Why do some communities like Seattle, Silicon Valley, Austin, Boston's Route 128, and the Research Triangle in North Carolina buzz with exciting business activity? Why is it that these locations seem to create new business ideas and new start-ups seemingly by the hour?
Yet other communities, often with similar demographics, struggle to survive, let alone create sufficient new entrepreneurial endeavors to sustain economic growth? Why do these communities, even though they may have a strong university or educational center and an excellent physical infrastructure, always struggle to create the entrepreneurs that add vitality to the economy and help drive philanthropy? Why does Anchorage not have the same buzz as Seattle?
Research has shown that while hard, physical assets and strong institutions such as a university, great schools and buildings are very important, it's the soft, people-based assets that make a real difference. Entrepreneurship thrives where people-based networking is a way of life.
Older and more traditional forms of networks such as club and affinity meetings are institutional in nature. That is, they are primarily driven by the need for inter-company relationships or alliances. There is also a membership aspect to these network meetings. To be effective, networks must be wide open. They cannot be restricted to a specific membership, club or age group.
Entrepreneurial networks differ from the traditional forms because they are networks of individuals.
Most entrepreneurs initially learn the practice of entrepreneurship through on-the-job-training. Even so, newly ordained entrepreneurs can achieve even greater success when they learn from the experiences of other entrepreneurs, and from professionals who have helped successful entrepreneurs. These shared learning experiences provide an extremely effective route to greatness through local entrepreneur-focused networks.
Successful networks do not just facilitate entrepreneurs exchanging ideas with other entrepreneurs. Success means creating a correct balance of the information exchange between individual entrepreneurs, and between entrepreneurs and compatible service providers, investors, politicians and attorneys. For entrepreneurs, the important networks revolve around access to capital, making business deals, forming partnerships, finding mentors, obtaining new markets and sales, and access to politicians. These networking needs evolve, because the entrepreneurs' needs change as they grow and become successful.
Over time, most networks grow stale. People attending them eventually squeeze out the benefits and move on to another network that better suits their requirements. Great networks are fluid. In communities such as Anchorage or Fairbanks, the whole network scene must continually adjust to accommodate changes in both the entrepreneur's demands and trend requirements.
Creating one network is not enough. Continually starting new networks to ensure diversification, achievement of different goals, and focusing on various industry sectors must be the primary goal. This seeds and expands the range of resources available to local entrepreneurs. Communities need to ensure that a range of networking opportunities is available so that they can address the needs of entrepreneurs as they grow.
It is important to establish strategic alliances with other networks and organizations that enhance the primary network. Institutional networks need to parallel business networks. Community and regional economic development depends on a deep assortment of networks for success.
In Alaska's case, its small rural communities need to network with other small communities to take advantage of the critical mass of a larger network. With current technology and appropriate use of resources, a network in Homer could quite easily be linked with similar networks in Bethel, Sitka, Wasilla, Juneau, Anchorage and Fairbanks.
Networks need to network.
But, making an effective network or networks takes time. It can start with one network, at one location, focused on one institution. This single network can grow - with patience - to multiple networks within the same community (Anchorage, for example) or linked to similarly single networks in different communities in more rural Alaska. While success cannot be guaranteed - and rapid success is often difficult to achieve - consistency is important, as is leadership.
Networks are not just good for the individual or for a business, they also make a significant impact on the economy of any community. Those communities with effective networks have the best track records for start-ups, fast-growth businesses and solid economic growth.
The most successful networks are designed to establish, benefit and further an entrepreneurial culture - a culture that encourages additional networking and expands economic activity. This ultimately leads to the development of a solid economic base. Networks are good for the community as a whole. Not only do networks help entrepreneurs, but they have an important role to play socially.
"People time" or "face time" will always be a major part of an entrepreneur's life. Physical networks provide real people with real face-to-face experiences. They will always provide the entrepreneur with current and relevant information to make the decisions needed for success.
When Anchorage's entrepreneurial scene becomes as vibrant as Austin, Texas, and Route 128 in Boston, it will be because networks are working.
Michael Haines is a business advisor, an "entrepreneurial engineer" and an expert in creating entrepreneurial networks. He consults to businesses and communities on the practical establishment of economic development and entrepreneurial programs. Reach him at alaskaentrepreneur@yahoo.com.
