Entrepreneurship

1

• Entrepreneurship
• as Public Policy
• Outline of a Discussion

As presented by Catherine A. Calarco, Senior
Lecturer MIT Sloan School of Management MIT
Entrepreneurship Development Program (EDP
2005) Cambridge, 28 Jan 2005
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Desired Outcomes of this Presentation

• Discuss the importance of entrepreneurship at the
  public policy level
• Rapidly growing populations
• Rising expectations
• Need for more, higher value jobs
• Need for more nimble, dynamic, globally
  competitive companies and economies.
• Understand the elements of establishing and
  implementing effective policies to support high
  tech entrepreneurship.

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Acknowledgements

• I gratefully acknowledge the support
• of several faculty and staff at
• The MIT Entrepreneurship Center, especially
  
  Prof. Richard Locke, Ken Morse and Bob Ayan, as
  well as the Venture Support Systems (VSS)
  project.

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Acknowledgements

• I gratefully acknowledge the support of several
  faculty and staff at The MIT Entrepreneurship
  Center, especially
  Prof. Richard Locke, Ken
  Morse and Bob Ayan, as well as the Venture
  Support Systems (VSS) project.

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The Impact of Entrepreneurshipas Public Policy
--- 1/2

• Governments must invest in education and RD
• Waves of technically trained young people--
  steeped in the latest theories and techniques,
  and honed by some of the smartest minds in
  science and technology--do more for raising a
  country's industrial competitiveness than all the
  tax breaks, development aid, and government
  initiatives put together.
•         Understanding Technology Transfer, June
  2005
• Written by The Economist Intelligence Unit
• Published by APAX Partners

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The Impact of Entrepreneurship as Public Policy
--- 2/2

• 70 of a nations economic growth is typically
  attributed to entrepreneurship
• 35 of the Fortune 500 list is displaced every
  3-4 years by new firms
• Inc. 500 firms grow at 1312 over 5 years
• NZ Fast 50 companies exceed 1000 growth
• GEM research suggests 30 of the differences in
  GDP growth are attributed to levels of
  entrepreneurship activity
• Entrepreneurship is the fuel that drives the
  expansion of cluster growth

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Global Competitiveness of Nations Regions
Drives the Need for Action

• Middle East - Governments need a dynamic,
  globally competitive private sector
• New Zealand - seeks to return to the top half of
  OECD, and reduce its traditional dependence on
  commodity exports
• Governments must replace lost businesses and
  jobs, and maintain economic growth
• There is a global trend towards dominance of new,
  fast growing firms
• There are never enough talented entrepreneurs!

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The Proper Role of Government - - 1/2

• Think and Act Long Term
• Establish a Growth Policy (vision) - channel self
  interest
• Prioritize initiatives which have greatest impact
  on sustainable long term growth
• Invest in RD and ensure IP Protection
• Invest in technically talented people
• Open new markets
• Establish a robust and dependable infrastructure
• Financial markets
• Create a productive ecosystem for
  entrepreneurship
• People are the 1 critical success factor
• Develop the right resources
• An education system which encourages and supports
  Entrepreneurship
• The right networks and support programs to ensure
  113

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The Proper Role of Government - - 2/2

• Be an active partner
• Promulgate clear long term strategies
• Undertake a few practical initiatives, with
  explicit
• timelines and outputs
• Provide proactive communication strategy
  including
• success stories, profile building and education
• Provide dependable funding and support
• Set rules of the road and get out of the way
• Create a few of the right regulations
• Enact and enforce them very well
• Let the market pick winners and losers
• enable more winners
• Consider and plan for the social and
  environmental
• impacts of growth in technology industries

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The Proper Role of the Private Sector--Focus on
execution and faster clock speed

• Be a true Active Partner
• Own the goal
• Be an aggressive industry voice to govt
• Stimulate faster clock speed
• Connect the industry
• Network with global markets
• Help develop top talent
• Grow Business
• Build export businesses which demand local
  supply,
• thus increasing the domestic market
• Help provide access to global markets
• Increase capability and viability of businesses
  to succeed
• in global markets
• Make investments

