Month: October 2015

Kauffman Foundation research draws lessons from ecology to provide a framework for building vibrant entrepreneurial ecosystems

A research paper released today by the Ewing Marion Kauffman Foundation calls into question the effectiveness of strategies by governments and private grantmaking focused narrowly on financing or training entrepreneurs, without regard to the broad context of entrepreneurship.

In contrast with such an approach, the report, “Enabling Entrepreneurial Ecosystems” by Philip Auerswald, associate professor at George Mason University, supports the view that entrepreneurs perform best in environments that are connected, dense and diverse.

This approach is especially apt to bear fruit amid economic disruptions, and even during recessions, when entrepreneurial activity actually intensifies.

“The paper raises questions and provides practical advice about the best way to encourage entrepreneurship, which is crucial to the growth of our economy,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “It encourages proponents of entrepreneurship to take a step back and envision a more holistic approach toward accomplishing their goals.”

The most significant impediments to entrepreneurship are the everyday struggles entrepreneurs face in communicating ideas, building trust and making deals, the report argues. The prescription is for an entrepreneurial ecosystem to remove, or at least minimize, the roadblocks to those goals.

The paper recommends six strategies to create strong entrepreneurial ecosystems:

  • Favor incumbents less. Policies and regulations that favor existing, dominant companies over entrepreneurial ventures constrain competition and create barriers to entry for new firms. Examples of such regulations include assertive enforcement of non-compete laws, excessively restrictive occupational licensing requirements and regulatory complexity that inhibits contracting. Policymakers should avoid such policies and regulations and work to reduce the barriers to business startup.
  • Listen to entrepreneurs. Rather than developing policies abstractly intended to correct “market failures,” policymakers should listen to what entrepreneurs have to say about their challenges. That input should be used to develop policies that stimulate idea exploration, product development and increased rates of deal flow.
  • Map the ecosystem. Entrepreneurial supporters should create an inventory or graph that indicates who the participants in the ecosystem are and how they are connected. Ecosystem maps can become valuable tools in developing engagement strategies.
  • Think big, start small, move fast. This simple rule, long a guiding principle for entrepreneurial ventures, also holds true for successful entrepreneurial ecosystems. The ecosystem should enable the connectivity needed for early success, and then clear the runway for future growth.
  • Avoid artificially segmenting your community or your strategies. Entrepreneurs and members of entrepreneurial communities are active participants in creating new companies, investing in and/or advising startups, mentoring entrepreneurs and serving as customers of entrepreneurial companies. Expect participants in entrepreneurial ecosystems to play multiple roles, and make the most of their valuable skillsets.
  • Prepare to capitalize on crises. Much like the rotting trunk of a fallen tree feeds the growth of new saplings, economic disruption creates entrepreneurial opportunities. Because disruptions are inevitable in economic and social life, architects of entrepreneurial ecosystems should anticipate them and prepare to make the most of the opportunities they create.

The paper says establishing an entrepreneurial ecosystem requires a practical approach toward entrepreneurs’ everyday needs. Policymakers should ask relevant questions and map out a broad framework that minimizes barriers to success. Once the results are evaluated, policymakers should use that data to make necessary adjustments.

McKinsey: How Companies Can Raise Their Digital Quotient (DQ)

With the pace of change in the world accelerating around us, it can be hard to remember that the digital revolution is still in its early days. Massive changes have come about since the packet-switch network and the microprocessor were invented, nearly 50 years ago. A look at the rising rate of discovery in fundamental R&D and in practical engineering leaves little doubt that more upheaval is on the way.

For incumbent companies, the stakes continue to rise. From 1965 to 2012, the “topple rate,” at which they lose their leadership positions, increased by almost 40 percent1 as digital technology ramped up competition, disrupted industries, and forced businesses to clarify their strategies, develop new capabilities, and transform their cultures. Yet the opportunity is also plain. McKinsey research shows that companies have lofty ambitions: they expect digital initiatives to deliver annual growth and cost efficiencies of 5 to 10 percent or more in the next three to five years.

To gain a more precise understanding of the digitization challenge facing business today, McKinsey has been conducting an in-depth diagnostic survey of 150 companies around the world. By evaluating 18 practices related to digital strategy, capabilities, and culture, we have developed a single, simple metric for the digital maturity of a company—what might be called its Digital Quotient, or DQ. This survey reveals a wide range of digital performance in today’s big corporations (exhibit).

