Page 67 - ENTREPRENEURSHIP Innovation and entrepreneurship

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60 THE PRACTICE OF INNOVATION

encroaching. By the year 2000, fifty percent or more of the steel used
in the United States is likely to come out of mini-mills, while the large,
integrated steel mills will be in irreversible decline.
There is a catch, however, and it is an important one. A similar
incongruity between the economic reality of demand and the econom-
ic reality of the process exists in the paper industry. Only in this case,
we do not know how to convert it into innovation and opportunity.
Despite the constant efforts of the governments of all developed
and most developing countries to increase the demand for paper—
perhaps the only objective on which the governments of all countries
agree—the paper industry has not been doing well. Three years of
“record profits” are invariably followed by five years of “excess
capacity” and losses. Yet we do not, so far, have anything like a
“mini-mill” process for paper. For eighty or ninety years, it has been
known that wood fiber is a monomer; and it should not be too diffi-
cult, one would say, to find a plasticizer that converts it into a poly-
mer. This would convert paper-making from an inherently inefficient
and wasteful mechanical process into an inherently efficient chemical
process. Indeed, almost a hundred years ago this was achieved as far
as making textile fibers out of wood pulp is concerned—in the rayon
process, which dates back to the 1880s. But despite millions spent in
research, nobody has so far found a technique to produce paper that
way.
In an incongruity, as these cases exemplify, the innovative solution
has to be clearly definable. It has to be feasible with the existing,
known technology, and with easily available resources. It requires
hard developmental work, of course. But if a great deal of research
and new knowledge is still needed, it is not yet ready for the entre-
preneur, not yet “ripe.” The innovation that successfully exploits an
incongruity between economic realities has to be simple rather than
complicated, “obvious” rather than grandiose.
In public-service areas, too, major incongruities between econom-
ic realities can be found.
Health care in developed countries offers one example. As recently
as 1929, health care represented an insignificant portion of national
expenditure in all developed countries, taking up a good deal less than
1 percent of gross national product or of consumer expenditures. Now,
half a century later, health care, and expecially the hospital, accounts in
all developed countries for 7 to 11 percent of a much larger gross
national product. Yet economic performance has been going down