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“What it Takes to Create an Entrepreneurial Region” Thomas S. Lyons, Ph.D. Director, Center for Research on Entrepreneurship and Enterprise Development.

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Presentation on theme: "“What it Takes to Create an Entrepreneurial Region” Thomas S. Lyons, Ph.D. Director, Center for Research on Entrepreneurship and Enterprise Development."— Presentation transcript:

1 “What it Takes to Create an Entrepreneurial Region” Thomas S. Lyons, Ph.D. Director, Center for Research on Entrepreneurship and Enterprise Development (CREED) University of Louisville © Thomas S. Lyons, 2005

2 Characteristics of Entrepreneurial Regions Possess a critical mass of entrepreneurs who are actively engaged in capturing new market opportunities A group of entrepreneurs constitutes a distinct and recognizable community within the region The region as a whole is entrepreneurial, not just some of its parts © Thomas S. Lyons

3 Prescriptions for Creating Entrepreneurial Regions Build Social Capital Develop Human Capital Build an “Innovative Infrastructure” © Thomas S. Lyons, 2005

4 Our chief approach, to date, for creating entrepreneurial regions is something called Enterprise Development

5 Enterprise Development… Refers to programs whose mission is to assist entrepreneurs in forming and growing new ventures

6 Enterprise development has four measurable objectives: To increase the rate of new business formation To increase the rate of survival and success of new enterprises To increase the rate of development of entrepreneurs and their new enterprises To increase the efficiency of the dissolution process if a firm fails

7 Why Enterprise Development’s achievements are so limited Activities are tool driven, not needs focused. Activities are fragmented and categorical. There is too little focus on execution. The learning cycle is broken. The focus is placed on the business, not the entrepreneur. There is a missing function – responsibility for the community’s supply of entrepreneurs. Funders, not clients, drive the operations. The impact is not scalable.

8 Five Elements of a Strategy for Building Entrepreneurial Communities Take a systems approach Customize the system for the community Focus on developing entrepreneurs Develop new roles, skills, and tools Operate as a “transformation business”

9 The Mission of an Enterprise Development Transformation Business… To develop a supply of highly skilled entrepreneurs that are capable of building successful companies in sufficient numbers to transform the economy of the region. © Thomas S. Lyons, 2005

10 We have developed a new approach to enterprise development that can effectively, efficiently, and equitably develop entrepreneurial talent as well as build successful companies on a large-scale and a sustainable basis. We call it the Entrepreneurial League System® (ELS)

11 The successful implementation of the Entrepreneurial League System ® in a region involves: 1. The creation of a community of entrepreneurs and a farm system for continuously developing entrepreneurial talent; 2. The development of a service provider system to meet the technical and financial assistance needs of those entrepreneurs; and 3. The development of community or civic leaders capable of building an entrepreneurial community or region

12 Entrepreneur Development Subsystem

13 Creating a system for developing entrepreneurs is essential: No organization performs this function in our communities or region – it is missing! Service providers need “deal” flow – a pipeline of qualified customers Developing entrepreneurs is not the responsibility of service providers !!!! There is a process of getting entrepreneurs ready to use technical assistance – i.e., there is a process for creating demand The ability to use technical and financial assistance is a function of entrepreneurs’ skill and level of development

14 The four dimensions of entrepreneurial skill: Technical Skills – ability to perform key operations of the business Managerial Skills – ability to organize and manage the operations Entrepreneurial Skills – ability to identify market opportunities and create solutions Personal Maturity Skills – self-awareness, accountability, emotional and creative development

15 The Entrepreneurial Leagues: TechnicalManagerialEntrepre.Personal Maturity Major League: Outstand./ Exceptional Outstanding AAA:High AA:HighMedium A:High/ Medium Low RookieLow/No

16 Developing the region’s pipeline of entrepreneurs and enterprises involves 3 major activities or strategies: 1. Performance Coaching and Success Teams 2. Talent Scouting and Pre-venture activities 3. Opportunity Scouts and Market Development Service

17 The ELS ® Coaching System: Classifies entrepreneurs into different “league” levels according to their skill in starting and operating a new business Clusters entrepreneurs into Success Teams Establishes individualized “game plans” Provides entrepreneurs with performance coaches who work with them on a one-on-one basis and as a group Helps them focus on execution Facilitates their transformation as entrepreneurs up the ladder by helping them develop their skills

18 Talent Scouts and Pre-venture Activities Recruiting aspiring and talented individuals to become entrepreneurs and participate in the ELS – just like in sports Orienting them to entrepreneurship and the ELS Helping them with the pre-venture activities of identifying a market opportunity, developing an offering and preparing to launch a venture

19 Opportunity Scouting and the Market Development Function Activities Opportunity scouts are responsible for identifying market opportunities that can be capitalized on by local entrepreneurs (multiple sources) Developing and maintaining an “opportunity register” Matching opportunities to potential entrepreneurs with the appropriate skill set Structuring the “deal” Pursuing opportunities for strategic alliance among startups to capture new business as a group

20 The ELS benefits entrepreneurs by providing: A map to know what fundamentals of success to focus on and when (i.e., way of setting priorities and managing time) A structure of support and disciplined performance A set of reference points by which to benchmark their performance and to expand their vision about other possibilities Financial and technical assistance that is integrated and customized according to level of skill A way of developing skills and a ladder of progression

21 Service Provision Subsystem

22 The ideal service provider system is one that… Provides the entrepreneurs in our communities or regions with the right kind of help (i.e., technical and financial assistance) at the right time and at the right price.

23 How do we do that? 1. By describing and comparing who does what 2. By identifying and filling the service gaps 3. By improving the performance of individual service providers and the system as a whole 4. By effectively evaluating performance

24 League Level Targeted by Service Providers Entrepreneurial League LevelType of Enterprise Development Assistance Providers Majors Venture capitalists, professional consulting practices, investment bankers, etc. AAA Angel investors, emerging business consulting practices, university tech transfer offices AA Manufacturing extension programs, small business development centers, small specialized venture funds, high technology incubation programs, etc. A Microenterprise programs, small business development centers, business incubation programs, etc. Rookie Microenterprise programs, youth entrepreneurship programs, etc.

25 Transforming Service Providers into a System: Managing the change process Requires a neutral, 3 rd party facilitator Motivation to participate – external as well as internal Development of a common language and diagnostic process Forming relationships of trust Frequent interaction Opportunities to learn and improve performance

26 The ELS benefits service providers by: Creating demand for services and improving utilization Linking clients to providers and providing them with qualified, pre-screened clients Facilitating access on a proactive vs. reactive basis Linking different kinds of services for synergistic effect Enabling services to be delivered more cost-effectively Fostering coordination among service providers

27 There must be a dynamic balance between two subsystems: One for developing entrepreneurs One for providing services

28 The ELS benefits the community by: Enabling a view of the economic community as a whole, not just parts Focusing on all levels/kinds of entrepreneurs - neither “trickle-up,” nor “trickle-down” Connects all rungs of the skill development ladder together, so that movement is possible Produces a continuous stream of new companies and business leaders Operates on a large enough scale to have impact

29 Regional Entrepreneurial League System® Performance Scorecard - 2010

30 “Take Home” Points Chief objective of the ELS is the development of entrepreneurs Entrepreneurs are made, not born Developing entrepreneurs skills involves a transformation Interventions should be practices-based Building entrepreneurial communities involves everyone

31 Contact Information: Thomas S. Lyons, Ph.D. Professor and Director Center for Research on Entrepreneurship and Enterprise Development (CREED) University of Louisville 426 W. Bloom St. Louisville, KY 40208 502-852-8256

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