepreneurship, and she also runs CPO training courses and workshops for practitioners. Noha Mellor is Senior Lecturer in Media and Cultural Studies, Faculty of Arts and Social Sciences, Kingston University. She is the author of The Making of Arab News (2005) and Modern Arab Journalism (2007). AlanFisher is currently Head of department of Music and Fashion at the University of Westminster, he qualified as an architect at the University of Sheffield in 1983 and subsequently went on to sign for Virgin records as part of the seminal electronic group Cabaret Voltaire. He moved into production, engineering, company directorship, and label management with Fon records work- ing with artists as diverse as Take That, Bjork, Boy George, Sparks, Inspiral Carpets, and 808 State, succeeding in promoting and engineering numerous top-ten hits, in both the album and singles charts. He is a Westfocus Fellow working on industry knowledge transfer events such as the Art of Record Production conference, now in its third year of international delivery.
  • 18.
    List of abbreviations 4CsConsumer wants, Convenience, Cost and Communication 4Ps The 4Ps of innovation: Product, Process, Position and Paradigm, or the 4Ps of marketing: Product, Place, Price and Promotion ACE-Chase An action audit tool A-I Adaption-Innovation ALUO Advantages, Limitations, Uniqueness and Opportunity BA Business angel CDA Compact Disk Audio CEO Chief Executive Officer CGI Computer Generated Images CPS Creative Problem Solving CSF Critical Success Factor DoI Diffusion of Innovations DRM Digital Rights Management DVD Digital Video Disk FFF Friends, Family and Fools GM foods Foodstuffs produced from genetically modified sources HOTPLOT See SWOTPLOT IPO Initial Public Offering IPR Intellectual Property Rights ISP Internet Service Provider M&A Mergers and Acquisitions MALDI-TOF Matrix Associated Laser Desorption & Ionization-Time of Flight MBA Master of Business Arts MPG Moving Picture (Experts) Group MTFC Multidimensional Treatment Foster Care NGO Non Governmental Organization NHS National Health Service OHP Overhead Projector PCR Polymerase Chain Reaction PLC Product Life Cycle (not to be confused with plc, public limited company) PR Public Relations QoS Quality of Service R&D Research & Development RiP Research in Practice RoI Return on Investment
  • 19.
    xiv List ofAbbreviations SDS-PAGE Sodium Duodecyl Sulphate-Poly Acrylamide Gel Electrophorsis SEARCH Scan, Expand, Adapt, Revise, Create and Harvest SELDI-TOF Surface Enhanced Laser Desorption & Ionization-Time of Flight SGM Strategic Group Mapping SIP Session Initiation Protocol SLC Social Learning Cycle SLEPT Social, Legal, Economic, Political and Technological SME Small and Medium-sized Enterprise SWOT Strengths, Weaknesses, Opportunities and Threats SWOTPLOT A development based on SWOT TBL Triple Bottom Line TD Trickle Down Theory TQM Total Quality Management TROTPLOT See SWOTPLOT TTM Time To Market UGC User Generated Content UNIX Software commonly used as a server platform USB Universal Serial Bus USP Unique Selling Proposition VC Venture Capitalist VHS Video Home System VoIP Voice over Internet Protocol
  • 20.
    Entrepreneurship gives birthto new commodities, techniques and goods, booting human progress forward and rendering the old obsolete, leading to the extinction of whole branches of industry and the creation of new ones. It is the use of innovation that makes many of our goods today not only better, but also cheaper, than they were even a decade ago. This process is so powerful that many large corporations are beginning to ask how they can use their employees’ talents for innovation. Innovation and the evolution of business Existing large firms are seldom capable of using innovation, e.g. of the largest (‘Fortune 100’) companies from 1930, only one – General Electric – still exists. New industries evolve out of start-ups. Few succeed. As new industries arise, they displace the old. The ‘first world’ technologies are being copied globally, meaning that ‘first world’ countries must constantly improve efficiency and create new industries in order to survive. In order to succeed, companies must constantly change and innovate; this is not impossible, but examples are few, e.g. the Preussische Bergwerks und Hutten Aktiengesellschaft (Prussian Society for Mining and Steel) became tourist giant TUI and the Nokianvirta Paper Mill became the mobile telephony giant Nokia. Traditionally, the focus of classical microeconomics is price; capitalists, owners and other busi- nessmen choose labour-intensive production when labour is cheap and interest rates high, or capital-intensive production techniques in the opposite circumstances. Guided by price, then they can choose to make fewer goods, or more. However, they rarely invent new goods or Introduction Why entrepreneurship? Robert B. Mellor
  • 21.
    radicalize production; thosewho use innovation to introduce something new are often called entrepreneurs. But introducing new products is a risky business; experience shows that less than 10 per cent of all inventions will result in a product and indeed only 0.5 per cent will return a significant profit. Clearly this is not an area that interests a manager of any traditional company, where stability, smooth adjustments and uninterrupted production are of the utmost priority. Most organizations or individuals do not want to change unless forced to – and log- ical, rational reasons alone are certainly insufficient to generate and sustain change. It is mostly the entrepreneurs, following their visions, who are ready to tackle such odds. If entrepreneurs – using innovation – take this step, then the question may be ‘How can we get more of them?’. That is the aim of this book – to teach and inform about entrepreneurship both those who wish to start a business, large or small, and those who wish to work in innov- ative companies. Fortunately, however, learning entrepreneurship goes further than that; entrepreneurship training teaches you how to be more enterprising, more creative, more inno- vative, more commercially aware and more self-motivated. These are skills that can have a pro- found positive effect on your employability, as well as on your private life. Some years ago there was a debate among academics about whether entrepreneurs are ‘born or made’. Obviously, if entrepreneurs became so by virtue of their genes, then there would be little point in trying to teach it – one cannot teach blue-eyed people to have brown eyes! However, as I discussed in one book (Mellor, 2005: Chapter 1.4), entrepreneurial behaviour does not follow Mendelian inheritance patterns and I believe that the data in question (for review, see Bridge et al., 2002: Chapter 3) can best be explained by social imprinting – similar to a Pavlovian reflex – from entrepreneurial role models during childhood. Entrepreneurship during one’s early twenties is also relatively popular; ‘nothing ventured, nothing gained’ is an attractive philosophy when you have little to lose. However, there is a dip in numbers of new entrepreneurs in their thirties and forties; risking everything is less attrac- tive when your house and family are part of the stakes. A relatively recent noted phenomenon is later-life entrepreneurship among the 45+ age group (‘senior entrepreneurship’). Such mature people often have some financial resources, but more importantly, they master their subject with massive competence and expertise, are psychologically very stable and have realistic expectations. Companies started by entrepreneurs in this category show a higher average success rate and above-normal growth rates. Indeed, the Australian organization EGC (www.egc.net.au) specializes in venturing with mature and experienced returning ex-pats. Thus it can be seen that anybody can be an entrepreneur at any stage in their life and indeed it could be argued that learning the tools of business creation is a skill that, if learnt now, may come in useful if not in the immediate future, then perhaps in 20 years time. Indeed, one fac- tor this book expressly covers is entrepreneurial management; the overlap between entrepre- neurship and management, in the realization that individuals can shift from one to the other (Figure 0.1). To illustrate its importance, 1,500 colleges and universities in the USA offer some form of entrepreneurship training. Growth in the UK has been even more explosive, with over 500 courses being offered at over 100 UK universities and interest in entrepreneurship education spreading to non-business disciplines, where students in engineering, life sciences and liberal 2 Introduction
  • 22.
    arts are interestedin becoming entrepreneurs, fostering a ‘comparative entrepreneurship’ approach. This module will give you a good grounding in entrepreneurship, regardless of your background. A sound mastery of technical fundamentals is needed for success and the core competencies for new ventures must include the technical skills involved. This has led to a bit of a quandary, because the Business Schools claim ‘ownership’ regarding the teaching of the commercial activity called entrepreneurship, but unfortunately the Business Schools – per definition – are incapable of teaching the wide variety of deeply technical skills needed for successful entrepreneurship. These technical skills are provided by what I call ‘the ABC Schools’ e.g. Architecture, Biology, Chemistry, etc., where A, B and C can be any academic discipline. Thus this book is aimed at technical experts learning technical ‘ABC’ subjects and it is hoped that the number of disciplines covered will expand with subsequent editions, so ‘A’ may cover Aerospace, Architecture, Art and Archaeology; ‘B’, Building, Beauty and Biology; ‘C’, Chemistry, Cloning and Clothing, etc. We call this approach ‘Embedded Entrepreneurship’ and feel that only in this way – offering optional modules as ‘Entrepreneurship & X’ – can we ensure that aspiring student entrepreneurs possess the required technical background. Teaching innovation, like innovation itself, flourishes on discontinuities, e.g. sudden unem- ployment. For final-year students one major discontinuity involves ‘employability’; leaving the cosy education system behind and graduating into the cold harsh world. Experience shows clearly that – especially for non-business students – entrepreneurship courses are by far most effective in the final year, or final semester and this module will help prepare you as a new graduate for this large discontinuity. The module instructor will guide participants through the course in such a way that you, upon graduation, will be in a better position to be able to see more clearly the choices and paths open to you. Introduction 3 Entrepreneurship (opportunity-seeking) Management (advantage-seeking) value creation Figure 0.1 A Venn diagram illustrating that efficient value creation often occurs at the overlap of entrepreneurial and managerial behaviour (often called ‘strategic innovation’, ‘entrepreneurial management’ or ‘strategic entrepreneurship’)
  • 23.
    This book followsthe European concept of ‘course book’, with a chapter for each class lesson. To Anglo-Saxons this may appear as lecture notes expanded into a standalone text and indeed optimal value will be gained when you read it during a module where your lecturer uses the presentations and instructor guides downloaded from the companion web site. The text itself is divided into four generic parts for all students, and a specialist part. This structure uses the first three generic parts – Principles, Practice and Context – to introduce concepts com- mon for students of all disciplines. In Part IV, you then concentrate on the chapter most related to the discipline you are studying and you may like to read the extra case studies related to the specialist chapters in Appendix B. The specialist strands re-join in Part V (‘Action’), which is about the young venture and academically forms a connection between the disciplines of entrepreneurship and small business research. There is much to learn, so you must read the appropriate chapter before each class lesson; first, Chapters 1–9, then the chapter on your specialist discipline, then Chapter 16. If you are not certain what an acronym stands for, look it up in the list of abbreviations. If you do not understand a piece of jargon, e.g. ‘market shakeout’, ‘entropy’ or ‘goodwill’, then Google it and try find out before asking your instructor. The text is sprinkled with ‘think boxes’ containing cases, definitions, etc. that illustrate the surrounding text and prompt you to investigate the subject further. This is also the point of the references, the further reading lists and web links contained at the end of every chapter. It is a challenge, but only by reading around the subject will you master it! 4 Introduction
  • 24.
  • 26.
    Introduction In this chapterthe need for an entrepreneurial team is put forward, as is the need for a concrete strategy (normally documented in the form of the business plan) and a network. The latter part of the chapter introduces how these and related topics are further developed in this book. Capitalizing on a bright idea The concept of ‘the entrepreneurial inventor’does not hold much water and indeed only a few of the classical ‘engineer entrepreneurs’ like Robert Stephenson, Isambard Kingdom Brunel and Alexander Graham Bell have received both honours and economic reward for their efforts. But the majority of the great scientific inventive minds have not managed to make a lasting financial profit (e.g. Curie, Einstein, Marconi, Pasteur and Whittle) and today a pop star probably makes more money than 50 Nobel Prize laureates (see Chapter 15). Even Thomas Edison, founder of the Edison Electric Light Company (later to merge with the Thomson-Houston Company and be called General Electric), like many scientists and engineers, was not a good financial manager and despite all his incredible energy he managed to bankrupt several – if not most – of his ven- tures despite the fact that he held 1,093 US patents and 1,239 foreign patents,including those on the phonograph, motion pictures, the alkaline storage battery and synthetic rubber, as well as the first practical incandescent light bulb (note that the ‘incandescent filament lamp’was invented by Joseph Swan, Edison bought the rights and made the process practical).Technical competence – the ability to make new things – can be plotted against managerial competence – the ability to get things done and products sold (Figure 1.1). 1 1 Developing People and Competencies Robert B. Mellor
  • 27.
