Startup innovation leadership

Local communities are important and should be energetically promoted. They have social capital. They create networks among people who live and work in the same area. This enables those communities to be more competitive, as well as making their people happier, healthier and more positive about their future.

This is why key people have to lead community members to a better life. It is not pushing people to do things they can’t fully visualize. Once they can envision that improved community, they will be self-motivated. The leader doesn’t have to exhaustingly keep pushing the concept.

My local connection

I have been to and worked in over 80 countries worldwide. But, in the past several years or so, I have had the desire to get to know my local community (southern Tokyo) better, which I hadn’t thought that much about up until then. To my surprise, there are thousands of small manufacturers in my area of Tokyo. There is only one other place like this in all of Japan, which is east Osaka.

Imagine two events. One is of you walking out of your house, and you shockingly see your neighbor die. Whether it is a heart attack or a violent attack doesn’t matter. The second event is floods in Bangladesh, which killed thousands of people. Here is the issue:, most of us will be emotionally impacted by seeing your neighbor’s death, but not shocked at the thousands dying in a flood. Why is that so? I think it is because we are connected to our friends, family, neighborhood and community, but not to people in foreign lands.

Near-shoring and friend-shoring

In reading Homecoming, by Rana Foroohar and The Rise of the Rest, by Steve Case, the expression “near-shoring” and “friend-shoring” supply chain strategies keeps coming up, and human emotion is involved. I think this relates to community identification. These localized supply chain strategies bring suppliers and users closer together, so they know each other personally. It is all about building a community to the point that you care about the wellbeing of your local suppliers and your local users, those you serve and those that serve you. That is why I recommended representatives for six company stakeholders in my article about the corporation board of stakeholders.

The question is: how can we develop local businesses that expand social capital collaboration in smaller communities? To build any business, three things are needed: land [environment], skilled labor [humanity] and capital [investments], and all must be respected. In The Rise of the Rest, by Steve Case, he looks at all three of these requirements and offers to help through investment activities.

Developing local entrepreneurship

The Rise of the Rest gives many examples of the development of local community entrepreneurship, mainly through accelerated collaboration and networking. The book clearly shows there are opportunities in smaller communities, and shows a bright future for some local communities. It presents this through specific local promotion activities and processes.

Case was a co-founder of America Online, in which the name created an image of the whole country being connected. This includes local communities, as they must be connected to the whole world as well. The book’s goal was to help people visualize, experience and believe that through local community startups, there are opportunities assembling key people, ideas, and capital.

Here is how Case is developing startups in mid-sized US cities:

First his team studies potentials in mid-sized city communities, starting with six months of preparation before a promotion event and six years follow up after the event is finished with regular calls and visits.

Then, he schedules a bus tour to each attractive city. The visit starts with a big breakfast to spot local community leaders and get people talking to each other.

He invites high-level investors, corporate CEOs, influential government officials, Chamber of Commerce members and others to listen to local startup concepts. He asks startup candidates to give pitches in a contest on why they will serve the community best and will be profitable themselves. There is a $100,000 investment reward to the winner, with the top five getting lesser rewards. Mostly, these people present their startup proposals to people they’ve never met before. The leaders of startups offer proposals that answer three questions: 

1. Why me? What is original about their proposal in this area? What is the need it addresses? Can it scale and reach a breakeven point quickly?
2. Why now? Is the infrastructure available in the area, or can it be developed to make the proposal feasible?
3. Who cares? Are there entrepreneurs who are looking to solve big problems and seize large opportunities? These are not current organizations but mostly new startups or startup departments within corporations. They are companies that want customers who care about the source of their goods. They have a sense of place (people with community identity, not transient outside people).

If a startup wins an award, not only does it get the money, but it builds credibility toward investors, skilled people, suppliers and customers.

By connecting investors to entrepreneurs, inventors, and innovators, ideas can be sparked, which drives more collaboration. Just showing up face-to-face on the front line where things happen gets discussions going. It could be as simple as putting excess, secure spaces to full use.

Case also recommends starting a single local innovation center to expand diverse collaboration, including investor to investor discussions.

These activities could start a local ecosystem, which exposes the area advantages and sees where relationships can be made between local universities, research institutes, innovators, local press and media, entrepreneurs, investors, government incentive officers, popular city mayors, corporations, community clubs (such as Rotary or Lions), local company founders, local online courses, local economic development foundations, and ecosystem builders.

The goal is to create a tipping point toward a “we-can-do-it” attitude that builds teams (not individuals) committed to both startup and community success.

Startup innovation

Looking at the above, you can’t create new jobs without creating companies, and you can’t create companies without a culture that nurtures startups. That is where leadership is important.

The types of companies Chase invests in includes:

1. Startups, not SMEs. He wants companies with few bad habits. The startup believes in the Open Organization principles of transparency, collaboration, adaptability, local inclusivity, and strong local community interaction.
2. Have local support: The community should want the startup in their community.
3. Startup belief in value to the community: The startup believes in the value it brings to the local community and wants to support what the area needs.
4. Startup dedication to the community: The startup is dedicated to the local community and wants to be a favorable influence in it.
5. Believes in its solution: There is a dedication to solving a specific problem and finding a better solution than what’s available today.
6. Startup desire for close stakeholder relations: They believe in respect for customers, suppliers, partners, investors and the community.