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How the Private Sector can Influence Public
Policy

• Expect more from Government
• Be active in policy committees and provide input
  (no matter how frustrating it might be)
• Contribute to the ecosystem for growth
• Tell your success story and rejoice in others
  successes and failures
• Enable entrepreneurs to flourish in your
  organization and on their own

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The Proper Role of Academia and Research Centers

• Develop human capital
• Create ongoing streams of IP
• Integrate with the private sector and support
  commercialization processes
• Create a hot bed of new technologies
• Create an environment for generating and growing
  companies leveraging new IP
• Develop knowledge and people for the future
• Create competitive centers of excellence

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Together We Create an EcosystemPeople, Venture
Support System, Government policy, Academia,
Innovation capital, large and small firms

• The companies spun out from just one university,
  the Massachusetts Institute of Technology, would
  constitute a nation with the twenty-fourth
  largest GDP in the world.
• Building Entrepreneurial Economies,
• Carl F. Schramm, Foreign Affairs, July/Aug 2004

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Implementing a Policy Framework -- Take a
holistic approach

• Create a long term vision and plan which
  addresses the social and environmental issues
• Inspire teams of entrepreneurs with a desire for
  independence and passion to solve problems
• Establish timely policies and programs to help
  them acquire the right skills at the right time
• Enable successes and celebrate them
• Actively tolerate honest failures
• Focus the right amount of funds on the right
  areas
• People, capital, environment of opportunity and
  networks

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Entrepreneurship and Government Policy an
Oxymoron?

• What good at -
• Set a vision
• Understand larger picture
• Support and fund activities
• Think clearly for the long term
• Tolerate risk while leading fundamental change
• Control the government process and environment
• Be predictable

• What not good at -
• Maintain fast clock speed
• Make rapid decisions
• Deploy high impact activities
• Be entrepreneurial
• Avoid politics
• Take action vs. talking forever
• Avoid control and indecision

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To Compete on the Global Stage, Government
Leaders Must

• ..take bold steps and deliver sustained follow-up
• To implement entrepreneurship policies,
  Governments must
• Serve as a facilitator for services
• Create new partnership institutions and
  collaboration models
• Foster continuous creation of new,
  technology-based enterprises
• Deliver what the industry and its people need
• to successfully grow
• Change the culture and their own culture
• Make great leaps forward

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Start with a VisionEnables focus and
accountability for results

• Addresses the need for global competition
• Inspires entrepreneurial culture and attracts
  world class talent including the Diaspora
• Inspires a vibrant, competitive private sector
• Generates a higher standard of living
• Responds to public pressure for more jobs,
  greater economic expectations
• Communicates plans to move away from dependence
  on commodity products
• Addresses social and environmental impact

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Then, Provide a Successful Implementation Plan

• Consider current environment and culture
• Address cultural issues
• People are basically all that matters
• Implement as a change management project
• Have a champion
• Use an integrated approach -- include the key
  influencers
• Government, universities, large and small firms
• Existing programs, industry organizations,
  incubators, VSS, VCs, Business Angels, education
  programs
• Enable the best people and teams to be successful
• Set up an organizational structure that best
  suits the problem
• Have a big dog at the top to stop squabbling
• Be persistent

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Implement a few of the right things very well!
Successful change Management Toolbox-style
Successful Change
Model the Way
Pressure for Change
Capacity for Change
Actionable first steps
Reinforce and Consolidate
Clear Vision






Fast start that fizzles
Model the Way
Pressure for Change
Capacity for Change
Actionable first steps
Reinforce and Consolidate






Cynicism and Mistrust
Pressure for Change
Capacity for Change
Actionable first steps
Reinforce and Consolidate
Clear Vision






Bottom of the in-tray
Model the Way
Capacity for Change
Actionable first steps
Reinforce and Consolidate
Clear Vision






