In their Mckinsey article Creating growth clusters: What role for local government? Julian Kirchherr, Gundbert Scherf, and Katrin Suder make wonderful arguments about governments role of removing obstacles that the entrepreneurs face as much as it should be building infrastructure. They began by bringing out the role of governments at various levels – like at national level it may be to device policies that help create enterprises that eventually lead to job creation. The municipal level of government that actually works at the ground level with the businesses can pick up interesting insights about what is coming in the way of new businesses.
I agree with one of their arguments that the bigger role that governments can play is in removing obstacles that young entrepreneurs usually face. They bring out 4 enabling factors that governments can play a role in creating a business friendly eco-system their regions – talent, infrastructure, capital, and networks. Developing talent means investing in education and right kind of skill development, infrastructure can mean things like Internet availability in countries like India and physical infrastructure where and when needed, capital is well understood and networks is something of a soft factor that needs involving many stakeholders from the society and becoming a nerve centre for the people to come to for any need that can be served.
Network is something that is most important for the entrepreneurs and something that they can not demand objectively. They need mentors to be their bouncing boards, they need problem solvers, they need help in finding right talent ( remember lot of new age companies have no traditional source to go to for talent and its not easy to attract good talent to a startup unless the founder has done couple of successful exits) and most importantly they need references for their initial set of customers. In the above article, authors suggest that governments need to hire talent from the business world, preferably established entrepreneurs to run their startup labs as the pace of doing things in the private and the public sector differ and that can be a deterrent to the startup economy.
Couple up reading this article with an interview with Klaus Wowereit, the Mayor of Berlin on how they scaled up a startup community in the city and their future plans.