How do you prosper in a highly competitive world where talent, creativity and imaginative ideas are the most important commercial currencies? Can spawning new digital technology start-ups act as a lasting stimulus in an otherwise ailing economy within a developed nation?
These are questions that are top-of-mind for me. It’s an intriguing topic for others as well.
It seems that supporting high-tech entrepreneurs is now viewed by many political leaders, from all parts of the globe, as a potent public policy remedy that may help them solve their local economic development challenges – particularly a lingering high unemployment rate.
As I walked through the exhibits on the South by Southwest (SXSW) trade show floor, I wondered what all these national and regional public sector agencies hoped to achieve with their presence at this year’s Interactive festival in Austin, Texas.
From my own trend-spotting perspective, what was the big attraction this year? Once again, the “SXSW Startup Village” brought together a multitude of entrepreneurs, angel and venture capital investors -- plus various recognized industry pundits -- into a vibrant dialogue about the evolving digital economy marketplace.
Indeed, the Interactive festival attendee demand for entrepreneurial practitioner insights remains very high. Many of the start-up related conference sessions I attended were quickly filled to capacity.
The SXSW 2013 Accelerator featured an eclectic mix of forty-eight new companies that pitched their business idea to a select group of experienced judges. Clearly, everyone who is tasked with driving economic growth would likely want a piece of this start-up action.
The Misguided Quest to Replicate Silicon Valley
I remember a time, in the not too distant past, when few people outside of the directly related industries showed any interest in learning more about the inner workings of the Silicon Valley technology and digital creative business clusters.
What’s it all about? People are building real things (products and services) that others want. Granted, the development effort sometimes includes a new mobile app that’s used for social media activity. But there’s so much more substantive work being done in the valley – some is hidden by the hyperbole.
Last year I visited the Digital Shoreditch Festival in the UK and shared my observations about the apparent challenges that will affect the growth of start-up clusters in London. I specifically mentioned why I don’t believe that comparing the London scene with Silicon Valley is wise or helpful to their cause.
That being said, I do believe that there’s much to be learned by following the British government’s initiative to try and help Tech City start-ups. After two years of intensive focus, lots of good intentions, and a change of leadership in government funded support organizations, the current performance report is not encouraging. Perhaps the real goal was somehow lost in all the media hype.
Building an Authentic Digital Start-up Ecosystem
The trend of shared collaborative workspace hubs for entrepreneurs provides a good example of how local constituents can work together to develop digital business ecosystem strategies that are customized for the local environment – acknowledging apparent strengths and weaknesses.
But how do you get the local entrepreneurs, higher-education academics and government agency representatives to rally around a nascent tech cluster? You need passionate community leaders who can see beyond their own vested interests. You want people to apply their intellect and energy, without strings attached.
I tend to agree with Brad Feld’s assessment – “give before you get” is the right attitude. I recommend reading his book entitled “Startup Communities: building an entrepreneurial ecosystem in your city.”
The best way for a start-up cluster to evolve is when committed entrepreneurs decide for themselves to lead the initiative – preferably on a pro-bono basis in the beginning. The national or local government’s role is to follow that entrepreneur-led process of self-determination and offer relevant assistance when asked.
In contrast, large amounts of government funding for research, planning and community marketing activity seems to reward the wrong kind of behavior. Opportunistic vendors will welcome the request to bid on these boondoggle contracts. Enough said.
Next Steps: Prepare for the Talent Shortage
Once funded, start-ups all quickly hit the same roadblock – finding appropriately skilled new employees. Talent is the key to success in the Global Networked Economy, but few people will qualify for these new jobs. Politicians don’t grasp this fact – start-ups can’t help solve the long-term unemployed problem.
According to the latest Mercer Talent Barometer Survey, 60% of organizations worldwide report a willingness to increase their investment in talent. However, only 24% say they’re able to meet current human capital needs.
More than 57% of those surveyed are not confident that educational institutions will generate the talent needed by their businesses today. That sentiment does not improve even when they’re looking out as far as five years.
“This lack of qualified talent is a real concern for employers and one that requires a multi-stakeholder approach to solving. We have found companies that are most optimistic about the future are actively involved in shaping it,” said Pat Milligan, Region President at Mercer and member of The World Economic Forum’s Global Agenda Council on Education and Skills.
So, given that backdrop, if there’s already insufficient talent supply to meet the current demand, then what’s the likelihood that emerging start-up communities can clone successful entrepreneurs and thereby create new jobs? Yes, it’s a rhetorical question; I know the answer.
View my SXSW 2013 photo stream on Flickr, to see some of the other countries represented.