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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
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
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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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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hip
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dvis
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En
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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
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hip
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dvis
ors
En
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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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Copyright © 2011, 2012 , 2013 Daniel Isenberg
Entrepreneurship Policy AdvisorsE
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BABSON COLLEGE — ALL RIGHTS RESERVED
What is going on?
It is method, not magic.
“Five P’s”Five (of many) Practical Principles on How to
Drive Rapid Economic Growth
BABSON COLLEGE — ALL RIGHTS RESERVED
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”
BABSON COLLEGE — ALL RIGHTS RESERVED
Five “P” Practical Principles
• Place: Choose a specific region, not a country
Entrepreneurship ecosystems are “hyper-local”
Entrepreneurship ecosystems are “hyper-local”
14
CIC
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
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)
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
BABSON COLLEGE — ALL RIGHTS RESERVED
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
BABSON COLLEGE — ALL RIGHTS RESERVED
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
BABSON COLLEGE — ALL RIGHTS RESERVED
Scale ups (high growth) create jobs
BABSON COLLEGE — ALL RIGHTS RESERVED
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
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
BABSON COLLEGE — ALL RIGHTS RESERVED
The Entrepreneurship Ecosystem
24
Growth
Entrepreneurship
Policy
Finance
Culture
Supports
Human Capital
Markets
BABSON COLLEGE — ALL RIGHTS RESERVED
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
BABSON COLLEGE — ALL RIGHTS RESERVED
Driving Economic Growth through Entrepreneurship
Ecosystems May 11-13, 2015
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
BABSON COLLEGE — ALL RIGHTS RESERVED
Rule of thumb:
29
High Growth
Entrepreneurship
Policy
Finance
Culture
Supports
Human Capital
Markets
BABSON COLLEGE — ALL RIGHTS RESERVED
Arequipa, Peru
~10 companies
Concepcion, Chile
~12 companies
Cordoba, Argentina
~13 companies
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”
BABSON COLLEGE — ALL RIGHTS RESERVED
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
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
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.
BABSON COLLEGE — ALL RIGHTS RESERVED
Driving Economic Growth through Entrepreneurship
Ecosystems May 11-13, 2015
President Santos’ Comments on Manizales-Mas
Thank youDaniel Isenberg