Where the Entrepreneurs Are
The Kauffman Foundation has recently published a study of the Inc. 500 firms for the past thirty years. While the companies in the Inc. 500 are self-selected (you have to apply to be on the list), it's a decent snapshot of entrepreneurial activity in the US. Despite what you might expect, this study found that innovation and growth of firms comes from a wide range of industries, not just "science and technology." Only 19.4 percent were IT firms and another 6.5 percent were in Health and Drugs.
Another great finding is that there are innovative, high-growth companies outside of the places you might expect. The authors were surprised to find Salt Lake City (second), Indianapolis (sixth), Buffalo (eleventh), Baltimore (fifteenth) as well as Nashville, Philadelphia and Louisville in the top twenty locations for Inc. 500 firms.
Here's my favorite tidbit. The study found no correlation between "the presence of venture capital investment, high quality research universities, federal R&D funding (such as SBIR), and patents" with the location of high-growth firms. Instead, they found that "the presence of a highly skilled labor force is important for concentration of Inc. firms."
Read the whole study HERE.
Redesigning State Economic Development Agencies
In the last three years, there has been substantial re-arranging of the deck chairs at state economic development agencies across the country. These changes are documented in a new study from the National Governors' Association. Dissatisfaction with the myriad of economic development organizations at the state, regional and local levels, lack of accountability and perceived overlaps among programs has pushed many states to change from state agency models to public-private partnerships. NGA says that there are three "foundational strategies" at work. They are:
The whole report is HERE.
- Engage and sustain private sector involvement.
- Create mechanisms to encourage collaboration.
- Institute a quantitative evaluation system. (Maine was lauded for its ten-year history with evaluation of its technology-based economic development initiatives.)
Leadership Matters to Innovation
We often talk about how important it is for innovative companies to have innovative leadership. Harvard Business School researchers Clayton Christensen, Jeff Dyer and Hal Gregerson found five "discovery skills" that distinguished innovators from non-innovators. They say, "Innovators ask provocative questions that challenge the status quo. They observe the world like anthropologists to detect new ways of doing things. They network with people who don't look or think like them to gain radically different perspectives. They experiment relentlessly to test new ideas and try out new experiences. Finally, these behaviors trigger new associations which let them to connect the unconnected, thereby producing disruptive ideas."
They went on to study companies that are very innovative, and found that the leader's innovation skills were extremely important. They found that "CEOs of high-innovation-premium companies scored at the 88th percentile of the five skills of disruptive innovators. By comparison, CEOs of average companies scored at only the 62nd percentile. From a different angle, innovative leaders spent approximately 31 percent of their time actively engaged in innovation-centered activities compared to only 15 percent by leaders of less innovative companies. Doubling the time a senior leader personally invests in getting new ideas typically delivers significant returns."
The whole article is in Forbes. There is also more information on this HBR site.