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Small business helps Idaho recover from COVID-19 recession

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Norris Krueger

When economies recover from a recession, who is the “culprit”? Here’s a clue: In June, U.S. small businesses added nearly 1 million jobs[i]. And yet civic officials deem them unimportant to economic recovery? Let that sink in.

Who has led every economy in every country out of recession? It’s new and small business. Every time. The real mystery isn’t whodunit but… Why are their voices not at the table?

We know how to help these hidden champions. Another mystery: So why aren’t we?

We know that an entrepreneur-led economy demands a very different approach. Today, institutional players are “feeders,” not leaders. They need to support the grassroots and not try to direct them. Economic development has already been disrupted, COVID just forced us to embrace the new. A final mystery: So why do we continue to support the old paradigm and let the old guard speak for entrepreneurs?

TLDR Good News: We know how to identify our difference-makers, our hidden champions, and we know how to help them. We know who is best prepared and able to be a difference-maker in helping hidden champions. Bad News: We are choosing to let others speak for them, usually those who don’t realize economic development has changed. Most of the help we offer entrepreneurs and SMEs is also stuck in the past. We are now in the world of entrepreneurial ecosystems, as different as Copernicus. Ecosystems can only function if the institutions and silos decide to engage on the side of the entrepreneurs, not try to lead.

More clues: Historically, 58% of new jobs in Idaho come from new businesses, 40% from growth of existing business, and yet we invest time, money and energy into the 2% of new jobs from firms that move here. Let THAT sink in. Entrepreneurial activity predicts lower poverty (1% more startups => 2% lower poverty) and higher quality of life. Want to grow your creative class? You first have to grow your new and small businesses. In 2020, counties with fewer ventures per capita saw more job losses. Let all that sink in too.

Around the USA and around the globe, who are the first responders for economic recovery? Yup, micro/small/medium business and entrepreneurs.[ii]. They are your hidden champions – your economic linchpins in every country on earth and in… Idaho.

And yet policymakers — even mayors! — disregard small business and entrepreneurs unless they fit the “quality” label as a sexy high-tech, high-growth unicorn wannabe. Note: I adore those too… but why try to grow unicorns without the right economic foundation? Tech-based economic development requires the fertile ground provided by a healthy entrepreneurial climate. So why aren’t we working to create that fertile seedbed? Consider this: How many Idahoans have actually experienced what the startup life really entails[iii]?

If Boise and Idaho are going to be leaders in recovering from COVID-gatory, we need the hidden champions’ voices not only at the table but leading the conversation.

Yet another mystery? If they can speak for themselves, why would civic officials ask someone else? Especially where even the supposed experts are driven by a convenient, comfortable old model?

Why They Lead Us Out of Recession: The world of effective economic development has changed and is not going back. It changed years ago; COVID now forces us to face that. These crises show us that it’s no mystery that innovative new and small businesses lead us out of recession: it’s because they are solving the problems. Government and large firms can survive without solving important problems; SMEs and entrepreneurs must diagnose the right problems and start solving them or they don’t survive. So why exclude their voices? Why not ask them to lead the discussion?

21st-century economic development IS entrepreneur-led economic development!

The dominant narrative of economic development? All you need is for the Important Players to establish the right enabling conditions and magic happens. All you have to do is to put academe, industry groups and government in the same room… et voila! You have innovation without innovators, entrepreneurship without entrepreneurs. Almost every country on earth buys into this “story.” Only one teensy problem… It does not work. It does not capture how innovation and entrepreneurship flourish. The dominant story obscures, even conceals the facts.

Worse, the dominant narrative lets traditional experts assume they are the ones to build the ecosystem. Worse, make them feel entitled: Entrepreneurs are their turf. There’s always a place for those who want to help entrepreneurs, but how does it help if they zealously guard their turf while relying too often on panaceas they haven’t had time to really learn? Lean startup, design thinking, biz model canvases are great, but you need an entrepreneurial mindset they don’t have. They also need a supportive ecosystem very different than they’re used to. Ask yourself: Are established entrepreneurial support organizations likely to disrupt? If anything, they face significant exit barriers.

