Creating Ecosystems of Entrepreneurship
The following is a guest commentary for CNBC.com.
Two-thirds of economic growth since World War II has been driven by innovation. While the debate surrounding what fuels American innovation often focuses on large macro issues (national tax policy, regulation, immigration, international trade laws), what often is missing from the discussion are the "microeconomic" strategies that can be used to leverage and foster innovation and job creation at the regional level.
A successful microeconomic strategy draws on a region's unique strengths (local industries and businesses, universities and community colleges, the skill base and experience of a local workforce). It then integrates the whole value chain to create ecosystems of entrepreneurship that support innovation and new business formation in these areas.
As these ecosystems take root, they create strong supply chains of innovative small businesses that support and encourage large corporations to set up shop and expand in these communities. It's no secret that a robust supply chain can be a competitive advantage for companies and can be a determining factor in bringing production back to the United States or utilizing a particular region as an export hub to sell American-made products to markets around the globe.
When most people think about regional ecosystems they think about Silicon Valley or the Research Triangle Park, or as Harold Sirkin, of the Boston Consulting Group, pointed out even Wall Street and Hollywood. But there are countless other ecosystems that are forming across the country—both organically and through public-private partnerships.
These range from industries as diverse as the microbrewing industry that has developed in Asheville, North Carolina, to the composite boat industry in Brunswick, Maine, where I live.
So the question becomes what can both the public and private sectors be doing to better support and grow these place-based ecosystems? How can we expand the playing field to more industrial, urban and rural communities? And how do these regional strategies complement broader national policies that fuel innovation and support America's long-term competitiveness.
To help answer these questions, the Small Business Administration (SBA) pioneered the federal government's first official cluster investment strategy. The SBA invested in 10 pilot clusters across the country, focusing on industries ranging from health care to cyber security to agriculture.
A key part of this investment was a focus on data collection and measurement. And the results are extremely promising. In the first year of investment, small business participation in our 10 pilot clusters increased by over 275 percent in just one year. Employment grew on average by over 11 percent in the small businesses that participated in the 10 pilot clusters. And over two-thirds (69 percent) of small businesses that sought cluster support reported that they developed new products and services.
Based, in part, on the success of these investments, the federal government has supported more than 40 clusters around the country, including 10 recently announced Advanced Manufacturing Clusters. And we continue to work across the Federal government to collaborate on additional opportunities.
In addition to clusters, we're focused on a broad range of place-based and integrated efforts that include partnerships with universities, entrepreneurs, funders of capital and advisors. These public private partnerships include innovation hubs, Manufacturing Innovation Institutes, and a robust network of growth accelerators.
We use the term accelerator to refer to organizations that are working to "accelerate" the growth and creation of start-up companies.
Accelerators come in different shapes and structures, sometimes they're housed at universities, others are private, and some are technology-based economic development programs. They also take on different structures—some are intensive boot camps for new businesses, others offer ongoing mentoring.
But, regardless of how they're structured, we believe these networks can play a powerful role in supporting the growth of successful start-ups that develop innovative products and services.
To strengthen these networks, we are working to better link accelerators to universities. We also are developing best practices and ensuring that these networks have access to important government programs.
At the heart of the SBA's place-based strategy is inclusive entrepreneurship, making sure that through effective public-private partnerships the positive impact of small business ownership and entrepreneurship can reach more industries and more areas of the country.
To do this, we're ensuring that access and opportunity (investment, mentoring, lending) reaches entrepreneurs not just in places like Silicon Valley, or Boston, or New York, but the agricultural vaccine company that I visited this summer in Ames, Iowa, or the businesses I visited along the I-79 high tech corridor in West Virginia or the producer of next-generation industrial fabrics and coatings that I talked to in New Hampshire a few months ago.
Our economy is growing. Manufacturing is coming back. America's entrepreneurial spirit is alive and well. Over the last four years, we've worked to put into place the foundation for America's long-term competitiveness. And by empowering and nurturing innovative small businesses and entrepreneurs in regions across the country, we can build on this economic momentum and ensure that America remains the greatest place to start, grow and build a business.