Ten rules for “revolutionaries”

  1. Stop emulating Silicon Valley! There are hundreds of attempts to replicate the unique success story of Silicon Valley, but these are futile. Even Silicon Valley could not create itself today if it were starting from scratch. Give up on the “knowledge-based society,” “the information economy.” You don’t need to tell entrepreneurs that they need to use Internet and mobile technologies, anymore than you need to tell them to use water or electricity.
  2. Tailor an ecosystem around your own particular characteristics. Sustainable entrepreneurship is the result of numerous forces working together, which we call the entrepreneurship ecosystem. Each region has a unique ecosystem.  Are there large companies that are used to interacting with small, innovative suppliers? Are there markets close by? Is the human capital technical in orientation? Does the culture support risk taking and innovative, contrarian thinking? Is leadership overtly and clearly supportive of entrepreneurship?  There are over a dozen entrepreneurship ecosystem elements. You need to understand all of them, and how they can be strengthened and aligned.
  3. Engage the entrepreneurship stakeholders early on. Entrepreneurship is about engagement and empowerment. All of the stakeholders must be on board. This includes the various segments of the private sector, educational leaders, community leaders, government officials, entrepreneurship development organizations, leaders of diaspora networks, university officials, investors and lenders, and so on. In some communities the cooperatives, unions, and even religious organizations are influential. They should all be engaged early on in the process of understanding and enhancing entrepreneurship. There are many ways to engage, but ongoing, sincere, open dialog is the most important starting point.
  4. Support the high potential entrepreneurs. Although entrepreneurship is inclusive (I like to say that entrepreneurship is the biggest equal opportunity employer), to jumpstart and entrepreneurship ecosystem, the most impactful sector to influence are the high ambition, growth oriented, market-seeking ventures. These create the jobs, the dynamism and vitality, and the growth.
  5. Get some visible successes, even by “brute force” if necessary. Success breeds success. Endeavor [LINK TO http://www.endeavor.org/ ] has built its entire strategy around this principle, finding and nurturing “high impact entrepreneurs.” This happens because (a) successful entrepreneurs like to help other entrepreneurs, (b) successful entrepreneurs become angel investors, (c) successful entrepreneurs make excellent board members, (d) success inspires latent-entrepreneurs to take the leap, and (e) successful entrepreneurs become powerful voices for governmental reform. And for every one big success, hundreds more start lining up.  This is the law of small numbers: it only takes a few successes to change the entire game. But when you see some successes on the horizon, make sure you celebrate them! Give a medal, an award, make them visible.
  6. Change the culture head on. Many leaders believes that this takes generations, and whereas much societal change is long term, there are certain social norms that can be changed in a few years: it is possible to increase tolerance for risk, the legitimacy (even nobility) of launching your own business, acceptance for honest failure. Media campaigns, annual events, and awards all help. Just think if you ran an entrepreneurship campaign as seriously as your own campaign for re-election?
  7. Stress the roots: don’t provide easy money. Early stage capital is always scarce, everywhere. But moving to the opposite extreme is equally disastrous. Provide funding, but insist that the entrepreneur bring in a matching investor. Keep the funding off the ventures’ balance sheets. Make sure the funds are not equity: government has no business selecting and nurturing winners. Directly incentivize the financial intermediaries, not the ventures themselves: make it easier for banks, private equity, angel investors, family businesses, leasing companies, to invest in the ventures themselves. Don’t be an evergreen financer: figure out a way to start the private financing markets, and get out, or focus on the highest risk areas.
  8. Pave the footpath. Don’t push clusters too hard. Every government now has a cluster strategy and think that will get entrepreneurship going, but success is elusive and rare. Clusters don’t create entrepreneurs. Entrepreneurs create clusters. Mike Porter said that in 1999, only no one listens. Watch where the entrepreneurs are walking, and then pave the footpath. Remember, entrepreneurship is inherently a contrarian activity, so wherever you decide they should be, the good entrepreneurs will always be figuring out how to do something else, do it differently, and do it better. Identify, watch, encourage, support.
  9. Remove bureaucratic obstacles for entrepreneurs. Get rid of onerous permitting procedures through consolidation and streamlining. Redeploy the dozens or hundreds of clerks whose seats depends on their ability to slow everything down. Have permitting “bootcamps” to free up log jams and show it can be done. Make regulations transparent and provide tools for entrepreneurs to address them. Get rid of outmoded obstacles to redeploying people–support and retrain the unemployed rather than preventing their firing. Make sure tax collections are rigorous, fair, but entrepreneur-friendly. As a government purchaser, buy from small suppliers, but make sure you pay on time: nothing is as demotivating as doing a good job as a new company, and waiting 3 months to get paid: this is absolutely unforgivable and has a huge dampening effect on entrepreneurship.
  10. Experiment relentlessly and holistically. This is still more art than science! Learn from what others have done around the world, we can help you do that. But then you have to experiment based on your own reality. Focus initially on short run experiments, small scale funding, short courses, small numbers of entrepreneurs. Small forays rather than large scale battles. 6 month pilots rather than five-year plans. Develop a norm of reflecting and learning from mistakes as well as successes. But don’t think expect piecemeal action to work: you need to move different elements of the ecosystem simultaneously. To use a simple example, creating private equity will be self-defeating if there is no high potential deal flow for investors to invest in, and ways for them to realize (“exit”)  their investment.

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