A working document of insights & ideas, and a thesis for transforming the economy, December 2010.

1. Grassroots
Entrepreneurism
An
working
document
of
insights
&
ideas
and
a
thesis
for
transforming
the
American
economy
December,
2010
Donna
Harris,
Dec.
2010

2. Convergence…
Entrepreneurial
Economy
Global
Economy
Network
Economy
Donna
Harris,
Dec.
2010

3. Entrepreneurial
Economy
• BELIEF
#1:
Entrepreneurship
is
the
leading
force
for
sustainable
economic
development
• Economic
growth
/
transformaMon
will
depend
on
innovaMve
entrepreneurs,
not
incumbent
corporaMons
– “the
net
source
of
new
jobs
will
be
predominately
created
from
an
entrepreneurial
climate,
not
from
revitalizing
old
industries”
(George
Solomon,
co-­‐director
of
the
Center
for
Entrepreneurial
Excellence
at
George
Washington
University)
– The
Kauffman
FoundaMon
has
found
that
from
1980
to
2005,
nearly
all
net
job
creaMon
in
the
U.S.
occurred
in
firms
that
were
less
than
five
years
old.
• both
on
average
and
for
all
but
seven
years
between
1977
and
2005,
exisMng
firms
are
net
job
destroyers,
losing
1
million
jobs
net
combined
per
year.
By
contrast,
in
their
first
year,
new
firms
add
an
average
of
3
million
jobs
– Of
all
the
US
businesses
that
exist
today,
half
of
them
did
not
exist
in
the
year
2000
• “We're
seeing
the
beginnings
of
the
entrepreneurial
economy,
a
system
built
on
nimble,
low-­‐overhead,
odenMmes
small
companies
with
fluid
workforces,
rather
than
the
massive
conglomerates
that
have
upheld
the
economy
for
decades.”
Entrepreneurial
Economy
Donna
Harris,
Dec.
2010

4. Business
CreaMon
• BELIEF
#2:
The
widely-­‐held
belief
that
capital
markets
(“VC,
Private
equity,
IPO”)
are
the
only
way
to
grow
scalable
new
enterprises
is
flawed.
• First,
roughly
600,000
new
businesses
launch
in
the
United
States
each
year.
Only
about
1,000
new
businesses
receive
their
first
venture
capital
funding
each
year.
That
means
only
.167%
of
new
businesses
receive
venture
funding.
• VC
funding
is
also
concentrated
in
select
regions
of
the
US,
leaving
out
enMre
swaths
of
the
naMon/world
– PWC
Data
Donna
Harris,
Dec.
2010

5. Most
firms
don’t
go
public
• Second,
over
70%
of
U.S.
firms
with
more
than
500
employees
choose
to
remain
private
rather
than
lisMng
on
a
stock
market
– U.S.
Census
Bureau
• The
number
of
IPO’s
in
the
US
is
declining
– See
link
re:
declining
IPO
market:
hmp://www.pascalsview.com/pascalsview/2010/08/
connecMng-­‐the-­‐dots-­‐how-­‐new-­‐job-­‐creaMon-­‐ipo
%E2%80%99s-­‐and-­‐venture-­‐capital-­‐in-­‐america-­‐are-­‐
inMmately-­‐linked.html
Donna
Harris,
Dec.
2010

6. Private
firms
as
employers
• Third,
privately
held
firms
account
for
more
than
two-­‐thirds
of
U.S.
private-­‐sector
employment
Donna
Harris,
Dec.
2010

7. Small
Businesses
contribute
to
employment,
trade
and
innovaMon
• Fourth,
there
are
29.6
million
small
businesses
in
the
US,
and
they
employ
over
half
the
private
sector
workforce.
They
represent
97.3%
of
all
exporters
of
goods
and
they
generate
the
majority
of
the
innovaMons
that
come
from
US
firms.
They
exist
in
every
city
in
the
country.
Donna
Harris,
Dec.
2010

8. High
Impact
Enterprises
• BELIEF
#3:
High
growth
entrepreneurs’
enterprises
create
a
disproporMonate
share
of
all
new
jobs
created
by
new
firms
• While
70%
or
more
of
an
industrialized
economy’s
jobs
are
generated
by
SMEs,
an
overwhelming
number
of
jobs
come
from
a
small
subset
of
SMEs,
“Growth
Entrepreneurs”
who
do
most
of
the
work
of
new
job
and
wealth
creaMon.
• “entrepreneurs
that
have
the
most
innovaMve
ideas,
the
power
to
inspire
through
their
stories,
and
the
most
scalable
businesses
in
their
respecMve
countries”
(Endeavor)
Donna
Harris,
Dec.
2010

