Over the last 25 years, almost all of the private sector jobs have been created by businesses less than 5 years old.
It’s because of this fact, that I believe most economic development strategies are broken. They focus on convincing bigger, established companies from outside of the region to open up new, remote offices, and focus less on fostering new growth opportunities by startups, building disruptive technologies.
One of my true passions in life is building communities. Connecting people to each other to solve the worlds biggest problems is something I do all the time. I’ve also been a technology entrepreneur for 15 years, building disruptive technologies.
The approach I’ve outlined below is one of treating Economic Development like a business. If I ran a business whose customer was the region and the services we offered were growing the economy, then I would apply the same rules of business to that outcome. It’s with that perspective that I offer up what I believe to be the following framework to approach creating a truly high growth regional economy.
This essay is void of politics and historical context as I feel it would confuse the conversation I’m hoping to spark. It’s not about working within boundaries, it’s about doing the right things regardless of the challenges in doing so.
The goal of this essay is to share 7 key perspectives that I believe will have the biggest impact on growing a region’s economy:
- Be world class at one growth sector
- The person who cares the most should be in charge
- Proximity matters
- Recruit the best mentors and advisors
- Recruit the best entrepreneurs in the world
- Pattern match against the world’s best innovators
- Tell stories and celebrate failures
1. Be World Class At ONE Growth Sector First
The key to building a great business is to focus and solve a core problem in the market, and focus on that one solution until it works, or pivot. Building a growth economy should follow the same approach. Choosing one sector that has the right characteristics of growth, and that you have the experience and culture to become world class at is a key in getting the foundation right.
Focus and it will expand:
Most regions have TOO MANY industries that they’re making bets on and most are fledgeling or dying. The concept of focus is no different than Jack Welch at GE saying, “Unless we’re #1 or #2 in a category, let’s get out of it,” or Steve Jobs returning to apple, drawing a quadrant and explaining how they would only focus on products in one of these 4 areas. Focus and it will expand.
Once you get traction, then the market will inherently spawn other pockets of industry but it usually starts with one that everyone got behind to push it forward.
Choosing a true Growth Sector:
Growth sectors aren’t ones that are sunsetting, or lack growth. It’s ones that have, or are on the verge of breaking out into multi-billion dollar industries. We live in a time of abundance and there are so many to choose from. Here’s a partial list:
- 3D Printing
- Stem Cells
- Virtual Reality
- and many others…
Go All In, Don’t Just Dip Your Toes
Where most regions go wrong is that they take a dying or stagnant industry and argue that it’s one of potential growth, but it isn’t. The list of industries, especially around information technology, have been well defined and discussed. Here’s a sample list:
As an example, many regions have a strong manufacturing base, but they hardly have 1 or 2 industrial strength 3D printers, let alone a thriving community around it. Choosing one growth industry and putting all of your energy behind it will build the foundation for innovation. It’s important to go ALL in.
Silicon Valley started with silicon. Why not create 3D Printing Alley, or Drone Alley? This is not a new idea and it’s one that is picking up steam around the world.
2. The Person Who Cares The Most Should Be In Charge
Every region that is growing is built off of the effort of its leaders. The best way to get more done is to recruit more leaders. Many regions have potential leaders that just need a push. Most of the time these are existing entrepreneurs.
Why Entrepreneurs? Because they know who to get things done. They aren’t weighed down by politics or hidden agendas. Their focus is on creating something special regardless of the effort. They’re committed to long term plans that span decades. The best thing you can do is identify them, challenge them to start something and support their efforts in every way possible. This also means that you won’t have control over it.
The Government Cannot Be in Charge The biggest challenge is letting go. Many regions feel it’s their responsibility to create organizations and events to build the region’s economical prosperity. I believe you need to support, but not lead. You can spark the interest and argue the need for something to exist, but let someone else lead.
There are 2 benefits of this:
- The resources required are usually less if someone is doing it out of passion
- They actually know how to get shit done.
Many people believe governments should be great at marketing, community development, strategy, etc … but I don’t. Instead, I suggest appointing someone as the leader of an initiative and supporting them financially and with resources, but staying out of their way.
Existing Incumbents Cannot Be a Part of The Investment
True disruptive innovation occurs when it cannibalizes existing incumbents. Just look at the mini steel mills, the iPhone, or the internet on publishing. Disruptive innovation has been documented at length by Clayton Christensen in, The Innovators Dilemma. That’s why existing incumbents cannot be the leaders of this investment. Their self-interest and self-preservation tendencies will not support it once it starts to create conflicts. Why would they? It’s going to disrupt their businesses.
Many pretend like they want to have it ignite, but it’s a false statement. If anything, it can be harmful to have incumbents involved. It’s always important to have local industry be early adopters of technology, but not lead it. Innovation requires fuel that doesn’t come from complacent, stagnant industries.
3. Proximity Is Required
One of the biggest failures from the outset of building a community is the lack of density around a geographical location. Even with all of the advancements in technology, NOTHING beats face to face conversations. Luck and opportunity are born out of serendipity. The best way to foster this is to ensure that there’s enough density among everyone involved in a physical community, so that collisions occur.
It requires more than just a space, a school or a program. It requires that all of the above are near each other physically. Ideally they would be in the same neighbourhood and people from each location would frequent the same coffee shops, restaurants and co-working space.
