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Using Supply Chains to Scale Up Your Business

Posted on Dec 4, 2015 in Articles, Harvard Business Review

By Daniel Isenberg and Timothy Coates   This article appeared on November 20, 2015 in the Harvard Business Review. Until a few years ago Steve Cronce’s Raphael Industries did $1 million dollars a year of specialized industrial painting for customers within driving distance of their plant in Milwaukee, Wisconsin. One of them happened to be GE Healthcare, which sent Raphael “dead” X-Ray tube parts for re-coating and re-commissioning. Challenged by other entrepreneurs in Scale Up Milwaukee’s Scalerator program to come up with a plan for rapidly ramping up his business, Cronce wondered: “What if I redefined Raphael as a strategic link in the global medical imaging supply chain, rather than as a paint shop?” This supply chain epiphany is taking Raphael toward $10 million of work a year by burrowing into GE’s global network as well as serving its competitors. He is poised to become the leader in this segment of a multi-billion dollar market. “By serving as GE’s and other equipment makers’ supply partner, the whole world is now my scope. I am no longer limited by geography.” This story leads us to a question: Which sounds sexier: sassy Silicon Valley startup or nose-to-the-grindstone supplier? No doubt the tech startup wins the popularity contest hands down. But let’s change what we’re asking: Which has the better potential...

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The Right Way to Plan an Innovation Tour

Posted on Dec 3, 2015 in Articles, Authored, Harvard Business Review

This article by Daniel Isenberg first appeared in the Harvard Business Review July 7, 2015. Innovation tourism: it’s a thing. The tourists are entrepreneurs looking for the right economic microclimate to start a business; corporate scouts looking to expand their company’s reach or improve their supply chain; policy makers trying to figure out the right balance of rules and infrastructure to create a thriving economy; investors searching for the next crop of opportunities. These well-intentioned professionals travel the world in pursuit of the secret sauce of innovation. Typically, tourism involves guided tours, pitch events, conferences with lots of panels, and well-planned visits to companies, universities, and government agencies tasked with increasing entrepreneurship and innovation. The problem is, all of these good people are often guided to see a distorted reality. Not that more formalized presentations and assessments are necessarily Potemkin villages, but they often miss what’s really going on. It’s just that these actors naturally tend toward self-promotion. (If you ask the director of a government innovation agency how influential or effective they are, what answer do you expect, other than “extremely?” Have you ever encountered a university tech transfer office director who says, “Sorry, we are a drain on the university’s cash?”) But an innovation tour can be valuable, as long as you know what...

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Judge an Economy by the Number of Scale Ups, not Start-Ups

Posted on Oct 2, 2014 in Authored, Harvard Business Review

Originally published in Harvard Business Review on October 1, 2014. Co-authored with Fernando Fabre. More new businesses are better for society, right? That’s a common assumption. For instance, take this recent Washington Post piece, headlined, “More businesses are closing than starting. Can Congress help turn that around?” Sounds ominous at first. But wait a minute – is starting more new businesses always a good thing? Isn’t it a basic economic tenet that well-functioning markets will have many entrancesand exits, that weak businesses (including thousands of one-person enterprises) will get recycled...

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How to Finance the Scale Up of Your Company

Posted on Aug 19, 2014 in Articles, Authored, Harvard Business Review

Originally published in Harvard Business Review on August 18, 2014. Co-authored with Daniel Lawton. Tom Szaky knows well the meaning of the saying “Beware your dreams, for they may come true.” With the 2004 Christmas retail season rapidly approaching, he was trying everything he could to scale up TerraCycle, a two year old venture selling liquid worm poop as fertilizer in used PET bottles. So far, he had been successful distributing through lots of smaller retailers, but had encountered a flood of rejections from...

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What an Entrepreneurship Ecosystem Actually Is

Posted on May 12, 2014 in Authored, Harvard Business Review

Fostering entrepreneurship has become a core component of economic development in cities and countries around the world. The predominant metaphor for fostering entrepreneurship as an economic development strategy is the “entrepreneurship ecosystem.” It should come as no surprise, however, that as any innovative idea spreads, so do the misconceptions and mythology. Here is a quick true-false test that will serve as a reality check on entrepreneurship ecosystems, and on the connection between entrepreneurship and development more generally. It’s important to...

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