9. MulMplier
Effect
• BELIEF
#4
–
Entrepreneurial
acMvity
has
a
mulMplier
effect
• GEM
2010
survey
shows
that,
in
the
economies
analyzed,
some
110
million
people
between
18
and
64
years
old
were
acMvely
engaged
in
starMng
a
business.
Another
140
million
were
running
new
businesses
they
started
less
than
3½
years
earlier.
Taken
together,
some
250
million
were
involved
in
what
GEM
defines
as
early
stage
entrepreneurial
acMvity.
• Out
of
these
individuals,
an
esMmated
63
million
people
expected
to
hire
at
least
five
employees
over
the
next
five
years,
and
27
million
of
these
individuals
anMcipated
hiring
twenty
or
more
employees
in
five
years.
• NOTE:
what
is
the
net
number
of
new
jobs
that
need
to
be
created?
Donna
Harris,
Dec.
2010

10. Capital
is
the
means,
not
the
end
• BELIEF
#5
–
Capital
is
merely
a
proxy
for
what
entrepreneurs
truly
need
(access
to
markets,
revenue
growth,
cash
flow).
– Capital
is
simply
a
tool.
– Much
energy
is
focused
on
the
effort
of
raising
capital
(oden
at
the
cost
of
other
aspects
of
the
business,
such
as
sales)
and
many
accolades
come
from
having
raised
capital.
Yet,
when
capital
is
received,
no
incremental
value
is
created.
Entrepreneurs
must
sMll
execute
to
create
value.
• NOTE:
can
we
find
data
on
how
Mme
is
spent
(i.e.,
the
“cost”
of
raising
capital?)
– Entrepreneurs
raise
capital
in
order
to
fund
their
growth
plans.
How
much
is
raised
is
based
on
the
cost
of
the
plan
and
the
Mme
it
will
take
to
execute.
– Utopia
reduces
the
cost
of
growth,
accelerates
the
Mmeframe,
and
reduces
the
risk
Donna
Harris,
Dec.
2010

11. Economies
are
dynamic,
not
staMc
• BELIEF
#6
-­‐
Lack
of
compeMMveness
comes
from
a
slow-­‐down
in
the
introducMon
of
new
products
(i.e.,
new
companies)
that
can
create
new
value,
create
new
markets
or
respond
to
shids
in
exisMng
markets
• As
the
pace
of
change
in
our
world
accelerates,
this
dynamic
becomes
more
pronounced.
New
businesses
are
introduced
with
innovaMve
offerings
that
replace
ones
now
obsolete.
– Schumpeter
–
entrepreneurs
disrupt
the
market
equilibrium
by
introducing
new
product-­‐
market
combinaMons
and
teaching
customers
to
want
new
things,
driving
out
obsolete
firms
and
advancing
economic
growth
– Drucker
–
the
role
of
the
entrepreneur
is
to
search
for,
respond
to
and
exploit
change
• Yet
the
US
economy
(governments,
states,
businesses)
is
not
structured
to
accommodate
this.
This
is
a
dramaMc
departure
from
historical
US
thinking,
with
long-­‐standing,
massive,
entrenched
corporate
enMMes
(“too
big
to
fail”,
GM,
bailouts,
etc.)
(bigger,
bigger,
bigger)
(US
collecMve
shock
that
GM
is
no
longer
the
market
leader)
(crossing
the
chasm)
• There
needs
to
be
a
balance
between
rates
of
established
businesses
and
rates
of
early
stage
acMvity
-­‐
“Ideally
an
economy
should
have
some
turnover
of
firms,
where
startups
introduce
ideas
into
their
environments
replacing,
in
part,
firms
whose
businesses
have
lost
their
relevance.”
GEM
Global
Report
Donna
Harris,
Dec.
2010

12. It’s
not
about
quanMty
• Belief
#7
–
we
have
to
culMvate
growth
businesses,
not
just
startups
– Over
the
past
decade,
we
have
been
creaMng
more
non-­‐employer
businesses
and
fewer
employer
businesses
per
capita.
(Employer
businesses
are
companies
that
the
Census
Bureau
reports
have
at
least
one
employee;
non-­‐
employer
businesses
have
no
employees.)
The
employer
business
share
of
the
total
businesses
has
slipped
four
percentage
points
since
1997,
from
26.4%
of
the
total
in
1997
to
22.4%
in
2007.
Non-­‐employer
businesses
aren't
the
source
of
job
or
wealth
creaMon
that
employer
businesses
are,
which
means
the
U.S.
economy
doesn't
benefit
as
much
from
them.
By
definiMon,
non-­‐employer
businesses
don't
create
any
jobs,
and
their
sales
and
profits
are
quite
low.
• Belief
#8
–
we
have
to
culMvate
success
among
companies
rather
than
simply
encouraging
more
companies
to
launch.
– Entrepreneurship
does
not
impact
an
economy
simply
through
higher
numbers
of
entrepreneurs.
It
is
important
to
consider
quality
measures,
like
growth,
innovaMon
and
internaMonalizaMon.
(GEM,
2010
report)
• Find
the
highest
potenMal
enterprises
(based
on
potenMal
impact)
and
give
them
their
“best
chance
to
reach
their
potenMal”
• Success
=
revenue
growth,
profitability
Donna
Harris,
Dec.
2010

