Introduction
Dr. Russell Sobel gave a guest lecture at Oklahoma State University last week, where he discussed the research that went into writing his book on Joseph Schumpeter. Dr. Sobel’s background is in economics and entrepreneurship, specifically the connection between the two and how entrepreneurial activity and economic models can demonstrate progress or decline. So, when he was asked to write this book, it was a no-brainer. I enjoyed every second of Dr. Sobel’s lecture and will highlight a few key points I found particularly interesting—from his explanation of how the automobile overtook the horse-and-buggy industry and its surprising connection to dog food, to his final words of advice about staying resilient and creative in adapting to a changing society.
What is an Entrepreneur?
To begin his talk, he introduced three unique definitions of entrepreneurship. Of these, I resonated most with his third and broadest definition—an entrepreneur is “an agent of change.” This definition includes not only the “Elon Musks” of the world, who introduce groundbreaking innovations, but also those who make smaller, yet still significant, changes. I’ve always believed that if someone is crafty or creative and chooses to make money off their hobbies on Etsy or eBay, they are an entrepreneur. Likewise, someone who rents out an existing property and reinvests the earnings into something bigger or better would also qualify. The key aspect that defines an entrepreneur in my view is their willingness to take a risk for the potential of profit. However, before this lecture, I wouldn’t have considered franchise owners or general managers to be entrepreneurs. After Dr. Sobel’s talk, I can confidently say my perspective has changed. These individuals still fit my definition, and they definitely align with the broad definition Dr. Sobel presented.
Discovery and Profit/Losses
One of the most fascinating parts of Dr. Sobel’s lecture, and probably my favorite, was how he applied numbers and mathematical reasoning to entrepreneurship. This resonated with me as an engineering student. He referenced Israel Kirzner, an Austrian economist who built upon the theory of entrepreneurship, explaining that entrepreneurs discover overlooked or unknown profit opportunities. He then introduced an idea that the rate of discovery is influenced by the potential profit or losses involved. To illustrate this, he described an experiment where participants were given one chance to transfer water from one bucket to another without touching the buckets. The groups that were promised larger rewards were significantly more creative in their methods compared to those who were offered something minimal, like a $5 McDonald’s gift card.
Invention vs. Innovation
Dr. Sobel then went on to clarify a crucial distinction—an invention is not the same as an innovation. Just because something new is created doesn’t mean it qualifies as an innovation. For an invention to become an innovation, it must enter the market, serve a broad audience, and generate profit. Innovations and inventions often arise when resources are combined in new ways, which is where Schumpeter’s work becomes particularly relevant.
Joseph Schumpeter
Joseph Schumpeter, another Austrian economist, made several key contributions to the field of entrepreneurship, but he is best known for coining the term “creative destruction.” In essence, this concept means that in order for something new, better, and more innovative to emerge, the previous version must be disrupted or even eliminated. Schumpeter strongly believed that allowing this process to unfold was essential for economic and societal progress. A prime example is the transition from horse-drawn carriages to automobiles. At the time, many resisted this change, but looking back, it’s clear that we are far better off with automobiles than we would have been had we clung to the past.
A major component of entrepreneurship in the wake of creative destruction is figuring out what to do with the remnants of what was replaced. This was another point Dr. Sobel emphasized—entrepreneurs don’t just create new things; they also find ways to repurpose and reinvent what’s left behind. A modern example would be the repurposing of abandoned malls. Instead of allowing these massive structures to sit empty, entrepreneurs have transformed them into indoor entertainment centers, office spaces, or even housing developments. The ability to recognize and capitalize on these opportunities is a key trait of successful entrepreneurs.
Conclusion
Dr. Sobel’s final and most impactful message was that in a world where the economy and society are constantly evolving, we must remain adaptable, leveraging our skills in creative ways to stay relevant. He encouraged us to embrace flexibility and find ways to apply our abilities wherever they are needed. Although I am an engineering student and plan to work in the field for the foreseeable future, I also have interests in real estate, educational outreach, music, and art. While it’s unlikely that all engineering jobs will be replaced by AI, I’m not willing to take that chance. Keeping my skills diversified ensures that I can pivot and thrive no matter how the job market shifts.
Overall, Dr. Sobel’s lecture provided incredible insight into entrepreneurship and its role in shaping economic progress. His discussion of Schumpeter’s “creative destruction” theory, the mathematics behind entrepreneurial discovery, and the importance of adaptability left a lasting impression on me. The world is constantly changing, and those who can recognize opportunities, take risks, and creatively apply their skills will always have a place in it.