McKinsey’s examination of the digital performance of major corporations points to four lessons in which we have increasing confidence:

  • First, incumbents must think carefully about the strategy available to them. The number of companies that can operate as pure-play disrupters at global scale—such as Spotify, Square, and Uber—are few in number. Rarer still are the ecosystem shapers that set de facto standards and gain command of the universal control points created by hyperscaling digital platforms. Ninety-five to 99 percent of incumbent companies must choose a different path, not by “doing digital” on the margin of their established businesses but by wholeheartedly committing themselves to a clear strategy.
  • Second, success depends on the ability to invest in relevant digital capabilities that are well aligned with strategy—and to do so at scale. The right capabilities help you keep pace with your customers as digitization transforms the way they research and consider products and services, interact, and make purchases on the digital consumer decision journey.
  • Third, while technical capabilities—such as big data analytics, digital content management, and search-engine optimization—are crucial, a strong and adaptive culture can help make up for a lack of them.
  • Fourth, companies need to align their organizational structures, talent development, funding mechanisms, and key performance indicators (KPIs) with the digital strategy they’ve chosen.

Collectively, these lessons represent a high-level road map for the executive teams of established companies seeking to keep pace in the digital age. Much else is required, of course.2 But in our experience, without the right road map and the management mind-set needed to follow it, there’s a real danger of traveling in the wrong direction, traveling too slowly in the right one, or not moving forward at all. We hope this article will help leaders steer organizations effectively as they make the transition to becoming more fully digital enterprises.

Read more here.

Future of Education

Five key trends for the future of education – technology immersion, data analytics, personalized learning paths, knowledge skills and economic alignment – are rapidly converging to produce a new paradigm called the “educational continuum.” The educational continuum achieves economic objectives by aligning the talent of human capital to the growth initiatives of a labor market. How an educational system responds to these trends will determine not only the value of that system to students, but ultimately the long-term value of the system to society.

Read this white paper to:

  •  Understand the direction, rate of change and shifting dynamics of each trend
  •  Develop realistic strategies for education policy, investments and programs
  •  Learn how to improve student performance, create greater workforce flexibility and enhance value to society

Link to download paper.

Green Building Advantages

About 40 percent of global carbon emissions come from buildings. Cities are waking up to the fact thatbuilding green can provide a win-win for environmental stewardship and cost savings (Governing).

Cities can compel developers to build sustainably though mandatory disclosures and benchmarking, but they can also incentivize them through green competitions. Not just for big cities, this year Woodville, Ala., pop. 741, won the EPA’s Energy Star Battle of the Buildings for achieving the largest reduction in energy use.

Industry groups are taking a lead role as well. The American Institute of Architects (AIA) has created avoluntary pledge that by 2030, its members will lower emissions from the buildings they design by 60 percent (CityLab). So far, results are mixed. Lack of awareness of sustainable design resources, such as energy modeling software, is something AIA is working to change.

One underutilized sustainability feature is green roofs, which incorporate trees or other plants on flat-roofed buildings (Construction Drive). Green roofs last 200 to 400 percent longer than normal roofs and provide cost savings between 25 and 50 percent. Several cities provide tax incentives to encourage broader adoption.

Sustainability (and preservation) advocates also are quick to point out the value in restoring and rehabilitating historic buildings (ArchDaily). After all, constructing even the greenest new building creates significant up-front environmental impact. The National Trust for Historic Preservation has noted that it can take 10 to 80 years for the energy savings in new green buildings to recoup their impact from construction.

Yet cities and developers are consistently rewarded for building new. As architects Jean Carroon and Ben Carlson put it:

Extending the service life of any object avoids the environmental impact of replacing it. To extend the life of buildings, regular maintenance is required, but this is hardly the norm. In the institutional and nonprofit world, fundraising for maintenance is exceedingly difficult. Having a new building or space named after a donor is much easier to sell than the Jane Doe Repair Plan.

Governing Magazine: A Tipping Point on Evidence-Based Policymaking

BY | OCTOBER 27, 2015

In 2012, I wrote in this space about an initiative being piloted in a handful of states to help policymakers, through the use of rigorous evidence and benefit-cost analysis, prioritize funding to programs that are most likely to produce positive results. At the time, many state and local governments were struggling to balance their budgets and policymakers were eager for an alternative to across-the-board cuts.

Fast forward to 2015, and 19 states and four counties have collectively directed $152.1 million to evidence-based programs with an estimated $521.3 million in return on investment. These governments have adopted an innovative and rigorous approach to policymaking: Create an inventory of currently funded programs; review which ones work based on research; use a customized benefit-cost model to compare programs based on their return on investment; and use the results to inform budget and policy decisions.

