The promise of digital entrepreneurs Creating 10 million youth jobs in the G20 countries Contents
3 Foreword
7 Executive Summary
13 Chapter 1: Entrepreneurs thrive on digital open innovation
22 Chapter 2: The rise of entrepreneurs that are “born global”
29 Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries
37 Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified
46 About the research
48 Acknowledgements
49 Sources
50 Survey results by country Foreword 3
Foreword
Young entrepreneurs are the driving force behind job creation in the G20 countries. Powered by their relentless efforts to innovate and embrace digital technologies, they are committed to achieving strong growth and job creation. Key to their success are the innovation ecosystems shaped by large companies and other “bridgemakers” that help entrepreneurs translate their ideas into marketable products and services, fostered by business-friendly government policies. Indeed, new Accenture research concludes that 10 million more youth jobs could be created in G20 countries if existing barriers to entrepreneurship were lifted.
Pierre Nanterme These are among the major findings The research also indicates that today’s Chairman & CEO, of this report, “The promise of digital young entrepreneurs are “born global.” They Accenture entrepreneurs: creating 10 million youth believe strongly that global expansion is jobs in the G20 countries” published important to job growth and that digital by Accenture and the G20 Young technologies facilitate such expansion. Entrepreneurs’ Alliance. The report—based In fact, 70 percent of entrepreneurs on a survey of 1,080 entrepreneurs in who launched their firms in the past all G20 countries as well as workshops, 12 months are already contemplating online forums and expert interviews—looks international expansion. However, as they at the critical role that open innovation, strive to localize offerings in new markets, globalization and access to skills and entrepreneurs are often faced with a severe talent play in helping entrepreneurs shortage of people their business demands. achieve the scale required to create jobs and grow. It also examines the barriers to In order to remove barriers to growth, entrepreneurial success and recommends business and government must work actions that can help entrepreneurs together to find solutions. Most public overcome big challenges. policies are largely fragmented and considered insufficient by the entrepreneurs Among the entrepreneurs surveyed, 83 we surveyed. Only a fourth of the percent believe that innovation, especially entrepreneurs believe the actions taken technology-fueled innovation, is vital by their government to support Bruno Berthon to grow their business and create jobs. entrepreneurial innovation and youth job Managing Director–Accenture Strategy, For example, SMAC technologies (social, creation are relevant and efficient, and Cross-Industry Strategy Lead mobility, analytics and cloud) enable one-fifth believe their government has entrepreneurs to build new business models, not done enough to support their participate in the sharing economy and international expansion efforts. create solutions that answer critical needs, such as remote health monitoring, at an affordable cost. 4
Stepped-up action is required on a number More than three-quarters of the Every large enterprise has of fronts. Beyond the traditional, yet entrepreneurs we surveyed see open an opportunity to become a fundamental, “ask”—increased access innovation as a key enabler, and they to funding, simplification of red tape, welcome collaboration with large bridgemaker. The more we can do increased tax incentives and labor market companies, customers, R&D institutes, to foster the growth of our young flexibility—new topics of discussion incubators or accelerators, non-profit entrepreneurs, the greater the are emerging that reflect the changing organizations and other start-ups. These chances that economic vitality will economy. These include: a greater focus on collaboration partners play a critical return to the G20 economies. producing science, technology, engineering role in the innovation process. They are and math (STEM) graduates; a stronger bridgemakers that serve as the conveyor effort to foster an entrepreneurial culture belt between the supply of innovation among young people; a harmonized (entrepreneurs) and the demand for it framework to support the international (customers and governments using it). mobility of data; lending support to the emergence of the sharing economy and of Accenture is an integral part of the the “social entrepreneur,” and development innovation ecosystem. We have created of international funding networks. many programs designed to develop and promote innovation, including an open Clearly entrepreneurs cannot achieve innovation ecosystem with universities, success by themselves. In order to innovate, technology partners and clients to globalize and attract the right talent, they accelerate the development of start-ups. need adequate support from regulators, We are delighted to partner with the B20, and they need to be part of a vibrant the G20 Young Entrepreneurs’ Alliance entrepreneurial ecosystem. and governments to provide inputs and recommendations and to make sure that entrepreneurs are represented in the evolving policy environment. Foreword 5
In December 2013, Australia assumed the role as Chair of the G20, a position that is surrounded with immense responsibility and complexity, but more importantly, the potential for a significant and enduring positive impact on the world’s future.
