Articles

Babson College, a leader in the study of entrepreneurship, is launching a new initiative: An Entrepreneur Experience Lab. According the the school, the lab will generate valuable insights into how to teach entrepreneurship.

The lab will provide an opportunity to test new concepts for developing support programs for entrepreneurs.

Most economists agree that entrepreneurial activity is the lifeblood of a vibrant economy and central to long term, sustainable job growth. The current economic crisis has only magnified our country's need to stimulate entrepreneurship and new company creation. The public/private entrepreneurship support system that has evolved in the U.S. and globally is well intended but insufficient given the importance and scale of the job to be done to enable a significant increase in the number of serial entrepreneurs and successful new companies created.

Public sector programs at the federal, state, and local level are too fragmented, underfunded, and still too rooted in old industrial economic development thinking. Academic programs and policies are more focused on technology transfer and licensing opportunities than on creating a conducive environment for students and faculty to pursue entrepreneurial activities. Incubator initiatives have been more about subsidized space than about enabling serial entrepreneurs and start-up financing programs leaving significant gaps in the funding continuum.

The voice and experience of the entrepreneur is largely absent from discussions dominated by public and private sector institutions on how to better support new company creation. We need to rethink our country's entrepreneurship support system and experiment with new approaches designed to enhance the entrepreneur's experience and accelerate entrepreneurial activity.

Read more.

"We have 440 employees and the technical skill set I need is evaporating like ether."

A manufacturer in New Hampshire is giving voice to what manufacturers around the country are experiencing. As they build back their production levels, they are not replacing workers with the same skill sets. They are looking for workers with higher level skills capable of being significantly more productive.

At the same time, these manufacturers are battling a demographic wave of older, skilled workers retiring.

So, it's likely we'll see more situations in which economic development strategies are forced to address workforce issues in a meaningful way. Read more.

To address these shortages, the National Manufacturers Association is pilot testing a new manufacturing skills certification. Here's background from one of the pilot sites in Lorain, Ohio. Read more.

View Bay Area Home Based Businesses in a larger map

In Pittsburg, Antioch, and Brentwood in California's Bay area, economic developers are focused on strong growth in home-based businesses.

As they have in the past when the economy has gone south, small and home-based businesses are becoming more popular — and cities are trying to help them prosper.

Based on the number of licenses it's already issued to home-based businesses since January, Antioch is projecting a nearly 37 percent increase in these micro enterprises this year.

Pittsburg has seen the number of home-based businesses grow by 48.5 percent since 2006.

Read more.

The University Research Corridor in Michigan connects the resources of the University of Michigan, Michigan State University and Wayne State University. It's the type of collaboration that will help regions redefine their economic possibilities.

These possibilities will be rooted in regional strengths. Here's an example.

A University Corridor report on advanced manufacturing underscores that universities provide invaluable new technologies, support for fledgling businesses and highly skilled workers to sustain advanced manufacturing.

Read more. I've attached a copy of the report.

Here's a good example of a cluster-based strategy: Maumee Valley Growers in Northwest Ohio. Triggered by a US Department of Agriculture grant in 2003, the cluster has been operating for the past six years:

Since 2004, over 60 greenhouse owners in a six-county region in northwest Ohio have been working together to address industry-wide challenges. They have been guided and supported in their efforts by faculty experts from the University of Toledo and Bowling Green State University.
 
Growers meet monthly to discuss challenges facing their industry and to identify and implement solutions. The first challenge addressed by the group was the lack of a distinctive market presence. With the help of a locally-based branding firm the growers developed a unique brand identity, Maumee Valley Growers.

Read more.

You can get additional background here .

In April, Minnesota established a new tax credit for angel investors. The initiative launched this month and appears to be gaining momentum. Read more.

The tax credit targets investments in "qualified businesses". Here's how that term is defined:

A qualified business must be engaged in research and development of proprietary technology in specified “qualified high technology fields” which include aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical devices, pharmaceuticals, diagnostics, biologicals, chemistry, or veterinary science.

In addition a qualified business must be:

• Be headquartered in Minnesota.
• Have a minimum of 51 percent of employees and 51 percent of payroll in Minnesota.
• Have fewer than 25 employees.
• Pay employees annual wages of at least 175 percent of poverty level, currently $18.55 per hour. Does not apply to business’ executives, officers, board members, 20 percent-plus owners.
• Not have been in operation for more than 10 years.
• Not previously have received private equity investments of more than $2 million.

To qualify as an investor, an individual must be an accredited investor under Regulation D investing at least $10,000.

Over the past decade, we have seen state and regional strategy move toward clusters. Michael Porter, a professor at Harvard who has pioneered this shift, argues that a cluster-based strategy is not really “picking winners and losers”.

But in practice, a cluster strategy is open to the criticism that government should be out of the business of steering investment one way or the other.

Colorado's governor faces critics who see his clean energy strategy is too narrowly focused.

