The Day After the Policy Idea: Now What?

Recently, the Kauffman Foundation hosted the third annual Mayors Conference on Entrepreneurship. Emily Fetsch did a very good tweet summary of the event.

Albuquerque Airport -- Mayors Conference

We ’ve had a lot of good feedback from attendees about the information they received at the event. For many attendees, this could have been the first time they had heard directly about the role of entrepreneurs in their community. For others, especially those who had attended last year in Louisville and the first year in Kansas City, they heard new perspectives and lessons on fostering entrepreneurial ecosystems.

Yet many of those who gave us positive feedback also expressed some level of frustration, often in the same breath. This frustration was usually a variation on two themes.

First, a mayor: “This information is great, and I’m excited to go home with this new lens of entrepreneurship and entrepreneurial ecosystems. But as soon as I go home, I’ll be sucked right into the daily cycle of crisis and meetings. Some more tactical, quick-implementation ideas from you would help manage this.”

The second, related frustration went like this: “These are great ideas, and I’m going to go home and change my economic development approach. But how do I implement all this? How do I, for example, fight against ‘incumbent protection’ or get philanthropic organizations in my city passionate about entrepreneurship? What’s the path from what I’m hearing here and what I actually do back home?”

Such frustrations are not unique to mayors and they’re felt by anyone who attends a conference, gets excited about something at the conference, and then has trouble sustaining or acting on that excitement when they get back to the office. And, for those of us who work hard on preparing a presentation for the conference, it can take time to  realize we’ve only provided a fraction of what would be valuable to those listening.

Underneath the immediate sentiments, there also seem to be some undercurrents that we would do well to highlight. Part of the frustration might relate to political realities. Entrepreneurship is not a purely economic phenomenon—it falls squarely in the old-fashioned discipline of political economy. Many efforts to promote entrepreneurship in a given city or region wither on the vine once people realize that entrepreneurship entails competition and competition means there will be losers. The losers might include some established businesses that currently dominate a city.

It’s one thing to say to a group of mayors: celebrate your entrepreneurs! It’s another thing for a mayor to go home and figure out how to navigate the Scylla of incumbent firms and the Charybdis of negative effects that entrepreneurship might have.

Another undercurrent of the frustrations is that, from the perspective of a policymaker, it’s not always obvious what kind of resources you have at your disposal to help entrepreneurs. Talk to entrepreneurs and the litany of challenges they face might include access to capital, finding workers, navigating regulatory mazes, developing customers, finding suppliers, and locating mentors and peers. Not all of these lend themselves to the ministrations of mayors, city council members, city managers, and county executives.

As a default, many local policymakers turn first to what they might be able to influence: fees, processes, taxes, and real estate. Fees and processes certainly matter, and fewer of them would often be better from the perspective of those setting up a business. Some efforts to address procedural complexity may create their own complications. One conference panelist said there was such a proliferation of “one stop shops” in various cities that he heard one city official say they needed a “one stop shop for the one stop shops.”

Streamlining processes is easier said than done—it can be hard to justify simplifying some processes but not others and vested interests may have grown up around an excess of process, both inside and outside government. At a conference this summer, I heard a law professor say that in his city, consulting firms had popped up purely to help new and young companies navigate local ordinances because they were just too convoluted for non-specialists to understand. Such regulatory arbitrage was a flashing neon sign that procedural simplification was badly needed, but that would also mean putting those consultants out of work.

Taxes matter to different kinds of businesses in different ways, and it can be hard to know where to start, let alone figure out where some of the foregone revenue will come from. Real estate developers are usually among the most politically powerful interests in any American city, so if mayors are looking for ways to help entrepreneurs, there will undoubtedly be some new real estate ideas in the offing. It’s not always clear, however, who will really benefit from new real estate projects, and how different types of entrepreneurs can be served by them.

It’s often said that what sets entrepreneurs apart from others is that, while lots of people come up with new ideas, only a few people actually implement those ideas. Mayors do not lack in the will and capacity to execute, but they apparently lack guidance in what to execute when it comes to entrepreneurship. In a future post, I’ll explore policy “experimentation” as a way to bridge this gap.

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