    In contrast toinventors, the entrepreneurs often mentioned in connection with entrepre- neurship, e.g. the late Anita Roddick (the Body Shop), Marks & Spencer, Tesco and Richard Branson (Virgin), achieved fame and fortune not by applying new technological inventions at all, but by using creative business models. So having a bright technology-based idea is only the first of several factors needed to form a successful enterprise.The second factor is the other people involved in the business aspects of a technical idea and who can bring it forward, while the third factor is most often called ‘the net- work’. The combination of the second and third factors, judiciously applied, can go a long way to solving the budding entrepreneurs’ major problem, namely finding finance. The entrepreneurial inventor The career of Elmer Sperry offers an excellent example of the entrepreneurial inven- tor. Sperry was born into a New York family of modest means and after attending pub- lic schools, decided that he wanted to be an inventor. He tried to learn as much about electricity as possible from the library and courses, including attending lectures at nearby Cornell University. Acting on the suggestion of one of the professors there, he designed an automatically regulated generator capable of supplying a constant cur- rent when the load on its circuits varied and then immediately started to search for a financial backer. In 1880, he was taken in by the Cortland Wagon Company, whose 8 Principles Technical competence Technical graduates Very few Most ordinary people Business school graduates Managerial competence Figure 1.1 Plot of technical versus managerial competence. Very few inhabit the top right quadrant, although the multi-skilled (e.g. an engineer with an MBA) will tend away from the axes towards the middle and thus may be more innovative (see Chapter 2)
  • 28.
    executives included bothinventors and investors and which provided him with the ser- vices of a patent lawyer, as well as money to live on and a workshop. In this ‘incuba- tor’ Sperry not only perfected his dynamo, but over the next two years developed a complete system of arc lighting to go with it. Thus the Sperry Electric Light, Motor, and Car Brake Company was formed in 1883, with Sperry (who owned a large part of the company’s stock) serving as ‘electrician, inventor, and superintendent of the mechanical department’. Although the company was not a financial success, it launched Sperry’s career. He would go on to write more than 350 patents and found nearly a dozen companies including – with the help of a wide assortment of financial backers – the Sperry Electric Mining Machine Company, the Sperry Streetcar Electric Railway Company, and the Sperry Gyroscope Company. Although Sperry often played an active role in these companies in their early stages, he typically downgraded his role to the position of technical consultant and went on to a new project, once they were reasonably well established. Sperry focused on ensuring that his inventions were commercially exploited as best possible and consequently sold many of his inventions to companies better placed to put them to productive use. Indeed, one of his firms was the Elmer A. Sperry Company of Chicago, formed in 1888 as a vehicle for his research and development activities and whose output was patented technology. Interestingly, this firm also advertised its business as helping inventors ‘develop, patent and render commercially valuable their inventions’. (Source: Further researched from Hughes (1971)) How, then, can you combine excellence in technical subjects, with excellence in business? Clearly it is advantageous if you have a large family consisting of marketing people, lawyers, accountants, etc. and in the early 1990s it was rumoured that the single largest success factor for new start-ups was a high-earning spouse! Most individuals wishing to start up, however, are not in the privileged position of being able to surround themselves with the necessary expertise from their immediate family. As a consequence of this – and as illustrated in Chapter 6 – investors strive to surround the inventor with bought-in professionals possessing these skills. Covering the business side Another method is to team up with people possessing complementary skills from the start. This involves teaming up ‘content people’, often real experts in their field, with ‘structure people’, who can sell – no matter what it is. The right person may not necessarily be someone Developing People and Competencies 9
  • 29.
    already known, oreven liked (indeed taking best friends or family on board can lead to excru- ciating conflicts). It must, however, be someone that the inventor can trust to make good busi- ness decisions, to be highly motivated and someone who can work towards a common goal. This mixing factor has been a feature of leading undergraduate courses for some years (e.g. at the University of Nevada, Reno – see Wang and Kleppe, 2001; and at the IT University of Copenhagen, Denmark – see Mellor, 2003, 2005).The very positive effect of these synergies is often called the ‘Hewlett-Packard’ effect after the huge success of the Hewlett-Packard Company, which combined the technical brilliance of Hewlett with the business brains of Packard (see Table 1.1). Entrepreneurship is often wrongly perceived as a solitary activity – this misconception is actually reinforced by terms such as ‘sole trader’. However, not only the high-profile examples cited in Table 1.1 but also the results of recent surveys e.g. Entrepreneurship and Local Economic Development, by the OECD (OECD, 2003) indicate that team-based business start-ups fare much better than individual start-ups. Specifically: • In micro enterprises, partnerships exhibit higher rates of survival than individual firms. • Investors are more likely to approve financing to team-led start-ups in early-stage venture capital assessments. • The success of the firm and client satisfaction correlate well with the degree of social interaction in entrepreneurial teams. And, indeed, many of today’s leading corporations, like General Motors, DuPont, Coca-Cola and McDonald’s, were all set up by teams and not by individuals acting alone. Although not all business ideas will result in a new Hewlett-Packard or Apple, a strong sales team can sell most things, so investors can expect some Return on Investment (RoI). Unfortunately most new businesses are weak on the business side; whereas 91 per cent of high-tech start-ups are confi- dent in their technical ability, only 27 per cent of high-tech start-ups are confident that they can get their product to the market on time (Mellor, 2003).This lack of proper management is seen as a major drawback by investors – who invariably know their business very well. It cannot 10 Principles Table 1.1 Illustrating the ‘Hewlett-Packard’ effect; ‘content’ people team up with ‘structure’ people to form a winning team Inventor (Content) Business (Structure) Bolton and Watt Watt Bolton Pattern Store and Erecting Shop HP Hewlett Packard Genentech Boyer Swanson Wolffolins Wolff Olin The Beatles George, Paul, Epstein John and Ringo Apple Wozniack Jobs
  • 30.
    be stressed enoughthat the business objectives are of paramount importance in setting up a business. One major indicator of the quality of the business acumen is the business plan. Table 1.2 illustrates that typically only few business plans receive funding and Table 1.3 illustrates that the reason for rejection is most often a poor management team. Since usually 100 ideas are needed to generate one business plan, the business plan needs not only to be excellent but must also address both technical and managerial issues. The essential social and business network The third ingredient for success is having a network. Networks are also useful in starting new companies as they provide a knowledge background. Since growing a company is full of uncer- tainties, it is not possible in advance to know which expert tips are going to be needed (i.e. het- erogeneous knowledge is needed).Those entrepreneurs with an extensive network are therefore in a much stronger position to reply to external threats, changes in the market and similar chal- lenges. They will be in a stronger position to innovate and overcome obstacles. This is the social capital that adds value to the company. Such social capital can be accessed formally or informally, e.g. on the web there exist many networks (communities) specifically to create this type of social capital, and where membership gives one the ‘right’ to approach others. Developing People and Competencies 11 Table 1.3 Commonly cited reasons for rejecting business plans Reason for rejection Number Weak management 52 Not market driven 38 Timeframe too long 31 Investment too large 25 Lack of patent/protection 15 Lack of technical expertise 12 Other 17 Source: Modified from Mellor (2003). Table 1.2 Number of business plans receiving funding in some common venture capital areas Ideas Plans Funds US Biotech 1000 100 56 EU ‘Hi-Tech’ 182 20 5 EU Internet 400 25 12 Source: Modified from Mellor (2003).
  • 31.
    Network, finance andtechnical ability: the case of Silicon Valley The importance of networking is perhaps best illustrated by the example of Silicon Valley. Silicon Valley is contained by the San Francisco Bay on the east, Santa Cruz Mountains on the west and the Coast Range to the southeast. Once – when fruit orchards predominated - it was called the ‘Valley of Heart’s Delight’. The San Francisco Bay Area has traditionally been a major site of US Navy work, as well as the site of the Navy’s large research airfield – including anti-submarine warfare rockets and torpedoes – at Moffett Field. A number of technology firms had set up business in the area around Moffett to serve the Navy. However, the Navy moved its west coast operations to San Diego and, in 1935, Moffett Field came under the control of the US Army Air Corps and later NASA took over portions of Moffett for aeronautics research. Many of the original companies stayed, while new ones moved in. The immediate area was filled with aerospace firms and the Air Force Satellite Test Center was created adjacent to Moffett. By this time a large pool of highly skilled knowledge workers were living in the ‘Valley of Heart’s Delight’ and, despite closures, many wished to stay in the area. Both from changing jobs and working in large bases, they often knew each other (network), had hard-to-imitate know-how (expertise) and some had significant cash lay-off settlements from the Government (finance). Given the vivid social network and access to capital, the area was already on its way to becoming a technology hot-spot (the software firm Novell pays tribute to these early days by retaining a section of the railway track to the military base in the recep- tion of its Silicon Valley office). But the enormous expertise the area had accumulated in radio and microwave technology, microelectronics, etc. (and later semiconductors, the example of Intel is probably the most famous) also made the area attractive for more established players, who were looking for something in short supply – competent suppliers. The more established players, however, were having difficulty moving in due to lack of space. Serendipitously and due to unrelated finance prob- lems at Stanford University (who own large portions of the estate), Professor Fred Terman had the idea of building an industrial park and raising finance by leasing land out to commercial companies. In 1951, Varian Associates signed a lease, and in 1953 the company moved into the first building in the park. Others, including Eastman Kodak, General Electric, the Admiral Corporation, Beckman Instruments, Lockheed and Hewlett-Packard, followed suit soon after. Today some 2000–4000 electronics and information technology companies, along with numerous service and supplier firms, are clustered in the area. 12 Principles
  • 32.
    Building the rightstrategy But is entrepreneurship only about building a team of at least two, possibly up to four or five ‘core’entrepreneurs with different but complementary skills and experience that will pay atten- tion to networking? The answer is not so easy. The other side of the coin is working out what the entrepreneur wants. Common aims for entrepreneurs are: 1 Some wish to open their own business or company immediately and head for an initial public offering (IPO). This involves writing an excellent business plan and showing a high degree of business acumen because it entails targeting providers of fairly substantial amounts of financing. 2 Establishing social enterprises like charities or other forms of ‘social entrepreneurship’; non-profit and not-for-profit enterprises. Nuffield, Carnegie, Rockefeller and others (probably including Bill Gates) all returned their enormous profits to society by way of such constructions. Major differences include tax laws and the use of capital (e.g. social enterprises often rely on voluntary labour). 3 Some want ‘organic growth’ starting with a micro-business and invest some low level of resources – like evenings and weekends – to see if the concept will work. Examples include Lovereading.co.uk and Totstofrance.co.uk. Here a business plan can function as a personal ‘roadmap’but will also be needed to attract investment should the concept begin to take off. 4 Some want to be employed in an ‘innovative company’ (which could be big or small). Large companies may try to act like a collection of small innovative companies and working in such an environment has significant differences to working for more tradi- tional companies. It is becoming more common for employees in innovative companies to be asked to make a ‘business plan’ concerning proposed reorganizations, new work- flows, product improvements, etc. Indeed, innovative companies may even put up the resources needed for employees to spinout their own ideas, like Rob Hamilton did with ‘Instant Offices’.This is often called intrapreneurship or corporate entrepreneurship. After having read and performed the exercises in this book, you should be in a good position to prepare the following: • a business plan; • a more (or very) concrete ‘central business proposition’; • an elevator pitch. Supported, where appropriate, by: • posters; • press releases; • consultancy reports or other presentations. Developing People and Competencies 13
  • 33.
    However, reading onits own is not sufficient. For knowledge to be understood and used, the individual must be involved in its active construction. You must have opportunities to answer questions, to discuss (heatedly) and debate meanings, strategies and implications, thus engaging authentic problem solving in near-real situations. Thus your business partner (ide- ally an inventor, if you are a business person, or a business person, if you are a more technical person) and your network should become your sparring partners in order to get first-hand experience of ‘decision-making’ and ‘action’ and thus to gain a real benefit that can be used in entrepreneurship. Choosing a topic The subject of these debates should ideally be a business idea that you and your business part- ner (or partners,if you have several) have agreed upon.The objection to this is that you may not have a fully finished idea right now.Those who have the germ of an idea may find the creativ- ity techniques described in Chapter 3 useful. Using these techniques, your idea can be modified or polished and thus can be used as a vehicle of entrepreneurship. Those who have no idea at the present time can choose between those presented shortly below – a fuller description is included in Appendix C – or your instructor may have created some other examples for you. • Euroflorida: This involves a scalable model of advertising and selling to other people over the web. The core is communicating Italian real estate to north Europeans, but could just as easily be e.g. Trinidad real estate to US Americans and involves globaliza- tion and legal, as well as trans-lingual, aspects. Furthermore, the idea is scalable, and could include not only selling retirement-quality estates to ‘grey gold’, but also e.g. inte- grating early retirees with useful skills into their new community, keeping in contact (clubs, newsletters), providing them with local services, etc., and thus the ‘product’ can contain considerable ‘added value’. • Gnashes: A simple Internet supply chain, trying to extract value from a service (compar- ison of dentists’prices) by e.g. advertising related goods on the web site or by sponsoring. Extra spice is added because the service suppliers and service receivers may not share common interests, i.e. dentists providing high-price services may drop out of the system unless some motivation is added. • LP2CD: This involves making a gadget to record CDA and/or MPG-compatible CDs from LPs. Thus it incorporates technical aspects and would be well suited to those with IT technical hardware/software patent-like ideas and interested in researching demo- graphics as well as IPR issues or advertising and distribution channels. • WFYK Holdings: A simple financial construction concerned with preserving knowl- edge assets. However, large degrees of complexity can be added, e.g. taxation issues and the project is aimed at those interested in venture creation, accounting and business economics. 14 Principles
  • 34.
    Your instructor willalso give you templates for the confidentiality agreements, etc. that you should exchange with your business partner(s). The development of a start-up In the course of this module you will learn many things. However, covering everything is not possible. In principle, the stages a classical start-up goes through are: Idea, Proof of Concept, Strategic Planning and Development, Venture Creation, Business Growth, Maturity and finally Exit. Your final report (the ‘business plan’) should cover these areas, although if you are heading for a try-it-and-see ‘organic growth’ strategy, then Exit may not be very relevant. In this book we shall cover the ‘Idea’ area in a comprehensive fashion: • Your motivation and creativity (Chapter 3). • Fitting your ideas to the market (Chapters 3 and 5). • Looking at emerging strategy (Chapters 3 and 4). • Starting your planning and operations (Chapter 7). • Your abilities and skills (Chapters 7 and 8). • The resources available to you (Chapter 9). As for the next stage, proof of concept, we will look into a more detailed marketing plan (Chapter 5) and the business plan itself (Chapter 6). However, if you have hard-to-imitate know-how and/or previous relevant experience, then you may wish to include more back- ground. What this is depends to some extent on your specialist area. Table 1.5 points out what factors are important for which branch of industry and these, where appropriate, could be highlighted in the final version of the business plan. Developing People and Competencies 15 Table 1.5 A matrix plotting the importance of various background factors in the specialist areas covered in this book Financial Low-end Knowledge External and legal High-end IPR IPR barriers network barriers patents, etc. copyright, etc. Technical High Low Low High Low Biotech High Low High High Low Green Medium Low Medium Low Low Health & Social Medium Medium Medium Low Low Journalism Low High Low Low High Arts & entertainment Low High Low Low High
  • 35.