Anxiety and frustration
Model the Way
Pressure for Change
Actionable first steps
Reinforce and Consolidate
Clear Vision






Haphazard False Starts
Model the Way
Pressure for Change
Capacity for Change
Reinforce and Consolidate
Clear Vision






Revert to old ways
Model the Way
Pressure for Change
Capacity for Change
Actionable first steps
Clear Vision






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People and Teams Matter Most

• Attract more people with the right attitudes,
  talent and capabilities be the place to be
• Access the Diaspora
• Access to markets, globally relevant skills, and
  investment
• Can recruit others
• Build strong networks and support systems
• Provide access to customers and markets
  customer focus
• Focus on education and commercialization support
• Tell success stories and show the way

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Finish by Measuring the Impact 1/2

• Determine what you want to achieve and measure
  what you can
• Measure knowledge-based enterprises focused on
  global markets
• Number of enterprises, enterprises per capita,
  enterprise density in an area, and life/death of
  enterprises
• Measure cultural attitudes
• perception of entrepreneurs, business attitudes,
  interest in being an entrepreneur, acceptance of
  success and failure

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Finish by Measuring the Impact 2/2

• Measure capital available for high growth
  companies, investments in RD and creation of IP
  (patents) and their resulting commercialization
• Track the outputs of entrepreneurship policy
  including
• Incubators, clusters, entrepreneurship centers,
  education programs, and communications programs
• Create simple key performance indicators for
  these

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A New Zealand Case Study --

• New Zealand Growth and Innovation Strategy
• Biotech, Information and Communications
  Technology (ICT), and Creative Industry
• ICT Taskforce Report
• The HiGrowth Project
• Create 100 companies that will exceed 100 Million

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High Tech Venture Creationin New Zealand

• The system and how it works (and sometimes
  doesnt)
• Many perpetually small, entrepreneurial companies
• Commercialization vs. research skills and
  investment
• Government policy and initiatives
• Support organizations
• Who you know consultants, advisors, contacts
• Need to cross two chasms size/momentum and
  geographic
• Changing environment of New Zealand
• Inadequate match of available capital to
  companies seeking investment

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ICT Taskforce Vision100 firms at 100 Million
in 10 years (10 of GDP)

• Strategies to Address Barriers to Growth
• Commit to Growth Target
• Build an Entrepreneurial Culture
• Focus on Global Markets
• Have the Right Team
• Grow the ICT Workforce
• Address Regulatory Policy Issues
• Enable Increased Productivity across NZ
• www.industrytaskforces.govt.nz

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The HiGrowth ProjectConnecting the ICT industry
to grow

• Implement the strategies from the ICT Taskforce
  report and powering up 100 companies to 100
  Million
• Worked with a small group of key companies
• Connect, communicate and collaborate across the
  entire ICT Industry
• Maximize existing excellent resources by creating
  pathways
• Ensure that the industrys needs are being met

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Growing an Industryfrom Vision to Global Brand

• Map out the companies growth tracks
• Guide businesses towards achieving
• the target
• Understand how acceleration works
• Isolate strategies, actions tools for speeding
  up progress down the track
• Measure performance
• Monitor actions and test their impact
• on ICT growth

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MIT G-Lab project findings, Jan. 2004

• Problem addressed how can a small company from
  an emerging economy, with a limited domestic
  market, successfully grow its business in
  international markets?
• Resulting recommendations
• Focus, Focus, Focus!
• Taking Calculated Risks
• Common International Hurdles
• Financing for International Growth
• Hiring Staffing
• Branding
• Marketing for Technology Companies
• Direct Sales Versus Partnering
• Networking as a Corporate Lifestyle

www.higrowth.nz
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What Happened from Company POV

• Signed up to the goal and profiled within the
  market
• Feedback was input into programs and
  organizations
• On-line knowledge center and industry directory
  reflected HiGrowth companies needs
• Obtained an advisor for education programs
• Participated in the MIT G-Lab project and
  obtained guidebook modules
• Learned about networking and became more
  connected
• Provided input into Government policy
• Observed the project catalyzed change for the
  industry

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New Zealand-related Project Results

• Media coverage and international interest
• 280 Companies and 45 supporting organisations
  inspired to grow towards 100 million
• Industry Directory and company profiles on line
• Over 10 organisations actively working towards
  the goal
• Over 70 companies profiled through 321GoGLobal,
  networks and forums
• Numerous regular events bringing appropriate
  people together
• Knowledge shared

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NZ What Went Right?