Through a partnership with the Pew-MacArthur Results First Initiative, states such asMississippi and New Mexico have joined the state of Washington — long considered an innovator in evidence-based policymaking — in developing policy frameworks that support effective programming and building the capacity to use analytical tools that inform the budget process.

In 2014, Mississippi passed legislation establishing evidence standards for evaluating the state’s corrections, health, education and transportation programs according to their predicted effectiveness. Similarly, the state, through its budget instructions, now requires executive agencies to justify funding for any new program by identifying evidence supporting the program’s effectiveness. Mississippi policymakers expect to use this information to bolster the state’s reinvigorated performance-based budget system.

Since 2013, New Mexico has used its customized benefit-cost model to compare the return on investment among programs in key policy areas, including criminal and juvenile justice, early childhood, and child welfare. The state, through its budget process, directed $104.4 million to the most effective programs.

Not surprisingly, city and county governments, often the leaders in finding innovative ways to improve government performance, are becoming increasingly interested in evidence-based policymaking. Earlier this year, Bloomberg Philanthropies launchedits What Works Cities initiative, offering incentives to 100 city leaders to create innovative models for using data and evidence that will improve the lives of their residents.

Four California counties are also partnering with the Results First Initiative to bringan evidence-based approach to reducing recidivism. The impetus for this work was a major restructuring of the state’s criminal-justice system that shifted much more responsibility to counties. Responding to a significant increase in the number of offenders serving time in their local jails or supervised in their communities, county leaders were eager to find tools to help identify effective programs for serving these populations.

In Santa Barbara County, leaders used information from a recidivism analysis — a critical step in developing their customized benefit-cost model — to determine that 63 percent of high-risk offenders were re-convicted within seven years, at a cost of $63,000 per offender. The next step was to look for programs that were most likely to reduce recidivism and to compare their costs and benefits. Armed with that information from the model, the county reallocated funding to serve 75 percent of high-risk probationers through evidence-based cognitive behavioral therapy programs.

Other California counties have used a national database, which pulls information from eight national research clearinghouses on the effectiveness of more than 1,000 interventions, to identify programs shown to work and compare them with the ones currently funded in the county. For example, leaders in Santa Cruz County used the database to determine that their correctional education programs lacked key components that research has shown are necessary to be effective, and are working to better align their services with proven practices.

Kern County, in the state’s agricultural interior, previously operated only a handful of inmate-focused programs — none of which were evidence-based — largely because offenders stayed in county facilities only for short periods of time. But when county leaders needed to find ways to better target scarce resources, they allocated funding to support five evidence-based programs that are currently operating in local jails and dedicated Probation Department staff to ensure that programs are implemented effectively and achieve the desired results.

As information on “what works” continues to grow, and tools that make this information more accessible and understandable are used more widely, we are likely to start to see more policymakers expect and demand evidence when making decisions about what programs to fund and which policies to support. Meeting this demand will be challenging, but that’s a good problem to have.


State and local taxes matter to business competitiveness

State and local taxes represent a significant costs for businesses, and the tax burden varies greatly between different states and industries.  The widespread interest in state corporate tax burdens has resulted in a variety of studies but none that provide business leaders or policymakers with a comparison of actual state tax burdens faced by real-world businesses.

KPMG and the Tax Foundation have collaborated on a study which fills this information gap. Location Matters: The State Tax Costs of Doing Business, not only examines the different tax rates faced by different types of businesses, but also highlights how tax codes treat new and previously established firms within each state.  Tax Foundation economists created seven model firms in different industries, and KPMG tax specialists calculated the tax bill for those firms in each state, both as new facilities and as mature firms.  The study accounts for all business taxes:  corporate income taxes, property taxes, sales taxes, unemployment insurance taxes, capital stock taxes, inventory taxes, and gross receipts taxes.