The priorities under Australia’s G20 chairmanship (sustainable and inclusive growth, employment, investment in infrastructure, trade, driving the commercialization of innovation and increasing the participation of women in the workforce) are all outcomes that result from building ecosystems that create and enable high-growth entrepreneurial small and medium enterprises (SMEs). Investment in SMEs is essential for the G20 to Jeremy Liddle Entrepreneur & President, achieve the 2 percent increase in global GDP committed to in 2014. G20 YEA Australia
The G20 Young Entrepreneurs’ Alliance The G20 YEA is very pleased to assist and (G20 YEA) is a collective of leading build on the acknowledgement of youth and entrepreneurship NGOs representing more entrepreneurship in the 2013 G20 leaders than 500,000 entrepreneurs across G20 declaration, B20 human capital taskforce, countries and the European Union that T20 and Y20 recommendations. We are have already created an estimated 5 very encouraged by the commitment of million jobs. In 2014 more than 400 the G20 employment working group to young entrepreneurs and leaders from address youth unemployment in their 37 countries selected to represent the employment plans. We extend heartfelt voice of the world’s future business leaders thanks to Robert Milliner, Mike Callaghan attended the G20 YEA Summit in Sydney and Holly Ransom for their leadership, from 18th July. guidance and collaboration. We hope to see the relationships with these official It has been very encouraging to see Aaron engagement groups continue to improve McNeilly, Sherpa for G20 YEA Australia, throughout 2014 and into Turkey’s leading a positive engagement with The chairing of the G20. Hon Bruce Bilson, Australia’s Minister for Small Business. We are very pleased We are particularly thankful and excited to host the Minister at the G20 YEA about the depth, strength and impact of our Summit in representation of the Australian partnership with Accenture and we hope government. We are also very grateful for that this is a long and enduring partnership the positive and encouraging words from that continues to create positive impact for Prime Minister The Hon Tony Abbott and many years to come. the work of the Office of the Prime Minister and Cabinet in assisting and facilitating the G20 YEA’s Government engagement. 6
Youth unemployment has reached critical level to potentially become a political ticking bomb. Recent reports from international organizations keep highlighting the vital role that the SME sector plays in job creation in the G20 countries, with SMEs being responsible for more than two- thirds of employment in the private sector and providing more than 80 percent of net job growth.
It is vital to create the conditions for ‘champions’ to emerge, given that the 5 percent of entrepreneurs who grow the most create over 50 percent of the total number of new jobs created by entrepreneurs.
Jean-Louis Grégoire In the G20 Young Entrepreneurs’ Alliance, • Pinpoint the barriers entrepreneurs Committee Chair, we passionately believe that entrepreneurs and SMEs face G20 YEA Partnership and Thought Leaders have their say in the youth employment • Identify best practices and provide challenge the G20 countries face, both recommendations for consideration from developed countries and emerging when forming policy and regulations countries. To take full advantage of the locally to encourage job creation benefits entrepreneurship can bring, the by entrepreneurs G20 governments need to take some decisive action. In order to prepare We are pleased to present you with concrete proposals, the G20 YEA the results of this study conducted by commissioned this report to: Accenture and we hope that the ideas presented here will serve as a guide for • Measure the impact of areas such as government members, policy makers trade and globalization, technology and key opinion leaders to unleash innovation and skills and human sources of job creation for the youth capital development to trigger in the G20 countries. growth and foster employment
About the G20 Young Entrepreneurs’ Alliance Summit The G20 Young Entrepreneurs’ Alliance (G20 YEA) is a collective of leading entrepreneurship not-for-profit organizations representing more than 500,000 entrepreneurs across G20 countries who seek to promote youth entrepreneurship as a powerful driver of economic renewal, job creation, innovation and social change. Country members include: Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, South Korea, Saudi Arabia, Turkey, the UK, the US, South Africa, Argentina and the European Union. Executive Summary 7
Executive Summary Young entrepreneurs are the G20 countries’ job creators.
