OPINION:We need more successful start-up companies to create the next generation of Irish entrepreneurs, writes CHRIS HORN
IN LAST Friday's Irish Times, I wrote in Innovationmagazine that Ireland has a great foundation. "We have many multinational companies present in the country, and are thus jealously viewed by competing jurisdictions. Our economy is open to enterprise and innovation . . . Our glass is thus half full. How do we fill the rest of it?"
We have more than 400,000 unemployed. We need to make an immediate improvement. Also, we need to build economic growth which can be sustained long term and be resistant to the vagaries of competing locations worldwide for enterprise investment.
Our work in the Innovation Taskforce since last July has been focused on these challenges. The smart economy cannot provide all the answers, but we believe it can be one major component of a solution to our faltering economy. The smart economy can create jobs directly in the economy, but can also indirectly sustain jobs in ancillary services (such as accountancy and law) and in consumer purchasing (retail and recreation). Innovation is applicable across our economy, including the public sector. Nevertheless, innovation which creates new offerings – services, products, and business processes – for the global export market, best stimulates our national income.
Let’s start with the multinationals operating in Ireland. Other jurisdictions are extremely envious of the breadth and quality of multinationals that we have been able to attract. Our multinational footprint is a considerable competitive advantage that creates opportunity for collaboration – in its widest sense – with many of the best companies in the world, and also with younger companies emerging on the global stage.
But we cannot be complacent. We have already lost some manufacturing and assembly operations to other countries. What will continue to attract and retain multinationals to Ireland ?
I believe there are three complementary strategies. The first is called “convergence” in the taskforce report. There are opportunities for collaboration between the multinationals operating in Ireland, even between direct competitors, to explore the overlap of new technologies.
The second is identified as “flagship” projects in the taskforce report. These are major collaborative projects in which an open consortium of companies (both foreign multinationals and indigenous) develop a solution for a major societal challenge for which Ireland can be the first customer, but also with key global export opportunities.
The third is collaboration with Irish based start-ups, including creating a large pool of acquisition possibilities in Ireland. In general corporate strategists within a multinational prefer to acquire an innovative business which has proved that there is a significant market for a new technology, rather than themselves licensing raw technology itself directly out of the academic community.
How about our own indigenous companies? The scaling of our most promising indigenous companies has been among the highest priorities of Enterprise Ireland in recent years. Growing companies to global Fortune 1000 requires capital. Engagement with top tier and world class risk capital is now one of the critical changes needed in our enterprise policy. The Taoiseachs Innovation Fund, announced last year, is a key catalyst. In the taskforce report, we also recommend a European Accelerator to provide further motivation for tier one risk capital to engage with Ireland. Such an accelerator will also further increase Irish based skills in international marketing, sales and channel management. Even more critically, it can immediately create further jobs in Ireland.
It is one thing to successfully scale a number of indigenous companies. It is another to sustain them as global champions. Global industries are intensely competitive. In general, Fortune 1000 companies successfully sustain themselves by acquiring exciting and dynamic younger companies which are proving new markets based on innovative offerings. Thus, if we are to sustain our own scaled, indigenous multinational companies, then we need to create a large pool of acquisition possibilities for them in Ireland: this precisely matches one of the three strategies above to embed foreign owned multinationals operating in Ireland.
So: start-ups are fundamental to both embedding multinationals in Ireland and to sustaining our own growing companies. We need start-ups as a pool from which our own candidate Fortune 1000 can continue to emerge. We need start-ups to help sustain our own indigenous multinationals for the long term. We need start-ups to help embed foreign owned multinationals in Ireland.
Start-ups can take raw academic intellectual property and convert it into commercially viable offerings. Successful start-ups inspire others to try their own luck, so enlarging our pool of entrepreneurs and innovators. Serial entrepreneurs create a steady stream of innovation. Successful start-ups also release experienced founders and senior managers, with a global network of business contacts, to become mentors, coaches and business angels for the next generation of entrepreneurs.
Not all start-ups succeed. If you have not failed, perhaps you are not trying hard enough. Both failure and success breed experience. The greatest failure is when an entrepreneur who fails does not pick herself up and try again. We should expect failures in a successful innovation economy, and we should encourage bona fide failures to absolutely start again.
The more start-ups we nurture, the more serial entrepreneurship we create; the more spin-outs from indigenous companies we create; the more successes we will have; and the more that others will be strongly tempted to try their own luck. We need to build a positive feedback loop to drive our smart economy: by priming the engine appropriately, it can gain its own self-sustaining momentum and lead to an exponential growth of jobs.
Thus there are three main and interrelated themes to our smart economy: enhance and embed the multinationals; grow but also then sustain our own cohort of Irish founded multinationals, and develop a large dynamic pool of exciting young companies.
The environment for these themes must be supportive and catalytic: our education and training system; our legislative system, including intellectual property and bankruptcy; our infrastructure, including broadband and “wet” laboratories; our public interest in innovation and creativity; our support for entrepreneurial activity including encouraging failures to try again; and most of all, our national pride.
Chris Horn is co-founder and former chief executive of Iona Technologies. He blogs at http://chrisjhorn.wordpress.com/