Everyone is talking about jobs — and how to create them. CEOs know better than government leaders where jobs are actually hatched. They’re never hatched by big business but rather by start-ups and “shoot-ups.”
Currently, about 500,000 businesses start per year. This number is declining, but it is where authentic organic job creation honestly exists. The second and last place where authentic organic job creation exists is in shoot-ups. Shoot-ups are the 5 percent within the existing 6,000,000 small to medium-sized operating businesses in the United States. Too few leaders in Washington know that while there are only 1,000 “big” companies, defined by 10,000 employees or more, there are 6 million small businesses that actually create most of the total jobs and all of the new jobs. All the new job creation occurs in start-ups and shoot-ups.
CEOs are paid to run their companies. But they are also tasked with energizing their headquarters communities. CEOs are the head coaches for their towns. They are what I call the “local tribal chiefs” for all good that happens…or doesn’t happen. When Gallup studies cities, we notice that there is huge variation by city. Meaning that some cities are doing very well, even during these tough times, while others are slipping into a new found Hell. Think of the difference between Detroit and San Francisco. Or the difference between Minneapolis and St. Louis. Or the difference between two non-strategically located state capitals — Austin and Albany.
Local leadership tends to explain most of the variation.
The most influential local leadership is the business leaders. The local power CEOs. They form a sort of good shadow government. When they do their local chieftain jobs well, the community is vibrant. Vibrant for citizens but especially for entrepreneurs. Nobody can influence almighty entrepreneurship in a community like the local power CEOs. Exactly what they can do is build every strategy and every decision, made by any leader in government, education or business around start-ups and shoot-ups.
Here are four key points for CEOs who care about the future of their cities and thus the American economy:
- Every decision, large or small, must make a significant contribution to building an environment that inspires entrepreneurship, or it has little to no value to your city.
- Local tribal leaders have to build networks of fans of free enterprise that love finding a future star rainmaker as much as many currently enjoy finding a great upcoming quarterback. If 10,000 city tribal chiefs went on a manhunt and womanhunt for the greatest entrepreneurs in their areas, found them and developed them, the United States economy and jobs would suddenly be coming back rather than slipping away.
- The best city leaders will build venture capital groups to ignite start-ups and shoot-ups. The best city leaders will build teams of local savvy mentors from businesses, banks and universities to alter the speed and course of this economic phenomenon.
- The best city leaders will start early with the entrepreneurial education and mentoring and interning programs. Financial literacy and courses on how-to-run-a-business should be initiated and supported starting in the 5th grade. These are the future players. The future Hall of Fame quarterbacks are right there waiting to be developed.
When I do the math on how many city tribal leaders there are in America, the back of the envelope math puts it right at 10,000. About 10,000 “good” shadow leaders in the top 100 American cities. If someone said, from all your research, who exactly either wins the upcoming play-off game for our very freedom, my answer would not be the President of the United States or Congress…it would be these 10,000 super CEO type local leaders.
And by the way, American CEOs absolutely must get all of this right. Because China really is coming.
Facts and Figures About Jobs
- Thirty million Americans are unemployed or underemployed — in otherwords, 30 million Americans don’t have a good job.
- Of those 30 million, 18 million people report that they have no hope of finding a job; many of them also have no hope of paying the mortgage, feeding their children or buying gas for the car to get to a job interview — and they have no reason to think things will change.
- America needs five million new good jobs right now and a minimum of 10 million new good jobs, net gained, within five years.
- Almost all new jobs are created by startups and small and medium-sized companies.
- Student graduation is one of the most definitive predictors of a city’s future innovation, entrepreneurship and subsequent job and GDP growth.
- There are three key energy sources of job creation in America: the country’s top cities, its top 100 universities and its 10,000 local tribal leaders.