How to Rapidly Stimulate a Local - Babson College€¦ · • Media writing new stories about local...

Five Practical Principles for Driving Economic GrowthApril 16, 2017

@danisen

How to Rapidly Stimulate a LocalEntrepreneurship Ecosystem

Daniel Isenberg, Professor of Entrepreneurship Practice

disen@babson.edu

First, imagine a regional economy, a medium sized metro area of 1 million peopleAnd imagine after three years:

• Dozens of firms increasing growth rates by 25-50%

• Manufacturers expanding facilities

• Local ventures winning first export contracts

• Banks increasing their loan portfolios,

• Equity investors making more investments

• Universities offering new courses on growth

• Media writing new stories about local firms growing

• VIPs from around the world coming to see the change

• There is “growth in the air”

• Growth becomes infectious, spirals

First, imagine a regional economy, a medium sized metro area of 1 million peopleAnd imagine after three years:

• Dozens of firms increasing growth rates by 25-50%

• Manufacturers expanding facilities

• Local ventures winning first export contracts

• Banks increasing their loan portfolios,

• Equity investors making more investments

• Universities offering new courses on growth

• Media writing new stories about local firms growing

• VIPs from around the world coming to see the change

• There is “growth in the air”

• Growth becomes infectious, spirals

licy A

Entrepreneurship Policy AdvisorsE

licy A

A Growth-Obsessed & Growth-Enabled Region

licy A

What is going on?

It is method, not magic.

“Five P’s”Five (of many) Practical Principles on How to

Drive Rapid Economic Growth

Five “P” Practical Principles

• Place: Choose a specific region, not a country

• High Potential: Focus on existing ventures with revenues rather than startups, or micro-enterprises, or conglomerates

• People: Get 15-20 most influential local leaders from different sectors of ecosystem for training, alignment, and planning

• Purpose: Set specific objectives for firm growth

• Practicality: Achieve and broadly communicate “quick wins”

Five “P” Practical Principles

• Place: Choose a specific region, not a country

Entrepreneurship ecosystems are “hyper-local”

Boston Innovation District

Boston Innovation

District

29 MILES

Boston Innovation

District

29 MILES

Entrepreneurship ecosystems are “hyper-local”

Companies between

$1-$10 million revenues

19, 232 companies

Greater Milwaukee

7,963 companies

Milwaukee

5,264 companies

Waukesha

Five practical principles

• Place: Choose a specific region, usually not a country

Variability within countries

Is greater than between

Nations are not usually good

units of analysis

.5 million – 2 million population

(very approximately)

• Place: Choose a specific region, usually not a country

• High Potential: Focus on existing ventures with revenues rather than startups, micro-enterprises, small businesses or large companies

Vast majority of initiatives are focused on new venture creation (startups)

• Incubators

• Angel networks

• Startup movements (Startup America etc.)

• Equity and other crowdfunding

• Small business incentives

• Coaching, mentoring

• Tax credits

• Government venture fund creation

Startup and Scale Ups are very different

• Start

– High number of new firm registrations

– High survival rates in startup phase

– Large numbers of owners

• Growth

– High growth rates

– Competition for talent

– Low firm registrations

– Low survival rates in start up phase

“Startups create jobs” misleading for 3 reasons

- Startups also shed jobs

- Those that do are much fewer than 1% of firms

- The jobs tend to be low paying

Scale ups (high growth) create jobs

Scale ups - High growth firms

• 1% to 6% of all firms which surpass 10 employees or $1 million revenues

• In basic industries (food, logistics, distribution, finance)

• Tend to be 15-30 years old

• Tend to grow in “spurts” which can be triggered by many events

• Place. Choose a specific region, usually not a country

• Potential. Focus on existing ventures with revenues rather than startups, micro-enterprises, or large companies

• People. Convene 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning

The Entrepreneurship Ecosystem

Growth

Entrepreneurship

Policy

Finance

Culture

Supports

Human Capital

Markets

Policymakers and public leaders

Financial actors

Culture impacters

Support organizations,

event organizers

Educators and developers of human capital

Corporations

Growth

Entrepreneurship

Each Ecosystem Domain has Official or Unofficial Leaders

Innovation Family business

Self-employment

Startups

Silicon Valley

Micro-enterprise

Technology

Getting the leaders aligned is one of the most important tasks

Driving Economic Growth through Entrepreneurship

Ecosystems May 11-13, 2015

• People. Get 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning

• Purpose. Set specific objectives for how many firms need to growth more rapidly

Rule of thumb:

High Growth

Entrepreneurship

Policy

Finance

Culture

Supports

Human Capital

Markets

Arequipa, Peru

~10 companies

Concepcion, Chile

~12 companies

Cordoba, Argentina

~13 companies

• People. Get 15-20 most influential local leaders from different sectors of ecosystem for education, alignment, and planning

• Purpose. Set specific objectives for firm growth

• Practicality. Achieve “quick wins”

Examples of quick wins (6 months)

• Scalerator Program for $1-$10 mio revenue companies

• Mayor’s Entrepreneurship Programming

• CEO Forum (for larger local corporations)

• Multi-stakeholder Roundtables

• Local Case Writing

• ScaleCorps program for executives and entrepreneurs (not startups)

• Loan Officer Training

Growth is the Focus in Scale Up Milwaukee

Babson Community :

Taking Charge of Change

Vini Onyemah

Elaine Eisenman

Les Charm

Daniel Isenberg

Oriana Torres ‘13

Antonette Ho

Candy Brush

Kevin Mulcahy

Angela Sanchez ‘11

Mary GaleMatt Allen

Sofia Stolberg 4 BEEE Staff

Babson Community :

Taking Charge of Change

Vini Onyemah

Elaine Eisenman

Les Charm

Daniel Isenberg

Oriana Torres ‘13

Antonette Ho

Candy Brush

Kevin Mulcahy

Angela Sanchez ‘11

Mary GaleMatt Allen

Sofia Stolberg 4 BEEE Staff

Scaling up a BEEP program

GovernanceProfessional

Project team

Growth

Entrepreneurship

Policy

Finance

Culture

Supports

Human Capital

Markets

Programming in all

Six domains

• Program

• Pilot

• Evaluate

• Scale

• Integrate

• Innovate

• Project manage

Takeaways

• Rapid economic growth is possible if

• You conceptualize entrepreneurship as growth

• You convene a group of leaders, different sectors

• From a specific location

• Set specific growth objectives

• Work quickly to generate evidence of progress

The public cost of a BEEP program in a city is <$1

dollar per resident per year for five years.

Driving Economic Growth through Entrepreneurship

Ecosystems May 11-13, 2015

President Santos’ Comments on Manizales-Mas

Thank youDaniel Isenberg

@danisendisen@babson.edu

How to Rapidly Stimulate a Local - Babson College€¦ · • Media writing new stories about local...

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