As the head of the state Chamber of Commerce argues, “Why should the state help one sector like bioscience or biomedical or green energy, instead of tourism, agriculture and manufacturing? How can you justify not helping all traded sectors in some kind of unified model?”

Read more.

My take:

• At the state level, economic development strategy should focus on traded clusters;
• State policy should avoid making direct investments in firms unless there is a nonpolitical process in place to make these decisions, such as the Ohio Third Frontier initiative;
• The best cluster strategies use public money to leverage private investment;
  
• The idea that government should not “pick winners or losers” is simplistic. Government is always making these choices. The question is whether the government is making these choices based on facts, strategy and transparency. We want our government to be smart  and open, not stupid and corrupt.
  

The Governor's Commission on Economic Development and Job Creation is continuing to meet Virginia. The commission has the task of defining a policy agenda for economic development in the state. You can access all the materials from the commission here. Among other items, Commission is teeing up a recommendation to establish a Virginia Emerging Technology Fund, patterned after a similar initiative in Texas.

Here's an article that gives you an overview of what the Commission has been doing. Read more.

That's the question that came to mind as I read this morning's Boston Globe article on Boston World Partnerships. Read more.

For the past 17 months, this relatively new nonprofit has been building networks within Boston, among entrepreneurs. Remarkably, the venture started out with $1.4 million in start-up funding. (It's not quite clear from the article, but it looks like they burned through about $80,000 a month. $1.4 million divided by 17 months.)

When you look at their website, you see there's a mix of free and paid services. The paid services are rather pricey: $2000 for an “idea testing forum”. And then there is “handmade” introductions for about $100 each. (Remarkably, one of the free services -- "Stuff to Share" -- is trademarked. Now that will be tough to defend.)

This all seems a little odd. One of the lessons I learned early on in working with small companies is that it's almost better to have too little money and too much. When you have two little money, you pay attention to every dime and you think carefully about how you commit your resources. When you have too much money, you easily make mistakes and simply move on without learning much. I've been in both situations, and I prefer the former to the latter.

I could be all wrong, but that seems to be what's happening with Boston World Partnerships. It seems like an early idea that just started out with too much money.

A better model, I think, can be found in Research Triangle with the Council for Entrepreneurial Development.

This organization has grown organically over a number of years to the point that it is now a vibrant part of the “ecosystem” supporting entrepreneurs in the region.

The winds of change are blowing across economic development, and the shifts pose an unprecedented set of challenges to economic developer organizations. Most of these organizations reflect a conventional view of corporate hierarchy. A volunteer board hires and directs a relatively small professional staff. The staff, in turn, manages the program of work with a hodgepodge of resources.

It's not surprising that sometimes organizations don't respond well to the shifts taking place in the broader economy. Hierarchical organizations can become closed and dangerously ingrown.

So it's a good idea every once in a while to rethink the strategy and structure of economic development organizations. In practice, however, few organizations really rethink their fundamental assumptions, unless, of course, they are facing financial collapse.

Redesigning and economic developer organization represents a healthy step toward adaptation to new realities. That appears to be what's taken place with the Creative Coast Alliance in Savannah, Georgia. Read more.

Building incubators can be an effective urban regeneration strategy, if the focus is on creating the networks needed by entrepreneurs to link and leverage resources. Here are two examples, one from New York and the other from Cleveland.

About a year ago, Mayor Bloomberg in New York launch new effort to encourage startup companies in his city. Now, a year later, some of the results are beginning to appear.

• City's first biz incubator hatches first chicks

In Cleveland, the Cleveland Clinic launched a new incubator in April focused on the Clinic's strengths in cardiovascular medicine. That incubator has shown remarkable growth with about 75% of the wet lab space now occupied.

• Cleveland Clinic-led cardiovascular technology incubator aims high

In Detroit, a new incubator called, NextWave has launched.

• NextWave small-biz incubator opens doors for start-ups

One of the most successful examples of an incubator =transforming a citry economy is the Youngstown Business Incubator :

• At YBI, they share wealth of knowledge

The key to success is taking advantage of the relatively dense networks of relationships in urban areas. Look, for example how the New Enterprise Opportunity in Lansing frames its value to entrepreneurs.

 “Handmade in America ” provides impressive proof that rural economic golden strategies can build around the concept of a “creative economy”. This approach to economic development emerged in the United Kingdom in the late 1990s. (Charles Landry, a leading thinker in the field, developed the concept of Creative Cities in the 1980's.)

Richard Florida then borrowed the term to promote a similar set of strategies in the U.S. (Sadly, Florida in his book did not do much to explain how the concept of a “creative economy” evolved in Europe prior to the publication of his book.) Florida, with his unique treatment, has narrowed the concept to his 3T's: talent, technology and tolerance.  Here's how Florida  presented his ideas in Roanoke, Virginia.

Building a creative economy in rural America involves a more subtle strategy that Handmade In America exemplifies. Now, a region in northeast North Carolina is taking the lessons of Handmade in America and applying them to their own regional strategy. Read more.

Now return to Charles Landry and see how he frames the connections of creativity and innovation.