Factors for local startup investment

Leaders have to consider how his startup can be successful. These leaders must get seven groupings to start collaborating, which Case calls the “Tech Ecosystem Wheel”:

Startups must have a community impacting business model for locations with low living/business operating costs. The startup founder should have a strong and broad relationship base in the community, so a level of trust has already been established.

Investors must care about the community they invest in. Investments could come in the form of accelerator and incubator programs to test the viability of projects.

There are research institutes or universities in the community or at least the region where required labs and equipment are available.

There are government (town mayors) encouragement, support and possibly incentive programs available.

Corporations, sports teams, local hotels and their spinoffs are available for encouragement and support.

There are community startup support organizations (chamber of commerce, development agencies, lawyers who can scale companies, accountants who can create business records).

Local media is available for announcements and information distribution.

I think the startup should be at the hub for a business model that serves the community. There should be a big outer circle of the community, like the below illustration.

Startups need not be supported by all these spokes, but some are definitely required. The important thing is that startup leaders must make those institutions visible and interested in what they offer to the community. The leader must make sure the hub of the ecosystem is connected to what is needed, what is available and what should be avoided. This is his promotional job.

Relationships matter

In any case, the potential startup leader must make relationships personal around the project and build a human connection with their community. Then, when the time comes, they will help each other. The startup champion must interact with others in special, helpful and valued ways. This could take place in locations one would least expect it, like declining, neglected parts of a city. 

The leader should instigate collaboration between universities, alumni research foundations and research institutes to create ecosystems which can develop startup mentorships, accelerators and innovation hubs.

If local communities are to thrive, they have to provide a quality of life where people want to live - communities that have a clean environment, a safe environment, a hazard-free environment, good schools, attractive parks, bike paths, and vibrant downtown activities, for example. Without that environment, no one who promotes a startup will be successful.

For example, community centers with clubs, classes, tutoring, summer camps, open gyms have been supported by local entrepreneurs, government leaders and corporations like Google Fiber. Through Google, smart speaker equipment, tablets, and other technical tools are made available, making it an easy environment to do business. Some even set up restaurants that offer a “pay when you can” policy to get local people together talking to each other. In exchange for food, tips go to people who can’t pay at all. These entities have the ability to help groups to assemble, have parties, educate each other, inform one another and build links to resources for startups. 

Investing with innovation centers

Sometimes, the greatest startup support organizations are large, existing companies, governments, and investors that a startup developer can tap into. For example, AT&T, Delta, Home Depot, and Southern Company have opened more than fifteen innovation centers in Georgia Tech’s Tech Square. The purpose of these innovation centers is to consider investing in good startup ideas.

The startup offerings and the intimate relationships to the location and community will determine success. You can find incubators, which are physical spaces for startup development with support staff and equipment to utilize. They may have a full range of programs, tools, mentorship, education and financing. This all could be supported by government incentives that a project champion can explore. 

Of all these support organizations for startups, universities are the most consistent driving force within successful ecosystems. Examples are Duke University (the Innovation & Entrepreneurship Initiative) and Johns Hopkins (FastForward), which offer coworking space, lab space, equipment, experienced mentors, legal/accounting services and investor networking. A project leader could build his startup community there.

Local media offers the ecosystem amplification of startup news, data and thought leadership. For example, Casted is a video podcast platform created for B2B marketers. The leader can explore what the media is doing in his area.

Network density

According to Case, in order to collaborate at the highest level to introduce a startup in a given community, leaders need to consider these areas of networking:

1. To deepen the connection and interaction, regular contact with passionate innovators is needed. One way to do that is by creating coworking spaces that can be designed to advance network density, collaboration and transparency.
2. Also, regularly contacting innovators with skills is important. To be successful, ecosystems and startups depend on entrepreneurs being close and in regular contact with others who share the same passion, skills, and tools. Clustering people, support organizations and required services are essential factors. 
3. This network density fuels both creativity and collaboration. Therefore, the startup promoter should look for locations that bring individuals together, like innovation centers which hold presentation/discussion events. These locations will accelerate the chance of serendipity to find resources and allies. Often, universities and local city governments (even a single mayor) are major players in entrepreneurial ecosystems which the startup promoter can look for. Sometimes, large corporations, local universities and local community connections come together to build innovation centers.
4. Regarding cost of living and ecosystem support, cities like Austin, Raleigh, Durham, Nashville, and Columbus are right at the top. The project startup promoter can look at those examples, and see what similarities there are in his community.
5. Building prototypes to present to potential supporters and investors takes expertise that the startup leader must develop. That is why universities and technical institutes are so important. In order to convince customers, investors, the local communities, the local media, local corporations, local universities and the local governments, all startup leaders must develop some kind of compelling presentation and testimonials of even an early prototype. Simply, it is making products as visual as possible. For local investors, you could explore PitchBook to find a company in your area as well as someone that might be interested in your particular product/service.
6. Prototypes fuel ideas and expose problems. This is what gathering points provide.

With all the above, the chance for serendipity for the startup leader to find allies will increase.

When it comes to inclusivity in local communities, people shouldn’t be forgotten, particularly those industrious people that have desire but no formal education. Case mentions the strategies of Catalyte, which invests in people with no college degree but have the talent and the desire to learn software development.

I hope the above gets you thinking about how local leaders can build a support network and accelerate any startup project. In a follow-up article, I’ll give examples on how to get these startups up and running, and discuss some of the challenges leaders might have to address.