According to OECD research1, young firms (those five years old or younger) generated nearly half of all new jobs created in the past decade, while accounting for only about 20 percent of non-financial business sector employment. During the crisis, most of the jobs destroyed were the result of established businesses downsizing, while net job growth in young firms remained positive.
Given the preceding, it’s not surprising Ninety-one percent of those saying In the process, they are having a that entrepreneurs in 2014 continue innovation is critical or important significant impact on businesses in all to consider themselves a key driver of to them also plan to create jobs in industries, as companies focus on new the economy. Research conducted 2014—compared with 61 percent of ways they can weave these technologies by Accenture and the G20 Young those who don’t find innovation critical into the next generation of their business Entrepreneurs’ Alliance (G20 YEA) or important to their business. strategies. Like their big-company found a majority (62 percent) expect counterparts, most entrepreneurs plan to post revenue growth of more At the heart of entrepreneurs’ innovation to invest in digital to not only improve than 5 percent, and 85 percent say and economic competitiveness lie the top line by seizing substantial they are critical to creating jobs for digital technologies: social media, new growth opportunities, but also young people in their country. mobile computing, big data, cloud, make their processes more efficient “the internet of things” and the and reduce their operating costs; to a The Accenture–G20 YEA research also like, which most entrepreneurs have large extent, every young entrepreneur discovered the more innovative young enthusiastically embraced. Emerging in is now a digital entrepreneur. entrepreneurs are, the more confident the past five years, these technologies they are in creating jobs. are now reaching a critical mass. 8
Barriers to scaling limit • Breaking through country borders. In fact, if these and other barriers to entrepreneurs’ ability to Although internationalization is growth were removed, Accenture models create more jobs an important driver of scalability, indicate that entrepreneurs could create too few start-ups have the tools to approximately 10 million jobs for young But fulfilling their potential as effectively expand beyond their people, the most chronically unemployed economic engines and job creators is home countries, although a sector of the G20 active population. The only possible if entrepreneurs can scale majority want to. knock-on effects across the economies their business to become champions would be widespread and substantial. in their industry. Typical scalability • Securing the right skills. challenges cited by entrepreneurs Having the right talent on board is In the report for this year’s G20 Summit, participating in Accenture’s research one of the most critical drivers of Accenture focuses on how to help include the following: start-up growth, but the required skills can differ considerably, entrepreneurs fulfill their growth and job- • Gaining access to funding. depending on a company’s stage creation potential. The report looks at the Ideally, sufficient funding is available of development. role three factors can play in fostering to generate early-stage growth, but scalability—open innovation, globalization capital needed to grow further Ten million new jobs can be created and access to skills and talent. It explores the critical role large companies and remains too limited in most cases. by fostering vibrant technology- other enablers called bridgemakers play in • Perpetuating innovation. enabled ecosystems (entrepreneurs, accelerating entrepreneurial growth. And While innovation is part of the DNA large companies and other it discusses a set of recommended policy of the founders of entrepreneurial bridgemakers) and business- actions that create a more nurturing businesses, scaling distribution and environment for entrepreneurs and help sustaining an innovation mindset as friendly government policies them achieve their business goals. the company grows can be difficult. The significance of these barriers cannot be overstated. They are some of the biggest obstacles preventing entrepreneurs from having a greater impact on unemployment.
