Oklahoma, Nebraska, USA. Inclusive Urban and Rural Economic Development Professional. Senior Advisor for the Federal Reserve Bank of Kansas City. PhD with an early bedtime.
I first learned about Dell Gines when he took the stage at the 2019 ESHIP Summit. As part of this Firestarter talk, he walked us through the shift from economic development to entrepreneurship ecosystems and once he entered my orbit, he never really left: . I have gone back repeatedly to study his talk and listened to him spread his wisdom on different podcasts – and I’m excited to share with you why:
Dell has been an outspoken advocate for the needs and support of entrepreneurial ecosystem builders and movement builders. Having worked in economic development for over a decade, I took this opportunity to ask Dell everything I’ve always wanted to know about
- The evolution of economic development to entrepreneurship ecosystems
- What both parties can learn from each other
- The issue with objectives and metrics of economic development
- The importance and nuances of inclusivity in ecosystem building.
I am so excited to share this conversation with you and for you to dive deeper into the myriad of resources that Dell has created and shared over the years (linked throughout).
The evolution of economic development and ecosystem building
“During my PhD, I dug deep into the history of economic development and I have identified four stages.
The first wave: Industrial recruitment (1930 onwards)
The first wave is what we do to this day, it’s the dominant approach to economic development called Industrial Recruitment. Industrial recruitment is based on the premise of reducing the cost of doing business in a community to incentivize companies to locate there. Take Amazon for example: Communities were willing to offer them tax breaks and cash in return for their second headquarters that would create jobs and tax income, hoping the latter would outweigh the former. This model originated in the South in the 1930s because they had tremendous troubles with poverty coming out of the various recessions, depressions and war. It worked for some communities and led to wide-spread adoption which is why it stopped being so attractive: Everybody was chasing the same companies with the same dollars. It’s a race to the bottom.
The second wave: Entrepreneurial strategies (1980s onwards)
In the 70 and 80s, people started to question the attraction model because it only worked for a few communities. Reagan and the federal government realized that they weren’t pushing a lot of resources to the local level. So in the late 70s, small business became more popular because research showed that it was small businesses who actually create more jobs over the long term. So you saw this explosion of entrepreneurship-focused activities from the government, something like 200 incubators were created between like 1983 and 1987. That development spiked, peaked, then it diminished.
The third wave: Cluster-based economic development (1980s onwards)
Then came cluster-based economic development in the 1990s. Michael Porter came up with this concept of not just focusing on individual businesses but really looking at the wider context. He advocated for the idea of bringing in companies that actually fit the competitive advantage of that particular community.
The fourth wave: Entrepreneurship Ecosystems (2010 onwards)
Then, in the 2010s, entrepreneurial ecosystems emerged from those previous three waves (which are all still happening to varying degrees right now). What is unique about entrepreneurial ecosystem building which focuses on creating a dense and clear environment of hyper-connected actors that support entrepreneurs as they start and scale businesses.
What has happened frequently in the past, and it still does, is that people talk about economic development only in the sense of industrial attraction, which is only one out of these four strategies. Attraction-based economic development works only for very very few communities but that doesn’t mean there is never a scenario where it makes sense.”
You’ll never hear me say any strategy is all good or all bad, the question is what makes the most sense for this community?
In other words, by not being careful with our definitions, economic development has been reduced to a hierarchical attraction-based approach often seen as the opposite of grassroots-born entrepreneurial ecosystem building when in truth, they all stem from the same roots of economic development.”
The power of ecosystem building lies in creating opportunity for ALL [entrepreneurs] to create wealth and value at the local level based upon their ability to conceive, believe and ultimately produce value.Dell Gines, ESHIP Summit 2019
The means to an end or an end in itself?
“I think ecosystem builders and economic developers alike miss this point: The final objective is not to create more entrepreneurs. The final objective is to enhance the quality of life for communities around the country. We’re not creating entrepreneurs for entrepreneurship sake. We use entrepreneurship as an intermediary to get to more sustainable and equitable communities with a higher quality of life and what that means in practice depends on each individual community now, doesn’t it?
We need to get back to some of the fundamental principles of ecosystem building and understand why entrepreneurship gets us to these goals.
Most of the time, when I talk to economic developers, they measure success in two ways: job creation and capital investment. They rarely ever talk about quality of life. Take Omaha, Nebraska, for example. At one point, the Black community in Omaha was one of the poorest in the nation. From an economic development standpoint, we should ask ‘How has this particular capital investment increased the quality of life for those folks?’
If the objective of ecosystem building and economic development is to increase the quality of life for local communities, we need to first know who is living in those communities and what an increase in quality of life even means. Only then can we choose a strategy, or a combination of strategies, from our portfolio of economic development to see how we might move ahead. And we need the right type of metrics to measure that progress. Job creation and capital investment are not going to cut it.”
Economic developers & ecosystem builders: Mutual learning
Let’s start off by making one thing clear: each community and its entrepreneurs therein have different prerequisites and needs. A major metropolis needs a different level of density and number of support organizations than a smaller micropolitan. But a micropolitan still needs a dense set of resources and support.
If you’re not developing and connecting relationships you’re not a real ecosystem builder.
That’s where ecosystem builders come in: They’re able to examine what resources and assets are actually available in that community. If, for example, you’re trying to focus on high-growth entrepreneurs, you need venture capital, that’s part of your context. And you have to figure out a way to address your context.