    16 Principles Chapter summary Inventorsand innovators can experience difficulty in bringing new products to market because they often lack the business skills needed to introduce new products to the market. Conversely, management specialists can only rarely invent breakthrough devices. Forming partnerships between business-minded people and technical-minded people can rectify this. This is the reason why group work is favoured. A good marker for possessing a high degree of business expertise is being able to produce a good business plan. Most business plans fail to attract funding and the major reason is because they reflect the lack of managerial and business ability of the authors. Business plans are needed not only by entrepreneurs – including entrepreneurs in the social sector – but also increasingly often by employees, especially in more innovative companies. An extensive network – ‘social capital’ – can help enormously both to produce the business plan, as well as to realize its aims, including raising finance. References Hughes, T. P. (1971) Elmer Sperry: Inventor and Engineer. Baltimore, MD: Johns Hopkins University Press. Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe. Mellor, R. B. (2005) Achieving Enterprise: Teaching Entrepreneurship and Innovation in Business and Academia. Cologne: Eul Verlag. OECD (2003) Entrepreneurship and Local Economic Development: Programme and Policy Recommendations. Available at: www.oecd.org/document/27/0,3343, en_2649_33956792_2502299 _1_1_1_1, 00.html. Wang,E.L.and Kleppe, J.A.(2001) ‘Teaching invention,innovation,and entrepreneurship in engineering’, Journal of Engineering Education, October: 565–70. Further reading De Bono, E. (1996) Serious Creativity. London: HarperCollins. Drucker, P. F. (1999) Management Challenges of the 21st Century. Oxford: Butterworth-Heinemann. Kirby, D. A. (2003) Entrepreneurship. Maidenhead: McGraw-Hill. McDonald, M. (1999) Marketing Plans. Oxford: Butterworth-Heinemann. Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe.
  • 36.
    Developing People andCompetencies 17 Web links The Financial Times. www.ft.com/businesslife/entrepreneurship The National Council for Graduate Entrepreneurship: www.ncge.org.uk Global Entrepreneurship Monitor: www.gemconsortium.org What’s happening in the EU: http://ec.europa.eu/enterprise/entrepreneurship/index_en.htm Suggestion for exercises Google the terms ‘added value’, ‘organic growth’, ‘grey gold’ and ‘elevator pitch’.
  • 37.
    Introduction In this chapter,entrepreneurship is introduced in its economic and academic setting; an economic theory and practice outside the perimeter of classical input-output economics. By the beginning of the twentieth century, neo-classical economics had refined the theory of the capitalist economy to one where the central concept is market equilibrium, and where market supply equals demand in a perfectly competitive market. In this scheme there is little place for innovative entrepreneurs and, interestingly, communist theoreti- cians also belittled entrepreneurs as merely being factors adding to the ‘background noise’ in the grand historical imperative. The benefits of economies of scale, i.e. the supremacy of the large corporation, remained the dominant theory (see e.g. Galbraith, 1967) for much of the twentieth century. However, several scholars, including Schumpeter, insisted that the equilibrium could be radically disturbed by the introduction of innovative products or services. The evolution of innovation and enterprise In the 1960s, uncertainty in the ‘smokestack’ industries led to widespread diversification among large companies. The strategy was that if you had a finger in many pies, then nothing much could go wrong. This went so far that many giant corporations ended up with divisions in rubber, in electronics, in chemicals, in steel, in coal, etc. However, it soon became obvious that quite different sets of skills were needed to run each division 2 2 The Economics of Entrepreneurship and Innovation Robert B. Mellor
  • 38.
    The Economics ofEntrepreneurship and Innovation 19 profitably. This led to a process of divestment, where the new mentality dictated ‘do what you are good at’. This shift meant that each industry had quite a narrow focus. It was built on the assumption that there only are a certain number of industries and that therefore understanding and controlling these will lead to optimal performance (for review see e.g. Mellor, 2003, 2005). Many scholars believe that this break-up of markets – the so-called ‘post-Fordist era’ – was actually the natural result of the downswing in the last Kondratieff cycle (Kondratieff, 1935), which introduced a period of ‘creative destruction’ (Schumpeter, 1942). This process has cast new light on the role of the entre- preneur, the force that rearranges the market into new and more efficient forms (e.g. Drucker, 1985). Value chains The IT and Internet revolution of the 1990s focused attention on the possibilities of opening up new business areas, it showed that – against existing dogma – it was possible to make new business where there no previous industry or business existed: the so-called ‘sunrise’ industries (e.g. Microsoft). However, it also cast just as much attention on the fact that existing business process can be recombined to form new ‘value chains’, involving the faster delivery of products that were both better and cheaper. This is the basis of entrepreneurship. Innovation and entrepreneurship are often associated with the terms ‘value chain’ and ‘creative destruction’ (note that disruptions are for companies, and that customers should experience progress, not disruptions). The value chain represents the value of a product in an unfinished state and increasing in value as it reaches the customer. The expression ‘value chain’ is also used in an intra-organizational sense, referring to a bundle of factors affecting value, from when a prod- uct enters the firm, to when it leaves it. Several ‘value chains’ may make up a ‘value system’ (e.g. Porter, 1990). Disruptions or discontinuities in the value chain cause a disturbance in the manufacturing or marketing equilibrium, leaving previous processes or intermediaries stranded outside the value chain. This is referred to as disintermediation or ‘creative destruc- tion’ (Figure 2.1 overleaf). Entrepreneurship is a topic largely overlooked in classical economics and indeed Schumpeter (e.g. 1939, 1942) is hardly mentioned in the standard textbooks, probably because enterprise is not amenable to mathematical modelling, and thus is often regarded by academics as, at the most, an interesting exception to neo-classical economic theory. However, Joseph A. Schumpeter introduced entrepreneurship theory and practice and Schumpeter’s book Theorie der wirtschaftlichen Entwicklung (1912) directed the attention of economists away from static systems and towards economic advancement. Schumpeterian rents are those arising from innovation, they are by their nature dynamic and transitory, and occur in the time between the initial innovation and the rise of imitation. Nevertheless, they may generate high returns for considerable periods of time.
  • 39.
    20 Principles Traditional process valuechain A) Innovative process (value chain B) Value (Price) Progression towards final market Figure 2.1 In traditional processes, value is added in a series of steps; as illustrated in value chain A a company may e.g. make pig iron from iron ore (the first triangle) then sell their product on to the next, who may make steel, then sell their product on to the next, who may make steel sheets, then sell their product on to the next, who may press sheet steel to car bodies, then sell their product on to the next, who may make automobiles. This is classically the realm of Input-Output Economics and the value increases as one progresses along the links of the value chain until a ‘final price’ is reached. In value chain B innovation (e.g. a new smelting or cheaper rolling process, or novel materials) is used to construct a new value. The old intermediaries are stranded (‘creative destruction’) while the entrepreneurial innovator can vary the final height of the stippled line to share more or less of his ‘Schumpeterian rents’ with the final customer Types of economic returns In economics, types of economic returns are called ‘rents’ and may sometimes be synonymous with profits. Some of the major types are listed below: • Porterian. Named after Michael Porter, these are rents returned from monopo- lies or monopoly-like situations. • Ricardian. Named after David Ricardo, these are rents returned by ‘supply and demand’ trading. • Schumpeterian. Named after Joseph Schumpeter, these are rents returned from using innovation and improved techniques. Schumpeter believed that the innovation practised by entrepreneurs allows economic systems to avoid repetition; especially repetition of old mistakes, and thus can progress on to more advanced states.
  • 40.
    The Economics ofEntrepreneurship and Innovation 21 Economic cycles Schumpeter (1939) also popularized the work of Nikolai Kondratieff. Kondratieff (1935) devel- oped the theory that technology stimulates industries in waves lasting approximately 50 to 60 years (the ‘Kondratieff cycle’). Each cycle consists of around 20 years to perfect and use a series of related technologies, followed by 20 years where the growth industries appear to be doing well, but what look like record profits are actually repayments on capital in industries that have ceased to grow. This perilous situation can turn to crisis, often precipitated by a relatively minor panic, and crash. There follows a long period of stagnation during which new, emergent technologies cannot gen- erate enough jobs to make the economy grow again. Completed Kondratieff cycles include the ‘steam and agriculture’ cycle (1820–1870), ‘rail and coal and steel and textile’ cycle (1870–1930) and the ‘electrical and auto and rubber and petroleum’ cycle (1930–1980). Kondratieff also pre- dicted that the content of previous cycles couldn’t be repeated, thus earning himself execution at the hands of Stalin, who had just instigated an ‘agricultural renewal’ in the USSR. Some believe that the present Kondratieff cycle is based on microelectronics and IT; others add space travel and biotechnology. Critics point out that IT is just an ‘enabling technology’, and not in itself a major new industry, and that the new cycle is best characterized by the rise of the service sec- tor. This sector is centred on the knowledge areas, e.g. architecture, consulting, design, education, finance, publishing, research, etc., surrounded and supported in turn by communications, distribu- tion, health, leisure, transport, etc. Conversely some writers believe that the move away from manu- facturing and towards service industries is merely the result of basic needs being successively met, and that this development is simply part of the evolution of economies from agrarian to industrial to service activities. Others argue that this is not a new type of ‘late capitalism’ economy, but that manufacturers have simply had to contract out services in order to cut costs, increase flexibility and thus remain competitive. The most correct analysis will probably be published around 2080. The works of Schumpeter and Kondratieff were popularized by Peter F. Drucker, in his influential text Innovation and Entrepreneurship (1985). Drucker contrasted the employment situation in Europe and in the USA, because at that time the USA was booming, while Europe showed the symptoms of being at the stagnation end of a Kondratieff cycle. While there could be little doubt that the western economy had entered the ‘post-Fordist’ stage (the end of the ‘smokestack’ industries and beginning of the ‘sunrise’ industries), Drucker argued that the dif- ference was due to the entrepreneurial culture in the USA, which was more flexible and thus better able to take advantage of the change. The effect was that within five years most European governments (and the EU itself) had passed legislation setting up initiatives to pro- mote innovation and entrepreneurship. Entrepreneurship has been a recognized independent discipline of management science in the USA since 1987, and since 2000 in the UK. Focus on entrepreneurship Classically, economics recognizes three factors in production: raw materials, labour and capital. All products, both goods and services, are a mixture of these three components. Value is
  • 41.
    22 Principles created bycombining these factors in such a way that human needs can be satisfied. Since the Industrial Revolution this process has taken place in organizations. Under these circumstances, entrepreneurship is sometimes referred to as the fourth factor, the way of organizing the other three factors. Thus entrepreneurship (classically) means: 1 Finding new products or combinations in order to satisfy needs (to innovate). 2 Organize resources effectively (to create organizations). 3 Create wealth by adding value (to generate employment). The word ‘entrepreneur’ comes from the French entre meaning ‘between’. The root of the verb entreprendre can be traced back to around 1200. By 1500, a noun form appeared and soon thereafter both the verb and noun entered the English language. Already in 1730, ‘entrepre- neur’ was used to mean a self-employed person with a tolerance for risk. Already here there exists confusion between the concept of ‘middle man’ or intermediary (the ‘between’ part) on one hand and, on the other hand, the concept of an innovative businessperson using superior managerial ability, new and improved methods, etc., to achieve commercial growth. As a broad generalization, classical economics focuses on the creation of demand, then satisfy- ing this with a slightly lower supply (i.e. reaping Ricardian profits, or ‘rents’). This is in contrast to an entrepreneur, who today would be described as a person who uses innovative methods to restructure a value chain so as to reap an entrepreneurial (or Schumpeterian) profit, see Figure 2.1. However, on a note of caution, innovation and enterprise are not equal to exploitation and cap- italism. Innovation is anti-totalitarian; see, for example, the persecution of innovators like Galileo through the ages. Indeed, diversity and incremental innovation have their base in solid communi- ties and helpful personal interactions. Furthermore, the great role of social entrepreneurship can- not be overlooked and indeed the Peter F. Drucker Foundation (www.pfdf.org) has the express mission: ‘To strengthen the leadership of the social sector’. Thus innovation and enterprise actively erode class distinctions and are by nature anti-war. As Mellor (2003) puts it, ‘Innovation is essen- tial to development and human progress. Innovation builds on education and intellectual free- dom.’ Indeed, one can pose the question, what would the status of innovation be in a society if that society were based on a static source like the Bible or the Communist Manifesto? Enterprise can be defined broadly as activity that raises the capacity (attitude, skills and competencies) for: • invention • innovation • commercialization • technology acquisition • founding new businesses (business creation). Thus, an enterprising person is: • creative • innovative
  • 42.
    The Economics ofEntrepreneurship and Innovation 23 • commercially aware • entrepreneurial • self-motivated. This is thought to mean that enterprising people are continuously employable, even in times of high unemployment, because an enterprising person would rather be self-employed than unemployed. This is thought to lead to a sustainable advantage, also at the national economic level (Porter, 1990). Some important basic definitions Entrepreneurship is an academic discipline in management and economics. In the framework of economics, entrepreneurship is an exception to classical input–output economics. In a social and management framework the entrepreneur is often an active ‘change agent’. The entrepreneur consciously uses innovation and creativity as tools to achieve enterprise. The formalization of innovation into forms that can be patented is a relatively new phenomenon. Thus the term ‘entrepreneur’ is today used differently from earlier terms like ‘trader’ and ‘mer- chant’, even though Marco Polo and the other merchants who plied the Great Silk Road were acting in an entrepreneurial fashion, for their time. These words and their meanings have simply evolved. Unfortunately many terms are still used interchangeably. These may be enterprise, invention, innovation and creativity. They may also be owner, entrepreneur and capitalist. Among the unfortunate lack of clarity when dealing with this topic is that a plethora of names and definitions abound. For example, there are many people who own their own businesses. These represent an enormous and hugely diverse range of businesses from being a plumber to being a lawyer. Clearly all (successful) business are mercantile and thus to some extent must add value. However, not all of these businesses or owners are entrepreneurial. Owners, capitalists and entrepreneurs For this reason the owner of a small business (small and medium sized enterprises, SMEs) is defined as: ‘an individual who establishes and manages a business for the principal purpose of furthering personal goals … The owner perceives the business as an extension of his or her personality, intricately bound with family needs and desires’ (Carland et al., 1984). Similarly, a capitalist has the will, ability and possibly the technical knowledge to produce wealth, but this wealth is normally personal, and should preferably be produced at minimal
  • 43.
