how to rapidly stimulate a local - babson college€¦ · • media writing new stories about local...
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Five Practical Principles for Driving Economic GrowthApril 16, 2017
@danisen
How to Rapidly Stimulate a LocalEntrepreneurship Ecosystem
Daniel Isenberg, Professor of Entrepreneurship Practice
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BABSON COLLEGE — ALL RIGHTS RESERVED
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
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BABSON COLLEGE — ALL RIGHTS RESERVED
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
![Page 4: How to Rapidly Stimulate a Local - Babson College€¦ · • Media writing new stories about local firms growing ... •Coaching, mentoring •Tax credits •Government venture fund](https://reader033.vdocuments.us/reader033/viewer/2022050102/5f41797e02e99a14dc7fb18c/html5/thumbnails/4.jpg)
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
ntre
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Po
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En
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pre
ne
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hip
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
ntre
pre
ne
urs
hip
Po
licy A
dvis
ors
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
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A Growth-Obsessed & Growth-Enabled Region
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En
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pre
ne
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
ntre
pre
ne
urs
hip
Po
licy A
dvis
ors
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BABSON COLLEGE — ALL RIGHTS RESERVED
What is going on?
It is method, not magic.
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“Five P’s”Five (of many) Practical Principles on How to
Drive Rapid Economic Growth
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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”
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BABSON COLLEGE — ALL RIGHTS RESERVED
Five “P” Practical Principles
• Place: Choose a specific region, not a country
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Entrepreneurship ecosystems are “hyper-local”
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Entrepreneurship ecosystems are “hyper-local”
14
CIC
Boston Innovation District
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Boston Innovation
District
29 MILES
Boston Innovation
District
29 MILES
Entrepreneurship ecosystems are “hyper-local”
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Companies between
$1-$10 million revenues
19, 232 companies
Greater Milwaukee
7,963 companies
Milwaukee
5,264 companies
Waukesha
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BABSON COLLEGE — ALL RIGHTS RESERVED
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)
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BABSON COLLEGE — ALL RIGHTS RESERVED
Five practical principles
• 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
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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
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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
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Scale ups (high growth) create jobs
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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
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BABSON COLLEGE — ALL RIGHTS RESERVED
Five practical principles
• 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
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BABSON COLLEGE — ALL RIGHTS RESERVED
The Entrepreneurship Ecosystem
24
Growth
Entrepreneurship
Policy
Finance
Culture
Supports
Human Capital
Markets
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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
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Innovation Family business
Self-employment
Startups
Silicon Valley
Micro-enterprise
Technology
Getting the leaders aligned is one of the most important tasks
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BABSON COLLEGE — ALL RIGHTS RESERVED
Driving Economic Growth through Entrepreneurship
Ecosystems May 11-13, 2015
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BABSON COLLEGE — ALL RIGHTS RESERVED
Five practical principles
• 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. 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
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BABSON COLLEGE — ALL RIGHTS RESERVED
Rule of thumb:
29
High Growth
Entrepreneurship
Policy
Finance
Culture
Supports
Human Capital
Markets
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Arequipa, Peru
~10 companies
Concepcion, Chile
~12 companies
Cordoba, Argentina
~13 companies
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BABSON COLLEGE — ALL RIGHTS RESERVED
Five practical principles
• 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. 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”
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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
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Growth is the Focus in Scale Up Milwaukee
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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
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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
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BABSON COLLEGE — ALL RIGHTS RESERVED
Scaling up a BEEP program
GovernanceProfessional
team
Project team
Growth
Entrepreneurship
Policy
Finance
Culture
Supports
Human Capital
Markets
Programming in all
Six domains
• Program
• Pilot
• Evaluate
• Scale
• Integrate
• Innovate
• Project manage
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BABSON COLLEGE — ALL RIGHTS RESERVED
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.
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BABSON COLLEGE — ALL RIGHTS RESERVED
Driving Economic Growth through Entrepreneurship
Ecosystems May 11-13, 2015
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President Santos’ Comments on Manizales-Mas