Tuesday, February 11, 2014

We’re #49! We’re #49! :)

We’re #49! We’re #49! :)

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 formation?



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 pulpit
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 versus Ideas
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, of course.)

3.       Listen to the experts: No more amateur night
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!)

5.       Google Maps?
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)

6.       You Win With People (or... “Ecosystems are Soylent Green?”)
                Entrepreneurial ecosystems 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 thank me.
                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)      bring a particular A-grade expertise at something mission-critical. Are they the best in the state at something important?
b)      are connected both locally AND at the regional/national/global level. Do the best people in the world on a topic think highly of them?
c)       are 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 customers??

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.)

First steps for Idaho (more ideas at DEFRAG, tactics, metrics)

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 other’s initiatives.
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!