Volume 2, Number 1 – March 2005

Networking: A Look at the Current Market Return

Successful 21 st century businesses will be led by people who have the skills and capabilities to network and collaborate with others. As the importance of networking becomes more widely understood, an interesting market of networking organizations has developed. Most communities have local networking groups, like the Chamber of Commerce or the Rotary Club, but a whole series of new national groups has emerged in the past decade. These groups are designed to help entrepreneurs network with one another, and to use these peer networks for both personal development and to grow their company. Here’s thumbnail guide to some of these national organizations. We have simply tried to list some of the leading players in the marketplace for entrepreneurial networking; these descriptions not endorsements of any specific organization.

All of the groups listed below operate on a national basis and help manage small peer networks, sometimes referred to as “mastermind groups.” This term derives from the writings of Napoleon Hill, one of the first motivational writers. Working in the early 1900s, he was a “Stephen Covey” of his day and advised major business leaders like Andrew Carnegie. These groups united a small group of peers in a learning and support network; this basic model can be easily adapted to working with networks of entrepreneurs.

Many communities have strong local networking organizations, like North Carolina’s Council for Entrepreneurial Development (www.cednc.org) or San Diego’s CONNECT program (www.connect.org). However, if your community lacks such groups or needs to supplement them, these national organizations might be right for you.

In addition, there are numerous groups that promote networking among specific types of businesses or different types of entrepreneurs. Examples would include the National Association of Women’s Business Owners (www.nawbo.org), the Indus Entrepreneurs (www.tie.org) or the National Association for American Indian Economic Development (www.ncaied.org). The groups listed below are open to all types of business owners.

The Alternative Board (www.tabboards.com): Founded in 1990, TAB helps create small “boards” of up to 12 individuals, who are supported by a TAB-trained facilitator. The board meets monthly, and the facilitator also leads monthly one-on-one coaching sessions with each member. Board members are in business themselves (in large and small firms), and each presents a pressing business problem for discussion at the monthly meeting. TAB operates on a franchise model.

Inner Circle International (www.innercircle.com): Inner Circle was founded by a former entrepreneur who started a local network in Minnesota. He was so pleased with the results that he started a national version that operates according to a franchise model. Each group consists of 10-12 entrepreneurs (with annual revenues between $500,000 and $50 million), and meetings operate with a focus on pressing real-life business issues.

Peerspectives (www.peerspectives.org): Peerspectives is a new initiative developed by the Michigan-based Edward Lowe Foundation. Second-stage entrepreneurs—those that generate at least $750,000 in annual revenue—are its target market. These firms are best poised for growth opportunities according to the program’s designers. The program has been piloted in Wisconsin and is now being marketed nationwide.

TEC (www.teconline.com): TEC has operated since 1957 with a focus on bringing chief executives together. Thus, TEC groups are not targeted to entrepreneurs only. They can also include corporate CEOs and other high-level managers whose firms generate revenues in the range between $1 million and $1 billion. TEC focuses on CEO leadership development and operates in 14 countries.

Young Entrepreneurs Organization (www.yeo.org): As its name suggests, YEO targets entrepreneurs under the age of 40 whose firms have annual revenues exceeding $1 million. It is allied with the World Entrepreneurs Organization, which operates in forty countries. YEO operates peer networks via its local chapters in dozens of US cities. It also provides both national and international training and leadership development opportunities.

Mental Models and Economic Development

Whether we know it or not, our actions are often driven by unconscious mental models. Maybe we in the field of economic development suffer from our own stereotypes and mental models. It seems to me that, in some ways, we still operate according to mental models that first emerged in the industrial economies of the late 19 th and 20 th centuries. Under this mechanistic approach, we tend to view our local economy as something akin to a factory. Our job as economic developers is to improve the quality of the inputs (e.g., capital, labor) and to sometimes market the outputs (e.g export promotion, tourism).

This type of thinking first emerged in the writings of Frederick Winslow Taylor and others who sought to bring scientific discipline to the field of management. Their legacy persists today in things like organization charts, job descriptions, and performance standards. The Federal government’s GS-system for employee rankings, which appears on its way out, may be the best-known example of such systems.

Yet the reality is that innovation no longer works in a mechanistic manner. We can’t simply prime the pump (e.g., by spending more on R&D) and hope good things happen. In fact, innovation may have never worked in such a fashion. Innovation isn’t linear, going from R&D to development to production. It works in a messier fashion, built around networks that tinker and constantly improve upon certain products, technologies, or services. Customers, users, designers, and manufacturers all interact in a process that yields new insights and learning.

The private sector has responded to this change, and now organizes itself in a much different manner. Instead of manning an org. chart of divisions, corporate leaders work within complex web of partners, competitors, suppliers, and support teams. Cisco Systems offers a classic example. Instead of operating its own internal R&D shop, it develops new technologies in partnership with the rich ecosystem of new start-up companies based in Silicon Valley and elsewhere. These networks are where innovation happens.

