A Systemic Approach to Accelerating Entrepreneurship

Extraordinary changes have taken place in the United States since the mid-1980s, when the passage of the Bayh/Dole Act, which allowed research institutions to license inventions coming out of federally funded grants, and the creation of the Small Business Innovation and Research (SBIR) program helped unleash an unprecedented era of innovation and entrepreneurship across the country. It is clear that the larger environment in which entrepreneurial enterprises emerge is critically important to the incubation, growth, and sustainability of wealth- and job-creating companies. We have a long history in this country of celebrating heroes, pioneers, and individual entrepreneurs, based on our deep belief in the power of the individual over his or her environment. However, increasing evidence suggests that environment, timing, and support can either enable or inhibit individual achievements, including successful entrepreneurship.

The 21^st-century environment for innovation and entrepreneurship has become globally interdependent in terms of inventions, innovations, markets, production, and talent. Discretionary resources are dispersed, rather than being concentrated in the hands of a few individuals or companies. Thus, many of the policies and practices vis-à-vis incentivizing and accelerating entrepreneurship in the 1980s may be insufficient for the challenges of the 21^st century. It may be time to rethink what it takes to accelerate innovation and entrepreneurship in a global knowledge economy.

My experience working in a community that completely reinvented itself over a 30-year period suggests that accelerating entrepreneurship is as much about community transformation as it is about helping individual entrepreneurs. Enhancing community capacity as it simultaneously supported entrepreneurs was at the core of San Diego’s strategy, especially the University of California, San Diego’s innovative CONNECT organization, which was created to be a catalyst for technology entrepreneurship. Started in 1984, just as the larger environment that enabled more localized innovation and entrepreneurship was unleashed by less restrictive intellectual property and financial policies, CONNECT began with an explicit commitment to enhance community capacity as it simultaneously provided support to individual entrepreneurs.

San Diego’s Transformative Journey

In a nutshell, well into the 1970s, San Diego’s economy had benefited from and leveraged federal relationships while supporting four wars—World Wars I and II, the Korean War, and the Vietnam War—and from the expanding military industrial complex that emerged in the late 1940s and 1950s. The military’s growing appetite for advanced technologies built on good basic science, especially in the naval and aviation arenas, drove the growth of a major R&D sector. All of this activity was animated by concerns about defending democracy in the world and protecting national security on the home front. The remainder of San Diego’s economy consisted of small businesses and booming real estate and tourism sectors. The result is that San Diego’s economy throughout the 20^th century and even in today’s “new economy” has been and remains significantly dependent on military expenditures, which were close to 50 percent of the economy during the major wars and is approximately 25 percent today because of the installations and R&D activities going on in the region. However, the city’s business culture has consisted of diverse small enterprises that collaborate and co-invest in a variety of initiatives, among which was assuring continued federal investment in the region.

The extent to which the military, and now the federal government more generally, has been the driver of economic prosperity in the San Diego region is the subject of a book I published with my colleague, historian Abe Shragge, Invention and Reinvention: The Evolution of San Diego’s Innovation Economy (Walshok and Schragge, 2013). The story line, which is extremely relevant to contemporary discussions about accelerating entrepreneurship, highlights how important collaborative mechanisms, as well as an ambitious and adaptive civic culture, were to San Diego in its journey to becoming a major innovation hub. Supporting the development of new technology clusters and edgy, risky entrepreneurial enterprises, along with leveraging assets, especially land, has been a key component of the region’s DNA for more than a century.

A distinguishing feature of San Diego’s economic character is the fact...