On the other side of the equation is the network of relationships. If you’re not developing and connecting relationships you’re not a real ecosystem builder. The role of ecosystem builders is to connect the dots between entrepreneurs and support providers, and among the different support providers to build a denser network of relationships.
I think that is one thing economic developers can learn and fine tune from the ecosystem building approach. If I’m a traditional economic developer, I really want to create a better set of relationship structures within my community between the business owners and the support systems for those business owners.
What ecosystem builders can learn from economic developers, on the other hand, is the role of policy and advocacy. The majority of their responsibility is to understand what policies are in place to support entrepreneurship and business, what the current infrastructure looks like, what land is available. And similarly: what resources and incentives have the state and federal government made available to help business owners, small, established and high-growth? Ecosystem builders are not yet doing a good job of really being able to leverage all the policies that apply in any given community.
Secondly, ecosystem builders can learn about the power of advocacy. Most of your major chambers leverage 501c(6)s, so they can go out and advocate for policy change in favor of businesses.”
The essence of ecosystem building
In his conversation with David Ponraj on his podcast Breaking Down Barriers Dell explained, “You can’t say you’re an ecosystem builder if you’re not an inclusive ecosystem builder. Because true inclusivity in your ecosystem means that you’re allocating resources to those with the most entrepreneurial talent so that you can create the greatest return […]. If I’m giving a white personmore resources simply because they’re white even if they’re an inferior entrepreneur to the Latina that’s starting a firm, my ecosystem is not functioning well or efficiently.
How can you say you’re a really good ecosystem builder if you’re not attacking issues of racism, sexism and geographic bias in your ecosystems?Dell Gines, Breaking Down Barriers
As the field of ecosystem building develops, [inclusion cannot be] an afterthought but permeates all aspects of how this field emerges in terms of practice.”
For a deep dive into the imperative of inclusivity in ecosystem building, read Dell’s Medium article Inclusivity Increases Economic Productivity in Entrepreneurship Ecosystems.
Passive and active inclusivity
As entrepreneurial ecosystem builders, focusing on diversity, equity and inclusion is not even a matter of ethics or how you feel about it morally, it’s a matter of economic logic.
There has long been this notion in the startup world of ‘If you build it, they will come.’ In terms of including historically marginalized communities, that translates to ‘If they come, we will treat them right.’ But after having been shut out for decades, these new founders from diverse backgrounds don’t even know they’re welcome, and even if they do, too many ecosystem builders don’t even understand how to make sure that people are comfortable once they get there. That’s what I call passive inclusivity.
For example, I may not know how to adequately support Native Americans but I am intentional in my ecosystem building efforts to continue to learn about how to be proactive. I go out of my way to find people who bring these issues to my attention so that I’m putting myself into a position to understand, invite them to the table, and make sure that they feel welcome and connected to the entrepreneurial community. That’s the major shift from passive to active inclusivity.
There’s not going to be perfection, but we have to show continued intentionality and a certain intensity to make sure that you’re trying to bring previously under-resourced and marginalized entrepreneurs along.”
An invitation to the table or building new tables?
“Another distinction we have to make is that between inclusive ecosystem building and ecosystem building in communities of color. In other words, we’re talking about including individuals and including groups.
If we look, for example, at a black entrepreneur, as ecosystem builders we can try to include her in pre-existing entrepreneurial support organizations and opportunities, or we can identify and help build up an ecosystem of black entrepreneurs and support entities around her, thereby lifting the entire group or collective through this economic development process?
So if I’m in a black community, I want to figure out a way for this whole community to be more participative in the ecosystem. That’s different than if an existing, predominantly white accelerator asks how they might create better inclusivity so that when a 56-year old Latina woman comes in, she feels comfortable and that this is a place for her.
These are two different things, and both are necessary. They feed off each other because now you’re creating bridges and pathways to networks and relationships and that’s where the good stuff happens: exchange of information and experiences that spur innovation and open up opportunities for greater perspectives.
Your role as an ecosystem builder is to continuously build relationships across different parts of your community.
If you’re not black or Latinx but you want to support their entrepreneurial community, take the time to listen and learn about what it truly is they need. Find out if they even want or need your help. At a bare minimum, we as ecosystem builders can connect the dots that we know of. When I talk to somebody, I’m always thinking ‘Who can I connect them to? What resource or information can I share that might help them move forward? Is there another individual that is aligned with what they’re doing?’
Throughout thirty years of doing this work, I realized that if I truly wanted to build community and especially if I wanted to support people, the best thing that I have for the ecosystem building world is my voice and the credibility of the institution that I work with to be able to leverage on their behalf.”
To learn more about ecosystem building in communities of color, be sure to grab Building entrepreneurship ecosystems in communities of color that Dell co-authored with Rodney Sampson.
What other ecosystem builders should be on our radar?
- Don Macke at E2 Entrepreneurial Ecosystems, formerly the Center for Rural Entrepreneurship
- Network Kansas and what they’re done at the state level
- Felicia Hatcher
Dr. Dell Gines
Omaha, Nebraska, USA
Inclusive Urban and Rural Economic Development Professional. Senior Advisor for the Federal Reserve Bank of Kansas City. PhD with an early bedtime.