U.S. job growth driven entirely by startups!

Several weeks ago, the Kauffman Foundation (a private nonpartisan foundation that works to harness the power of entrepreneurship and innovation) released a study showing that from 1977 to 2005, startups (firms younger than one year) accounted for on average 3 million new jobs per year while existing firms shed 1 million jobs net per year. Interestingly, while older firms downsized during a recession, job creation at startups remained stable.

The findings underline the importance that should be placed on creating an environment highly favorable to entrepreneurship (including favorable immigration policies – see the website for the Startup Visa for more on this).

Download the report here. Or read the press release below.

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U.S. job growth driven entirely by startups, according to Kauffman Foundation

New firms add an average of 3 million jobs in their first year, while older companies lose 1 million jobs annually

(KANSAS CITY, Mo.), July 7, 2010 – When it comes to U.S. job growth, startup companies aren’t everything. They’re the only thing. It’s well understood that existing companies of all sizes constantly create – and destroy – jobs. Conventional wisdom, then, might suppose that annual net job gain is positive at these companies. A study released today by the Ewing Marion Kauffman Foundation, however, shows that this rarely is the case. In fact, net job growth occurs in the U.S. economy only through startup firms.

The new study, The Importance of Startups in Job Creation and Job Destruction, bases its findings on the Business Dynamics Statistics, a U.S. government dataset compiled by the U.S. Census Bureau. The BDS series tracks the annual number of new businesses (startups and new locations) from 1977 to 2005, and defines startups as firms younger than one year old.

The study reveals that, both on average and for all but seven years between 1977 and 2005, existing firms are net job destroyers, losing 1 million jobs net combined per year. By contrast, in their first year, new firms add an average of 3 million jobs.

Further, the study shows, job growth patterns at both startups and existing firms are pro-cyclical, although existing firms have much more cyclical variance. Most notably, during recessionary years, job creation at startups remains stable, while net job losses at existing firms are highly sensitive to the business cycle.

“These findings imply that America should be thinking differently about the standard employment policy paradigm,” said Robert E. Litan, vice president of Research and Policy at the Kauffman Foundation. “Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies. But the data from this report suggest that growth would be best boosted by supporting startup firms.”

Because startups that develop organically are almost solely the drivers of job growth, job-creation policies aimed at luring larger, established employers will inevitably fail, said the study’s author, Tim Kane, Kauffman Foundation senior fellow in Research and Policy. Such city and state policies are doomed not only because they are zero-sum, but because they are based in unrealistic employment growth models.

And it’s not just net job creation that startups dominate. While older firms lose more jobs than they create, those gross flows decline as firms age. On average, one-year-old firms create nearly one million jobs, while ten-year-old firms generate 300,000. The notion that firms bulk up as they age is, in the aggregate, not supported by data.

Contact: Rossana Weitekamp, 516-792-1462,  rossana@weitekamp.com  | Barbara Pruitt, 816-932-1288, bpruitt@kauffman.org , Kauffman Foundation

Note: This post is based on the July 7 Press Release by Kauffman Foundation

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What is the Difference Between Innovation and Creativity?

Check out this great post that highlights the differences between innovation, creativity, and invention. Worthwhile thinking more about. I especially like the bit about "We tend to think of an innovation as a new product but you can innovate with a new process, method, business model, partnership, route to market or marketing method." Although these could fall under process/method - I would add "new ways of thinking" or more specifically, a new way of arriving at answers. Feel free to expand on this list in the comments!

What is the Difference Between Innovation and Creativity?

by Paul Sloane via Blogging Innovation

Discussions about innovation are often made difficult because people are unclear about the exact meanings of some key terms. In particular there is confusion about the difference between creativity, innovation and invention. Let us start with some definitions:

• “Creativity is the capability or act of conceiving something original or unusual.”
• “Innovation is the implementation of something new.”
• “Invention is the creation of something that has never been made before and is recognized as the product of some unique insight.”

If you have a brainstorm meeting and dream up dozens of new ideas then you have displayed creativity but there is no innovation until something gets implemented. Somebody has to take a risk and deliver something for a creative idea to be turned into an innovation. An invention might be a product or device or method that has never existed before. So every invention is an innovation. But every innovation is not an invention. When your company first published its website that was a major innovation for the company even though many other websites already existed.

Read the whole post here.

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Go Miniman Go

This one is for all of you out there who, as I did, built whole new worlds (and immersed themselves in them for weeks on end) with nothing more than little plastic building blocks. I'm talking about the kind that required do-it-yourself imagination and skill, not today's pre-designed sets (although I always wanted to have some of these!).

My parents still have boxes and boxes of Legos, including an entire Lego train system, in the basement - last time a world was created, it filled up a large room!

One day - maybe sooner than later - I will dig out the Legos and rebuild all those worlds and explore many still unknown ones ... this video certainly inspires to do so. Oh the memories!

Check out the full story on 30 years of Lego on the GoMinimanGo website.

Or, go vintage with classic Lego commercials (now that's the "real" Lego!)

 

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Extreme environments, behavior changes and being able to do more when allowed to do less

Interesting blog post by trackchanges that looks into how new environments, especially when extreme, lead to changes in behavior. Continuum sent a Programm Development Associate and a Principal in Human-Centered Design to West Point to undergo day one of basic training. Read the full report and watch the video below.

Another thought: At West Point the recruits are subject to extreme situations and extreme constraints. As a result they change behavior and perform at or above their maximum. Likewise, a designer or innovator is at their best / most creative when working under constraints. As Charles and Ray Eames said "Design is all about constraints." I would consider this when interpreting the findings the two designers had at West Point.

