Saturday, June 01, 2013

Sturgeon's Law? (90% of everything is....)

“90% of Everything is Crap!”

Gulp. Science fiction giant Ted Sturgeon offered this iron law of the universe more than once.
Actually, all he is doing is pointing out that the world, especially the human world, is Pareto distributed.
You know Pareto’s famous heuristic – the 80/20 Rule? That’s all Sturgeon is saying… provocatively.
Here’s why…. And here’s why it matters in entrepreneurship development.

90% of pretty much anything IS crap… by comparison to the top 10%. In any market, the top 10% of firms tend to control the market share, represent the leading innovation, are the best firms to work for, etc. Look at the distribution of salaries in sports: The best leftfielder in baseball might make 10X what the 10th-best leftfielder makes. And deserves it.

And among that top 10%, the best 10% of those is head and shoulders above the others. And so on… Think: the Seals are from the very best Marines, Delta Force is the best of the best Seals, etc. You want to tell a Marine that s/he’s crap? :) But if you ask them about the Seals or Delta Force? They know.

Think about it visually: What you have are two Bell curves, one for the 90%+, another for the 1%. If you are on the “90-percenter” curve where the median is set at 20-25 on an 0-100 scale, you’ll see that most ecosystems (and programs) will fall between 15 and 30. If you move from 10 to 20, that looks impressive. However, where you want to be is in the top 1%, yes?

These numbers were developed as part of a global effort to classify entrepreneurship programs. Of the ~5,000 programs worldwide, less than 50 really have something special going. Less than 500 are doing the right things the right way (and for the right reasons). Most programs (4500+) are trapped in the 90% because they will never do what’s necessary to move up. Do you want to be average when average is not very good or....???

Ecosystems are no different. There are maybe 1% of the entrepreneurial communities who are true “Startup Communities” but maybe 10% are starting to get there. So…. 

Do YOU want to be in the 90% or the 1%? (1) 

An Important Point
If we chart ecosystems on a 0-100 scale, “average” doesn’t look very good. This stylized drawing shows how “average” is probably centered around 25 and you don’t really move the needle until you hit 50 or so. 

What if 90% of ecosystems “score” between 20 and 30? What if the top 1% scores in the 80s and 90s?

Do you want to move your community from 20 to 25? Or do you want to move it above 50? For likely the same amount of money & effort? Remember that moving like that is often not a function of doing more, trying harder or spending more money. Making the leap requires doing things very differently.

Another Important Point
The difference is not just quantitative, it’s qualitative. Think about the 10,000-20,000 hours of deliberate practice to grow the mindset of an expert. Part of why it takes so long is that experts in a domain see the world very, very differently. In ways that are far from the conventional wisdom. The Navy Seals may be faster and stronger but what really differentiates them is a very different mindset.

Why Does This Matter for Entrepreneurial Ecosystems?
Take a look at the very best entrepreneurial ecosystems.

#1. They are scarce, maybe 1% of communities. If we believe Sturgeon’s Law, that makes them the best of the best of the best. And they are qualitatively different.

#2. They operate very, VERY differently.

It’s Not Just Ecosystems…
Consider as a parallel, the very best programs of technology commercialization. They do 8-10 things that the average program doesn’t do (and maybe can’t do or worse… Won’t do.) Some programs dabble in 1 or 2 of these highly disruptive behaviors but to even make it to an average program, you’ll have to do more and you have to do them well. And if you want to be in the top 1%? You have to do all of them and be good at all of them. (2)

The same dynamics appear to be true for the very, very best entrepreneurial ecosystems. The “special sauce” consists of a set of ingredients, each of which adds its own “flavor” of disruption. Is your community prepared to do these things? No matter how it takes?

If you truly believe in doing the right things the right way AND for the right reasons, you need the right people. And often, that is the hardest and most disruptive behavior of all. You want to tell an entrenched (and ‘entitled’) insider that he or she lacks the right stuff? I’d rather risk annoying that Marine! :) 

It all adds up to a new narrative, a new shared mental map of how things work, how things get better and how we do things. When we say “REALLY map the ecosystem”, a big part of this is showing everyone what the current narrative is… the shared cognitive maps and scripts… and showing everyone there’s a new narrative. Once we defrag the existing ecosystem, that new narrative will become clear. If may involve a few 180-degree turns and some judicious shuffling of the chairs. 

But do this right? We just may be able to accelerate the growth of a healthy, self-renewing entrepreneurial ecosystem!

(1) If Brad Feld is right, then it will still take decades (that 10-20,000 hours again?). But if he is… shouldn’t we get going? NOW? (and if we can accelerate the process then… shouldn’t we get going? NOW? J )
(2) By the way, the same is true for the very best entrepreneurship programs. (And, intriguingly enough, the top 1% overlaps almost completely with the top 1% of tech commercialization programs. Hmmm…….)


Blogger Danny Holtschke said...

Great post Norris!

When we analyzed the best global Startup Ecosystems in 2012 it became clear that SE are perceived the same extinct. However to succeed on a global scale, SE need to distinguish itself (tech, bio-tech, health) and even each category could be broken down (tech = mobile, consumer, enterprise etc.) -> Adam Smith's Division of Labor idea!

12:26 AM  

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