Saturday, December 01, 2007

Catch the Culture

A newly released paper from Harvard economist Edward Glaeser reinforces a theme regarding startups and emerging enterprises that I'm finding to be true everywhere I turn.

Professor Glaeser's paper, "Entrepreneurship and the City", was discussed in the online forum, The National Dialog on Entrepreneurship, a Kauffman Foundation site. The abstract is available from the Harvard Institute of Economic Research. I have purchased the full article, but it's not here yet. However, the abstract and NDE discussion is enough for me to make the point of this post.

While this research looked specifically at what made cities more successful, I have no doubt that the same findings can be said for any region and probably any country.

The paper concludes that it is the culture of entrepreneurship that is critical to the success of a city. Specifically, cities don't have entrepreneurial cultures by some magic stoke of good luck. They succeed because they support and educate the widest number of people who then become entrepreneurs.

Professor Glaesser finds that cities with a skilled and appropriate work force tend to have higher rates of self-employment and relatively higher proportions of small firms.

The paper also concludes that, "There is a strong connection between area-level education and entrepreneurship."

There is no mention of advanced business school training, only education leading to a "skilled and appropriate work force".

Yes. Absolutely. The culture of success is built person-by-person, startup-by-startup, new enterprises becoming small creative, valuable contributors to their cities and regions.
Does that mean all these small new entrepreneurial ventures are going to succeed? Of course it doesn't. Just the opposite. The vitally different - and better - way of asking that question is why is the idea of failure universally seen as nothing but negative by so many people?

Why can't failure be seen as the valuable learning step it can be? In successful entrepreneurial cultures, you aren't looked down upon for failing. You're looked at as someone that's working hard and could use an introduction or two, maybe a referral to a needed link in their next chain.

Now, if your failures involve lots of money and little planning, the value of that lesson is dimmer and can be hard to locate.

If you fail by losing important money in some high risk gamble, that's not failure, that's stupidity.

But if you roll out your startups following the ideas in the slow startup movement I've been writing about and you fail, congratulations! You've learned something valuable without paying much for it. You now know one small thing better than most of the population of the planet. String a few of those together, and you're gold. Nobody can catch you now. You'll know one specific set of things that virtually no one else on earth knows. If you launch your new startup by spending more time than money on it, the world of enterprise becomes an entirely different and more welcoming place.

But you need the culture of support for innovation that only comes from doing it not talking about it.

In many of the circles I travel in, I hear all kinds of supportive talk for entrepreneurship.

This week, I was fortunate enough to see this kind of culture-building support for innovation actually being done.

Was it valuable to for the entrepreneurs and would-be entrepreneurs? There are a few metrics I could use to define success, but let's use one that should have obvious meaning. I saw a large group of people come out on a cold November night in Wisconsin, at the very same time the Green Bay Packers were playing the Dallas Cowboys (both with records of 10 and 1), to share and support their entrepreneurial ideas. Value? Hmm. I'd say.

This was an Inventor and Entrepreneur Club meeting in beautiful Juneau County, WI. Wow. The stories, the mutual support, the flat out usefulness of the entire process was really fun.

Terry Whipple coordinates the meetings. No, that's too orderly a word… Terry mobilizes the meetings. These are very peer-to-peer driven. I'm excited for their organizations. Terry and Sue Noble from the Vernon County Club, and I got to meet before, during, and after the meeting. Talk about getting it! Talking about building entrepreneurial cultures for all the right reasons.

I also came away from a recent Green County I&E club meeting with a similar sense. There are wonderful, low-cost, effective, and highly supportive ways to create a culture of innovation and entrepreneurship, one person at a time.

This is new enough for a Harvard professor to be writing about it, and yet surely is as old as commerce itself.

The folks working at these grassroots levels in my state are not counting business plans and filtering them for their high tech/biotech/nanotech sex appeal. They are building cultures of entrepreneurship one person, one relationship at a time. They are building networks on networks, one network at a time.

Sue Noble told me a story about her I&E Club which almost had me in tears. I'm headed to one of their Vernon County meetings ASAP, and will post that story soon.

Professor Glaeser writes that "local entrepreneurship depends mainly on having the right kind of people". And I would suggest that to create the most efficient and widespread effects, the right kind of people would be those that are respected, supported, and trained to learn from failure and to grow in sustainable ways. That's a real culture of innovation.

Terry had posters all over the room reading 'Catch the Culture!'. I got it but didn't post it to my notebook. The next day I read about the Harvard study, stating that regions that create systems for supporting small scale entrepreneurship build successful cultures. Terry suddenly seemed smarter than he'd ever claim.

There is a tantalizing reference in Professor Glaeser's abstract for my boomer entrepreneur buddies. "Self-employment is particularly associated with abundant, older citizens and with the presence of input suppliers." Yikes. Boomer biz with lots of small operations. The research paper is ordered. Stay tuned.

I love studies that agree with me. They seem so prescient. Yet the truthfulness and the timeliness of these ground-up ideas makes perfect sense. The idea of building successful, entrepreneurial cultures from the bottom up has to be true.

Is this a knock on other kinds of enterprise creation? Of course not. Those high tech, biotech and nanotech models can be wonderful and produce spectacular results. What I do intend to say is that those models aren't the only valuable kids on the block. The entire entrepreneurship movement needs support and respect for the whole culture to grow and prosper.

This Harvard study focused on two measures of entrepreneurship: self-employment and the number of small firms. "Both of these measures correlated with urban success."

You do the numbers. Any region needs more entrepreneurs and more small enterprises to be successful. That is NOT the same as more headline grabbing this-tech or that-tech venture funded firms. It's sheer numbers. More entrepreneurs and more enterprises make the culture succeed. From this perspective, risk in the economy of our regions gets spread around and diversified, more people get to contribute, and more people become engaged solving problems. Tell me something bad about this approach.

Thanks, Harvard. More importantly, thanks Terry and Sue and all the other good folks working from the bottom up to create a culture of entrepreneurship for all of us.

To anyone considering their own startup or new enterprise, I'd say "Welcome aboard". We all need you.

Juneau County, WI Inventors and Entrepreneurs Club

Contact Vernon County, WI economic development folks to learn more.

Abstract "Entrepreneurship and the City" (October 2007). Glaeser, Edward L., Harvard Institute of Economic Research Discussion Paper No. 2140

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