• Bold vision created a paradigm shift in the
  market
• Enabled a strong champion for entrepreneurs and
  growth
• Focused on growth continuum and sustainability of
  organizations
• Companies loved the idea and were inspired to
  grow
• Communications
• Organizations got out of their comfort zone and
  talked about strategies for growth
• Shared success stories and knowledge
• Extensive media interested in project and
  companies
• Project was fast and flexible
• Created the first industry database and knowledge
  center
• Contention brought about positive change,
  including collaboration within industry
  organisations
• Taskforce stimulated other projects including
  Future in Tech, 321GoGlobal, focused education
  initiatives, and stronger network connections

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NZ What Went Wrong?

• Government contract and governance
• Aspiration aspect of goal was misunderstood
• Politics turf disputes and control issues
• False collaboration
• Lack of focus and too large a brief
• Too many KPIs across too many areas
• Volunteer board with no consensus on priorities
• Push back and slow down actions from govt
• Naïve team
• Champions burned out and left
• Not enough long term financial support
• No sustained centralized support for the
  projects goal
• Scaling back to an internal support organization
  for government economic development

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Key Lessons Learned

• Deploy change management techniques
• Be inspirational, tell great stories, and
  celebrate success
• Communicate, communicate, communicate with all
  stakeholders
• Entrepreneurial champions are a fundamental
  requirement
• Have support from key political and industry
  officials before implementation
• Get long term funding a the start
• Success requires new forms of institutions and
  relationships cooperation and collaboration
• Measure outcomes and recognize soft
  measurements
• such as attitudes
• Focus on best results for the industry keep the
  political system well fed
• Work with a few key partners and be a compatible
  part of the existing system
• Set up programs as best you can and continually
  improve
• Be persistent and committed for the long term
• Dont try to please everyone, but be nice to
  everyone!
• Keep focused do a few of the right things very
  well

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NZ Experience to date, summary

• Have the right attitudes and vision
• Produce what many people will buy
• Be innovative
• Have the right people on your team
• Have basic long term funding in place before
  launching
• Listen to someone who has been there, done that
• Be speedy to market
• Implement well
• Think (but not too much), do well and take risks
• Constantly improve
• Perfection is our goal, excellence will be
  tolerated.
• ? Author J.Yahl

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Areas for Future Research 1/2 MIT
Entrepreneurship Center Seeks Future Case Studies

• Adding case studies in other areas
• other countries or regions are doubtless
  exploring similar
• or comparable initiatives
• Interested in studying other initiatives and
  their outcomes
• Munich Network and MBPW
• Ireland ICT an update
• Puerto Rico
• Sweden
• Spain
• UAE
• China
• others

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Areas for Future Research 2/2 What does it take
for Public Private Partnerships to work?

• Review existing models
• Commercial and some University organizations
  should be studied and compared
• Kauffman Center, Endeavor, MIT
• Cambridge-MIT Institute, Munich Network
• The selected model must be a fit for the designed
  purpose and environment
• Set expectations at beginning be open and honest
• Consider changes needed to be sustainable for the
  long term
• It takes 3x as long and 3x as much money
• Success is more about the people and long term
  commitment at the top

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Questions?
Please feel to contact me Catherine Anne
Calarco, Senior Lecturer MIT Sloan School of
Management

• c/o MIT Entrepreneurship Center
• Room E40-196
• One Amherst Street
• Cambridge, MA 02142-1352 USA
• Office 1-617-253-8653
• Mob 1-617-688-2888
• ccalarco_at_mit.edu
• (as of September 2005)