Economic Development Myth 1 - If A Big Company Can't Make It . . .

As I mentioned in the introductory blog post, many economic development attempts to attract entrepreneurs miss the essence of entrepreneurship and wind up being under-valued by entrepreneurs or destroyed by attention to unnecessary detail. I also mentioned I’d provide a set of myths to consider.

So what is the key issue blinding old-school economic developers to understanding entrepreneurship as an economic base? It’s a belief that large corporations are the best benchmark. Myth 1 says:

If the largest corporations can’t figure out how to stay on top, how can entrepreneurs compete?

The myth has a corollary as well, that replaces entrepreneurs with small communities and provides entré for old-school economic developers to charge inordinate consulting rates to small communities who think they need big-city examples to help them compete with, umm, big cities:

If the largest corporations can’t figure out how to stay on top, how can small rural communities even begin to compete?

Don’t believe it? The corollary was pulled straight from an economic development website – one that purports to help entrepreneurs but in reality only uses entrepreneurial language to mask old-school economic development pedantry.

The myth is flawed at its core, of course, by logic. First, big companies always do stay on top, if one is counting single biggest company impact on a market, which appears to be the assumption in this myth. While your particular big company may not stay on top, it will be replaced as the single market leader by another big company. Second, entrepreneurial companies are, by definition, smaller than the market leader. No way to get around the core logic to bring the myth into the realm of truth, but the emotional logic sure sounds good.

How could the myth be corrected, so that emerging economic developers could actually benefit entrepreneurs (or small communities, although both often go hand in hand)? Change a few words and it brings out a whole new meaning:

If your largest corporations can’t figure out how to stay on top, what can they learn from or acquire from entrepreneurs to be able to compete?

OR

If the largest corporations can’t figure out how to stay on top, what infrastructure can be put in place to encourage entrepreneurs to rapidly compete (without pushing them away)?

Several have been interested in the picture accompanying the introductory blog, so another hint along those lines: two of the key words about the picture appear in the latter rewritten myth.

Entrepreneurship vs Economic Development

I’m frequently asked my opinion on Entrepreneurship as a catalyst for growth, a way that regions or communities can lure their best and brightest young people back home. Some locales even attempt to institutionalize entrepreneurship as an integral part what is called economic development, a fancy name for going out and trying to find jobs for a community.  But many attempts miss the essence of entrepreneurship and wind up being under-valued by entrepreneurs or destroyed by attention to unnecessary detail.

What separates entrepreneurs from economic developers? And can we nurture both in a symbiotic relationship (at least until the entrepreneurial culture has grabbed hold of the reins and economic developers move into the role of holding on for dear life as the opportunities flow in fast and furious)?

The answer is a resounding Yes! The path forward is daunting to old-school economic developers and industrial boards, frustratingly obvious to the serial entrepreneur, the free agent and the entrepreneurial creatives, the cream of the creative class new generation.  With a bit of help, even the new-school economic developer can learn to court entrepreneurs, some of which may become your largest customers and most vocal champions.

We’ll explore these insights over the next few blog posts, as an excerpt from a larger presentation I created as a result of my crash-course in economic development over the past three years. I use this presentation when I speak to localities and communities interested in attracting – or home-growing – entrepreneurs. As a first hint, the picture accompanying this blog should give those with a keen eye and a keen imagination an insight into the role of economic development, entrepreneurial style.

Otherwise, just have someone standing by to take out the trash and shut the lights down.