13. Building
profitability
reduces
churn
• Belief
#9
-­‐
Lack
of
profitability,
NOT
access
to
capital,
is
the
most
frequently
cited
reason
for
disconMnuing
(across
all
economies,
regions
and
countries)
– FACT.
See
GEM
Report
• While
some
level
of
disconMnuance
is
necessary
to
maintain
a
dynamic
economy,
when
churn
is
too
high,
entrepreneurial
acMviMes
do
not
have
a
net
posiMve
contribuMon
on
the
economy.
• The
US
has
a
high
TEA
rate
(lots
of
new
businesses)
but
also
has
the
highest
disconMnuance
rate
of
all
innovaMon
based
economies.
• This
churn
can
be
reduced
if
companies
can
find
a
way
to
increase
the
likelihood
of
reaching
profitability
Donna
Harris,
Dec.
2010

14. Economic
Diversity
is
CriMcal
• BELIEF
#10
–
Economic
transformaMon
must
entail
diversificaMon
• Likened
to
a
successful
investment
porvolio,
entrepreneurship
in
a
society
should
contain
a
wide
variety
of
business
phases
and
types,
parMcipaMng
in
numerous
industries,
led
by
different
types
of
entrepreneurs,
including
women
and
underrepresented
age
groups.
• Michigan
as
the
example
(or
PA)
in
affiliaMng
with
a
limited
industry
base
Donna
Harris,
Dec.
2010

15. Economic
TransformaMon
means
creaMng
real
value
• Wall
Street
Economy
versus
Main
Street
Economy
– Wall
Street
Economy
=
A
system
of
pure
money
that
is
highly
biased
towards
the
wealthiest
and
most
predatory
members
of
society.
• Bigger
is
bemer
• IPO
driven
/
maximizing
shareholder
return
• Phantom
wealth
– Main
Street
Economy
=
real
economy
of
Main
Street
where
people
are
trying
to
figure
out
things
to
do
with
their
resources
to
provide
for
their
livelihoods
and
to
create
community
wealth.
• Real
wealth
in
real
dollars
• “rooted
local
economies”
Donna
Harris,
Dec.
2010

16. The
Missing
Middle
• Investors
commonly
look
at
risk
reducMon,
rather
than
reward
capture,
as
the
key
valuaMon
driver
for
the
venture,
parMcularly
in
the
development
stage.
• Wide
gap
between
microfinance
and
private
equity.
The
middle.
•
As
Peter
Drucker
has
said,
"What
we
need
is
an
entrepreneurial
society
in
which
innovaMon
and
entrepreneurship
are
normal,
steady,
and
conMnuous.“
Donna
Harris,
Dec.
2010

17. Interlink
of
economic
transformaMon
and
social
transformaMon
• BELIEF
#11
–
Economic
transformaMon
can
and
should
produce
societal
transformaMon
• At
the
root
of
most
social
challenges
lie
economic
issues
• “Most
all
of
the
dysfuncMons
that
we’re
experiencing
in
society—
economic
instability,
social
breakdown,
violence,
and
war,
environmental
destrucMon—they
are
all
inevitable
consequences
of
an
economic
system
that
is
designed
to
concentrate
power
and
focus
social
values
on
money.
The
only
way
we’re
going
to
be
able
to
correct
the
failure
is
through
economic
transformaMon.”
– David
Korten,
author
of
“When
CorporaMons
Rule
the
World”
and
“Agenda
for
a
New
Economy”
– hmp://www.yesmagazine.org/issues/a-­‐resilient-­‐community/get-­‐free-­‐from-­‐wall-­‐
street
• UN
Millennium
Goals
Donna
Harris,
Dec.
2010

