Post by

Gabito

Farewell to the Young Entrepreneur Myth: Those Over 50 Are the Most Radical Innovators

Published on

yakihonne.com

Sep 3, 2023

As the population is aging in many developed countries, and people are working longer, it's essential to understand how we can better leverage the experience of seniors.

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Julie Wainwright, with almost two decades of experience as a CEO, was around 50 when she created the luxury second-hand platform, The RealReal . Harland Sanders had turned 62 when he founded the Kentucky Fried Chicken (KFC) restaurant chain, and Bernie Marcus was 50 when he opened the first Home Depot store. But how common is this innovative potential among older entrepreneurs?

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As the population is aging in many developed countries, and people are working longer, it's essential to understand how we can better leverage the experience of seniors.

In our study published in July 2023, we provide evidence that older entrepreneurs have a lot to offer. The findings indicate that individuals who start businesses at older ages (beyond 50) are more likely than younger entrepreneurs to introduce radical or disruptive innovations to the market. In other words, innovations that bring about revolutionary changes or entirely new developments in technology. Since these novel products and services benefit the economy, we can conclude that the skills and experiences of older entrepreneurs are highly valuable.

Senior Entrepreneurs Innovate and Sell More

Based on data collected between 2008 and 2017 from 2,900 startup founders in Germany, we discovered that for every additional ten years of age, the likelihood of an entrepreneur introducing an innovation to the market increases by up to 30%.

Late-career entrepreneurs who are highly innovation-focused and have management experience are more than three times as likely as the average in the sample to introduce innovations to the market.

In terms of sales, every ten additional years of age result in approximately €35,000 more in annual sales from innovations, representing nearly 26% more than the sample average. The positive impact of the entrepreneur's age on novel products or services continues until retirement.

On the other hand, younger entrepreneurs tend to introduce more innovations, but they are often more commonplace, focusing on improving processes and a company's product offerings. These innovations might involve creating new software to reduce costs, employing new technologies to shorten production times, or adding new features to make a product or service more user-friendly.

The difference arises from the fact that older entrepreneurs, when creating their own businesses, have two advantages: management experience and greater personal wealth. When combined, these factors enhance their ability to create innovations and develop novel products or services that disrupt markets.

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Breaking the Myth of the Young Entrepreneur

The findings challenge the prevailing stereotype that older business founders are not innovative. We demonstrate the importance of distinguishing between innovations that are merely new to a specific company and those that are new to the market.

For states to benefit from this talent, it is necessary to break the notion that only young people possess entrepreneurial spirit. Concrete measures, such as creating pension plans that encourage longer entrepreneurship, and promoting professional mobility, should be taken.

As for established companies, the conclusions suggest that older workers have significant innovation potential if they are given leadership roles. Managers should question stereotypes about older workers and create workplace environments where it is precisely their original ideas and broad skills that drive innovative changes.

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