Dear entrepreneurial friends - here is a synopsis of the absolute state-of-the-art about how we grow entrepreneurs. This data is 'hot off the presses' from the largest high-quality data sets available (GEM, PSED, World Bank) What amazing talent... humbling for me, as usual.
A FAVOR: Please give me feedback - argue with me -cheer me on - buy me a beer -make me buy YOU a beer. Idaho needs to talk about this stuff - now.
Drawing on the Global Entrepreneurship Monitor (GEM) data set (ultimately involving well over 1 million respondents globally over nearly a decade) several realities are beginning to emerge. None should be that surprising, except maybe just how strong the conclusions appear. And that there are direct policy implications... that need not cost much.
Total entrepreneurial activity (both entrepreneurship from the push of necessity and from the pull of opportunity) has very clear predictors that we need to recognize.
* Globally (and definitely in the US) opportunity-driven entrepreneurship has been in decline since 2005 and plummeted in the last year. Unsurprisingly, necessity-driven entrepreneurship has increased but that creates fewer jobs. We simply are not growing ventures that create lots of jobs. And Idaho lags the US...
Implication for Idaho: We need to help businesses (of any size/age/industry) to grow!
(* We already knew that the decline of job creation since 2008 has been unprecedented. Layoffs increased, of course, but that pales in comparison with the fall-off in job creation. Meanwhile, we seem hellbent on increasing the barriers to entrepreneurial job creation.)
* So how can we change all this?
Here are the three most important factors - all of which are things that we can influence as a community.
i. Entrepreneurial Potential is a Function of Potential Entrepreneurs.
The strongest predictor of entrepreneurial activity is the prevalence of adults who are prepared for entrepreneurial activity -- they have the entrepreneurial mindset: I can be an entrepreneur. I want to be an entrepreneur. And I know how to do it right.
Implication for Idaho: Quality, not just quantity of training. This is not about entrepreneurial training - it is cultivating an expert mindset. You've heard this often but now even more critical: Truly experiential, deeply transformative entrepreneuirial learning. (Think Startup Weekend, not "how to write a biz plan"!)
i-a. Fear of Failure?
Fear of entrepreneurial failure or do potential entrepreneurs accept (or even embrace) that failure is a possibility?
And a possibility for learning?
Implication for Idaho: See experiential learning above! Book learnin' won't cut it.
ii. Is Growing a Business Highly-Regarded?
Cultural support for entrepreneurship - Do people believe they'll be encouraged if they try, does the media "get it" (do they focus heavily on newer & especially fast-growing businesses?) Is entrepreneurship generally considered a good career option? Is entrepreneurial success rewarded by the community?
"Old school" values are also important: Respect for authority wedded to a healthy skepticism of authority (sounds pretty Idahoan, doesn't it?)
Implication for Idaho: Communities are often more supportive than we realize so we need to do anything we can to let prospective entrepreneurs know that there is a supportive ecosystem. And to help local communities to help entrepreneurial growth. (In turn, this helps grow the ecosystem.)
Implication for Idaho: Structurally, revamping your local innovation system will obviously help:
(a) Really map the existing ecosystem, as it is & as it is perceived,
(b) build a first-cut road map for upgrading the innovation system,
(c) then align your resources to the roadmap in terms of distinctive (not core) competences.
iii. Is It Getting Easier or Harder to Grow a Business?
Ease of doing business - how hard is it to start a business in terms of bureaucratic hurdles? Is the regulatory regime friendly? (Is the tax & regulatory burden actually shrinking?) How centralized are the control mechanisms for the local economy?
Implication for Idaho: Identify the systematic barriers - actually measure what is required. However, it is also a great opportunity to identify missing/needed facilitators (what will trigger entrepreneurial action?)