18. It’s
not
an
either-­‐or,
it’s
a
both-­‐and
• TradiMonal
entrepreneurship
=
innovaMon
+
income
(devoid
of
any
concept
of
impact)
– Come
back
to
this:
investors
interested
in
building
important
businesses,
influenMal
businesses
(versus
impacvul);
importance
does
not
equal
impacvul
– Importance
– InfluenMal
• Social
entrepreneurship
=
innovaMon
+
impact
(but
struggles
with
sustainability/income)
• The
future
is
TransformaMonal
Entrepreneurship,
which
=
innovaMon
+
income
+
impact
• Impact
=
Jobs
created,
revenue
driven
throughout
supply
chain/economy,
plus
secondary
impacts
– HP
example
• “Job
creaMon
is
the
key
to
ge|ng
tracMon
in
most
other
kinds
of
improvement
in
society,
and
entrepreneurship
is
the
key
to
job
creaMon.”
(Endeavor
HBS
Case
study)
Donna
Harris,
Dec.
2010

19. Requires
New
Thinking
• Belief
#12
–
There
needs
to
be
new
ways
of
thinking,
new
ways
to
approach
markets,
new
ways
of
building
enterprises
• We
will
need
to
transform
our
way
of
thinking
if
we
are
going
to
transform
our
economies
• US
has
lost
its
confidence
as
an
entrepreneurial
naMon,
and
entrepreneurialism
has
been
hijacked
by
the
capital
markets
(see
Drucker)
• “Leadership
for
insMtuMonal
transformaMon
rarely
comes
from
within
the
insMtuMons
of
Empire”.
• TransformaMonal
leadership
comes
from
outside
the
establishment
to
challenge
the
status
quo
and
create
alternaMve
insMtuMons
that
ulMmately
displace
those
that
no
longer
serve.
• The
key
is
the
individual,
who
is
increasingly
empowered
in
an
era
of
technology
and
social
media.
Donna
Harris,
Dec.
2010

20. Global
Economy
• Belief
#1
-­‐
Today’s
economy
is
global,
not
local.
• GlobalizaMon
=
EliminaMon
of
barriers
(tech,
comm,
travel)
=
enterprises
playing
globally.
• The
world’s
markets
and
businesses
are
increasingly
connected
and
interdependent.
• The
integraMon
of
naMonal
economies
into
the
internaMonal
economy
through
trade,
foreign
direct
investment,
poliMcal
idea
exchanges,
capital
flows,
migraMon,
the
spread
of
technology,
and
military
presence.
• Driven
by
a
combinaMon
of
economic,
technological,
sociocultural,
poliMcal,
and
biological
factors.
Global
Economy
Donna
Harris,
Dec.
2010

21. High
PotenMal
Firms
all
over
the
Planet
• Belief
#2
-­‐
There
are
world
class
entrepreneurs
all
over
the
planet
• Most
people’s
assumpMons
about
entrepreneurship
in
the
developing
world—that
entrepreneurs
either
don’t
exist
there
or
are
microentrepreneurs—are
wrong.
High
potenMal
ventures
are
surfacing
where
no
one
is
looking
for
them—in
Beirut
instead
of
Boston,
in
Cape
Town
instead
of
Silicon
Valley—among
people
who
have
historically
been
outside
the
economic
power
structure.
• Countries
that
want
to
play
in
the
global
economy
need
companies
like
these,
which
are
building
and
redefining
industries
that
saMsfy
domesMc
demand
and
generate
export
income—not
to
menMon
create
employment
for
the
rapidly
growing
younger
populaMon.
– Quotes
from
AllWorld
HBS
video
• Consider:
– The
Saudi
Fast
Growth
100
companies
collecMvely
created
35,000
jobs
since
they
were
established,
of
which
nearly
15,000
were
created
in
just
the
last
five
years
Donna
Harris,
Dec.
2010

22. Sweet
16
–
Countries
to
Invest
In
Source:
hmp://cebviews.com/2010/03/25/the-­‐16-­‐countries-­‐you-­‐should-­‐invest-­‐in/
Donna
Harris,
Dec.
2010

23. Global
from
IncepMon
• Belief
#3
–
Today’s
entrepreneurs
are
already
thinking
global
from
day
1
despite
public
percepMons
of
globalizaMon
• Historically,
firms
first
sought
to
grow
at
home,
then
long-­‐term
grow
overseas
(tradiMonal
MBA
training
in
InternaMonal
Business)
• 61%
of
people
surveyed
view
China’s
economy
as
more
of
a
threat
to
US
jobs
than
an
opportunity
for
new
markets
and
investments.
• Regardless
of
tradiMonal
training
or
public
percepMon,
today,
companies
are
thinking
global
from
incepMon,
frequently
starMng
overseas
rather
than
at
home,
melding
home/foreign
employee
bases,
using
foreign
suppliers,
markeMng
globally,
etc.
• The
absolutely
will
influence
the
economic
base
of
the
future
Donna
Harris,
Dec.
2010

