2nd in a 3-part blog on actions that create an impactful entrepreneur ecosystem
Part 1- Click Here
We All love Data, but some of its Superfluous Poppycock.
NBA legendary coach Greg Popovich of the San Antonio Spurs said about the rise of sports analytics: "I look at the analytics. Some of it is very worthwhile. Some of it is superfluous poppycock." Regarding ecosystem data and analysis, I agree with Coach Pop; some of it helps make an informed strategy, but some are “superfluous poppycock.”
Ecosystem analysis is helpful to governments, donors, and foundations to justify funding entrepreneurship activities. In my experience conducting 15 entrepreneurial ecosystem strategies, the most critical data is capturing entrepreneur voices. That said, many regions use other ecosystem analysis tools that are helpful but are often biased or lack deep insights. Here are some examples of exciting ecosystem analysis tools that provide imperfect analysis to drive an impactful entrepreneur ecosystem strategy:
1. Entrepreneurial ecosystem maps or maturity analysis provide exciting but insufficient information to create concrete steps. Most ecosystem maps use Gap analysis. The analysis will present gaps in service offerings, types of entrepreneurs being supported, or stages of support. The analysis provides potential areas of needed support. Maturity models present the current stage of ecosystem development vs. “top” ecosystems like Silicon Valley. Although these analyses are helpful and show a broad category of missing support for the next step in ecosystem development, they provide little understanding of priorities or specific actions to the entrepreneur’s needs today.
2. Several startups and business ranking tools show skewed data that will lead to poor analysis and, thus, poor strategies. I find too many startup ecosystems' rankings are heavily based on financial metrics that measure venture capital, exits, and valuations. Utilizing these rankings typically leads to an ecosystem strategy of more public funding toward capital or tax credits for investors.
The Voices of Entrepreneurs is the Most Important Data to Capture
Entrepreneur analysis tools like Global Entrepreneur Monitor (GEM) or the Global Accelerator Learning Initiative (GALI) have set up a robust process and system to collect the voices of entrepreneurs. That is why we get some unique insight from these tools. For example, GEM provides some of the best understanding of entrepreneurial culture in a country. However, there are two difficulties in collecting the voices of entrepreneurs: 1. the process is resource intensive and 2. entrepreneur “opinions” are different than entrepreneur “actions.” Some ways to manage this are the following:
Hacks for collecting entrepreneur data:
Without a significant budget, there are hacks to reduce the cost of collecting entrepreneur voices. One hack is to get other ecosystem actors like investors, entrepreneurs, support organizations, media organizations, government agencies, and business associations to help collect data. Enlisting these organizations to help to ensure the data and analysis will benefit them and the greater ecosystem. Being involved should include giving them the chance to design the analysis and output reporting. By creating this alignment, it will be easier to leverage these organizations' entrepreneur networks and resources to collect data. In addition, as in-person events start up again, use these opportunities to engage directly with entrepreneurs to conduct interviews since online surveys are challenging to complete. Ensure you can use several events to represent your targeted population for a random sample.
2. Truly understanding entrepreneurs' needs!
I’ve read at least 50 entrepreneur ecosystem studies based on entrepreneurs' surveys, and all state their most significant issue is lack of financing. But if you talk to the entrepreneur, financing masks their real issues, lack of product-market fit, or no real go-to-market strategy. The best data collection methods will capture entrepreneurs' actions rather than their opinions. One of the best reports I have seen on how to help SMEs was done by a German Research Group (sorry don't have access to it) about 12 years ago. About 100 CEOs were interviewed on their journey to growing their company; interestingly, many reached success by starting as middle managers in Multinational corporations. This insight showed the need for ESOs to do outreach to middle managers who have a side startup and need help launching it.
To develop an impactful ecosystem strategy, you need to listen to your local entrepreneurs while leveraging other ecosystem analytical tools and recognizing their biases and limitations.
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