In economic development, we must begin to “govern by networks.” At the broadest level, this means that agency managers must focus less on managing divisions of workers and the direct delivery of services. Their new role will involve orchestrating a network of organizations (both public and private) to deliver services. It will also mean closer cooperation with customers (i.e., local businesses). Learning about customers via surveys and focus groups is not true collaboration. Effective partnerships require a more sustained relationship where businesses have input on how programs are designed and delivered. They may even end up doing the program delivery themselves.

Economic development organizations will need to transform their own internal operations accordingly. Several changes are likely to result:

• The line between public and private will further blur: More services will be provided by the private sector with support and cooperation from the public sector.
• We will need to adopt a “portfolio management” approach. Instead of simply raising funds and delivering programs, managers will need to focus on how they manage partnerships and relationships within their networks.
• The skill sets needed by successful economic developers will change. New skills, that are not currently taught in most training programs, include managing collaborative relationships and negotiating/managing contracts.

NOTE: We are just beginning to grapple with many of the issues raised in this essay, which is designed to stimulate discussion more than provide answers. We welcome your comments, feedback and ideas.

If you are interested in learning more on these topics, check out the following:Books and Articles:

Stephen Goldsmith and William D. Eggers, Governing by Network: The New Public Management Imperative, Washington, DC: Brookings Institution Press, 2004

Andrew Hargadon, How Breakthroughs Happen: The Surprising Truth about How Companies Innovate, Cambridge, MA: Harvard Business School, 2003.

Marco Iansiti and Roy Levien, The Keystone Advantage: What the New Dynamics of Business Ecosystems Mean for Strategy, Innovation, and Sustainability, Cambridge, MA: Harvard Business School, 2004.

Valdis Krebs and June Holley, Building Sustainable Communities through Network Building, Manuscript, 2002. Available at http://www.orgnet.com/BuildingNetworks.pdf

Helen McCarthy, Paul Miller and Paul Skidmore, Network Logic: Who Governs in an Interconnected World, London: Demos, 2004.

Paul Miller and Paul Skidmore, Disorganization: Why Future Organizations Should “Loosen Up,” London: Demos, 2004.

Web Sites:

Plexus Institute: Plexus is a network of people interested in learning more about the science of complexity and how its concepts can be applied in practical settings. To learn more, visit www.plexusinstitute.org

Miscellaneous Plugs: Southern Edition

In our travels around the world and around the web, we regularly find some very cool stuff that might interest our readers. In our last edition, we plugged a few resources from the Mid-Atlantic region. This time, we’re trying some “southern cooking” with an emphasis on innovative activities in the Southeast. Look for more “plugs” in future editions:

Community Readiness/E-Net (http://www.georgia.org/esbd/community_based/index.asp): Developed by Georgia Tech’s Economic Development Institute and Georgia’s Department of Economic Development, E-Net focuses on training community leaders in effective strategies for supporting local entrepreneurs. Under the program, a team of experts provides a community assessment as well as a work plan for how a town or region can become more “entrepreneur friendly.” Five communities have already been certified: Valdosta-Lowndes County, Douglas-Coffee County, Blue Ridge-Fannin County, Ashburn-Turner County, and Adel-Cook County.

Kentucky Entrepreneurial Coaches Institute (http://www.uky.edu/Ag/KECI/): Many entrepreneurs in rural Kentucky lack the peer or mentor networks that were described above. The Coaches Institute seeks to build that kind of local support by training local leaders in how to be effective facilitators and business coaches for entrepreneurs. These facilitators don’t directly provide business services, but instead help network business owners with other local and national resources. The program has operated since 2003. Thirty individuals have proceeded through the training, and a second class will be recruited soon.

Kerr-Tar Hub Project (www.kerrtarhub.org): While it’s still too early to call this North Carolina-based project successful, it seeks to address a pressing problem for many rural communities. How to capitalize on a booming economy in a nearby metropolitan area? The Kerr-Tar region of central NC is hoping to tap into the skills, talent, and technology resident in the adjacent Research Triangle region. By offering specialized training and facilities, the region’s leaders hope to encourage NC’s technology firms to set up branch or support operations in their communities. The project is avoiding the common trap of trying to build a local industry cluster from scratch. Instead, it is seeking to capitalize on strong technology clusters in the Research Triangle by tailoring its programs to the needs of firms focused on fields like biotechnology and information technology.

What’s Happening at EntreWorks Consulting?

Over the past few years, more and more community colleges are starting to support local entrepreneurs. This is a promising trend that will likely continue thanks to a new support organization, the National Association of Community College Entrepreneurship (www.nacce.com). Working with EntreWorks Consulting, NACCE is developing a development and expansion plan designed to make community colleges among the nation’s leading providers of entrepreneurship education. At present, less than 10% of the nation’s 1,600 community colleges offer such training, so the market is greatly underserved. If you’re interested in this topic, you might consider coming to NACCE’s 3 rd annual conference to be held in Las Vegas from October 9-12, 2005. More details are available at www.nacce.com.

Several new articles are posted in the EntreWorks Library (www.entreworks.net/library). These include the following:

“Building Systems for Entrepreneur Support,” Economic Development America , forthcoming.

“The New Demographics of Entrepreneurship,” Local Economy. Vol. 20, No. 1 (February 2005).