Small Business is the Problem, Not the Solution. Scale Up Instead.

The startup movement has failed, but not necessarily for the reasons most believe. Roughly 50 million new companies launch globally each year. More than 75 percent crash and burn. And often, it’s not the tough market, wrong team, lack of product-market fit, deficient capital, or any combination of the infinite circumstances most often blamed for entrepreneurs’ bombed businesses. Starting up is deceptively easy. Scaling up is vastly harder – but according to global entrepreneurship expert Daniel Isenberg, sustained success won’t happen without it.

Author of “Worthless, Impossible, and Stupid: How Contrarian Entrepreneurs Create and Capture Extraordinary Value,” he argues that “Starting up a venture is just the baby step on a long hard trudge to scale up… Without the ability to scale way beyond start, all the blood, sweat and tears (and money) will be flushed down the drain.”

Isenberg, founding executive director of the Babson Entrepreneurship Ecosystem Project, looks at entrepreneurship in terms of extraordinary value creation and capture, and extraordinary value creation, he says, cannot occur without growth. “Growth entails developing a powerful sales and marketing machine, building an organization by hiring and managing diverse groups of people, and knowing how to acquire strategic inputs such as the right kinds of capital and supplier,” he explains in a Harvard Business Review article, “Focus Entrepreneurship Policy on Scale-Up, Not Start-Up.”

“Growth requires amazing amounts of energy and dedication, not to mention smarts. Forward-looking policy, as well as culture and the private sector must support all these skills and resources more than it does at present.” Isenberg believes societies’ leaders continue to wrongly hail small business as the backbone and lifeblood of our economy. Instead, they need to re-balance entrepreneurship policy toward scale, not start, and foster complex entrepreneurship ecosystems in which high growth firms can take root and thrive.

“The true enemy of growth is stagnation, and the reality is that most small businesses are stagnant,” he says. “You can’t call something entrepreneurship unless it is driven by big vision, big aspiration and a burning desire and ability to grow.”

Isenberg is a popular contributor to Harvard Business Review. Read his column calling for bigger bets on high growth firms, not small business. You might also be interested in his latest piece about entrepreneurship and inequality.

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