How Cities can Help High Growth Companies Flourish

29 January, 2016 / Articles

Gazelles – companies that show 20 percent revenue growth annually for four consecutive years, starting from a revenue base of at least US$1 million – may be scarce on the landscape, but they are incredibly productive. The fastest-growing 1 percent of firms generate 40 percent of new jobs in the U.S. economy, according to white paper issued by 2015 Strategic Innovation Summit: Enabling Economies for the Future at Harvard University.

Over the past three years, for example, the 10 fastest-growing companies in Ann Arbor, Michigan, created 26 percent of the job growth in southern Michigan. Nationally, from 2002 to 2012, just 4 percent of U.S. companies generated 10.7 million jobs – coming close to matching the 11.7 million jobs created by the rest of the economy.

Cities hoping to foster high-growth businesses should recognize that gazelles exist in every sector of the economy. About 30 percent of them are in wholesale or retail. And they are not necessarily start-ups; the average gazelle is 25 years old.

Entrepreneurs creating gazelles pair fresh ideas with vision and know-how to innovate, launch concepts, and develop a viable business. They move quickly when new information arrives and the market shifts, building businesses that advance their industries and contribute to their communities.

These entrepreneurs and their companies are major disruptors of today’s competitive global market – and they are the major source of growth for their local markets. Innovation does not stop with their strategy or with the products or services they bring to market. Open platforms and the quest for globalization spark innovative partnerships with suppliers and employees, and even with competitors. And as gazelles grow, they preserve nimble cultures to keep the ingenuity flowing and engage the 21st-century workforce.

The communities in the top 25 future-ready economies, a list based on research from Dell and IHS Economics, focus on supporting these entrepreneurs through policies and programs that attract and nurture human capital; foster collaborative, growth-oriented commercial environments; and build enabling foundations of technology.

According to a report from the 2015 Strategic Innovation Summit: Enabling Economies for the Future, hosted by Harvard University, these policies must support more than just a start-up culture. Cities that want to grow can be even more successful by also focusing on the entrepreneurs and their companies that qualify as gazelles.

So how can cities help spur the growth of these companies?

Local Support

Although they may eventually expand regionally, nationally, and even internationally, most gazelles start out by servicing a local market. To help gazelles get off to a faster start, cities can develop local networking structures and help in attracting capital.

The lack of trained workers, specifically at the technician level, can also be a challenge for high-growth companies. Cities can stimulate local gazelle formation by promoting vocational-level education and encouraging collaboration between business and educational institutions. These private-public partnerships are being deployed in many future-ready cities to spur growth.

Access to Diverse Talent

Cities that create broader access to capital and counseling for entrepreneurs who come from traditionally overlooked communities will create a more robust local economy. For instance, it has been estimated that if female entrepreneurs had the same access to capital as their male counterparts do, 6 million jobs could be added to the U.S. economy over the next five years.

The hallmark of high-growth companies is their ability to identify new markets and innovative ideas. The different skills and viewpoints of a diverse workforce enhance those capabilities. Cities that attract and support diversity and provide strong education opportunities create new pools of talent to fuel these companies.

Networks

For gazelles to scale successfully, they must have access to business information and experience. Mentoring programs can give vital assistance to growing companies that are facing greater market and organizational complexity and seeing new opportunities for growth. These programs provide critical sounding boards for young businesses and help them move quickly. In England, for example, Dell and the University of Cambridge have launched a program to make the university’s high-powered computing capabilities available to small and midsize businesses, thereby lowering cost barriers and allowing those firms to accelerate their development.

Technology They Can Grow Into

To thrive, gazelles require technology that scales quickly and adapts rapidly to innovations and disruptions. A core philosophy of flexible, open technology has allowed Dell to help thousands of businesses move from start-up through a high-growth period to become large, highly scaled businesses.

Cities establishing that kind of technology infrastructure can attract high-growth companies, and the resulting positive ripple effects will create new opportunities for businesses throughout the local economy.

In addition to the obvious benefits of job creation, the presence of gazelles in an economy indicates a pairing of innovation and technology that shows growth potential – a strong sign of a future-ready economy.

Dell recognizes that entrepreneurship in its many shapes and sizes is the engine driving global growth. As a former gazelle that developed into a mature global enterprise, Dell has for years been focused on working with gazelles to develop future-ready economies. Dell invests time, money, and resources in these diverse companies to encourage technology innovation and to broaden technology democratization.

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