The promise of digital entrepreneurs: creating 10 million youth jobs in the G20 countries
48 IF BARRIERS WERE REMOVED 46 44.3 44.2 44.3 44.9 44 41.8 42 40 UNEMPLOYED 38 10M YOUTH NEW 36 (MILLIONS) JOBS 34 31.3 32 30 28 26 2011 2012 2013 2014 2015 2016 2017 If barriers were removed (Accenture estimates, millions) Unemployed youth — million (ILO historical) Unemployed youth — million (ILO forcasts)
Source: Accenture Research scenario based on historical ILO Global Employment trends2 Executive Summary 9
Entrepreneurs thrive on digital open Business incubators, private or publicly The new generation of innovation: partnering with large backed, have long been vital resources entrepreneurs is “born global”: companies accelerate translating for start-ups, offering a wide range bridgemakers can accelerate of resources and helping shape the ideas into marketable products access to local markets entrepreneurial ecosystem. Increasingly, According to the Accenture–G20 YEA however, large companies are realizing In addition to innovation, the Accenture– survey, the vast majority of entrepreneurs the mutual benefits of open innovation G20 YEA survey found that entrepreneurs believe innovation is critical to their and are expanding their role in the are using globalization to help fuel their ability to grow and create jobs. entrepreneurial ecosystem. Some have growth. International expansion is on the However, the survey also revealed now developed their own accelerator minds of most entrepreneurs surveyed, that innovation does not flourish in programs to provide venture capital irrespective of their size. The newer the isolation: Entrepreneurs innovate as funds, mentoring and access to their companies, the more global their mindset: part of an “open” innovation ecosystem marketing and sales resources that can seven in 10 companies launched in the that includes many different parties far help entrepreneurs translate their ideas past 12 months already think about global outside the walls of the organization. into marketable offerings customers can expansion as a source of growth, a much purchase. Indeed, entrepreneurs benefit higher proportion than older companies. Evidence of entrepreneurs’ “openness” is most when large companies play the role seen in the extent to which entrepreneurs of bridgemaker. New technologies are helping collaborate with others. Nearly nine make globalization a reality, as in 10 indicated they collaborate with Large-scale open innovation is boosted they dramatically open up markets, customers to co-create offerings, by the rise of new digital technologies, reduce the costs of international while between one-half and two-thirds which support participation by a large expansion and increase the flexibility said they collaborate with a variety number of geographically dispersed of operations. Almost three-quarters of organizations—including public participants and provide opportunities of surveyed entrepreneurs who plan institutions or governments, academics or to create new business models. In fact, to expand internationally felt that universities, R&D institutes, incubators or every entrepreneur is now a digital digital technologies are important accelerators or non-profit organizations entrepreneur and many of them are to the success of their international (such as foundations). Just under three- focusing their innovation efforts on the expansion. Digital provides a global quarters said they collaborate with so-called “sharing economy”: business springboard for entrepreneurs with peers or other small businesses or models that heavily use digital platforms innovative products and services to with large companies. to enable consumers and businesses access new markets, cross-border to actively share and exchange assets, financing and global ecosystems. These collaboration partners play a products and services for mutual benefit. critical role in the innovation process: The rise of the sharing economy has been They are “bridgemakers,” serving as the driven by an explosion of start-ups and key link between the supply of innovation widespread experimentation between (entrepreneurs) and the demand for it large companies and entrepreneurs. While (customers and governments using it). profits thus far for most sharing economy businesses have been limited, sharing- based enterprises have great potential to transform the larger economy across the G20. 10
Importantly, firms considering Entrepreneurs succeed or fail More than half of entrepreneurs also international expansion a priority expect on talent: skills shortage hits highlighted the relative costs for them to faster revenue growth than their locally entrepreneurs hard hire and train young people—a cost they focused peers and as a result, expect often find difficult to afford when scaling A third key lever in the success of to create more jobs. Interestingly, they their business—and they cited the lack entrepreneurial ventures is talent. Yet typically expect to create more jobs of incentives targeted at hiring young according to the Accenture–G20 YEA at home than overseas as a result of people as an impediment to growth. survey, a number of barriers make it international expansion: creating jobs difficult for entrepreneurs to hire as at home and abroad is not mutually Labor market inflexibility and government strongly as they could, which in turn is exclusive; on the contrary, it is a mutually regulations and compliance requirements preventing entrepreneurs from doing reinforcing virtuous circle in most cases. were also seen as barriers to hiring by more to spur employment across the G20. 