    24 Principles risk. Incontrast to these, Schumpeter saw the entrepreneur as a person who implements new combinations of the means of production, including: • creating new products; • altering the quality of an existing product; • developing new processes of production; • opening new markets; • capturing new sources of supply; • developing new forms of organization or industry. Some of the differences between owners, entrepreneurs and capitalists are listed in Table 2.1. Table 2.1 The mercantile uses of innovation: classification of owner, entrepreneur and capitalist according to their use of different types of innovation Owner Entrepreneur Capitalist Invention Clearly an inventor is an owner The entrepreneur may well May seek to invest in (they own their inventions) and work closely together with others’ inventions, may even set up a business on an inventor to bring a new but rarely is an the basis of this. But a glance product to market, however, inventor at the Yellow Pages will reveal entrepreneurs are more that the overwhelmingly vast inventors of e.g. business majority of small businesses processes and are rarely are not based on inventors of concrete technical breakthroughs technological products Creativity The process of forming a The entrepreneur is May seek to invest in business is by definition a often creative others’ creativity, but creative act, and quite often is most often a fairly the original business idea mechanical profit from an owner will involve a maximizer rather reasonable degree of creativity than being creative (theme restaurant, etc.) Innovation Owners may well use external The entrepreneur is often May seek to invest in innovation (the newest tools, highly innovative or open others’ innovations, but etc.) but will rarely innovate to innovation and it is this is rather a risk-minimizer or use innovation in systematic innovation, which drives the than an innovator way to improve their product entrepreneurial process Invention is not innovation At this point, it is appropriate to take a closer look at innovation. Often one hears the terms discovery, invention and innovation used as synonyms, however, they are quite distinct. Discovery is a new addition to knowledge. These are (normally) in the physical, biological or
  • 44.
    The Economics ofEntrepreneurship and Innovation 25 social sciences. Theoretical knowledge is obtained from observations and the experimental testing of hypotheses while practical knowledge is obtained from practice, e.g. the practical knowledge acquired by a workforce in making new machinery operate well. Invention is a new device or process. Most inventions are minor improvements and do not qualify as patents. To qualify as a patent, an invention must pass a test of originality (i.e. is different from previous inventions). Only a small percentage of patents have any economic value. Those that do, tend to be those which are immediately applicable. An example of this is the Phillips screw which made two crosswise grooves in a screw head instead of only one. Robot arms can grip this screw and this opened whole assembly lines to automation. Innovation is a better way of doing things. An innovation improves performance in goal-directed behaviour (e.g. re-election politics, personal lifestyle) as measured by any applicable or relevant criterion (e.g. profit maximization). Invention is not innovation. One simple example of this difference could be spreadsheet programs like Excel. The invention is the computer and its various parts, including the software (e.g. Excel). However, using spreadsheets to plan hourly work in an office is an inno- vation. Invention is promoted by discovery (especially in biology) whereas innovation is promoted by invention (especially in industrial engineering and business). Thus it also becomes obvious that innovation is time and context dependent; clearly in the eighteenth century inventing the steam engine and applying it to the cotton industry was an innovation, but today it would not be so. Prescott and Van Slyke (1996) refer to ‘Technology Cluster Innovation’, pointing out the links between discovery and entrepreneurial application (Table 2.2). Table 2.2 Illustrating that the meta-cluster ‘Aerospace’ can be divided according to the inventive character (e.g. based on patents) on the left, the mostly innovative in the centre, and the entrepreneurial applications on the right. Even this superficial overview shows a meta-cluster consisting of three overlapping clusters, ranging from mostly inventive, through mostly innovative, to almost purely entrepreneurial Branch Products Application and exploitation Aerodynamic and engineering Producers (e.g. Boeing) of many Many different airline research performed at different types of aeroplanes, companies with different e.g. universities helicopters, rockets, etc. target groups, e.g. Ryanair Types of innovation Radical innovation is an intellectual jump, which changes a whole area. An example of this is the steam engine of the 1770s, which revolutionized industrial production, resulting in the price of cotton cloth falling to 0.1 per cent of what it had been. Vertical innovation reflects the mobility of ideas at a systems level, i.e. between the social strata of a society. By 8000 BC, humans had begun to use agriculture, as opposed to being purely hunter-gatherers. For the
  • 45.
    26 Principles first timepeople were able to use relatively permanent settlements, and this, together with the greater productivity of their efforts, enabled them to devote more time to non-subsistence activities. As the population grows, more hands are available for labour tasks and, as Adam Smith pointed out, division of labour involves specialization. Specialization leads to greater efficiency and technological progress. Indeed, pottery, requiring less labour to produce than stone containers, was in use around 2000 years later. However, hunting, gathering and farm- ing were complementary activities for many generations. Perhaps migratory bands or hunting expeditions would replace shelters of skins and tree branches with dugouts or wooden shel- ters, followed by sod houses and eventually houses of sun-dried mud brick (see e.g. Cameron and Neal, 2003). Experience in making bricks may have been cross-fertilized with pottery skills. As potters refined their art, they invented the potter’s wheel, preceding the use of the wheel for transport. Such invention and innovation progressed by almost-imperceptible increments. This type of progress is thus called ‘incremental innovation’. In spreading from farmer to farmer, we can also speak of ‘horizontal innovation’; innovation spread between peers, i.e. people with common problems, and without large differences in social status. However, incremental innovation can also be vertical: Henry Ford copied production processes that he had seen at Chicago meat plants and ‘simply’ applied them in the motor industry (Chaston, 2000), creating an assembly line out of a disassembly line with huge ram- ifications (Figure 2.2). Vertical Horizontal Incremental Radical Henry Ford’s assembly line Motor engines Everyday improvements The wheel Figure 2.2 The dimensions of innovation Some authors refer to the ‘4Ps of innovation’: Product, Process, Position and Paradigm (note that this is not the same as the ‘4Ps of Marketing’), even constructing 3D relationships. In prin- ciple, vertical can refer to Paradigm and the assembly line example above to the process part, the motor engine to the product part. The 4P model suffers from being rather blurred, especially with respect to services. The traditional economic perspective of the Schumpeterian hypothesis (see Schumpeter, 1942) addresses the relationship between company size and the efficiency, or productivity, of
  • 46.
    The Economics ofEntrepreneurship and Innovation 27 the innovative process, especially as to whether there are economies of scale in innovation. For example, Palmer (2004) reports that L’Oréal have 28,000 patents, Proctor & Gamble have over 30,000 active patents and that IBM applies for typically more that 3,000 patents each year. Clearly this is a pipeline production where a few patents more or less may not matter. So there appear to be economies of scale in invention. To add to this concept, Utterback (1994) showed that companies often start with a ‘product innovation’ (possibly invention) but after introduction, the impact of the ‘product innovation’ grows less, and ‘process innovation’ becomes more important (Figure 2.3). An example is the invention of the light bulb, a great breakthrough where the first light bulbs were produced by craftsmen using a process involving many hundreds of steps. Clearly ‘process innovation’ was an important factor in automating this process so as to ensure that satisfactory light bulbs could be produced to an acceptable price. Potential start-up Product innovation Process innovation Fluid Transitional Specific Time Figure 2.3 Change in type of innovation with time: Ideas in a ‘fluid’ phase crystallize into an innovative product. If appropriate, a company can be set up at this point. However, the effect of product innovation decreases and the focus shifts to process innovation in a transitory stage. Eventually the two curves come closer and parallel, the so-called ‘specific phase’ Source: Modified from Utterback (1994) Process innovation is often driven by diversity innovation (as opposed to e.g. invention). Diversity innovation is most often a peer-to-peer phenomenon, i.e. horizontal and incre- mental innovation. It can be best summed up as ‘sometimes the answer just falls into your lap’. A typical environment could be simply an informal talk with someone from a different background.
  • 47.
    28 Principles Sources ofinnovation In sum, it appears that significant progress stems from invention, but inventions are few and far between (look through the Yellow Pages and try to estimate how may companies are founded on the basis of patents or inventions). New business models can spring from a middle layer of innovation (‘creativity innovation’), and there exists a layer below, which depends on the simple diversity existing between humans (‘diversity innovation’) (Figure 2.4). To put it simply, talking to somebody with a different background may deliver the problems solution right in your lap, without any significant degree of invention and/or creativity. However, diversity innovation is hard to provoke and control. Also there cannot be economies of scale in diversity innovation. Quite the opposite; if x is the number of two-way communication connections and y the number of nodes (people involved), then x = y * [y-1]/2, or that for a com- pany with 120 employees, 3,540 communication possibilities exist. Taking 5 minutes each, talk- ing continuously and without any break, this would take 595 hours or 16 man-weeks of working time, and this is just for employees to talk to each other for 5 minutes, excluding that any employ- ees got a chance to repeat conversations or do any work. Each further employee would take 10 man-hours to talk to existing employees for 5 minutes each. This is called the transaction costs for communication and the consequences of this are discussed further in Chapter 8 (Knowledge Management). Invention Creativity Diversity Figure 2.4 Illustrating that innovation can come from three sources, the application of invention, the application of creativity, and the application of diversity, where the ‘mundane’ diversity is responsible for the majority of everyday problem solving (incremental innovation) and invention is responsible for the few radical innovations
  • 48.
    The Economics ofEntrepreneurship and Innovation 29 Chapter summary The two classically known sources of innovation are the applications of either invention, or of creativity. These are important factors in large companies that have e.g. an R&D depart- ment. However, a third source exists: a kind of mutual inspiration derived from the applica- tion of diversity. This ‘diversity innovation’ (largely) and ‘creativity innovation’ (to some extent) are major contributors to ‘incremental innovation’, most often progressing horizontally, but sometimes vertically. Thus, this third kind of innovation is the most important when companies are small. Entrepreneurs are different from owners and capitalists in that they seek to use innovation as a tool to achieve shorter-term advantage. Improved processes result in ‘creative destruction’ and new value chains being formed. The result is better products and services – often at lower prices. References Cameron, R. and Neal, L. (2003) A Concise Economic History of the World, 4th edn. Oxford: Oxford University Press. Carland, J. W., Hoy, F., Boulton, W. R. and Carland, J. A. C. (1984) ‘Differentiating entrepreneurs from small business owners, a conceptualisation’, Academy of Management Review, 9: 354–9. Chaston, I. (2000) Entrepreneurial Marketing. London: Macmillan. Drucker, P. F. (1985) Innovation and Entrepreneurship. Oxford: Butterworth-Heinemann. Galbraith, J. K. (1967) The New Industrial State. Boston: Houghton Mifflin. Kondratieff, N. D. (1935) ‘The long waves in economic life’, Review of Economics and Statistics, 17: 105–15 (originally published in 1926 in Archiv für Sozialwissenschaft und Socialpolitik). Mellor, R. B. (2003) Innovation Management. Copenhagen: Globe. Mellor, R. B. (2005) Achieving Enterprise: Teaching Entrepreneurship and Innovation in Business and Academia. FGF Entrepreneurship Research Monographs, 49, Cologne: Eul Verlag. Palmer, A. (2004) Introduction to Marketing Theory and Practice, 2nd edn. Oxford: Oxford University Press. Porter, M. E. (1990) The Competitive Advantage of Nations. London: Macmillan. Prescott, M. B. and Van Slyke, C. (1996) ‘The Internet as innovation’, Industrial Management & Data Systems, 97/3: 119–24. Schumpeter, J. A. ([1912]1952). Theorie der wirtschaftlichen Entwicklung, 5th edn. Leipzig: Duncker and Humblot. Schumpeter, J. A. (1939) Business Cycles: A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. New York: McGraw-Hill. Schumpeter, J. A. (1942) Capitalism, Socialism and Democracy. New York: Harper. Utterback, J. M. (1994) Mastering the Dynamics of Innovation. Boston: Harvard Business School Press.
  • 49.
    Further reading Mellor, R.B. (2005) Sources and Spread of Innovation in Small e-commerce Companies. Copenhagen: Globe. Ormerod, P. (2005) Why Most Things Fail. London: Faber & Faber. Von Stamm, B. (2003) The Innovation Wave. Chichester: John Wiley & Sons, Ltd. Web links EU articles on innovation: http://ec.europa.eu/enterprise/innovation/ The Ewing Marion Kauffmann Foundation: www.kauffman.org Harvard Business School On-line: http://harvardbusinessonline.hbsp.harvard.edu Suggestions for exercises 1 Explain what a ‘value chain’ is and what is meant by ‘creative destruction’. 2 Look up the Kondratieff cycle. Do Kondratieff cycles drive the whole of society or do a few industries drive the economy as a whole? 30 Principles
  • 50.
