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Do Startups Really Create Lots of Good Jobs – Harvard Business Review

Posted on Jun 15, 2016 in Articles, Authored, Harvard Business Review

Cross-posted from Harvard Business Review, June 6, 2016 Eskimos have 50 words for snow. Humans only use 10% of our brains. We hear these types of “facts” all the time — but are they true? Scientists are now saying, “Not so simple.” We have all seen how repetition of a particular statement or idea tends to lend it legitimacy – the so-called “truth effect.” This effect is likely strengthened when the assertion is made in a serious context by intelligent people with authority. Consider the idea, increasingly an assumption of fact, that “startups create jobs.” Since President Obama exhorted Americans to create startups, and the U.S. government, the Kauffman Foundation, and other partners launched the Startup America Partnership (which launch I attended), startups have been increasingly put forward as drivers of economic growth, in large part because it’s become accepted...

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What Schumpeter Got Wrong About Innovation and Entrepreneurship

Posted on Jun 5, 2016 in Articles, Authored, LinkedIn

Which is entrepreneurial, and which is innovative: Venture A or Venture B (real but disguised)? Venture A, an eight-year old startup with patents, a vision to disrupt a large growing market (think big data in a basic industry), $3 million of revenues, a $20 million operating deficit funded by investors, and an implied valuation of $200 million? The founders have 40% of the equity. Venture B, the eight-year-old acquisition of a 35-year-old copycat business (think generic drugs), no patents, that has grown in eight years from $37 million of legacy revenues to $1 billion, $200 million of operating surplus, and an implied valuation of $2 billion? The team also has 40% of the equity. You can hardly say both because, except the equity stake, they are diametrically opposed. Most people confuse entrepreneurship and innovation. Entrepreneurship and innovation are distinct...

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Fostering Scale Up™ Ecosystems For Growth

Posted on Mar 15, 2016 in Articles, Authored, Miscellaneous blogs, Other

If more and more companies grow more and more rapidly in your region, your economy will grow. Since 2010 we have been pioneering new methods for using entrepreneurship to drive regional economic growth. Rather than focusing on increasing the number of new firms, we are catalyzing local ecosystems which increase the firms with new growth – Scale Ups. Scale Ups are companies that enter into new, rapid growth trajectories. Our experience is that roughly 10-20% of existing businesses in any region have the business experience, customer base and operational skills to double their growth rate. What they are lacking is an environment – the entrepreneurship ecosystem – that supports new growth trajectories. Our Scale Up™ Ecosystems projects have the following core elements: Program. We have created an interconnected series of programs to impact every domain of the Scale Up™...

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Fostering Scale Up™ Ecosystems For Growth – The cases of Manizales-Mas and Scale Up Milwaukee

Posted on Mar 15, 2016 in Articles, Authored, Miscellaneous blogs

Daniel Isenberg and Vincent Onyemah [1] To appear in MIT Innovations: Technology, Governance, Globalization March 8, 2016 The search for reliable and replicable strategies to stimulate regional economic prosperity is as old as the field of economic development itself. [2],[3] These strategies have included the encouragement of direct investment, business attraction and retention,[4] and sector-based cluster strategies.[5] More recently, the role of entrepreneurship has been explicitly recognized, descriptively and prescriptively. Glaeser et al. and others have shown that one essential element in sustained regional growth is the presence of significant concentrations of indigenous small and growing businesses. [6] On the surface, these empirical findings are consistent with the popularization of the entrepreneurship ecosystem metaphor and the subsequent launching by governments and civic organizations of a plethora of startup encouragement programs (e.g., the Startup America Partnership; Startup Chile) as a...

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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...

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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 quickly (fast failure) and that over time, vigorous, well-regulated markets will support strong and growing companies, which in turn provide dignified jobs and prosperity? This conflation of startups with entrepreneurship, and more broadly with “business dynamism,” has become so widespread it can muddle even the most serious research. For example, the admired Brookings Institution recently purported to explain an apparent decades-long decline in American entrepreneurship....

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