48 percent and 43 percent of But the challenges of localizing their entrepreneurs, respectively. Whether the firm is large or small, offerings in new markets remain availability of appropriate skills is the significant barriers to success, especially To be sure, some entrepreneurs find single biggest barrier to recruiting more for smaller firms. These challenges ways to overcome these barriers young people. Six in 10 entrepreneurs include finding the right partner, building and grow in spite of them. But many said difficulty accessing the right talent sufficient local market knowledge, more do not, which means many jobs was one of their top three recruiting understanding local regulations, finding are never created. However, if the concerns. In addition, 78 percent said local skilled resources, getting access three groups of main stakeholders they have challenges recruiting the right to affordable finance and containing (entrepreneurs, large companies and other skills in their development. The scarcity of logistics costs. bridgemakers), enabled by governments, talent was felt by entrepreneurs in both can develop coordinated actions at scale, manufacturing and services, as well as Bridgemakers and, in particular, entrepreneurs will generate significantly firms both young and old. multinational companies have a key more jobs than they would if they are left role to play in enabling entrepreneurs to develop their businesses on their own. to address these challenges—by helping Accenture research and analysis shows entrepreneurs establish global business that this “3+1” virtuous circle could help relationship, gain access to foreign entrepreneurs create 10 million new investment and local distribution youth jobs2, which would reduce youth capacity, and enhance their unemployment from 13 percent overall credibility. to 10 percent.3 Executive Summary 11
Policy and regulatory issues For instance, they said governments And they believe governments can help also pose challenges: can substantially boost entrepreneurial them create more jobs via a variety entrepreneurs expect open innovation by: of efforts—including those that: budding G20 reforms • Simplifying regulations • Support vocational training to be amplified • Developing tax incentives to and apprenticeship Entrepreneurs believe governments encourage open innovation • Produce more science, technology, can play a major role in helping to • Opening public procurement engineering and mathematics eliminate barriers to starting and scaling to small businesses (STEM) graduates businesses. Governments themselves • Helping entrepreneurs access • Increase general labor market agree. Many have taken steps to provide funding at various stages in flexibility stronger support to entrepreneurs, their lifecycle • Foster an entrepreneurial culture enacting policies designed to help start- among younger people • Encouraging systemic approaches that ups get funding, expand globally, take enable entrepreneurs, large businesses, • Encourage development of more advantage of the digital infrastructure bridgemakers, and government to agile types of working environment and find and hire innovative talent. foster open innovation and youth and forms of employment job creation at the local level • Facilitate development of new But while welcome, those initiatives categories of companies focused are far from sufficient in the eyes of They think governments can foster on social outcomes as much as on global expansion of entrepreneurial entrepreneurs. Only about one-fourth economic and financial ones of all entrepreneurs surveyed think that companies through: actions taken by their government to As a key stakeholder in the G20 • New global trade agreements support entrepreneurial innovation are economy, governments must do all they relevant and efficient; one-fifth feel that • Boost international financing can to make it easier for entrepreneurs their government has done enough to • Programs that facilitate mobility of to create viable businesses and grow support their international expansion; and talent across borders them in concert with market demands. one-fourth consider the actions taken • Initiatives that encourage the by their government to support youth creation of communities or When they do, everybody wins. job creation as relevant and efficient. clusters of entrepreneurs across the G20 Entrepreneurs surveyed believe governments have significant opportunities to improve their performance in these three areas, and cited numerous actions they would like to see governments take to help them succeed. 12
Conclusion Definitions The economic challenges facing the G20 are indeed formidable. Businesses Innovation and governments alike must find ways Innovation is defined in the Oslo to remove the barriers to generating Manual as including product stronger, sustained growth and reducing innovation, process innovation, youth unemployment. marketing innovation and organizational innovation. Entrepreneurs represent a promising, Innovation is interpreted potentially landscape-altering, solution. by Accenture as “a new way of Historically the engines of economic doing things that adds value” in growth, entrepreneurial businesses can the fields listed above. help restore vitality to G20 economies by unleashing innovative products and Entrepreneurs services that can stimulate demand. Entrepreneurs are defined by the In the process, as they grow and scale OECD-Eurostat Entrepreneurship at speed, thanks to the possibilities Indicators Program as those offered by the digital transformation of persons (business owners) who economies, they can create millions of seek to generate value, through jobs—especially for young people. the creation or expansion of economic activity, by identifying But they cannot do it alone. To have and exploiting new products, the most success—and, by extension, processes or markets. In this the greatest positive impact on the report, the focus is on “employer economy—entrepreneurs need the help enterprises,” which are more of other influential entities. In particular, closely related to the notion of they need large companies that can entrepreneurship as a driver of help them accelerate their innovation job creation and innovation than efforts, bridgemakers that can help micro enterprises (those that connect their new ideas with customers, provide some form of subsistence and governments that can create a to the owner, usually self more supportive and nurturing policy employed and without employees). environment for fledgling and growing new businesses. Youth unemployment
