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Tag: Europe

Roland Berger & IESE recognize the importance for Entrepreneurial Ecosystems

Wednesday, January 13th, 2010

It appears that Europe is lagging behind their Lisbon objective to become “the most competitive and dynamic knowledge-based economy in the world”. Innovative start-ups and entrepreneurs are crucial for the economy as they are the job and new growth creators.

Roland Berger and IESE Business School tried to find answers to the question how Europe can successfully stimulate knowledge-intensive start-ups learning from world-class European ecosystems. 1.000 entrepreneurs from 57 countries participated in their new study  “For Entrepreneurs, By Entrepreneurs” examining the mechanisms behind stimulating entrepreneurship.

The authors found that the key to fostering and accelerating knowledge-intensive entrepreneurship is to forget the idea that entrepreneurs are exceptional individuals who work alone, and focus on building more and better “ecosystems.”

The value of the ecosystem
Start-ups thrive specifically in ecosystems that provide the necessary support. The study cites IESE Business School and Delft University of Technology in the Netherlands as examples of successful ecosystems. Within an ecosystem, start-ups and corporations can interact and mutually benefit from each other’s knowledge and connections. In an entrepreneurial ecosystem (e.g. Silicon Valley ), entrepreneurs have immediate access to coaches, supporting professionals in different business areas, as well as a network of customers and companies with whom they are in frequent contact.

The study distinguishes between two levels of networks within an ecosystem: the “open network,” through which entrepreneurs get in touch with customers, suppliers and other supporters; and a “closed network,” with whom an entrepreneur shares his or her ideas and worries, in order to receive immediate advice or feedback. Considering that 90 %  of initial business plans are adjusted before becoming successful businesses, fast, critical and expert advice is a crucial element in the entrepreneurial process.

Main hurdles in setting up a company
The study identifies a start-up’s main hurdles and looked at possibilities how to stimulate and foster knowledge-intensive entrepreneurship.

1. Contacting and contracting clients
Getting to know their customers before starting a successful business is the Number 1 hurdle for 57 % of the interviewed entrepreneurs.
2. Acquiring resources
44% indicated sufficient fund raising as their main obstacle such as finding and contracting the right suppliers.
3. Building a team
Adding experienced people to the team is a major driver of success. Firms that add experienced people to the team think bigger, act faster and make more use of industry contacts,” the authors stress.

Six key insights leading to entrepreneurial growth
After assessing the hurdles, the authors highlight six key insights to building high-growth firms:

1. Entrepreneurial behavior is developed through personal and interpersonal competencies. Good entrepreneurs need more than business skills – personal competencies such as creativity, determination, integrity and self-criticism will enable entrepreneurs to make the right decisions in matters that are beyond his or her knowledge.
2. Ecosystems allow entrepreneurs to develop their initial ideas more quickly and, using feedback from networks, validate their business ideas.
3. Corporations can provide vital business know-how to start-ups, but can also benefit from the product, service and process ideas by participating in the start-up ecosystem.
4. Ecosystems create entrepreneurs by validating that one has or can develop the capabilities to start a firm.
5. Government support of ecosystems and start-ups should be faster, more targeted and less bureaucratic.
6. Knowledge centers, investors and business service professionals should take the lead in setting up platforms for interaction to facilitate the development of ecosystems.

This study gives further evidence of the importance for strong entrepreneurial ecosystems and validates the significance of the concepts and projects developed by Foundum.