    Introduction New and entrepreneurialcompanies are formed on the basis of someone having an innovative, novel or creative idea. This chapter explores what creativity is, starting with some of the more accepted thoughts on the subject. Defining creativity ‘Creative’ refers to novel products of value, as in ‘The airplane was a creative invention.’‘Creative’ also refers to the person who produces the work, as in, ‘Picasso was creative.’ ‘Creativity,’ then refers both to the capacity to produce such works, as in ‘How can we foster our employees’ creativity?’and to the activity of generating such products, as in ‘Creativity requires hard work…’. (Weisberg, 1993: 4) ‘Creativity is defined as the tendency to generate or recognize ideas, alternatives, or possibilities that may be useful in solving problems, communicating with others, and entertaining ourselves and others.Three reasons why people are motivated to be creative are the: 1 Need for novel, varied, and complex stimulation 2 Need to communicate ideas and values 3 Need to solve problems In order to be creative, you need to be able to view things in new ways or from a different perspective. Among other things, you need to be able to generate new possibilities or new alter- natives. Tests of creativity measure not only the number of alternatives that people can generate but the uniqueness of those alternatives, the ability to generate alternatives or to see things uniquely does not occur by chance; it is linked to other, more fundamental qualities of thinking, such as flexibility, tolerance of ambiguity or unpredictability, and the enjoyment of things heretofore unknown’. (Franken, 1994: 394–6) 3 3 Promoting Creativity Robert B. Mellor
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    The psychological originsof creativity The origins of research into creativity can be traced back to Max Wertheimer who was one of the principal proponents of Gestalt theory (i.e. behaviourism). Gestalt theory says that the character- istics of stimuli received by the brain cause us to ‘group’(structure or interpret a problem) in a cer- tain way (Wertheimer,1923).The primary factors – called ‘the laws of organization’– determining grouping are: 1 Proximity – elements tend to be grouped together according to their nearness. 2 Similarity – items similar in some respect tend to be grouped together. 3 Closure – items are grouped together if they tend to complete some entity. 4 Simplicity – items will be organized into simple figures according to symmetry, regularity, and smoothness. Wertheimer was especially concerned with problem-solving and, in 1959, he provided a Gestalt interpretation of problem-solving episodes of famous scientists (e.g.,Galileo,Einstein) as well as children presented with mathematical problems where he explained that the essence of success- ful problem-solving behaviour is being able to see the overall structure of the problem: ‘A certain region in the field becomes crucial, is focused; but it does not become isolated. A new, deeper structural view of the situation develops, involving changes in functional meaning, the grouping, etc. of the items. Directed by what is required by the structure of a situation for a crucial region, one is led to a reasonable prediction, which like the other parts of the structure, calls for verification, direct or indirect.Two directions are involved: getting a whole consistent picture, and seeing what the structure of the whole requires for the parts’. (Wertheimer, 1959: 212) Gestalt principles: parallelograms The classic example of Gestalt principles provided by Wertheimer is children finding the area of parallelograms. As long as the parallelograms are regular figures, a stan- dard procedure can be applied (making lines perpendicular from the corners of the base). However, if a parallelogram is provided which has a novel shape or orientation, then the standard procedure no longer works and the children are forced to solve the problem by a different method, which they can only do if they understanding the true structure of a parallelogram i.e., the figure can be bisected anywhere if the ends are joined. Source: Adapted from Wertheimer (1959) 32 Principles
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    Thus, the principlesof creative problem solving were postulated to be: 1 The learner should be encouraged to discover the underlying nature of a topic or problem (i.e., the relationship among the various elements). 2 Gaps, incongruities, or disturbances are an important stimulus for learning. 3 Instruction should be based upon the laws of organization: proximity, similarity, closure and simplicity. The relationship between creativity and other human characteristics like intelligence has been a central concern of psychology for some time (see e.g. Guilford, 1950) and much effort has been devoted towards the semi-quantitative measurement of creative potential (e.g. Guilford, 1986; Torrance, 1979).Taylor and Williams (1966) provide a survey of the relationship between creativ- ity and instruction and there have also been many attempts to increase creative behaviours (e.g., Osborn,1953; Parnes,1967).Popular questions include: is there one kind of creativity,or is creativity specific to a medium? For example, are good painters also good musicians? What are the work habits of extremely creative people and can these be emulated so others can be more creative? Arising from this intensive research, there is general agreement that the creative process involves the application of past experiences or ideas in novel ways. One example is the Creative Problem Solving (CPS) Model, based upon the work of Osborn and of Parnes (Osborn, 1953; Parnes, 1967; Van Gundy, 1987) and which refines the ‘laws of organization’ as suggested by Werthheimer to five major steps: 1 Fact-finding 2 Problem-finding 3 Idea-finding 4 Solution-finding 5 Acceptance-finding. However,the situation is complicated by the general acknowledgement that social processes play a major role in the recognition of creativity (e.g. Amabile, 1983) and that certain cognitive skills that may either be instilled at an early age, or learned later, seem to underlie creative behaviour. These include fluency, flexibility, visualization, imagination, expressiveness, and openness. Edward De Bono, like the behaviourists, argues that the characteristics of stimuli received by the brain cause us to ‘group’ (structure or interpret a problem) in a certain way and that this process involves the application of past experiences, i.e. that when looking at a phenomenon, the subcon- scious locates how this was handled in the past, and – assuming that the past experience was not so disastrous as to have impinged upon the consciousness – will try to process the new input in the same way.This appears a reasonable argument since the converse, constantly trying to find new processes for routine problems,would quickly lead to a nervous breakdown or similar overload situation. Tools for analysing problems Several methods exist for structured problem identification and analysis. The most common are the Pareto analysis (sometimes known as the 80/20 rule), cause-and-effect (also known as Promoting Creativity 33
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    fish-bone or Ishikawa)diagrams and cognitive mind-mapping.Pareto analyses plot the cause of a problem against frequency, e.g. companies often have to deal with dissatisfied customers; there may be five causes of dissatisfaction but analysis typically shows that the frequency of complaints is not equally spread and that only one (i.e.20 per cent of the potential causes) accounts for 80 per cent of complaints. This has led to companies recording and storing customer complaints for data-mining exercises. Cause-and-effect diagrams consist of a few simple steps and are a way of refining the search further – to arrive at a tighter shortlist of potential problems and solutions. Mind-mapping (more for individuals) and the related technique of cognitive mind-mapping (more often for groups of stakeholders) may be useful techniques to uncover hidden assumptions. This area borders on the discipline of decision-making and many software tools (‘Decision Support Systems’) have been developed to aid these processes. Tools for promoting creativity De Bono’s best-known creative method – lateral thinking – uses Wertheimer’s second law of organization (‘gaps, incongruities, or disturbances are an important stimulus’) to get a different perspective on a problem by breaking the elements up and recombining them in a different way (sometimes even randomly!). The actual process of lateral thinking then uses feedback itera- tion, or a ‘harvesting’ step, to take the idea through the stages 2–5 as proposed by the Creative Problem Solving Model (although note that De Bono does not acknowledge any theoretical antecedents for his lateral thinking technique). De Bono goes on to identify four critical factors associated with lateral thinking: 1 The recognition of the dominant ideas that polarize the perception of a problem. 2 Searching for different perspectives – different ways of looking at the case (‘thinking out of the box’). 3 The relaxation of the ‘normal’rigid control of thinking, i.e. relaxing the process pathways used for the routine handling of input. 4 Encouraging the use of chance to encourage other ideas (chance, because lateral thinking involves ideas of such low probability that they are unlikely to occur in the normal course of events). An example of lateral thinking A merchant (Mr A) who owes money to a moneylender (Mr B) is unfortunately insolvent and thus agrees to settle the debt based upon the random choice of two stones – one black, one white – picked by Mr A’s daughter from a money bag. If Mr A’s daughter chooses the white stone, the debt is cancelled; if she picks the black stone, then the moneylender gets the merchant’s daughter. 34 Principles
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    However, the moneylendertries to ‘fix’ the outcome by putting two black stones in the bag. The daughter sees this and when she picks a stone out of the bag, she immedi- ately drops it onto the path full of other stones. She then uses logic to point out that the stone she picked must have been the opposite colour of the one remaining in the bag. That is, the one she did not pick is now revealed as black; ergo she must have picked the white one. Unwilling to be unveiled as dishonest, Mr B the moneylender must agree and cancel the debt. The daughter has solved a seemingly-intractable problem through the use of lateral thinking. (Source: Taken from De Bono 1967) Reprinted with permission from the author. Lateral thinking applies to all human problem-solving and involves (typically) a deliberate provocation – like a negation or wild over-exaggeration – to ‘heave’the input out of the normal thinking or thought-processing pathways. For example, the statement ‘cars cost money’ could be negated with ‘cars are free’or ‘the customer comes to the pizzeria’is negated by ‘the pizzeria comes to the customer’. However, ideas at this mid-point are typically of little use. From there a second round of creativity is applied to ‘heave’ the input into a new and innovative channel (‘cars are free, if you only buy your petrol from me’ or the concept of a mobile pizzeria on a truck).One often-cited example of creativity is George de Mestral’s observation of how cockle- burs attach to clothing, which led him to invent the hook-and-loop fastener known as Velcro®. He transformed a common nuisance into a useful product. Another is Dell computers who have created the software and service for networked printers to automatically order new ink cartridges on-line when they are running low. When one looks back in time to analyse how a creative act was made, one often finds that creators made a novel interpretation of a well- known fact or occurrence, often involving converting a disadvantage into an advantage. Another commonly cited example of creativity is Art Fry’s development of Post-It® remov- able notes at 3M Corporation in 1974. Conventional wisdom states that all adhesives must be strong, but another 3M scientist had developed a polymer adhesive which takes years, if ever, to set. Fry wanted a better bookmark for his church hymn book, so he used a bookmark smeared with the weak adhesive. By ignoring the conventional wisdom, Fry developed a highly success- ful office product by redefining the problem (i.e. to finding a use for a weak adhesive). However, not only did he need to develop the idea, but he also had to sell the idea to his management and marketing departments (points 4 and 5 of the Creative Problem Solving Model). De Bono has discussed the application of lateral thinking both to management development and in some of his recent work,on schools (e.g.,De Bono,1991).Visit the De Bono website for up-to-date information on lateral thinking and related techniques like brainstorming and ‘six thinking hats’. From the above, it would appear that to enhance innovation anyone could simply apply creativity exercises. This idea has been important in spreading the works of Edward De Bono. For example De Bono’s book Serious Creativity (1996) starts with the words ‘If I were to sit Promoting Creativity 35
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    between Jehovah andthe Israel of the monarchy was finally closed, and no penal balance was carried over to stand against the restored community. The last portion of this chapter is so important that we must reserve it for separate treatment, but we may pause for a moment to consider the prophecy of the restoration of Ephraim from two points of view—the unity of Israel and the return of the ten tribes. In the first place, this chapter is an eirenicon, intended to consign to oblivion the divisions and feuds of the Chosen People. After the fall of Samaria, the remnant of Israel had naturally looked to Judah for support and protection, and the growing weakness of Assyria had allowed the Jewish kings to exercise a certain authority over the territory of northern tribes. The same fate—the sack of the capital and the deportation of most of the inhabitants—had successively befallen Ephraim and Judah. His sense of the unity of the race was too strong to allow the prophet to be satisfied with the return of Judah and Benjamin, apart from the other tribes. Yet it would have been monstrous to suppose that Jehovah would bring back Ephraim from Assyria, and Judah from Babylon, only that they might resume their mutual hatred and suspicion. Even wild beasts are said not to rend one another when they are driven by floods to the same hill- top. Thus various causes contributed to produce a kindlier feeling between the survivors of the catastrophes of Samaria and Jerusalem; and from henceforth those of the ten tribes who found their way back to Palestine lived in brotherly union with the other Jews. And, on the whole, the Jews have since remained united both as a race and a religious community. It is true that the relations of the later Jews to Samaria were somewhat at variance both with the letter and spirit of this prophecy, but that Samaria had only the slightest claim to be included in Israel. Otherwise the divisions between Hillel and Shammai, Sadducees and Pharisees, Karaites, Sephardim and Ashkenazim, Reformed and Unreformed Jews, have
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    rather been legitimatevarieties of opinion and practice within Judaism than a rending asunder of the Israel of God. Matters stand very differently with regard to the restoration of Ephraim. We know that individual members and families of the ten tribes were included in the new Jewish community, and that the Jews reoccupied Galilee and portions of Eastern Palestine. But the husbandmen who had planted vineyards on the hills of Samaria were violently repulsed by Ezra and Nehemiah, and were denied any part or lot in the restored Israel. The tribal inheritance of Ephraim and Manasseh was never reoccupied by Ephraimites and Manassites who came to worship Jehovah in His Temple at Jerusalem. There was no return of the ten tribes that in any way corresponded to the terms of this prophecy or that could rank with the return of their brethren. Our growing acquaintance with the races of the world seems likely to exclude even the possibility of any such restoration of Ephraim. Of the two divisions of Israel, so long united in common experiences of grace and chastisement, the one has been taken and the other left. Christendom is the true heir of the ideals of Israel, but she is mostly content to inherit them as counsels of perfection. Isaiah[422] struck the keynote of this chapter when he prophesied that Ephraim should not envy Judah, nor Judah vex Ephraim. Our prophet, in the same generous spirit, propounds a programme of reconciliation. It might serve for a model to those who construct schemes for Christian Reunion. When two denominations are able to unite on such terms that the one admits the other to be the first-born of God, His darling child and precious in His sight, and the latter is willing to accept the former's central sanctuary as the headquarters of the united body, we shall have come some way towards realising this ancient Jewish ideal. Meanwhile Ephraim remains consumed with envy of Judah; and Judah apparently considers it her most sacred duty to vex Ephraim. Moreover the disappearance of what was at one time the most flourishing branch of the Hebrew Church has many parallels in
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    Church History. Againand again religious dissension has been one of the causes of political ruin, and the overthrow of a Christian state has sometimes involved the extinction of its religion. Christian thought and doctrine owe an immense debt to the great Churches of Northern Africa and Egypt. But these provinces were torn by the dissensions of ecclesiastical parties; and the quarrels of Donatists, Arians, and Catholics in North Africa, the endless controversies over the Person of Christ in Egypt, left them helpless before the Saracen invader. To-day the Church of Tertullian and Augustine is blotted out, and the Church of Origen and Clement is a miserable remnant. Similarly the ecclesiastical strife between Rome and Constantinople lost to Christendom some of the fairest provinces of Europe and Asia, and placed Christian races under the rule of the Turk. Even now the cause of Christians in heathen and Mohammedan countries suffers from the jealousy of Christian states, and modern Churches sometimes avail themselves of this jealousy to try and oust their rivals from promising fields for mission work. It is a melancholy reflection that Jeremiah's effort at reconciliation came too late, when the tribes whom it sought to reunite were hopelessly set asunder. Reconciliation, which involves a kind of mutual repentance, can ill afford to be deferred to the eleventh hour. In the last agonies of the Greek Empire, there was more than one formal reconciliation between the Eastern and Western Churches; but they also came too late, and could not survive the Empire which they failed to preserve.
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    CHAPTER XXXIII RESTORATION—IV. THENEW COVENANT xxxi. 31-38: cf. Hebrews viii. "I will make a new covenant with the house of Israel and the house of Judah."—Jer. xxxi. 31. The religious history of Israel in the Old Testament has for its epochs a series of covenants: Jehovah declared His gracious purposes towards His people, and made known the conditions upon which they were to enjoy His promised blessings; they, on their part, undertook to observe faithfully all that Jehovah commanded. We are told that covenants were made with Noah, after the Flood; with Abraham, when he was assured that his descendants should inherit the land of Canaan; at Sinai, when Israel first became a nation; with Joshua, after the Promised Land was conquered; and, at the close of Old Testament history, when Ezra and Nehemiah established the Pentateuch as the Code and Canon of Judaism. One of the oldest sections of the Pentateuch, Exodus xx. 20-xxiii. 33, is called the "Book of the Covenant,"[423] and Ewald named the Priestly Code the "Book of the Four Covenants." Judges and Samuel record no covenants between Jehovah and Israel; but the promise of permanence to the Davidic dynasty is spoken of as an everlasting covenant. Isaiah,[424] Amos, and Micah make no mention of the Divine covenants. Jeremiah, however, imitates Hosea[425] in emphasising this aspect of Jehovah's relation to Israel, and is followed in his turn by Ezekiel and II. Isaiah.