24. Global
Business
Model,
not
just
Customers
• Belief
#4
-­‐
The
global
economy
is
mulM-­‐dimensional,
not
linear
• Historic
conversaMons
have
been
about
ge|ng
countries
to
open
borders
to
trade
(i.e.,
to
US
products),
but
this
oversimplifies
and
wrongly
focuses
the
issue
on
one
dimension
• i.e.,
not
just
about
selling
US
products
in
other
countries
• InternaMonalizaMon
is
not
just
about
having
foreign
customers.
It’s
about
thinking
globally
about
all
aspects
of
a
business
– Brand,
MarkeMng,
Customers,
Suppliers,
OperaMons,
Employees,
Owners,
Investors…
– “Any
job
can
be
sent
overseas
if
it
can
be
digiMzed
and
you
don't
need
face-­‐to-­‐
face
interacMon
like
a
haircut
– “transnaMonal
strategy”
in
which
each
organizaMonal
acMvity
is
performed
in
a
locaMon
where
it
can
be
best
accomplished
• Physical
country
borders
are
becoming
less
and
less
relevant
(especially
to
entrepreneurs
and
high
growth
companies)
– Re-­‐read
“When
CorporaMons
Rule
the
World”
Donna
Harris,
Dec.
2010

25. Example
• In
2008,
Chinese
companies
had
invested
less
than
$5b
in
the
US,
while
US
firms
made
$50B
capital
investments
in
China
and
employed
tens
of
thousands
of
Chinese
workers.
Since
2009,
Chinese
investment
in
the
US
has
jumped
150%
to
almost
$12b
(Rhodium
Group).
Chinese
firms
employ
over
10,000
Americans
and
growing.
– Suntech,
world’s
largest
producer
of
solar
panels,
HQ
in
Wuxi,
China.
Establish
Phoenix
assembly
line
to
get
big
savings
on
shipping
costs
and
a
foothold
in
a
growing
market.
Received
a
$2.1
million
manufacturing
tax
credit
through
the
economic
sMmulus
package
on
an
investment
of
about
$10
million
and
also
became
eligible
to
supply
solar
panels
to
installers
that
win
government
contracts
with
"Buy
American"
clauses.
More
than
1,000
people
turned
up
at
a
recent
Suntech
job
fair.
Suntech
is
using
more
advanced
manufacturing
equipment
in
AZ
than
in
Wuxi,
allowing
30
Arizonans
to
produce
the
same
number
of
solar
modules
as
100
Chinese.
(U.S.
producMon
costs
are
sMll
about
10
percent
higher.)
"If
it
works
very
well,
we
can
integrate
the
same
manufacturing
technology
in
China,"
Guo
says.
"This
would
help
Suntech
China
make
[a]
manpower
reducMon."
Jobs
for
Americans
and
pink
slips
for
the
Chinese—just
one
more
turnabout
in
the
U.S.-­‐China
relaMonship.
– Wanxiang
InternaMonal
($8b
global
company)
purchased
or
invested
in
over
20
US
firms,
saved
over
a
dozen
companies
from
bankruptcy
and
employs
over
5,000
Americans
(Wanxiang
America
has
$1.3B
in
revenue)
Ex:
Vizio
from
$0
to
$2b
in
less
than
5
years
by
leveraging
suppliers
all
over
the
world
rather
than
verMcally
integraMng
Donna
Harris,
Dec.
2010

26. Network
Economy
• Belief
#1
–
Technology
enables
enMrely
new
methods
of
enterprise
creaMon
• Inventory,
customer
management,
accounMng,
shipping,
corporate
communicaMons
and
even
human
resources
can
be
outsourced
to
the
digital
ether
as
a
cluster
of
web-­‐based
services
and
applicaMons
• Web
tools
(Apps,
Email,
Skype)
facilitate
remote
work
• Eliminates
the
need
for
physical
plant
• Reduces
the
need
for
large
office
spaces
and
a
large
pool
of
employees
• Enables
remote
collaboraMon
• DramaMcally
lowers
cost
of
building
/
scaling
a
business
–
cost
of
entry
nearing
zero
– Ex:
WAFW
brand
development
-­‐
$2,500
and
done
on
4
conMnents
• Reduces
the
capital
required
for
scaling
• TradiMonal
business
building
methods
are
now
obsolete
Network
Economy
Donna
Harris,
Dec.
2010

