Disruptive innovation, the term coined by Harvard Business School Professor Clayton Christensen, is both destructive and creative. Disruptive entrepreneurs displace an existing market, industry or technology, producing something new and more efficient. In doing so, they capture value, but do they also create jobs?
Our survey reveals a close correlation between disruptive strategies for growth and job creation. More than half (52%) identify as disruptors, reporting they had changed at least some or all the rules of their sector, and a further 13% describe themselves as innovators, creating an entirely new product, service or business model in the last year.
The most disruptive entrepreneurs, the 17% of respondents who say they have changed all or many of the rules in their sector, are 58% more likely to forecast an increase in their overall workforce in the next 12 months, compared with their more conventional competitors.
Across the whole sample of entrepreneurs, 59% expect to increase the size of their global workforce, compared with just 47% in 2015, representing a 25% increase in hiring intention, year-on-year. Additionally, entrepreneurs say 12% of all new hires will be young people fresh to employment.
Contrast this with the segment of entrepreneurs who are not breaking the rules in some fundamental way. Just 4 in 10 of these plan to create jobs in the next 12 months — and at a much lower rate of only 3%.
The generative power of youth
Furthermore, nearly 67% of young entrepreneurs — those under 35 — expect to grow their workforce in the year ahead. Additionally, they anticipate their net workforce growth to be 14.4% — almost five times the expected growth rate among those over 55 (3%).
This may feel intuitively right. Younger entrepreneurs are usually at an earlier stage of their company’s life cycle than more mature peers. This is when we would expect to see more dynamic growth, and the figures correlate with entrepreneurs running businesses less than five years old.
But young entrepreneurs are also more than twice as likely to characterize themselves as disruptors than entrepreneurs over the age of 55 (65% compared with 27%). The survey also indicates that younger, more disruptive companies tend to begin life with a more global mindset. They expect to make more hires in overseas markets than their older peers, anticipating 32% of their workforce growth in overseas markets versus just 18% in the over-55 cohort.
This statistic reveals another facet of disruption: it knows no borders. You have only to look at how, for example, mobile payment systems were pioneered in India and Kenya and then migrated to developed economies.
Female entrepreneurship comes of age
Much ink has been spilled discussing women entrepreneurs, their access to funding, and their ability to scale start-ups as fast and effectively as men. Between 2010 and 2015, just 10% of venture dollars globally (US$31.5b) funded a start-up with at least one woman founder, and just 15% of seed dollar investment went to a team that included a woman.1 While these figures remain woefully short of parity, they show a marked increase over previous years.
Women entrepreneurs comprise 37% of survey respondents — the greatest proportion since the survey was first undertaken. They also show strong growth ambitions, and they are scaling. While the median expected hiring increase among male respondents is 8.3%, female respondents expect to increase their workforces by 10.9% — a rate that is 31% higher.
Women under 35 mirror their age group as a whole and expect to swell their teams by 16% over the next 12 months.
Women were more likely than men to have underestimated their hiring growth over the last 12 months, too. Just under half (43%) say they hired more than anticipated compared with just 39% of men. This figure grows to 56% among women entrepreneurs under 35.
Dynamic growth is not, however, limited to youth or women. Our sample of “master entrepreneurs” — those who have competed in their country’s EY Entrepreneur Of The Year™ Program — are the most likely to plan headcount growth in the next 12 months. Nearly three in four (74%) of the program’s alumni plan to increase their employee numbers over the next year.
Size plays a role
Entrepreneurs who reported revenues of more than US$1b in the past year — 6% of the wider sample — were more global in their workforce growth plans than anyone else. More than one-third (35%) of their total workforce growth will be in overseas markets, compared with 29% across the wider sample.
Three countries — China, the US and the UK — are home to 64% of respondents in the US$1b-plus group, and one-third come from just two sectors: manufacturing and technology.
The largest entrepreneurs (by revenue) are most likely to describe themselves as the most disruptive — 3 out of 10 US$1b+ business owners described themselves as changing many or all of the rules of their sector, almost twice the average global figure.
This data shows the advantages of size: greater access to resources, a better brand and reputation, and greater ability to expand internationally.