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    Jeremiah had playedhis part in establishing covenants between Israel and its God. He is not, indeed, even so much as mentioned in the account of Josiah's reformation; and it is not clear that he himself makes any express reference to it; so that some doubt must still be felt as to his share in that great movement. At the same time indirect evidence seems to afford proof of the common opinion that Jeremiah was active in the proceedings which resulted in the solemn engagement to observe the code of Deuteronomy. But yet another covenant occupies a chapter[426] in the Book of Jeremiah, and in this case there is no doubt that the prophet was the prime mover in inducing the Jews to release their Hebrew slaves. This act of emancipation was adopted in obedience to an ordinance of Deuteronomy,[427] so that Jeremiah's experience of former covenants was chiefly connected with the code of Deuteronomy and the older Book of the Covenant upon which it was based. The Restoration to which Jeremiah looked forward was to throw the Exodus into the shade, and to constitute a new epoch in the history of Israel more remarkable than the first settlement in Canaan. The nation was to be founded anew, and its regeneration would necessarily rest upon a New Covenant, which would supersede the Covenant of Sinai. "Behold, the days come—it is the utterance of Jehovah—when I will enter into a new covenant with the House of Israel and the House of Judah: not according to the covenant into which I entered with your fathers, when I took them by the hand to bring them out of the land of Egypt." The Book of the Covenant and Deuteronomy had both been editions of the Mosaic Covenant, and had neither been intended nor regarded as anything new. Whatever was fresh in them, either in form or substance, was merely the adaptation of existing ordinances to altered circumstances. But now the Mosaic Covenant was declared obsolete, the New Covenant was not to be, like Deuteronomy, merely a fresh edition of the earliest code. The Return from Babylon,
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    like the primitiveMigration from Ur and like the Exodus from Egypt, was to be the occasion of a new Revelation, placing the relations of Jehovah and His people on a new footing. When Ezra and Nehemiah established, as the Covenant of the Restoration, yet another edition of the Mosaic ordinances, they were acting in the teeth of this prophecy—not because Jehovah had changed His purpose, but because the time of fulfilment had not yet come.[428] The rendering of the next clause is uncertain, and, in any case, the reason given for setting aside the old covenant is not quite what might have been expected. The Authorised and Revised Versions translate: "Which My covenant they brake, although I was an husband unto them";[429] thus introducing that Old Testament figure of marriage between Jehovah and Israel which is transferred in Ephesians and the Apocalypse to Christ and the Church. The margin of the Revised Version has: "Forasmuch as they brake My covenant, although I was lord over them." There is little difference between these two translations, both of which imply that in breaking the covenant Israel was setting aside Jehovah's legitimate claim to obedience. A third translation, on much the same lines, would be "although I was Baal unto or over them";[430] Baal or ba'al being found for lord, husband, in ancient times as a name of Jehovah, and in Jeremiah's time as a name of heathen gods. Jeremiah is fond of paronomasia, and frequently refers to Baal, so that he may have been here deliberately ambiguous. The phrase might suggest to the Hebrew reader that Jehovah was the true lord or husband of Israel, and the true Baal or God, but that Israel had come to regard Him as a mere Baal, like one of the Baals of the heathen. "Forasmuch as they, on their part, set at nought My covenant; so that I, their true Lord, became to them as a mere heathen Baal." The covenant and the God who gave it were alike treated with contempt. The Septuagint, which is quoted in Hebrews viii. 9, has another translation: "And I regarded them not."[431] Unless this represents a
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    different reading,[432] itis probably due to a feeling that the form of the Hebrew sentence required a close parallelism. Israel neglected to observe the covenant, and Jehovah ceased to feel any interest in Israel. But the idea of the latter clause seems alien to the context. In any case, the new and better covenant is offered to Israel, after it has failed to observe the first covenant. This Divine procedure is not quite according to many of our theories. The law of ordinances is often spoken of as adapted to the childhood of the race. We set children easy tasks, and when these are successfully performed we require of them something more difficult. We grant them limited privileges, and if they make a good use of them the children are promoted to higher opportunities. We might perhaps have expected that when the Israelites failed to observe the Mosaic ordinances, they would have been placed under a narrower and harsher dispensation; yet their very failure leads to the promise of a better covenant still. Subsequent history, indeed, qualifies the strangeness of the Divine dealing. Only a remnant of Israel survived as the people of God. The Covenant of Ezra was very different from the New Covenant of Jeremiah; and the later Jews, as a community,[433] did not accept that dispensation of grace which ultimately realised Jeremiah's prophecy. In a narrow and unspiritual fashion the Jews of the Restoration observed the covenant of external ordinances; so that, in a certain sense, the Law was fulfilled before the new Kingdom of God was inaugurated. But if Isaiah and Jeremiah had reviewed the history of the restored community, they would have declined to receive it as, in any sense, the fulfilling of a Divine covenant. The Law of Moses was not fulfilled, but made void, by the traditions of the Pharisees. The fact therefore remains, that failure in the lower forms, so to speak, of God's school is still followed by promotion to higher privileges. However little we may be able to reconcile this truth with a priori views of Providence, it has analogies in nature, and reveals new depths of Divine love and greater resourcefulness of Divine grace. Boys whose early life is unsatisfactory nevertheless grow up into the responsibilities and
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    privileges of manhood;and the wilful, disobedient child does not always make a bad man. We are apt to think that the highest form of development is steady, continuous, and serene, from good to better, from better to best. The real order is more awful and stupendous, combining good and evil, success and failure, victory and defeat, in its continuous advance through the ages. The wrath of man is not the only evil passion that praises God by its ultimate subservience to His purpose. We need not fear lest such Divine overruling of sin should prove any temptation to wrongdoing, seeing that it works, as in the exile of Israel, through the anguish and humiliation of the sinner. The next verse explains the character of the New Covenant; once Jehovah wrote His law on tables of stone, but now:— "This is the covenant which I will conclude with the House of Israel after those days—it is the utterance of Jehovah— I will put My law within them, and will write it upon their heart; And I will be their God, and they shall be My people." These last words were an ancient formula for the immemorial relation of Jehovah and Israel, but they were to receive new fulness of meaning. The inner law, written on the heart, is in contrast to Mosaic ordinances. It has, therefore, two essential characteristics: first, it governs life, not by fixed external regulations, but by the continual control of heart and conscience by the Divine Spirit; secondly, obedience is rendered to the Divine Will, not from external compulsion, but because man's inmost nature is possessed by entire loyalty to God. The new law involves no alteration of the standards of morality or of theological doctrine, but it lays stress on the spiritual character of man's relation to God, and therefore on the fact that God is a spiritual and moral being. When man's obedience is claimed on the ground of God's irresistible power, and appeal is made to material rewards and punishments, God's personality is
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    obscured and theway is opened for the deification of political or material Force. This doctrine of setting aside of ancient codes by the authority of the Inner Law is implied in many passages of our book. The superseding of the Mosaic Law is set forth by a most expressive symbol,[434] "When ye are multiplied and increased in the land, 'The Ark of the Covenant of Jehovah' shall no longer be the watchword of Israel: men shall neither think of the ark nor remember it; they shall neither miss the ark nor make another in its place." The Ark and the Mosaic Torah were inseparably connected; if the Ark was to perish and be forgotten, the Law must also be annulled. Jeremiah moreover discerned with Paul that there was a law in the members warring against the Law of Jehovah: "The sin of Judah is written with a pen of iron, and with the point of a diamond: it is graven upon the table of their heart, and upon the horns of their altars."[435] Hence the heart of the people had to be changed before they could enter into the blessings of the Restoration: "I will give them an heart to know Me, that I am Jehovah: and they shall be My people, and I will be their God: for they shall return unto Me with their whole heart."[436] In the exposition of the symbolic purchase of Hanameel's field, Jehovah promises to make an everlasting covenant with His people, that He will always do them good and never forsake them. Such continual blessings imply that Israel will always be faithful. Jehovah no longer seeks to ensure their fidelity by an external law, with its alternate threats and promises: He will rather control the inner life by His grace. "I will give them one heart and one way, that they may fear Me for ever; ... I will put My fear in their hearts, that they may not depart from Me."[437] We must not, of course, suppose that these principles—of obedience from loyal enthusiasm, and of the guidance of heart and conscience by the Spirit of Jehovah—were new to the religion of Israel. They are implied in the idea of prophetic inspiration. When Saul went home to Gibeah, "there went with him a band of men, whose hearts God had
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    touched."[438] In Deuteronomy,Israel is commanded to "love Jehovah thy God with all thine heart, and with all thy soul, and with all thy might. And these words, which I command thee this day, shall be in thine heart."[439] The novelty of Jeremiah's teaching is that these principles are made central in the New Covenant. Even Deuteronomy, which approaches so closely to the teaching of Jeremiah, was a new edition of the Covenant of the Exodus, an attempt to secure a righteous life by exhaustive rules and by external sanctions. Jeremiah had witnessed and probably assisted the effort to reform Judah by the enforcement of the Deuteronomic Code. But when Josiah's religious policy collapsed after his defeat and death at Megiddo, Jeremiah lost faith in elaborate codes, and turned from the letter to the spirit. The next feature of the New Covenant naturally follows from its being written upon men's hearts by the finger of Jehovah:— "Men shall no longer teach one another and teach each other, saying, Know ye Jehovah! For all shall know Me, from the least to the greatest— it is the utterance of Jehovah." In ancient times men could only "know Jehovah" and ascertain His will by resorting to some sanctuary, where the priests preserved and transmitted the sacred tradition and delivered the Divine oracles. Written codes scarcely altered the situation; copies would be few and far between, and still mostly in the custody of the priests. Whatever drawbacks arise from attaching supreme religious authority to a printed book were multiplied a thousandfold when codes could only be copied. But, in the New Israel, men's spiritual life would not be at the mercy of pen, ink, and paper, of scribe and priest. The man who had a book and could read would no longer be able, with the self-importance of exclusive knowledge, to bid his less fortunate brethren to know Jehovah. He Himself would be the one
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    teacher, and Hisinstruction would fall, like the sunshine and the rain, upon all hearts alike. And yet again Israel is assured that past sin shall not hinder the fulfilment of this glorious vision:— "For I will forgive their iniquity, and their sin will I remember no more." Recurring to the general topic of the Restoration of Israel, the prophet affixes the double seal of two solemn Divine asseverations. Of old, Jehovah had promised Noah: "While the earth remaineth, seedtime and harvest, cold and heat, summer and winter, day and night, shall not cease."[440] Now He promises that while sun and moon and stars and sea continue in their appointed order, Israel shall not cease from being a nation. And, again, Jehovah will not cast off Israel on account of its sin till the height of heaven can be measured and the foundations of the earth searched out.[441]
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    CHAPTER XXXIV RESTORATION—V. REVIEW xxx.-xxxiii. Inreviewing these chapters we must be careful not to suppose that Jeremiah knew all that would ultimately result from his teaching. When he declared that the conditions of the New Covenant would be written, not in a few parchments, but on every heart, he laid down a principle which involved the most characteristic teaching of the New Testament and the Reformers, and which might seem to justify extreme mysticism. When we read these prophecies in the light of history, they seem to lead by a short and direct path to the Pauline doctrines of Faith and Grace. Constraining grace is described in the words: "I will put My fear in their hearts, that they shall not depart from Me."[442] Justification by faith instead of works substitutes the response of the soul to the Spirit of God for conformity to a set of external regulations—the writing on the heart for the carving of ordinances on stone. Yet, as Newton's discovery of the law of gravitation did not make him aware of all that later astronomers have discovered, so Jeremiah did not anticipate Paul and Augustine, Luther and Calvin: he was only their forerunner. Still less did he intend to affirm all that has been taught by the Brothers of the Common Life or the Society of Friends. We have followed the Epistle to the Hebrews in interpreting his prophecy of the New Covenant as abrogating the Mosaic code and inaugurating a new departure upon entirely different lines. This view is supported by his attitude towards the Temple, and especially the Ark. At the same time we must not suppose that Jeremiah contemplated the summary and entire abolition of the previous dispensation. He simply delivers his latest message from Jehovah, without bringing its contents into relation
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    with earlier truth,without indeed waiting to ascertain for himself how the old and the new were to be combined. But we may be sure that the Divine writing on the heart would have included much that was already written in Deuteronomy, and that both books and teachers would have had their place in helping men to recognise and interpret the inner leadings of the Spirit. In rising from the perusal of these chapters the reader is tempted to use the prophet's words with a somewhat different meaning: "I awaked and looked about me, and felt that I had had a pleasant dream."[443] Renan, with cynical frankness, heads a chapter on such prophecies with the title "Pious Dreams." While Jeremiah's glowing utterances rivet our attention, the gracious words fall like balm upon our aching hearts, and we seem, like the Apostle, caught up into Paradise. But as soon as we try to connect our visions with any realities, past, present, or in prospect, there comes a rude awakening. The restored community attained to no New Covenant, but was only found worthy of a fresh edition of the written code. Instead of being committed to the guidance of the ever-present Spirit of Jehovah, they were placed under a rigid and elaborate system of externals—"carnal ordinances, concerned with meats and drinks and divers washings, imposed until a time of reformation." [444] They still remained under the covenant "from Mount Sinai, bearing children unto bondage, which is Hagar. Now this Hagar is Mount Sinai in Arabia, and answereth to the Jerusalem that now is: for she is in bondage with her children."[445] For these bondservants of the letter, there arose no David, no glorious Scion of the ancient stock. For a moment the hopes of Zechariah rested on Zerubbabel, but this Branch quickly withered away and was forgotten. We need not underrate the merits and services of Ezra and Nehemiah, of Simon the Just and Judas Maccabæus; and yet we cannot find any one of them who answers to the Priestly King of Jeremiah's visions. The new Growth of Jewish royalty came to an ignominious end in Aristobulus, Hyrcanus, and the Herods, Antichrists rather than Messiahs.