27. New
View
of
Value
CreaMon
• BELIEF
#2
–
Today’s
economy
is
a
networked
economy,
which
upends
tradiMonal
thinking
about
value
creaMon
• In
a
network
economy,
value
is
created
and
shared
by
all
members
of
a
network
rather
than
by
individual
companies,
and
economies
of
scale
stems
from
the
size
of
the
network
-­‐
not
the
enterprise.
• CollaboraMon,
not
control,
is
the
primary
value
creaMon
mechanism
• The
great
benefits
reaped
by
the
new
economy
in
the
coming
decades
will
be
due
in
large
part
to
exploring
and
exploiMng
the
power
of
decentralized
and
autonomous
networks.
• A
network
is
a
possibility
factory.
Not
only
can
it
be
tapped
to
provide
value
to
a
company,
it
is
also
a
great
source
of
ideas
and
opportuniMes.
– Ex:
Crowdsourcing
(NYC
Give
a
Minute)
• Wholesale
reshaping
of
how
enMre
industries
operate
• An
economy/system
built
on
nimble,
low-­‐overhead,
odenMmes
small
companies
with
fluid
workforces,
rather
than
the
massive
conglomerates
that
have
upheld
the
economy
for
decades.
Donna
Harris,
Dec.
2010

28. Virtual
OrganizaMons
• BELIEF
#3
–
Today’s
most
compeMMve
enterprises
employ
a
federaMon
approach,
melding
a
network
of
alliances
or
partners
into
a
virtual
organizaMon
• CollecMon
of
enterprises
Med
together
through
contractual
or
other
means
(joint
ventures,
strategic
alliances,
minority
investments,
consorMa,
coaliMons,
outsourcing,
franchises)
• The
virtual
organizaMon's
goal
is
to
extract
the
maximum
value
from
its
partners
while
making
the
minimum
investment
in
permanent
staff,
fixed
assets,
and
working
capital.
• Strategic
core
funcMons
are
retained
with
the
enterprise
to
create
compeMMve
advantage
• Enables
specializaMon
(selecMon
of
the
best
partner
for
each
need),
higher
access
to
talent,
and
flexibility
amid
shiding
global
markets
(rapid
adaptability
/
easily
ramp
up
and
down)
• Examples:
– the
development
of
the
B-­‐1
bomber
required
teams
from
as
many
as
2,000
separate
corporaMons
to
work
together.
They
formed
a
virtual
organizaMon
to
accomplish
the
design
and
manufacture
this
product,
an
effort
that
required
several
years
to
complete.
• Source:
hmp://www.cis.gsu.edu/~drobey/Cis8160/Global.pdf
Donna
Harris,
Dec.
2010

29. Virtual
Workforce
• Belief
#4
-­‐
the
physical
locaMon
of
work
can
be
decided
by
more
relevant
criteria
than
the
need
to
co-­‐locate
workers
contribuMng
to
a
common
task.
• Virtual
organizaMons
oden
allow
individual
employees
to
perform
their
work
in
a
variety
of
locaMons:
home,
car,
office,
or
on
airplanes.
• Employees
performing
services
need
not
be
physically
located
close
to
their
customers
if
customer
contact
can
be
mediated
by
other
means
(advanced
communicaMon
technologies).
Donna
Harris,
Dec.
2010

30. Managing
Talent
&
Resources,
not
Employees
• Belief
#5–
There
are
enMrely
new
models
for
accessing
human
resources
• Shid
from
“employees”
to
“talent”
• Right
skill
for
today,
different
skill
for
tomorrow
– High
value
at
each
stage
– Staging
the
skills
• Trends:
– Rise
of
“Expert
networks”
“ConsorMums”
which
facilitate
the
flow
of
informaMon/experMse
between
those
who
have
it
and
those
who
need
it.
Allows
companies
to
piggy
back
off
the
expert’s
reputaMon
/
credibility
– Many
more
people
are
pursuing
self-­‐employment
or
starMng
specialized
small
businesses
– Young
people
(future
workers)
seek
independence/control
rather
than
employment
• DATA
– The
number
of
small
businesses
created
in
2008
was
sMll
at
pre-­‐recession
levels,
according
to
the
latest
data
from
the
Small
Business
AdministraMon,
contrary
to
most
economic
indicators
– The
Kauffman
Index
of
Entrepreneurial
AcMvity,
which
measures
new
startups,
shows
a
slight
upMck
during
the
same
Mme
period,
and
that
is
expected
to
conMnue
through
2009
– Self-­‐employment
rates
have
been
growing
at
an
average
of
4.5
percent
annually
most
of
this
decade,
adding
roughly
1
million
people
per
year,
and
they
are
expected
to
keep
pace
or
spike
when
the
2008
and
2009
numbers
are
released.
– Entrepreneurship
programs
at
accredited
universiMes
have
jumped
from
just
a
handful
10
years
ago
to
more
than
200
entrepreneurship
centers
today,
and
more
than
500
higher-­‐ed
insMtuMons
offer
cerMficates,
minors,
or
majors
in
entrepreneurial
studies.
According
to
one
recent
poll,
51
percent
of
teens
hope
to
one
day
start
their
own
business,
and
see
it
as
a
way
to
take
greater
control
of
their
lives.
Donna
Harris,
Dec.
2010

