How to Grow the Next Generation of Fortune 500 Companies in Your City

I’m not your typical romantic. For example, when my wife and I were dating, she looked at me across the table once and said, “Travis, you make me so happy.”

My response? “No, my love. I create an environment in which your happiness is the most likely outcome.”

I’ll never have a career writing Hallmark cards, but this outlook has served me well in helping cities drive growth through entrepreneurship.

Cities — like relationships — become great when a certain set of conditions are created in which people can flourish. If you establish an environment where people are empowered to launch innovative businesses, your city will become an innovation hub before you know it.

Big Companies Are Sexy, but Startups Are Sustainable

Many municipalities I’ve worked with think they need to flutter their eyelashes at Fortune 500 companies to cultivate business growth. But while Fortune 500s make headlines and create instant jobs, they’re not always the best bets for long-term growth. Instead, innovative cities should be looking to grow their own Fortune 500s.

People often overlook or, worse yet, look down on startups. After all, in the early stages, they’re not major sources of employment and don’t generate much tax revenue. However, a community that promotes entrepreneurship is likely to be passionate, idea-driven, and full of talent — three things cities need in order to grow.

And startups usually stick around their home city to mentor future generations. According to the National Business Incubator Association, 84 percent of companies that graduate from an incubator or accelerator stay in the local market. This homegrown approach, when used right, can become a city’s innovative advantage.

Case Study: Philadelphia

Over the past few years, Philadelphia has proved that nurturing the right environment can help a city create sustainable business growth. The City of Brotherly Love has 5,100 tech companies fueled by a broad network of startup resources and 13,000 STEM degrees awarded annually by area colleges and universities.

This innovation surge is not a coincidence. Philadelphia’s leaders and institutions have worked hard to cultivate rich ground for innovation and entrepreneurship. Philly’s universities have strong research links with corporations and local business research and development. In addition, the corporate venture community is active and supportive, viewing startup investment as a key part of its strategy. The city’s modest cost of living means that capital goes further than it would in other big metros.

As an East Coast city in a Rust Belt state, Philadelphia could have easily suffered from an identity crisis in business development. Instead, its leaders connected the raw materials of innovation and made them widely available to entrepreneurs. Now, business in Philadelphia grows like wildflowers.

5 Ways to Foster Entrepreneurial Energy in Your City

Start building an environment where entrepreneurship and innovation are the most likely outcome with the following five tips:

1. Create a culture of “trying local.”

Turn your citizens into early adopters and beta testers; it will give them a sense of community pride when they realize they’re improving products in their area. Cities can make this happen by presenting residents with opportunities to pilot new innovations and technologies, giving startups a ready-made fan base.

2. Take startups seriously.

Sure, if you drop a major manufacturing plant down in your city, a bunch of new jobs will accompany it. But it’s often a one-time gain. If you want job creation that keeps growing, the startup sector will serve you best. To do this, create programs that reward promising startups after they stick around and contribute to the local economy.

3. Inspire startups to solve local problems.

Look for ways to engage the innovation community with the unique challenges facing your city. Forming public-private partnerships to tackle local problems can be a strong approach in generating goodwill and cooperation from your city’s startup community. Not to mention, there’s a chance you’ll develop some innovative ideas in the process, too.

4. Surrender control.

As a city leader, it can be tempting to try to force the change you want and block the change you want to avoid. The reality is that you’ll never be able to anticipate all potential shifts in the market, and adopting restrictive policies risks scaring off innovators. Instead, city leaders are better off using a light touch. Carry this through by encouraging businesses to share responsibility in crafting a long-term economic vision.

5. Be a better you.

Philadelphia created an entrepreneurial environment by being a better version of itself — not by pretending to be Boston, New York, or San Francisco. Build on your city’s strengths, and ask progress-minded questions: Are we better today than we were yesterday? Are we better this year than last? Small, manageable improvements are the first step toward sustainable growth.

Recruit a Fortune 500 company, and you’ll create jobs for a day; help nurture successful startups, and you’ll create jobs for the foreseeable future. It can feel uncomfortable to put energy and resources into the startup world, but innovation lives in that uncertain space between failure and success. To truly foster long-term growth, cities should focus on creating an environment in which success is the most likely outcome. Feel free to use that line in your love life, too.

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