The formation of new businesses since the end of the recession has been
lackluster at best. Job creation by new firms has lagged as well. In the latest data
from the good folks at EMSI
(Moscow, Idaho!) where does Idaho rank among the states for net new business
Add in the average number of jobs per startup has declined nationally
since before the recession. And gross job creation peaked in 2005… pretty much
globally. Then look at the self-employed: Those numbers are declining too (also
still at least 25% of the Idaho workforce).
What the bloody hell is going on??
Job creation by startups in Idaho is better than the new business
formation rate would suggest but - just as before the recession* – the
overwhelming percentage of net new jobs comes from the growth of existing
businesses. (Jobs from in-migrating firms remain very low.)
Cities are important, too. By the way, the best correlate of job growth
is population growth. That means we also need to look at within/across states.
Example: Indiana’s data looks pretty good but it’s pretty much all in the
Indianapolis area. Rural areas are seeing a significant move in jobs from rural
to urban. Idaho has the same issues but my SWAG is that we’re at least better
(less bad) than the Hoosiers. Still, we eventually want to decentralize our
DEFRAG of Idaho’s entrepreneurial ecosystem.
What the bloody hell can we DO?
The states (and countries and cities) that ARE seeing strong net business
formation are doing things very differently. The top 1% of those cities look
and act in ways that we can learn from. Some quick examples plus how Idaho can
follow suit. (for example)
1. Listen to the entrepreneurs: The bully
How many people in high places are singing the praises of entrepreneurial
activity? Is the media? Has this filtered down to the local level? More
important, are they listening to the entrepreneurial community? (And actually
hearing what they say?) Too often, cities and states end up listening to the
power players and institutions who with the absolute
best of intentions end up focusing on giving entrepreneurs what they think we
need (not what we actually want).
2. Few of us are truly ambidextrous: Execution/Implementation
A “great” idea is not a great idea unless
you can make it work. (“Better a Grade A entrepreneur and a Grade B idea than
vice-versa!”) Whether the idea is home-grown or a “shiny pebble” we see
elsewhere, there’s a natural tendency to want to do it ourselves (see #3 below)
but our communities deserve the best, yes?
“Ambidextrous” in the management world is
being good at identifying what to do AND being good at implementing, a rarer
skill than we’d like to think. It’s easy to get this backward – ask great
implementers to come up with great ideas. (The ambidextrous few are invaluable,
3. Listen to the experts: No more amateur
Why would you give creative input to those who’ve been awful for
literally decades, especially when A+ expertise is readily available? (And why
would you give them creative control? Sigh… ) Communities have this maddening
tendency to want to do things themselves. Yes, we need deep, broad local buy-in
and effort. But there is so much expertise at Idaho’s fingertips that is
outside the borders (and willing to help us! And they will listen to Idaho’ entrepreneurs – how do you think
they got to be experts?)
4. Everyone needs a Secret Evil Plan?
Bottom-up and inclusive but have a plan. The most successful communities
have an overarching framework that marshals institutions in support of the
bottom-up wants of the entrepreneurial community. Resources get aligned to
maximize the delivery of value to the entrepreneurial community. This
characterizes every great entrepreneurial ecosystem I have ever seen. It can
happen organically but it can be nudged along (even shoved!)
What are the first two things you do when you open up Google Maps? The
start point and the end point, eh? So how many communities really understand
their starting point – how many have a great map of their ecosystem? (VERY few…
though some communities have multiple competing maps that basically suck.) Even
fewer have any sense of the ‘end point’- how many actually have asked the
entrepreneurial community about their vision of where we could be? Almost none.
Any city or state who will do these two things brilliantly will jumpstart their
entrepreneurial ecosystem. (And aligning resources becomes a lot easier.) But
you have to do it brilliantly. Bring in the experts (example)
With People (or... “Ecosystems are Soylent Green?”)
aren’t lists of participants – the best maps (and visions and strategies)
capture the dynamics and especially the interconnections in the system. Great ecosystems reward proactive connectors.
But that makes them intolerant of the turf-grabbers, narcissists and other
pathogens in the system.
Jim Collins’ great maxim that we
need to get the right people on the bus and the wrong people off the bus has
never been truer. But who are the
“right” people? Who are the “wrong” people? And how do we get the wrong people
off the bus when they’ve duct-taped themselves to the steering wheel? (Part of
being “wrong” is feeling entitled to drive despite any actual expertise. Cue
the Dunning-Krueger effect?) Google Bob Sutton’s “No Asshole Rule”. You will
Markers of the “right”
people/organizations? Think the 3 C’s: Competent, Connected, Collegial. When
you start the ecosystem re-build, find the people who:
a particular A-grade expertise at something mission-critical. Are they the best
in the state at something important?
connected both locally AND at the regional/national/global level. Do the best
people in the world on a topic think highly of them?
trustworthy. Have they ever grabbed turf that wasn’t theirs or claimed
expertise they didn’t have? The heart of a great ecosystem is trust. Awfully
hard to get started using people that have been untrustworthy…visibly.
7. Bold, public commitment – not just to
growing the ecosystem but also to embracing disruption
We can be the squirrel or the
truck. We can no longer choose to be neither. Disrupt or be disrupted. Or, more
likely, disrupt AND be disrupted. We are
back to the bully pulpit: the economy is going to be very different in 10
years, even 5 years. More important, it is already more important.
Adapting is not going to be
incremental – it is going to be very discontinuous and most likely where you
least want things disrupted. Assume your business model is toast in 3-5 years…
if you’re lucky. But remember that business models are about serving customers
and others… who wouldn’t be enthused about getting better at serving
8. ENJOY the ride (“Move that bus!”)
Idaho may be #49 in creating new
businesses... but we have every reason
to believe that we can change that. Radically. Now.
We have it within our grasp to
jumpstart our entrepreneurial ecosystem.
Think of it as an Extreme Makeover… an Extreme Entrepreneurial Makeover.
(Apologies if you haven’t seen the tv show.)
1. Bully Pulpit: Celebrate. Educate. Initiate.
Never miss an opportunity to celebrate what we have. Never miss an opportunity
to educate all of Idaho’s citizens on all this. Never miss an opportunity to
initiate things like this Extreme Entrepreneurial Makeover or to support
2. Listen to the Experts/Ambidexterity:
Take advantage of all those who have already said they’d help us. Be ruthless
about great implementation. Quit playing amateur night.
3. Evil Plan: Use the
cutting edge of what we know to create a strategy to engage institutions in
helping. Comprehensive entrepreneurship development strategies (e.g., FIRE)
pull together the no-brainer proven practices that will support bottom-up,
entrepreneur-led efforts. Job #1
4. “Google Maps”: Do a first-class mapping of the
entrepreneurial ecosystem. We know how to do it well. Job #2. And do a first-class assessment of the entrepreneurial
community’s vision for where we want to go. We also know how to do this well. Job #3.
5. Win With People:
Identify an “A Team” who pass both the 3 C’s and Bob Sutton’s test. Use the
bully pulpit to empower them.
6. Bold, Public Commitment: Make the need to embrace disruption a
recurring theme – emphasize that embracing disruption is the only way to help
mold our future. And support that with training and resources to help Idahoans
to do exactly that. Once again, we know how to do that.
7. Have Fun! In the tv show “Extreme Makeover” they did things in a
week or less. It will take us longer, maybe a lot longer. But doesn’t that mean
all the more reason to get started?
I can’t wait till Idaho can yell
“Move that bus!” and unveil a stronger, more resilient (and job creating!)
economy, fueled by a stronger entrepreneurial ecosystem.
Somebody try to tell me this won’t be ridiculously fun…. And won’t create jobs!