Location Matters can be a valuable resource for a variety of stakeholders to help ensure that:

  • CEOs, CFOs, and other corporate stakeholders can better evaluate the relative competitiveness of states in which they operate or states in which they are contemplating business investments
  • Businesses and trade organizations can better identify policy improvements for each state
  • Site-selection experts can screen states more quickly and accurately for consideration by their clients

Perhaps Ohio should follow Tennessee’s lead on rural economic development

Tennessee Gov. Bill Haslam recently announced a new fund to support economic development in rural parts of the state. While most of the $8 million (approximately $7 million) is designated for shovel-ready economic development sites and tourism projects, the state will commit $600,000 for economic development grants to support entrepreneurship in small towns across the state including $300,000 to support a Main Street Business Incubator Program for downtown business districts. Launch Tennessee will receive $75,000 for AgLaunch – an agritech-focused business acceleration program developed by Memphis Bioworks Foundation. The state also committed $250,000 for a statewide broadband supply/demand analysis. Read the release:

Learning as an Entrepreneur

It’s been almost a year since I took the entrepreneurial leap and launched my executive coaching practice. I’m not going to lie, working for myself has been completely spoiling. Setting my own agenda, choosing the place and times to work, and determining the clients with whom I work (no social hand grenades) has been completely fulfilling.

I’m a big believer that in uncertainty lies opportunity. If the rules aren’t already written then write your own rule book, and if there is a book, make edits.

Sharing lessons is important. After all, nobody learns from their successes or really even question why they won something, they just accept it. Here are four things to consider before taking your leap into the entrepreneurial unknown:

1. Marketing isn’t easy.

Not in terms of marketing your product but yourself (self-promotion). Now, I’m not blanketing all entrepreneurs by saying this because there are certainly people out there who believe the world revolves around them. However, for those who live in reality and “get it,” selling yourself (not that way) isn’t easy.

Here’s the secret to not sounding like a you-know-what: don’t talk about yourself. Instead, highlight what it is your product or service provides and let customers make the connection for how it benefits them. This is a subtle yet important difference. People want to know how they’ll benefit from buying what you’re selling, and yes, who you are is a large part of that.

Consumers buy from vendors they like, trust, and respect. They also buy products and services that benefit them so be sure to craft your marketing message that way.

2. A strategy is different from an objective.

I wrote in another column what a sound strategy looks like, and just the process of thinking strategically can be a challenge if you’re more inclined to the executor role. Think of it this way: an objective is where you want to end up — it’s your destination. Strategy is how you get there.

Consider, for instance, a ladder — the kind you lean up against the side of the house to clean out the debris in your home’s gutters. When you lean the ladder against the house, the goal is to climb to the top (and not fall off). The rungs provide the means by which you get there — the daily behaviors that help you execute the strategy — and the rails of the ladder set the direction for where those rungs lead (they can only go one way). If, once you get to the top of the ladder you find yourself on the wrong roof, you simply shift the ladder.

Related: Being Your Own Boss Is Great Except for the Hours

3. Focus on what you, and only you, can affect.

Entrepreneurship is an investment in yourself, your beliefs, convictions and definition of value. After all, if you don’t believe your new widget is valuable then you wouldn’t feel compelled to sell it, right?

As an entrepreneur, you should focus on your area(s) of expertise, on what only you can affect, and allocate other tasks to outside professionals. Virtual assistants are great for this as they provide the subject-matter expertise to work effectively and efficiently in their roles while allowing you to do the same.

4. Stay fit.

Anybody who says there’s no time in the day to exercise simply doesn’t place fitness as a priority. It’s that simple. Being an entrepreneur is no different. What prevents people from doing the hobbies they enjoy is fear. They worry that if they’re not working on something geared toward business then they’re not being productive, and this is anything but true.

We all need personal time, it’s how we decompress from the pressure of the day so we can return the next day and work optimally. Learn how to manage your fear of missing out (or FOMO) syndrome and watch your stress levels plummet.

It’s not an easy decision, but holding your feet to the fire and placing yourself in an environment that demands success certainly narrows down your priorities of what’s important and what isn’t. It also wields greater fulfillment. Choose wisely.

Entrepreneur Magazine

Affordability helps drive tech boom in small cities

A virtue of the tech industry is that its work can be done virtually anywhere. So when the cost of certain cities’ real estate reaches parity with that of lush Mediterranean islands, smaller, less expensive cities look more appealing (CityLab).

One such place is Lincoln, Nebraska. The “Silicon Prairie” is building on its existing assets (i.e., low cost of living and a nearby research university) with economic development incentives and hip amenities designed to attract young, talented workers (Bloomberg Business).

“What some people on the coast refer to negatively as fly-over country is going to be the epicenter of the next wave of innovation,” said Steve Case, co-founder of AOL.

Although no city has succeeded in becoming the next Silicon Valley, small metros are demonstrating that innovation isn’t inexorably tied to big cities (CityLab). A working paper from Stanford and Waterloo universities compares the volume of patent applications with population density and finds that the relationship between the two variables has steadily decreased in recent years.

