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Dear Santa, Please bring economic recovery…

Topic: Entrepreneur Evangelist | Comments (1)

Posted on December 7, 2009 by admin

Santa Claus Shopping SpreeI have a friend who, until a year ago, was living in a small Appalachian town.  She had hoped to open a small cafe, in response to the lack of social venues in the rural community.  Unfortunately, the former mining town has not been able to find a new source of economic stability, and so she changed her plans and moved to Texas where she felt sure she could find more opportunities to start and grow a successful business.

One of the most compelling stories she tells of her time in the small town, though, was about a town council meeting in which the topic of conversation was limited to “how to bring mining and manufacturing back” to their community.

When I see the list of companies the White House had on hand to discuss job growth last week, my friend’s story is what I think of.  It’s like watching Rupert Murdoch claim that the solution to the newspaper industry’s woes is simply to cut Google out of the loop.  It is stubborn Industrial Age thinking that flies in the face of everything we know to be true in the Information Age.

Amy M. Wilkinson, a Senior Fellow at Harvard University Center for Business and Government and a public policy scholar at the Woodrow Wilson Center, wrote an exceptional op-ed for CNN on Friday that eloquently makes the point:  it is not big business that is going to be our future economic recovery, it is entrepreneurs.

There is a common warning that financial experts will give small businesses: do not ever let too much of your revenue be tied to a single client.  Of course, the danger in that is obvious: if something causes that client to disappear, then your business is devastated.  The more subtle danger, though, is that if a single client is responsible for too much of your survival, then the distribution of power is entirely in their favor.  They say, “Jump!” and you are stuck asking, “How high?”

For a century this is how the economy has functioned: large industries said “Jump!” and policy makers had to ask, “How high?”  Last week’s White House summit was an homage to days gone by, and yet no one seemed to recognize it.  Once again, we all fell into our old habits and assumed that big industry’s leaders were the people who should be in the room, who should be helping to shape policy, who should be the best informed about what works and what does.

And yet they aren’t.  Big business is not the future.  Nobel Prize winning economist, Ronald Coase, posited that the size of the firm is dictated by the cost of information.  Everything we have witnessed over the past two decades has continued to confirm the economic implications of that theorem: in a world of affordable communication vehicles, a firm no longer needs to be large to be impactful.  And the more mobile and electronically-based we get, the less relevant a traditional firm model becomes.

Despite the fact that we see this daily with the success of firms on the cutting edge of the information economy — large ones like Google, Amazon and Salesforce, as well as smaller ones, like WorkingPoint, Zoho and SocialText — culturally we continue to cling to the realities of last century when it is time to fix things.  We are like grownups who write Christmas Wish Lists to send to Santa, even though we know better.

Economic recovery isn’t something that Santa Claus is going to leave in our collective national stocking or under our tree.  We need to stop relying on the tactics that worked 30 years ago, and start recognizing that in an information economy, it is not the AFL-CIO or General Motors that is going to pull us up by our bootstraps.  It’s the mom-and-pop dry cleaner and the tech startup that begins in someone’s spare bedroom.  We need economic policies that recognize that reality, and to stop deluding ourselves that “too big to fail” is anything but an outdated failure.

Alora Chistiakoff is an entrepreneur, content strategist and project manager who has been developing online business and technology for startups for more than a decade.  She co-owns The Indigo Heron Group, Inc., a content strategy firm in Austin, Texas.