Who then are the New Experts toiling in the trenches to grow local entrepreneurial communities, often succeeding despite all the resources and energy showered on the “old school”? We are now in the world of entrepreneurial ecosystems that can only function if the institutions and silos decide to engage on the side of the entrepreneurs. We need the Important People more than ever! Not to be directive but to help ecosystem builders implement the right efforts to grow entrepreneurial ecosystems.

Rise of the Ecosystem Builder: I’ve been so proud and so tickled to work with America’s top ecosystem builders via the Kauffman Foundation’s ESHIP initiative[iv]. It’s been a joy to see his new “ecosystem builder” role emerge. VC (and Friend of Boise) Brad Feld showed us years ago that every successful startup community shares key things – key activities are led by entrepreneurs and the ecosystem includes everyone. That’s why this new problem-solver (ecosystem builders) is so critical. Genuine ecosystem builders, those who get it, are rare and rarely funded and too often lose turf battles.[v]  Idaho does have a few gems who could lead – if a mayor or governor wants the list, I’m at their service.

So… What Does That Mean for Boise and Idaho?

How can we best help our hidden champions, our linchpins for the economic recovery? My last two Idaho Business Review pieces[vi] mapped out proven strategies and battle-tested tactics that speak to what new and small businesses want. The strategy that any community must embrace:

First, embrace the reality that COVID forced us to see — they ARE the keys to recovery.

Second, listen to them, hear their voices, and ACT on what you hear.

Third, appoint an ombudsman to be that voice in city hall/Capitol, to raise hell when government gives unfair treatment. (Seattle did this with Rebecca Lovell to marvelous effect.

Hidden champions are those that innovate, that re-invent business models and supply chains — 92% of small businesses surveyed said they’d significantly re-invented themselves. Not quite “innovate or die” but telling. Even more telling, though, is the firms reported significant disappointment with the quality of advice and mentoring.

So, fourth, don’t Boise and Idaho businesses deserve the BEST advice? Why not identify the best of the best and recruit them to help grow our hidden champions with entrepreneurial masterclasses? And, fifth, why the heck don’t we rally Idaho’s best ecosystem builders as the true working group for a recovery task force? P.S. NONE of this costs much.

One final sobering thought plus a glimmer of hope. This crisis is far from over; we can count on another dip. Do you want your community to rely on the old school or face it competently? Talent is coming. Do you want your community to start building the fertile seedbed for potential entrepreneurs & business owners? With all the great people asking to help us, the only real mystery is… why haven’t we already started?

Around the USA and around the globe, who are the first responders for economic recovery? Micro/small/medium business and entrepreneurs. They are your hidden champions — your economic linchpins in every country on earth. If you want to recover capably, listen to them and take advantage of the true ecosystem builders. Any community who steps up, you have my sword.

[i] https://adpemploymentreport.com/2020/June/NER/NER-June-2020.aspx
[ii] Dell & Enoch say it better than I can. Read these two short items and I dare to tell me that we don’t need this new approach! https://ecosystembuilderhub.com/the-covid-19-crisis-shows-the-logic-of-entrepreneurship-ecosystem-building/ and https://ecosystembuilderhub.com/business-and-entrepreneurship-will-play-a-critical-role-in-creating-a-better-world-heres-how/
[iii] Major HT to Jeff Reynolds and Raino Zoller for this insight
[iv] What IS ecosystem building? https://www.linkedin.com/pulse/so-what-eship-heck-champion-norris-krueger/
[v] Why the world needs ecosystem builders from Anika & Jeff https://ecosystembuilderhub.com/manifesto-for-a-new-majority/ and https://ecosystembuilderhub.com/now-more-than-ever-we-need-ecosystem-builders/
[vi]  My open letters to civic leaders: https://bit.ly/IBRMay25; https://bit.ly/IBRJuly10 -> thanks to Senator Risch’s staff who cheerfully asked for more! Happy to share that intel with IBR readers.

Norris Krueger is a Goal Champion for the Ewing Marion Kauffman Foundation’s ESHIP initiative to grow ecosystem building. He is also a leading academic expert on growing entrepreneurial communities, active mentor for Venture Capital.Org and a much-decorated entrepreneurship educator and global consultant to OECD, EU and others. He can be reached at Norris.krueger@gmail.com, on social media or at www.norriskrueger.com/my-last-12-months.

About Norris Krueger