  • 69.
    The Reunion oflong-divided Israel is for the most part a misnomer; there was no healing of the wound, and the offending member was cut off. Even now, when the leaven of the Kingdom has been working in the lump of humanity for nearly two thousand years, any suggestion that these chapters are realised in Modern Christianity would seem cruel irony. Renan accuses Christianity of having quickly forgotten the programme which its Founder borrowed from the prophets, and of having become a religion like other religions, a religion of priests and sacrifices, of external observances and superstitions.[446] It is sometimes asserted that Protestants lack faith and courage to trust to any law written on the heart, and cling to a printed book, as if there were no Holy Spirit—as if the Branch of David had borne fruit once for all, and Christ were dead. The movement for Christian Reunion seems thus far chiefly to emphasise the feuds that make the Church a kingdom divided against itself. But we must not allow the obvious shortcomings of Christendom to blind us to brighter aspects of truth. Both in the Jews of the Restoration and in the Church of Christ we have a real fulfilment of Jeremiah's prophecies. The fulfilment is no less real because it is utterly inadequate. Prophecy is a guide-post and not a mile-stone; it shows the way to be trodden, not the duration of the journey. Jews and Christians have fulfilled Jeremiah's prophecies because they have advanced by the road along which he pointed towards the spiritual city of his vision. The "pious dreams" of a little group of enthusiasts have become the ideals and hopes of humanity. Even Renan ranks himself among the disciples of Jeremiah: "The seed sown in religious tradition by inspired Israelites will not perish; all of us who seek a God without priests, a revelation without prophets, a covenant written in the heart, are in many respects the disciples of these ancient fanatics (ces vieux égarés)."[447] The Judaism of the Return, with all its faults and shortcomings, was still an advance in the direction Jeremiah had indicated. However
  • 70.
    ritualistic the Pentateuchmay seem to us, it was far removed from exclusive trust in ritual. Where the ancient Israelite had relied upon correct observance of the forms of his sanctuary, the Torah of Ezra introduced a large moral and spiritual element, which served to bring the soul into direct fellowship with Jehovah. "Pity and humanity are pushed to their utmost limits, always of course in the bosom of the family of Israel."[448] The Torah moreover included the great commands to love God and man, which once for all placed the religion of Israel on a spiritual basis. If the Jews often attached more importance to the letter and form of Revelation than to its substance, and were more careful for ritual and external observances than for inner righteousness, we have no right to cast a stone at them. It is a curious phenomenon that after the time of Ezra the further developments of the Torah were written no longer on parchment, but, in a certain sense, on the heart. The decisions of the rabbis interpreting the Pentateuch, "the fence which they made round the law," were not committed to writing, but learnt by heart and handed down by oral tradition. Possibly this custom was partly due to Jeremiah's prophecy. It is a strange illustration of the way in which theology sometimes wrests the Scriptures to its own destruction, that the very prophecy of the triumph of the spirit over the letter was made of none effect by a literal interpretation. Nevertheless, though Judaism moved only a very little way towards Jeremiah's ideal, yet it did move, its religion was distinctly more spiritual than that of ancient Israel. Although Judaism claimed finality and did its best to secure that no future generation should make further progress, yet in spite of, nay, even by means of, Pharisee and Sadducee, the Jews were prepared to receive and transmit that great resurrection of prophetic teaching which came through Christ. If even Judaism did not altogether fail to conform itself to Jeremiah's picture of the New Israel, clearly Christianity must have shaped itself
  • 71.
    still more fullyaccording to his pattern. In the Old Testament both the idea and the name of a "New Covenant,"[449] superseding that of Moses, are peculiar to Jeremiah, and the New Testament consistently represents the Christian dispensation as a fulfilment of Jeremiah's prophecy. Besides the express and detailed application in the Epistle to the Hebrews, Christ instituted the Lord's Supper as the Sacrament of His New Covenant—"This cup is the New Covenant in My blood";[450] and St. Paul speaks of himself as "a minister of the New Covenant."[451] Christianity has not been unworthy of the claim made on its behalf by its Founder, but has realised, at any rate in some measure, the visible peace, prosperity, and unity of Jeremiah's New Israel, as well as the spirituality of his New Covenant. Christendom has its hideous blots of misery and sin, but, on the whole, the standard of material comfort and intellectual culture has been raised to a high average throughout the bulk of a vast population. Internal order and international concord have made enormous strides since the time of Jeremiah. If an ancient Israelite could witness the happy security of a large proportion of English workmen and French peasants, he would think that many of the predictions of his prophets had been fulfilled. But the advance of large classes to a prosperity once beyond the dreams of the most sanguine only brings out in darker relief the wretchedness of their less fortunate brethren. In view of the growing knowledge and enormous resources of modern society, any toleration of its cruel wrongs is an unpardonable sin. Social problems are doubtless urgent because a large minority are miserable, but they are rendered still more urgent by the luxury of many and the comfort of most. The high average of prosperity shows that we fail to right our social evils, not for want of power, but for want of devotion. Our civilisation is a Dives, at whose gate Lazarus often finds no crumbs. Again Christ's Kingdom of the New Covenant has brought about a larger unity. We have said enough elsewhere on the divisions of the Church. Doubtless we are still far from realising the ideals of chapter xxxi., but, at any rate, they have been recognised as supreme, and
  • 72.
    have worked forharmony and fellowship in the world. Ephraim and Judah are forgotten, but the New Covenant has united into brotherhood a worldwide array of races and nations. There are still divisions in the Church, and a common religion will not always do away with national enmities; but in spite of all, the influence of our common Christianity has done much to knit the nations together and promote mutual amity and goodwill. The vanguard of the modern world has accepted Christ as its standard and ideal, and has thus attained an essential unity, which is not destroyed by minor differences and external divisions. And, finally, the promise that the New Covenant should be written on the heart is far on the way towards fulfilment. If Roman and Greek orthodoxy interposes the Church between the soul and Christ, yet the inspiration claimed for the Church to-day is, at any rate in some measure, that of the living Spirit of Christ speaking to the souls of living men. On the other hand, a predilection for Rabbinical methods of exegesis sometimes interferes with the influence and authority of the Bible. Yet in reality there is no serious attempt to take away the key of knowledge or to forbid the individual soul to receive the direct teaching of the Holy Ghost. The Reformers established the right of private judgment in the interpretation of the Scriptures; and the interpretation of the Library of Sacred Literature, the spiritual harvest of a thousand years, affords ample scope for reverent development of our knowledge of God. One group of Jeremiah's prophecies has indeed been entirely fulfilled.[452] In Christ, God has raised up a Branch of Righteousness unto David, and through Him judgment and righteousness are wrought in the earth.
  • 73.
  • 74.
    CHAPTER XXXV JEREMIAH ANDCHRIST "Jehovah thy God will raise up unto thee a prophet from amongst thee, of thy brethren, like unto me; unto him shall ye hearken."—Deut. xviii. 15. "Jesus ... asked His disciples, saying, Who do men say that the Son of Man is? And they said, Some say John the Baptist; some, Elijah: and others, Jeremiah, or one of the prophets."—Matt. xvi. 13, 14. English feeling about Jeremiah has long ago been summed up and stereotyped in the single word "jeremiad." The contempt and dislike which this word implies are partly due to his supposed authorship of Lamentations; but, to say the least, the Book of Jeremiah is not sufficiently cheerful to remove the impression created by the linked wailing, long drawn out, which has been commonly regarded as an appendix to its prophecies. We can easily understand the unpopularity of the prophet of doom in modern Christendom. Such prophets are seldom acceptable, except to the enemies of the people whom they denounce; and even ardent modern advocates of Jew-baiting would not be entirely satisfied with Jeremiah—they would resent his patriotic sympathy with sinful and suffering Judah. Most modern Christians have ceased to regard the Jews as monsters of iniquity, whose chastisement should give profound satisfaction to every sincere believer. History has recorded but few of the crimes which provoked and justified our prophet's fierce indignation, and those of which we do read repel our interest by a certain lack of the picturesque, so that we do not take the trouble to realise their actual and intense wickedness. Ahab is a by-word, but how many people
  • 75.
    know anything aboutIshmael ben Nethaniah? The cruelty of the nobles and the unctuous cant of their prophetic allies are forgotten in—nay, they seem almost atoned for by—the awful calamities that befell Judah and Jerusalem. Jeremiah's memory may even be said to have suffered from the speedy and complete fulfilment of his prophecies. The national ruin was a triumphant vindication of his teaching, and his disciples were eager to record every utterance in which he had foretold the coming doom. Probably the book, in its present form, gives an exaggerated impression of the stress which Jeremiah laid upon this topic. Moreover, while the prophet's life is essentially tragic, its drama lacks an artistic close and climax. Again and again Jeremiah took his life in his hand, but the good confession which he witnessed for so long does not culminate in the crown of martyrdom. A final scene like the death of John the Baptist would have won our sympathy and conciliated our criticism. We thus gather that the popular attitude towards Jeremiah rests on a superficial appreciation of his character and work; it is not difficult to discern that a careful examination of his history establishes important claims on the veneration and gratitude of the Christian Church. For Judaism was not slow to pay her tribute of admiration and reverence to Jeremiah as to a Patron Saint and Confessor. His prophecy of the Restoration of Israel is appealed to in Ezra and Daniel; and the Hebrew Chronicler, who says as little as he can of Isaiah, adds to the references made by the Book of Kings to Jeremiah. We have already seen that apocryphal legends clustered round his honoured name. He was credited with having concealed the Tabernacle and the Ark in the caves of Sinai.[453] On the eve of a great victory, he appeared to Judas Maccabæus, in a vision, as "a man distinguished by grey hairs, and a majestic appearance; but something wonderful and exceedingly magnificent was the grandeur about him," and was made known to Judas as a "lover of the
  • 76.
    brethren, who prayethmuch for the people and for the holy city, to wit, Jeremiah the prophet of God. And Jeremiah stretching forth his right hand delivered over to Judas a sword of gold."[454] The Son of Sirach does not fail to include Jeremiah in his praise of famous men; [455] and there is an apocryphal epistle purporting to be written by our prophet.[456] It is noteworthy that in the New Testament Jeremiah is only mentioned by name in the Judaistic Gospel of St. Matthew. In the Christian Church, notwithstanding the lack of popular sympathy, earnest students of the prophet's life and words have ranked him with some of the noblest characters of history. A modern writer enumerates as amongst those with whom he has been compared Cassandra, Phocion, Demosthenes, Dante, Milton, and Savonarola.[457] The list might easily be enlarged, but another parallel has been drawn which has supreme claims on our consideration. The Jews in New Testament times looked for the return of Elijah or Jeremiah to usher in Messiah's reign; and it seemed to some among them that the character and teaching of Jesus of Nazareth identified him with the ancient prophet who had been commissioned "to root out, pull down, destroy and throw down, to build and to plant." The suggested comparison has often been developed, but undue stress has been laid on such accidental and external circumstances as the prophet's celibacy and the statement that he was "sanctified from the womb." The discussion of such details does not greatly lend itself to edification. But it has also been pointed out that there is an essential resemblance between the circumstances and mission of Jeremiah and his Divine Successor, and to this some little space may be devoted. Jeremiah and our Lord appeared at similar crises in the history of Israel and of revealed religion. The prophet foretold the end of the Jewish monarchy, the destruction of the First Temple and of ancient Jerusalem; Christ, in like manner, announced the end of the restored Israel, the destruction of the Second Temple and of the newer
  • 77.
    Jerusalem. In bothcases the doom of the city was followed by the dispersion and captivity of the people. At both eras the religion of Jehovah was supposed to be indissolubly bound up with the Temple and its ritual; and, as we have seen, Jeremiah, like Stephen and Paul and our Lord Himself, was charged with blasphemy because he predicted its coming ruin. The prophet, like Christ, was at variance with the prevalent religious sentiment of his time and with what claimed to be orthodoxy. Both were regarded and treated by the great body of contemporary religious teachers as dangerous and intolerable heretics; and their heresy, as we have said, was practically one and the same. To the champions of the Temple, their teaching seemed purely destructive, an irreverent attack upon fundamental doctrines and indispensable institutions. But the very opposite was the truth; they destroyed nothing but what deserved to perish. Both in Jeremiah's time and in our Lord's, men tried to assure themselves of the permanence of erroneous dogmas and obsolete rites by proclaiming that these were of the essence of Divine Revelation. In either age to succeed in this effort would have been to plunge the world into spiritual darkness: the light of Hebrew prophecy would have been extinguished by the Captivity, or, again, the hope of the Messiah would have melted away like a mirage, when the legions of Titus and Hadrian dispelled so many Jewish dreams. But before the catastrophe came, Jeremiah had taught men that Jehovah's Temple and city were destroyed of His own set purpose, because of the sins of His people; there was no excuse for supposing that He was discredited by the ruin of the place where He had once chosen to set His Name. Thus the Captivity was not the final page in the history of Hebrew religion, but the opening of a new chapter. In like manner Christ and His Apostles, more especially Paul, finally dissociated Revelation from the Temple and its ritual, so that the light of Divine truth was not hidden under the bushel of Judaism, but shone forth upon the whole world from the many- branched candlestick of the Universal Church. Again, in both cases, not only was ancient faith rescued from the ruin of human corruption and commentary, but the purging away of
  • 78.
    the old leavenmade room for a positive statement of new teaching. Jeremiah announced a new covenant—that is, a formal and complete change in the conditions and method of man's service to God and God's beneficence to men. The ancient Church, with its sanctuary, its clergy, and its ritual, was to be superseded by a new order, without sanctuary, clergy, or ritual, wherein every man would enjoy immediate fellowship with his God. This great ideal was virtually ignored by the Jews of the Restoration, but it was set forth afresh by Christ and His Apostles. The "New Covenant" was declared to be ratified by His sacrifice, and was confirmed anew at every commemoration of His death. We read in John iv. 21-23: "The hour cometh, when neither in this mountain, nor in Jerusalem, shall ye worship the Father.... The hour cometh, and now is, when the true worshippers shall worship the Father in spirit and truth." Thus when we confess that the Church is built upon the foundation of the Prophets and Apostles, we have to recognise that to this foundation Jeremiah's ministry supplied indispensable elements, alike by its positive and in its negative parts. This fact was manifest even to Renan, who fully shared the popular prejudices against Jeremiah. Nothing short of Christianity, according to him, is the realisation of the prophet's dream: "Il ajoute un facteur essentiel à l'œuvre humaine; Jérémie est, avant Jean-Baptiste, l'homme qui a le plus contribué à la fondation du Christianisme; il doit compter, malgré la distance des siècles, entre les précurseurs immédiats de Jésus."[458] Printed by Hazell, Watson, & Viney, Ld., London and Aylesbury.