31. Donna
Harris,
Dec.
2010
Corporate
Local
Hierarchical
Entrepreneurial
Global
Networked
Closed
Collabora9ve
Transforma9onal
Transac9onal
Shid
from
a
Top-­‐down
to
a
Bomom
Up
Economy

32. Where
the
Jobs
Are
• Belief
#1
–
The
current
unemployment
problem
is
not
simply
a
lingering
effect
of
the
recent
financial
crisis
and
recession,
but
is
rather
a
reflecMon
of
advances
in
technology
and
changing
pamerns
of
global
trade,
manufacturing,
and
capital.
• These
changes
have
been
building
over
the
past
several
decades,
and
are
now
obvious
and
laid
bare
by
the
recession
and
financial
crisis
• Manufacturing
jobs
have
been
declining
since
1999
– Due
primarily
to
gains
in
producMvity-­‐
hmp://data.bls.gov/Mmeseries/PRS30006092
• jobs
and
output
are
declining
as
a
share
of
GDP,
but
manufacturing
output
and
producMvity
are
increasing
• The
greater
efficiency
of
the
manufacturing
sector
afforded
either
a
slower
price
increase
or
an
outright
decline
in
the
prices
of
this
sector’s
goods.
As
one
example,
inflaMon
(as
measured
by
the
Consumer
Price
Index)
averaged
3.7%
between
1980
and
2009,
while
at
the
same
Mme
the
rise
in
prices
for
new
vehicles
averaged
1.7%.
So
while
the
number
(and
quality)
of
manufactured
goods
had
been
rising
over
Mme,
their
relaMve
value
compared
with
the
output
of
other
sectors
did
not
keep
pace.
This
allowed
manufactured
goods
to
be
less
costly
to
consumers
and
led
to
the
manufacturing
sector’s
declining
share
of
GDP.
– Due
also
to
globalizaMon
• The
U.S.
accounted
for
25.92%
of
world
manufacturing
output
in
1970
and
20.19%
in
2009.
The
relaMve
decline
in
the
2000s
was
a
result
of
a
24.1%
increase
in
world
manufacturing
output
between
2000
and
2009
compared
with
just
a
10.1%
increase
in
the
United
States
over
that
same
period.
•
As
you
might
expect,
Chinese
manufacturing
grew
157.4%
from
2000-­‐2009,
and
China's
growth
accounted
for
55.9%
of
the
world's
total
growth
over
that
Mme
period.
Surprisingly
(at
least
to
me),
manufacturing
value
added
in
Western
Europe
fell
3.4%
at
the
same
Mme.
• “Decline
of
manufacturing”
is
a
global
phenomenon,
not
just
limited
to
the
US
– The
standard
of
living
around
the
world
today,
along
with
global
wealth
and
prosperity,
are
all
much,
much
higher
today
with
manufacturing
represenMng
16-­‐17%
of
total
world
output
compared
to
1970,
when
it
was
almost
twice
as
high
at
26.7%.
– As
a
share
of
GDP,
manufacturing
has
declined
in
most
countries
since
the
1970s.
A
few
examples:
Australia's
manufacturing/GDP
raMo
went
from
21.3%
in
1970
to
9%
in
2009,
Brazil's
raMo
went
from
24.6%
to
13.3%,
Canada's
from
21.7%
to
11.3%,
Germany's
from
35%
to
19%,
and
Japan's
from
35%
to
20%
THE
CRISIS
Donna
Harris,
Dec.
2010

33. Where
the
Jobs
Are
Donna
Harris,
Dec.
2010

34. Where
the
Jobs
Are
• Belief
#2
–
To
forecast
the
future
of
manufacturing,
look
to
agriculture
• Manufacturing
is
just
like
agriculture
in
the
19th
and
20th
centuries
• Due
to
technology
and
producMvity
gains,
manufacturing
will
shrink
as
a
percentage
of
the
labor
force.
– There
will
never
be
as
many
factory
jobs
as
there
were
in
the
mid-­‐20th
century,
just
as
there
will
never
be
as
many
agriculture
jobs
as
in
the
mid-­‐18th
century.
• Going
all
the
way
back
to
the
early
1800s,
more
than
80
percent
of
both
U.S.
employment
and
output
were
directly
Med
to
a
relaMvely
inefficient
(by
today’s
standards),
labor-­‐intensive
agriculture
sector
of
the
economy.
Food
products
were
very
expensive
and
consumed
a
large
part
of
a
typical
household’s
income.
Over
Mme,
technology
revoluMonized
farming,
resulMng
in
the
same
trends
we
observe
today
in
manufacturing:
huge
increases
in
farm
worker
producMvity,
reduced
farm
employment,
significantly
lower
and
more
affordable
prices
leading
to
a
reduced
share
of
food
in
both
household
income
and
naMonal
income
(GDP).
• This
brings
us
back
to
the
same
quesMon
we've
been
grappling
with,
as
a
society,
since
the
1980s.
• Namely,
what
do
people
do
to
make
a
living?
Donna
Harris,
Dec.
2010