Furthermore, angel investors in the Great Lakes region invested more money last year than in any other region, including California (SSTI). This is a first since the Angel Resource Institute began tracking this data in 2006.

Another useful resource: Bloomberg Business has created a visual comparing average STEM pay vs. cost of living in the top 100 U.S. tech metros.

Fast Company: Top Jobs for Work-Life Balance

Maintaining a healthy work-life balance is a challenge, even when you have a job you love and an understanding boss.

According to its most recent survey of employee feedback from about 60,000 company reviews, Glassdoor found that work-life balance has actually been creeping downward in recent years, as employees reported an average work-life balance satisfaction rating of 3.5 in 2009, 3.4 in 2012, and holding at 3.2 since 2013, based on a five-point scale with 1.0=very dissatisfied, 3.0=okay, 5.0=very satisfied.

“Many employees are now connected to their work 24/7 thanks to technology, often checking their email and putting in extra hours on nights, weekends, and even when they’re out on vacation in many cases,” observes Glassdoor’s career trend analyst Scott Dobroski. He points to these as some of the reasons why employees have reported less satisfaction with work-life balance in recent years.

Judging by the results of a survey from EY, a global assurance, tax, and advisory services organization, one reason is that the traditional 40-hour workweek is becoming obsolete. Sixty-four percent of U.S. workers report they’re working two to four hours more a week, and one-third (36%) are on the job an extra five hours or more.

U.S workers trying to balance their personal and professional lives are torn most often between working those additional hours and handling more responsibilities, and getting enough sleep in addition to finding time for self-care and spending time with family and friends.

The other part of the problem is that while flex-time policies proliferate—according to research and HR membership service Workplace Trends and CareerArc, nearly a third of companies (29%) spent over $40,000 implementing a flex-time program last year, and more than half say they’ll invest more in those initiatives this year—managers and employees have different takes on whether they’re working. For example, the survey found that the majority of workers (65%) say their manager expects them to be reachable outside the office. That squares with the 64% of employers who expect staff to be on call when they are officially off the clock.

Glassdoor analyzed those employee feedback reports over the past year and found the top 25 jobs where it is possible to have a greater work-life balance.

For a job title to be considered for Glassdoor’s report, it had to have at least 75 work-life balance ratings shared by U.S.-based employees over the past year from a minimum of 75 companies. Of the job titles that met this criteria, they also had to include “work-life balance” and/or related terms as a pro of the job in at least 15% of reviews. Finally, these jobs had to have at least 200 openings, which represent active job listings on Glassdoor as of October 1.

Click here for the full list of the top 25 jobs with the best work-life balance.

Data scientist tops the list of jobs where workers are reporting greater work-life balance. It’s interesting to see this in-demand position get high marks, because according to , somewhere between 140,000 and 190,000 data science openings in the U.S. will go unfilled by 2018.

Shashi Upadhyay, a data scientist and CEO of Lattice Engines, recently wrote a post for Fast Company about attracting and retaining talent in this competitive field. “Those [companies] that can’t offer the most competitive salaries will need to find other enticements to offer,” Upadhyay writes. Though flex-time isn’t one of the options he highlighted, Glassdoor’s research shows that such jobs are already factoring that in.

As for SEO manager, the job in second place is another in-demand position at virtually any company that has a web presence. Search engine optimization has been called a “modern art form” that uses creative approaches to content to get Google, Bing, Yahoo, and other search engines to bring a business’s site up in the first listings.

One SEO specialist at Geek Powered Studios reported on Glassdoor: “Great company culture, opportunity for growth, fun coworkers, work-hard, play-hard mentality. We often have company outings, video-game breaks, catered lunches.”

Talent acquisition specialists come in third place this year, with a four out of five rating for work-life balance. Although we’ve seen some recruiters have the unenviable task of sorting through thousands of resumes to find the best person for a particular job, others are able to leave work behind after office hours. One company currently searching for a talent acquisition specialist gets high marks for work-life balance: “The hours seem long on paper, but the days fly by. Minimal weekend work. After-hours work only during an emergency.”

For those seeking better balance between their personal and professional lives, Glassdoor’s Dobroski says it’s all about setting goals and expectations between managers and employees. “When employees have a very clear vision of what they need to do and what’s expected of them, they can better manage their work life with their personal life,” he says.

Inevitably, there are some jobs that may require more attention during and out of normal office hours. Dobroski advises that before accepting a job, job seekers should do their research to understand the hours that are expected in the role, where and how they can get their work done, and the overall nature of the job.