April 4, 2013
The program, called OPEN for Enterprise: Coalitions for High-Growth Entrepreneurship, is based on Isenberg’s work fostering entrepreneurship in Colombia, Brazil, and Denmark through BEEP. His perspective is that ”scale-ups” are more important than startups: we should focus not on encouraging more entrepreneurs to startup but on helping existing companies with the challenge of scaling. After the initiative in Milwaukee, OPEN for Enterprise will hopefully have a model that they can bring to other US cities.
The program got started after American Express OPEN – which provides credit cards, products, and services for small businesses and entrepreneurs – convinced Isenberg to bring his learnings to the United States. As creators of the Small Business Monitor report and Small Business Saturday, the company is acutely aware that 82 percent of US businesses are sole proprietorships.
“If we can even make a small dent in that percentage, it’ll have a tectonic impact on a lot of things related to entrepreneurship and the economy,” says Ben Stone, director of small business and start up development. “When startup companies grow and thrive, it’s good for all of us – it’s good for our communities, it’s good for other businesses, and it’s good for the nation’s economy.”
Below, Isenberg provides some more information on the details and the inspiration for the program.
Tech Cocktail: What are the specific steps to implementing your program in a city?
Daniel Isenberg: There are many components to impacting the entire ecosystem of a region like Milwaukee, and it takes time and a large concentration of effort. The first step is always engaging the various stakeholders (entrepreneurs, investors, corporations, policymakers, planners, educators, and many others) in understanding the various assets and obstacles, setting short-term objectives and long-term vision. Together we create a variety of programs to address the opportunities created by the assets and reduce the barriers created by the obstacles. The programs address all the aspects of the ecosystem – culture, policy, finance, support organizations, human capital, and access to customers. In parallel, we teach principles of ecosystem fostering. When it gets into full gear, the number of programs can be in the dozens.
Tech Cocktail: Why is it harder to scale up rather than start up? It seems counterintuitive that executing on a sound business idea is harder than finding one.
Isenberg: This is the empirical evidence from around the world. The number of startups is much greater than the number of companies that, for example, get to 10 or 20 people. We think that it is because ideas are much easier than executing. Scaling up requires a broad range of complex skills. It is also related to the competitive dynamics of the market – it is very difficult to crack into markets, or create new ones.
Tech Cocktail: Why is it important for city planners and public officials to get involved?
Isenberg: It is important for all of the stakeholders to get involved, including city officials. Planning is important because infrastructure for business is required. Public officials can help set the tone, create vision, bring stakeholders together, tweak existing policy, or create new policy. A good example is Boston’s innovation district and the role of city hall there.
Tech Cocktail: Would it be better if fewer startups were started? Or more died off?
Isenberg: No one really knows for sure, but likely it is more of the latter. In places such as Israel, Taiwan, and Silicon Valley, for example, you see a lot of “churn,” a lot of failures. In general, fast failure is beneficial.
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