35. technology
plus
globalizaMon
• If
you
look
at
the
American
economy
right
now,
we
are
back
to
pre-­‐crisis
level
of
GDP,
which
is
about
$13.5
trillion.
We're
producing
the
same
number
of
goods
and
services
as
we
did
in
2007
with
seven
million
fewer
workers.
• So
at
some
level,
that's
a
producMvity
increase,
which
is
admirable.
But
what
it
tells
you
is
we
are
achieving
producMvity
where
you
can
get
GDP
growth
without
hiring
more
people
-­‐
in
fact,
by
firing
people.
• Look
at
every
industry:
Technology
is
replacing
people.
• Back
in
1979,
General
Motors
had
618,000
jobs
in
the
United
States.
2011,
down
to
77,000
• Facebook
employs
2,000
people.
It's
a
$50
billion
company.
Donna
Harris,
Dec.
2010

36. crisis
of
growth
and
unemployment
• We
would
need
to
create
187,000
jobs
a
month,
growing
at
a
rate
of
3.3%,
to
get
to
a
healthy
5%
unemployment
rate
by
2020.
• Nobel
laureate
Michael
Spence,
author
of
The
Next
Convergence,
has
looked
at
which
American
companies
created
jobs
at
home
from
1990
to
2008,
a
period
of
extreme
globalizaMon.
The
results
are
startling.
The
companies
that
did
business
in
global
markets,
including
manufacturers,
banks,
exporters,
energy
firms
and
financial
services,
contributed
almost
nothing
to
overall
American
job
growth.
The
firms
that
did
contribute
were
those
operaMng
mostly
in
the
U.S.
market,
immune
to
global
compeMMon
—
health
care
companies,
government
agencies,
retailers
and
hotels.
Sadly,
jobs
in
these
sectors
are
lower
paid
and
lower
skilled
than
those
that
were
outsourced.
• Worker
Mobility:
In
the
1980s,
about
1
out
of
5
workers
moved
every
year;
now
only
1
of
10
does.
• The
youth
unemployment
rate
is
now
24%,
compared
with
the
overall
rate
of
9.1%.
If
and
when
these
young
people
return
to
work,
they'll
earn
20%
less
over
the
next
15
to
20
years
than
peers
who
were
employed.
Donna
Harris,
Dec.
2010

37. Conclusions
• Significant
economic
impact
can
come
through
acceleraMng
the
growth
and
success
of
the
highest
potenMal
enterprises,
regardless
of
where
they
reside
or
the
industry
they
serve.
• Such
scaling
should
not
be
limited
to
VC-­‐backed
firms.
• Growing
these
enterprises
will
immediately
impact
enMre
economies
through
revenue
and
job
creaMon
and
secondarily
impact
our
world’s
most
pressing
social
challenges.
• We
can
accelerate
the
trajectory
of
company
formaMon
and
scale
(and
enable
startups
to
achieve
their
full
global
potenMal)
by
pu|ng
the
network
economy
to
use.
Individuals,
rather
than
insMtuMons
can
drive
economic
transformaMon.
• This
is
criMcal
work.
Without
it,
our
global
economy
will
lack
the
jobs
necessary
to
sustain
our
populaMon.
Donna
Harris,
Dec.
2010

38. Strategyà
Grassroots
Entrepreneurism
• InsMgaMng
a
movement
of
bomom-­‐up,
entrepreneur-­‐led,
open,
collaboraMve,
entrepreneurship
support,
to
create
a
single
network
supporMng
startups
in
every
city
– Tap
serial
successful
entrepreneurs
in
ciMes
across
the
country
– Tackle
the
problems
that
keep
startups
from
succeeding
locally
–
mentorship,
educaMon,
support,
capital.
– Band
together
into
a
naMonal
network
to
share
ideas;
help
every
community
and
every
startup
reach
their
full
potenMal.
– Focus
on
revenue,
profitability
for
long-­‐term
value
creaMon
• As
a
result,
together,
we
can
transform
and
build
strong
economies
by
helping
scalable
/
high
impact
enterprises
accelerate
the
trajectory
of
their
growth
Donna
Harris,
Dec.
2010