Entrepreneurship: a Entrepreneurship: a competitive edge for competitive edge for

economic developmenteconomic developmentPresenterPresenter

H. Randall Goldsmith, PhDH. Randall Goldsmith, PhD

EntrepreneurEntrepreneur

Entrepreneur:Entrepreneur: someone who organizes, someone who organizes, manages, and assumes the risks of a manages, and assumes the risks of a business or enterprise. business or enterprise.

An entrepreneur is an An entrepreneur is an agent of changeagent of change..

InnovationInnovation

InnovationInnovation: a new product, process, : a new product, process, material, design, know-how, or material, design, know-how, or business strategy.business strategy.

“The interaction of technological innovation with the competitive marketplace is

the fundamental driving force in capitalist industrial progress.”

Joseph Schumpeter, 1942

Economic ResearchEconomic Research

““Small firm establishment births have Small firm establishment births have a larger impact a larger impact than any other factor examinedthan any other factor examined on gross state on gross state product, state per capita income, and total state product, state per capita income, and total state employment. employment. Donald Bruce, SBADonald Bruce, SBA

It is crucial to raise It is crucial to raise innovative start-up activityinnovative start-up activity, which , which is more important than an increase in general start-up is more important than an increase in general start-up

activity.activity. P. Mueller, Small Business EconomicsP. Mueller, Small Business Economics

ContextContext

TraditionalTraditional Economic Economic DevelopmentDevelopment

versusversus

Innovation-ledInnovation-led Economic Economic DevelopmentDevelopment

Traditional Economic Traditional Economic DevelopmentDevelopment

**AttractionAttraction*Expansion*Expansion

*Retention*Retention*Creation*Creation

Metric: Jobs

Innovation-led Economic Innovation-led Economic DevelopmentDevelopment

*Research*Research*Entrepreneurs*Entrepreneurs

*Capital*Capital*Workforce*Workforce

*Business Infrastructure*Business Infrastructure*Community Environment*Community Environment

Metric: Intellectual Capital

Economic Development ModelEconomic Development Model

Newco GrowthAcquire orAcquired

Talent

NewcoNewcoNewcoNewcoInfrastructure

Ecosystem

Talent

Balance:Balance: NotNot UsUs versusversus Them…Them… Rather Rather UsUs andand ThemThem

Core economy strategies andCore economy strategies and

Innovation economy strategiesInnovation economy strategies

Pathway to ProgressPathway to Progress

BiologyChemistryPhysics

Engineering

EnergyTransportation

CommunicationsMaterials

Bioscience

Innovations

Companies& Jobs

EconomyEducation

Government Recreation

QOL

Discovery

Transfer

Development

Transform

New

Economic ProgressEconomic Progress

1840 1890 1940 1995 2045

Mercantile Factory Corporate Knowledge

Productivity

New Economy

New Economy

New Economy

New Economy

Old Economy

Old Economy

Old Economy

Steam

Steel

ElectronicsCIT

•Real PPCI•Education•Life Span•Health•Gov Serv•QOL

Source: R.Atkins

Recipe for High Performance Recipe for High Performance Regional EconomyRegional Economy

“Virtually unimaginable a half-century ago was the extent to which conceptsand ideas would substitute for physical resources and human brawn in the production of goods and services.” Alan Greenspan

HighPerformanceCompanies

High Performance

Jobs

HighPerformanceCommunities

High Performance CommunityHigh Performance Community

% of HPIIEs % of HPIIEs (3.5%*)(3.5%*)

Science & Engineering Jobs Science & Engineering Jobs (4.1*)(4.1*)

Patents/100K population Patents/100K population (41*)(41*)

Personal per capita income Personal per capita income ($41.6K*)($41.6K*)

Community GDP/capita Community GDP/capita ($48.4K*)($48.4K*)

*U.S average

High-performance, Innovation Intensive High-performance, Innovation Intensive Enterprises Enterprises (HPPIEs)(HPPIEs)

High performance: 2X jobs, 2X revenuesHigh performance: 2X jobs, 2X revenuesAverage age: 15 yearsAverage age: 15 yearsTotal # companies: 375,000 (2.3%)Total # companies: 375,000 (2.3%)Size: All (<20 employees = 94%)Size: All (<20 employees = 94%)Location: 77% urban, 23% ruralLocation: 77% urban, 23% ruralIndustry sector: AllIndustry sector: All

Source: SBA: Gazelles Revisited

HPIIEs account for virtually ALL new growth in US economy

Barriers to EntrepreneurshipBarriers to Entrepreneurship

• 98% Willingness to take risks• 93% Time and effort• 91% Ability to raise capital• 89% Business management skills• 84% Know-how in starting a business• 83% Industry and market knowledge• 73% Family support

Source: Wadhwa and Salkever, Kauffman

Critical Community Factors for Critical Community Factors for EntrepreneursEntrepreneurs

Availability quality work Availability quality work forceforce

Availability quality Availability quality managementmanagement

Access to expansion capitalAccess to expansion capital

Overall regional economic Overall regional economic healthhealth

Overall standard of livingOverall standard of living

Entrepreneur support Entrepreneur support organizationsorganizations

Access to alternative Access to alternative financingfinancing

Quality K-12 schoolsQuality K-12 schools

Availability of qualified Availability of qualified service providersservice providers

Access to seed capitalAccess to seed capital

Council for Entrepreneurial DevelopmentCouncil for Entrepreneurial Development

Innovation EcosystemInnovation Ecosystem

Know What Know Who

Know How

Researchers

Entrepreneurs

Investors

Workers

Intermediaries

Nexus of Innovation

To Be an ILED PlayerTo Be an ILED Player

CommunicateCommunicate

CollaborateCollaborate

ParticipateParticipate

Thank You!Thank You!

Randy Goldsmith, PhDRandy Goldsmith, PhDPresidentPresident

www.T3DC.orgwww.T3DC.org

Startup HPIIEsStartup HPIIEs

Exponential growth potentialExponential growth potential

A radical, disruptive, platform innovationA radical, disruptive, platform innovation

Highly competent managementHighly competent management

Wealth generation strategyWealth generation strategy

Significant early stage capital requiredSignificant early stage capital required

Average HPIIE EntrepreneurAverage HPIIE Entrepreneur

40 years old40 years old

70% married70% married

60% have 1+ children60% have 1+ children

72% middle class72% middle class

95% bachelors degree95% bachelors degree

New Economy FeaturesNew Economy Features

Knowledge jobsKnowledge jobs

GlobalizationGlobalization

Economic dynamismEconomic dynamism

Transformation to a digital economyTransformation to a digital economy

Technological innovation capacityTechnological innovation capacity