Check out the full article and video below.

Designing from the Trenches

Posted by Alanna Fincke

 

Recently, Continuum staffers Devorah Klein, Principal in Human-Centered Design, and Caitlin Toombs, Program Development Associate, braved a day of basic training at the famed West Point military academy in Hudson Valley, New York. Why, you ask, would these two subject themselves to such torture? They were lucky enough to attend a practice R-Day.

R-Day is the first day of training for the new class of recruits, done each year in the summer. The real R-day is run partially by the more senior cadets, so for a rehearsal, West Point opens up their doors once a year to a select few brave civilians, who allow themselves to be the guinea pigs for a dry run.

The Continuum team wasn’t just in it for the extraordinary stories they’d get to tell us when they got back. Klein and Toombs were interested in how R-Day—so tough that you are supposed to fail and fail fast—could affect behavior change. After all, change is hard. And the military knows a thing or two about effectively managing behavioral change.

How can going to extremes, beyond your personal limit, help you make dramatic changes in your life? What could they teach us about adherence and compliance—and, more importantly, about human behavior?

Find out what they learned in Devorah Klein’s video.

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Most interesting blogs (in my world)

Today I sat down and went through my Google Reader account to make a list of all of the blogs that I regularly read. Turns out it is quite long. Each of them inspires and excites and definitely makes for great reading.

The topics range from design, design thinking and innovation to entrepreneurship, startup financing, and management advice. Also included are several personal blogs from friends of mine.

Have a look at the new page on my website for the complete list and a chance to check out each of them in detail. I'll be updating as my reading list changes.

Sneak preview in form of a word cloud:

Credits go to Wordle

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Sailing the Hanne-Marie (Intelligent Design Meets Wind)

This past weekend, a group of friends and I chartered the Hanne-Marie, a large wooden sailboat, for two nights and two days of sailing on the Baltic Sea. The Hanne-Marie was built 1919 in Denmark as a fishing boat. An interesting feature were a number of tanks with different sized holes going directly into the ocean. These allowed water to circulate into where the fish were held, keeping them alive until the harbor was reached. In the early 1980s she was renovated to accomodate guests and has been in posession of a nonprofit since mid 2000. She is almost 20 Meters long, 4 Meters wide and has 140 square Meters of sails.

We had perfect weather, great wind and an amazing time. See a few of the images below one from the Hanne-Marie's website since we couldn't take pictures of the whole boat under sail). Find out more the Hanne-Marie and plan your own sailing trip here (in German).

Aside from being one of the best weekends I have had in a long time, I fell in love (all over again) with sailing and have decided to finally go for my sailing license this August. With some luck, I should be able to do another week of sailing in the Masuria lake region, Poland, in September. This would then be just a friend and I chartering our own little yacht.

For those of you who have not been on a sailboat (no matter what size) - It is such a very beautiful way to travel - incredibly aesthetic (not just in a visual sense) and fascinating how silently, actually quite magically, sailboats cut through the water propelled only by intelligent design and wind.

There really is nothing like the moment when the sails have been hoisted, the wind starts taking over, and the engine is cut off. Suddenly all is quiet and the boat begins to glide.

 

See and download the full gallery on posterous

Many thanks to Nadia Cone for most of the pictures!

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Say Yes to Not Saying No!

Ryan Jacoby from IDEO makes a great point in his latest post "Leading Innovation: Ignore your instincts, say "yes." 

 

Namely: If you want to be an outstanding innovation leader that generates revolutionary ideas ... then get out of your routine --  say yes to the unknown, say yes to getting out of your comfort zone, say yes to entertaining new ideas, and definitely say YES to not saying no. 

 

My thoughts on this: I couldn't agree more! Since moving to Germany several years ago, I've thought a lot about the differences between the German and American culture. Although this might be boiling it down to a stereotype, I've noticed that while Americans tend to say yes (i.e. entertain an idea) first, Germans take the more conservative route of a skeptical no before coming around (if the idea warrants it).I for one have taken this observation to promote “yes-behavior" in my thoughts and actions -- in my opinion quite successfully. Some of the best things that have "happened" to me, happened because I started off by thinking and saying yes. 

 

However, there are some forms of yes that may need to be excluded, such as:

• In some cultures no is seen as impolite, leading to a yes even when no is meant [confusion ensues]
• Many people say yes because they are unable to say no.
• Yes, but .... / Yes, maybe ....

So, say yes first. And mean it! This makes the thinking that follows more open. Feel free to think about why an idea will work. Play with it. You can always arrive at no later. Benefit from a big portion of pure and open YES in your life”!
I’m looking forward to your comments .... 

 

[@Ryan Jacoby - don't you mean "When in Doubt, Do!?] 

 

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Leading Innovation: Ignore your instincts, say "yes"
by Ryan Jacoby via do_matic

 (From Dean Terry's Flckr photostream shared herewith under the auspices of Creative Commons which says "yes.")

When in doubt, don't.

Almost every organization in the world struggles to design and bring new, valuable and cool stuff into the world. With their success, organizations evolve towards consistency and away from variance. As individuals, leaders follow suit. We develop all kinds of strengths and behaviors that help us to perform well at "consistency tasks".

To avoid being too smart, leaders looking to encourage innovation have to learn to catch themselves and overcome the urge to say "no."

Great innovation leaders learn to start with "yes." They see the possibility of new options, give the gift of emotional support for those bringing them new ideas and provide the instrumental support to help these new options progress. The strong ones survive anyway. 

See Chapter 16 of Oribiting the Giant Hairball ("The Office of the Paradox") for more on this.

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