Anytime you fracture the resources into smaller communities – either around town, or across different cities in a region, you dilute the impact and the ability for a community to evolve quickly. Another way to increase community is to build out events and invite incredible speakers to share what they’ve learned. Bringing people together from across a region on a consistent basis is another way to improve proximity challenges.
4. The Best Mentors and Companies To Be Involved
The value in a community is derived from its network. Networks expand exponentially when you add a node to it that is connected to other networks. One way to increase your leverage is to be deliberate in who you recruit to mentor or advise the companies. The best mentors are those who understand the industry and are willing to spend real time with the companies.
Mentoring does not mean giving a talk or conducting a Skype Q&A. It means coming into the building with the other companies, sharing their “real” story (avoiding success theatre), and sticking around afterwards to answer private questions from the founders.
Recruiting mentors is easily one of the toughest jobs because most communities aren’t interesting. They don’t know how to sell themselves, or create value for the mentors. It needs to be a two way street.
Most regions actually have healthy networks to pull from but are too lazy to do the hard work. It requires someone to identify the right people, then find a connection back to your community. This can be done via University affiliations, companies or existing mentors supporting an introduction.
If you have the best mentors, you’ll foster the best people. The best way to learn is through osmosis.
5. Recruit The Best Entrepreneurs To Engage
I believe that the more high growth founders you have in a region, the higher the economic output. Most regions have ~1% of their population who are high growth founders. So how do you increase it? The suggestions listed above will help attract them, but there’s other strategies and one that I feel isn’t being evaluated, and that is: recruit them.
Ways To Recruit High Growth Entrepreneurs
There’s never been a moment in time where you can find all of the entrepreneurs from around the world. Social networking and vertically focused communities have allowed founders to connect with each other, ideas and investors. If the data exists to identify some of the best, then why not recruit them?
The world’s best are standing with their hands up, here’s where to find them:
Accelerators: Almost all accelerators in the world list their portfolio companies. There founders are typically pre-qualified as high growth founders due to the nature of selection process of the accelerator and their startups focus. There’s estimated to be over 1500 accelerators around the world, that’s A LOT of high growth founders.
Social Media: In todays world of techonology founders sharing on social media, there’s a lot of data you could use to analyze the right founders on social networks like Twitter & LinkedIn to identify the right founders for your region.
Crowdfunding Sites: Never has there been so many sites that allow anyone to review great companies, but also their founders. AngelList, KickStarter, Fundable, Indiegogo, etc are filled with 10,000’s of founders looking to leave a dent on the universe and are a great place to look for high growth founders.
This is only a partial list, but the idea is to identify them and recruit them to join your ecosystem of innovation.
What’s In It For Them:
Now that you know where they’re at, it’s time to give them a compelling reason to relocate to your community. This is where all of the work above comes in to play. When you focus on being the best at one thing, it becomes extremely compelling to an entrepreneur who wants to build a company in that space.
If you’ve recruited the best mentors and built out a strong community, then those are differentiate benefits you can offer. To build a world class region, you need to learn how to package and communicate the story. They won’t come for the money – well they may come, but they’ll quickly leave when it runs out – they’ll come & stay for the support and network.
6. Pattern Match Against World Class Communities
One of the ways you can accelerate an investment in a growth sector community is to borrow inspiration from existing innovation models from around the world. Regardless of the sector, there’s existing organizations that are considered world class.
R&D: Rob & Duplicate
Your best bet is to copy as much as you can from those entities so you can get the fastest results. In business I call this R&D (Rob & Duplicate). It’s a faster way to create something of value from the outset that you can extand and improve as it grows.
Connects You To The Networks
The other big benefit of leveraging existing networks for your region is that it connects you to the networks. You could build your own accelerator, but not being part of Global Accelerator Network would be a lost opportunity. Same goes for creating a 54 hour event for communities to experience building a startup first hand, working with Startup Weekend would be a much better way to create this. There’s so many great organizations that you can help you get going and that will teach you best practices and plug you into their network of sponsors and mentors.
Startup Events / Organizations
- Startup Digest
- 1 Million Cups
- Ignite Talks
- Women 2.0
- plus many others…
7. Tell Stories and Celebrate Failures
The reason why Silicon Valley exists is because everyone supports the entrepreneur and they help them to tell their story. One of the best things you can do to build a community that grows and builds innovative companies is to celebrate their successes AND failures. Anyone who stands up and tries should be recognized, regardless of the outcome.
Video, Podcasts & Blogs
One of the most powerful forces in the world is story. The best investment in a community would be to have groups documenting and sharing those stories. This is a missed opportunity for most regions. One thing I would suggest is no talk goes unrecorded. Everyone has the ability to record on their mobile phone and upload to YouTube for the rest of the world to see. The same is true for blogging and creating podcasts. The more people documenting the stories, the more content will be available to inspire and attract others.
The core thesis of this essay is 1) focus, 2) it’s all about the people. The ideas above are just attempts to broaden the thinking of why you should do this, and the best ways to engage people to contribute to the ideas.
How have you created community and innovation in your community? What resources or tools have you used to build it? Leave a comment below with your answers. Have an incredible day!