Future Here Now: Why we choke small businesses and entrepreneurs... despite everything we do.
The Big Idea
This week’s Future Here Now focuses on our need to grow a robust small business and entrepreneurship small business sector — something we are not doing at all well, and something that we need more than ever.
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Despite the fact that entrepreneurship rates are rising for the first time in 30 years or more, the overwhelming majority of entrepreneurs now come from backgrounds that cannot give them the social support, economic resources or knowledge that entrepreneurs have relied on throughout history. And while small businesses historically account for the majority of new employment in any community, longstanding barriers to growth are keeping small businesses from reaching that potential in communities that need those jobs the most.
This is a serious challenge for all of us. In a VUCA future where success depends on innovation and collaborative, creative problem-solving, entrepreneurial skills sets will be critical for a variety of reasons. Not only will most of us have at least some stints of self-employment throughout our lives, but entrepreneurial skills — tenacity, flexibility, persuasion, and continuous growth, among others — will differentiate leaders and innovators in both large and small organizations.
Perhaps most significantly, research indicates that new products and solutions are more easily created in small and new businesses, and that persons who approach a thorny problem from outside the usual paradigm are more likely to generate a breakthrough solution. These items and more point to entrepreneurship as one of the most critical needs of the unfolding Fusion Era.
But entrepreneurs fail, go broke, burn out and destroy their business and community relationships when they can’t thrive — and in doing so, they can drive the next generation of potential entrepreneurs away from trying anything so risky.
Or, as we too often see in entrepreneurs who come from undersupported backgrounds, their vision gets stunted, their business failing to reach its potential - big enough to provide food and clothes, but too small to build wealth and create the kinds of employment and potential that their community needs the most.
But Della, I hear you say, we’ve got lots of entrepreneurship programs. We’ve got incubators and accelerators and pitch competitions and big Innovation Center buildings. Across the county. Rural and urban.
Why are we failing to make the impact that we so often promised our community at the start? Why do so many of our “entrepreneurship ecosystems” fail to generate new businesses that actually move the needle for the whole community?
In 2019, I wrote a book called Everybody Innovates Here: Accelerating Innovation and Entrepreneurship Across Your Community. In that book, I laid out three reasons for that systemic failure:
We fall prey to mistaken hype about the“The Next Google,” and we take our local businesses for granted — businesses that consistently increase employment, determine how existing and potential residents feel about the community, and keep local dollars circulating within the local economy (which gives us all more money to work with). And businesses that can become big, and are more likely to stay in the community if and when they do.
We assume that One Size Fits All — that offering a business planning class or a boot camp is enough to help any business at any stage. Or that the business owners who don’t show up don’t actually need any help. In reality, they may need a ton of help - just not the help you’re offering.
We treat entrepreneurs like cockroaches. We follow the advice that I learned from an esteemed community development leader: “Just put out a pile of rich food, and the entrepreneurs will grab what they need.”
I’m going to focus on that last one for a minute, because it’s a crucial part of what we need to all do. And because I believed her, and repeated that line.
Until I learned the lesson that was in yesterday’s Try It On from those underestimated entrepreneurs. Until I learned that the entrepreneurs who need that support the most, and the ones with arguably the most to offer, don’t have the bandwidth to wade through the mess we’ve dump in front of them, with the tacked-on label of “ecosystem.”
No wonder they give up or stay at subsistence level.
In Everybody Innovates Here, I laid out a new model of an “entrepreneurial ecosystem” — except that instead of the usual random pile of programs and competitions accreted over time, I borrowed the metaphors of infrastructure - the systems of wires and concrete and culverts and traffic lights that we often overlook, but that make civilization possible.
I categorized the kinds of things we typically do to support entrepreneurs as Pumps: centers of activity that are supposed to put additional power behind the entrepreneurs and equip them to make impact, to get to the next level. Different Pumps have different levels of strength and work best for entrepreneurs at particular phases in the growth process.
As you might guess, the Pumps are connected by Pipes. At least, they’re supposed to be. In too many places, as I described, the Pipes don’t connect correctly, and entrepreneurs spill out of one Pump without any way to get to their next level of opportunity. Or the Pipe has become stopped up or cracked or collapsed under the weight of bad blood between program managers, or egotist founders who think their program is The Best Thing Ever for Everyone, or because funding sources don’t prioritize connection and instead help the Pumps build concrete walls around themselves.
Does that sound like a functioning ecosystem to you?
It sounds like a dump to me
But it doesn’t have to be that way. We are developing the network collaboration skills to collaborate the way a true Entrepreneurial Ecosystem demands — that’s one of the First Principles and defining characteristics of the Fusion Era that’s underway. And we’re slowly unwinding some of our damaging Industrial Era assumptions, such as walling off organizations from each other or assuming that you have to be Really Big to matter.
But we’ve got a lot of old damage to do, and a lot of Pipes to clean out. So we need to get to it.