  • 79.
    FOOTNOTES: [1] For spellingsee note, page 4 [2] Cf. Preface. [3] We know little of Nebuchadnezzar's campaigns. In 2 Kings xxiv. 1 we are told that Nebuchadnezzar "came up" in the days of Jehoiakim, and Jehoiakim became his servant three years. It is not clear whether Nebuchadnezzar "came up" immediately after the battle of Carchemish, or at a later time after his return to Babylon. In either case the impression made by his hasty departure from Syria would be the same. Cf. Cheyne, Jeremiah (Men of the Bible), p. 132. I call the Chaldean king Nebuchadnezzar—not Nebuchadrezzar—because the former has been an English household word for centuries. [4] xi. 19. [5] xvi. 2. [6] 2 Kings xxiii. 30-32. [7] Cf. xxii. 26. [8] xxii. 10-12. [9] Ezek. xix. 3, 4. [10] The expression is curious; it usually means all the cities of Judah, except Jerusalem; the LXX. reading varies between "all the Jews" and "all Judah." [11] See especially the exposition of chaps. vii.-x., which are often supposed to be a reproduction of Jeremiah's utterance on this occasion.
  • 80.
    [12] The Hebrewapparently implies that the discourse was a repetition of former prophecies. [13] vii. 12-14. Even if chaps. vii.-x. are not a report of Jeremiah's discourse on this occasion, the few lines in xxvi. are evidently a mere summary, and vii. will best indicate the substance of his utterance. The verses quoted occur towards the beginning of vii.-x., but from the emphatic reference to Shiloh in the brief abstract in xxvi., Jeremiah must have dwelt on this topic, and the fact that the outburst followed his conclusion suggests that he reserved this subject for his peroration. [14] v. 31. [15] Acts xxi. 27-30. [16] 2 Kings xv. 35. [17] Mark xiv. 58. [18] Acts vi. 13, 14, vii. 48. [19] 2 Kings xviii. 4, xxiii.; Isa. xxxvi. 7. [20] vii. 4. [21] Micah iii. 12. As the quotation exactly agrees with the verse in our extant Book of Micah, we may suppose that the elders were acquainted with his prophecies in writing. [22] Psalm xxxi. 13-15, 18, 19. The Psalm is sometimes ascribed to Jeremiah, because it can be so readily applied to this incident. The reader will recognise his characteristic phrase "Terror on every side" (Magor-missabib). [23] This incident cannot be part of the speech of the elders; it would only have told against the point they were trying to make. The various phases—prophesy, persecution, flight, capture, and execution—must have taken some time, and can
  • 81.
    scarcely have precededJeremiah's utterance "at the beginning of the reign of King Jehoiakim." [24] Assuming his sympathy with Deuteronomy. [25] 2 Tim. iv. 3. [26] See Cheyne, Giesebrecht, Orelli, etc. [27] R.V. "against." The Hebrew is ambiguous. [28] So Septuagint. The Hebrew text has Israel, which is a less accurate description of the prophecies, and is less relevant to this particular occasion. [29] Jeremiah (Men of the Bible), p. 132. [30] Cf. Chap. V. on "Baruch." [31] Verses 5-8 seem to be a brief alternative account to 9-26. [32] 1 Chron. xx. i. [33] 'ĀCÛR: A.V., R.V., "shut up"; R.V. margin, "restrained." The term is used in xxxiii. 1, xxxix. 15, in the sense of "imprisoned," but here Jeremiah appears to be at liberty. The phrase 'ĀC̦ ÛR W ĀZÛBH, A.V. "shut up or left" (Deut. xxxii. 36, etc.), has been understood, those under the restraints imposed upon ceremonial uncleanness and those free from these restraints, i.e. everybody; the same meaning has been given to 'ĀC̦ ÛR here. [34] xxvi. 2. [35] So Cheyne; the Hebrew does not make it clear whether the title "scribe" refers to the father or the son. Giesebrecht understands it of Shaphan, who appears as scribe in 2 Kings xxii. 8. He points out that in verse 20 Elishama is called the scribe, but we cannot assume that the title was limited to a single officer of state.
  • 82.
    [36] Cf. xxvi.10. [37] Isa. lviii. 3-8. [38] Micah vi. 6-8. [39] So Orelli, in loco. [40] Hebrew text "to Baruch," which LXX. omits. [41] In verse 18 the word "with ink" is not in the LXX., and may be an accidental repetition of the similar word for "his mouth." [42] The A.V. and R.V. "all the words" is misleading: it should rather be "everything"; the princes did not recite all the contents of the roll. [43] The English tenses "cut," "cast," are ambiguous, but the Hebrew implies that the "cutting" and "casting on the fire" were repeated again and again. [44] One is called Jerahmeel the son of Hammelech (A.V.), or "the king's son" (R.V.); if the latter is correct we must understand merely a prince of the blood-royal and not a son of Jehoiakim, who was only thirty. [45] For verses 29-31 see Chap. VI., where they are dealt with in connection with xxii. 13-19. [46] The supposition that Jeremiah had written notes of previous prophecies is not an impossible one, but it is a pure conjecture. [47] Cf. Orelli, in loco. [48] Num. vi. 2. [49] xix. 94. [50] Scott, Legend of Montrose, chap. xxii.
  • 83.
    [51] The term"house of the Rechabites" in verse 2 means "family" or "clan," and does not refer to a building. [52] Eight Jeremiahs occur in O.T. [53] Literally "sons of Hanan." [54] Jeremiah, according to this view, had no interview with the Rechabites, but made an imaginary incident a text for his discourse. [55] ii. 10, 11. [56] Matt. xi. 21, 22. [57] Ch. Hist., ii. 23. [58] Antt., x. 9, 1. [59] xxxvi. 26, 32. [60] In order of time, ch. xxxvi. [61] xxxii. [62] xliii. [63] Antt., x. 9, 1. [64] Bissell's Introduction to Baruch in Lange's Commentary. [65] So LXX., which here probably gives the true order. [66] The clause "I am weary with my groaning" also occurs in Psalm vi. 6. [67] The concluding clause of the verse is omitted by LXX., and is probably a gloss added to indicate that the ruin would not be confined to Judah, but would extend "over the whole earth." Cf. Kautzsch. [68] Hist. of Israel, iii., 293.
  • 84.
    [69] 2 Kingsxxiii. 34-xxiv. 7. [70] iii. 274. [71] xxii. 30. [72] R.V., "Ah my brother! or Ah sister!... Ah lord! or Ah his glory!" The text is based on an emendation of Graetz, following the Syriac. (Giesebrecht.) [73] Chap. xiii. [74] Jude 9. [75] Apc. vi. 10. [76] xxii. 17. The exact meaning of the word translated "violence" (so A.V., R.V.) is very doubtful. [77] Hist., etc., iii. 266. [78] Rawlinson, Ancient Egypt (Story of the Nations). [79] Dan. iv. 30. [80] I have followed R.V., but the text is probably corrupt. Cheyne follows LXX. (A) in reading "because thou viest with Ahab": LXX. (B) has "Ahaz" (so Ewald). Giesebrecht proposes to neglect the accents and translate, "viest in cedar buildings with thy father" (i.e. Solomon). [81] According to Giesebrecht (cf. however the last note) this clause is an objection which the prophet puts into the mouth of the king. "My father enjoyed the good things of life—why should not I?" The prophet rejoins, "Nay, but he did judgment," etc. [82] Isa. lvii. (English Versions). [83] Macc. ii. 59, ix. 10.
  • 85.
    [84] iii. 269. [85]P. 142. [86] Also called Coniah and Jeconiah. [87] Considerable portions of chaps. i.-xx. are referred to the reigns of Jehoiakim and Jehoiachin: see previous volume on Jeremiah. [88] i. 18. [89] The Chronicler's account of Jehoiakim's end (2 Chron. xxviii. 6-8) is due to a misunderstanding of the older records. According to Chronicles Jehoiachin was only eight, but all our data indicate that Kings is right. [90] In LXX. of 2 Chron. xxxvi. 8, Jehoiakim, like Manasseh and Amon, was "buried in the garden of Uzza": B, Ganozæ; A, Ganozan. Cheyne is inclined to accept this statement, which he regards as derived from tradition. [91] xxxvi. 30. [92] So A. B. Davidson in Cambridge Bible, etc., by a slight conjectural emendation; there have been many other suggested corrections of the text. The Hebrew text as it stands would mean literally "he knew their widows" (R.V. margin); A.V., R.V., by a slight change, "he knew their (A.V. desolate) palaces." [93] Ezek. xix. 5-7. [94] 2 Kings xxiv. 8-17. [95] 2 Kings xxv. 27-30; Jer. lii. 31-34. [96] The Hebrew verbs are in 2 s. fem.; the person addressed is not named, but from analogy she can only be the "Daughter of Zion," i.e. Jerusalem personified.
  • 86.
    [97] Identified withthe mountains of Moab. [98] R.V. margin, with LXX., Vulg., and Syr. [99] Milman's Latin Christianity, vi. 392. [100] 1 Chron. iii. 17 mentions the "sons" of Jeconiah, and in Matt. i. 12 Shealtiel is called his "son," but in Luke iii. 27 Shealtiel is called the son of Neri. [101] xxxvii. 2. [102] 2 Kings xxiv. 18-20. [103] 2 Chron. xxxvi. 10 makes Zedekiah the brother of Jehoiachin, possibly using the word in the general sense of "relation." Zedekiah's age shows that he cannot have been the son of Jehoiakim. [104] Ezek. xvii. 13, 14. [105] xxiv. [106] vii.-xi. [107] viii. [108] Gen. xlix. 24, J. from older source. Micah v. 5. [109] ix.-xi., xiii. 7-9. [110] Ezek. xxxiv. 2-5. [111] Zech. x. 3, xi. 5. [112] xxv. 34-38. [113] Froude, i. 205. [114] LXX. See R.V. margin.
  • 87.
    [115] Possibly, however,the insertion of this passage in one of the books may have been the work of an editor, and we cannot be sure that, in Jeremiah's time, collections entitled Isaiah and Micah both included this section. [116] xxvi. 20. [117] So LXX. and modern editors: see Giesebrecht, in loco. R.V. "What burden!" [118] vii. 14; but cf. R.V.; "I was," etc. [119] Zech. xiii. 2-5. Post-exilic, according to most critics (Driver's Introduction, in loco). [120] Froude, ii. 474. [121] The close connection between xxvii. and xxviii. shows that the date in xxviii. 1, "the fourth year of Zedekiah," covers both chapters. "Jehoiakim" in xxvii. 1 is a misreading for "Zedekiah": see R.V. margin. [122] 1 Kings xxii. 11. [123] The rest of this verse has apparently been inserted from xxvii. 6 by a scribe. It is omitted by the LXX. [124] xxii. 15-25. [125] Doubts have been expressed as to whether this verse originally formed part of Jeremiah's letter, or was ever written by him; but in view of his numerous references to a coming restoration those doubts are unnecessary. [126] The Hebrew Text inserts a paragraph (vv. 16-20) substantially identical with other portions of the book, especially xxiv. 8-10, announcing the approaching ruin and captivity of Zedekiah and the Jews still remaining in Judah. This section is omitted by the LXX., and breaks the obvious connection between verses 15 and 21.
  • 88.
    [127] Smith's Assurbanipal,p. 163. [128] 2 Macc. vii. 5. [129] lii. 24; 2 Kings xxv. 18. [130] Ecce Homo, xxi. [131] li. 59, Hebrew Text. According to the LXX., Zedekiah sent another embassy and did not go himself to Babylon. The section is apparently a late addition. [132] xvii. 15. [133] xxvi. 2. [134] Ezek. xxi. 21. [135] xxv. 1-7. [136] xxi. 1-10. The exact date of this section is not given, but it is closely parallel to xxxiv. 1-7, and seems to belong to the same period. [137] xxi. 1-10. [138] Deut. xv. 12. Cf. Exod. xxi. 2, xxiii. 10. [139] xxxiv. 14. [140] xxxiv. 13. [141] 2 Kings xxiii. 3. [142] xxxiv. 15. [143] xxxiv. 9. [144] Gen. xv. [145] xxxiv. 19. [146] Ezek. xvii. 17.
  • 89.
    [147] Hosea vi.4. [148] Milman's Latin Christianity, viii. 255. [149] Cf. xxxii. 6-8. [150] xxxvii. 12; so R.V., Streane (Camb. Bible), Kautzsch, etc. [151] xxvi. 10. [152] xxxviii. 1. [153] Cf. Renan, iii. 333. [154] Gen. xxxvii. 22-24. [155] xxxix. 15-18. [156] So Giesebrecht, in loco; A.V., R.V., "third entry." In any case it will naturally be a passage from the palace to the Temple. [157] Chapter lii. = 2 Kings xxiv. 18-xxv. 30, and xxxix. 1-10 = lii. 4-16, in each case with minor variations which do not specially bear upon our subject. Cf. Driver, Introduction, in loco. The detailed treatment of this section belongs to the exposition of the Book of Kings. [158] Literally "the house"—either Jeremiah's or Gedaliah's, or possibly the royal palace. [159] lii. 6, 12. [160] Pulpit Commentary, in loco. Cf. the previous volume on Jeremiah in this series. [161] The sequence of verses 4 and 5 has been spoilt by some corruption of the text. The versions diverge variously from the Hebrew. Possibly the original text told how Jeremiah found himself unable to give an immediate answer, and Nebuzaradan,
  • 90.
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