Working together, entrepreneurs, large The International Labor companies, other bridgemakers and Organization defines youth governments can provide the momentum unemployment rate as the the G20 needs to restore economic number of unemployed youth growth and put people back to work. (typically those 15 to 24 years old) divided by the youth labor force (employment + unemployment). Specifically, the unemployment rate is a measure of the inability of an economy to generate employment for those persons who are not employed but are available and actively seeking work. Chapter 1: Entrepreneurs thrive on digital open innovation 13
Chapter 1: Entrepreneurs thrive on digital open innovation
“Innovation is not only in the entrepreneurs’ culture, it is the primary force underpinning company creation. What is at stake is to maintain creativity in the long run.” — François Bieber, CEO, Kwanko
Innovation is critical to the long-term But beyond being an engine of profitable Perhaps nowhere is innovation more success of any business. Without a growth for companies, innovation critical than in the entrepreneurial steady stream of new ideas, enterprises benefits the larger community. It plays an world. Innovation is the driving force for risk being passed by and eventually may important role in increasing the vitality entrepreneurs, who view innovation as face difficulties in growing. Innovation of an industry and society by creating critical to their ability to grow and create boosts a company’s top line by increasing jobs and raising the standard of living. jobs. Indeed, in Accenture’s survey of competitive advantage and customer entrepreneurs across G20 countries, 83 satisfaction and diminishing the chance Open Innovation—facilitated by percent said innovation is vital to grow of disruption by more forward-thinking their business and create jobs. digital technologies—is the fuel companies. Operationally, innovation helps enhance the bottom line by increasing for entrepreneurs’ growth More than 70 percent leverage or plan to efficiencies that save time and money. leverage mobile technologies (73 percent) or social media technologies (72 percent) Figure 1: to develop their business and more than Entrepreneurs who embrace Open Innovation create more jobs 60 percent do the same with data analytics (64 percent), cloud technologies (60 percent) or the Internet of Things Create new jobs in 2014 89% (62 percent). To a large extent, every 4 34% Increase in revenue growth 91% entrepreneur is a digital entrepreneur .
Increasingly, innovation as practiced by 76% entrepreneurs is largely collaborative and open in nature. Seventy-six percent of entrepreneurs surveyed by Accenture see 42% open innovation as an enabler of innovation in their business (Figure 1). Interestingly, those who consider that open innovation is a major enabler of innovation are also enjoying higher revenue growth Create new jobs in 2014 39% than the rest of entrepreneurs. 24% Increase in revenue growth 54%
This sentiment reflects the broader evolution of innovation—from Open innovation is a major enabler Sample base = All respondents (N=1,080) of innovation in my business structured and closed to something very Open innovation is an enabler entrepreneurial that extends far outside but not a major one the walls of the organization. Open innovation is not an enabler of innovation in my business 14
For decades, innovation was primarily the Such technologies also allow entrepreneurs In a workshop with domain of big institutions: governments, to test multiple forms of collaboration formal labs and large corporations. involving a wide range of players. entrepreneurs in Bangalore, the concept of the “angel However, as technology evolved and speed As shown in Figure 2, the largest customer” emerged as an became more critical, companies began percentage of participants in the Accenture especially important party involving more parties in their innovation survey (86 percent) indicated they efforts—a shift that became known as collaborate with customers to co-create with which entrepreneurs can “open innovation,” the term coined by offerings, while between one-half and collaborate. “People generally Henry Chesbrough in 2003. two-thirds said they collaborate with a speak of angel investors, but variety of organizations—including public it’s very difficult to get the “The prevailing logic was … if you want institutions or governments, academics something done, do it yourself,” Chesbrough or universities, R&D institutes, incubators angel customer,” said one said in 2011. “This logic of open innovation or accelerators or non-profit organizations participant. “You can also call turns that completely on its head. (such as foundations). Just under three- him a risk-taking customer Competitive advantage now comes from quarters said they collaborate with having more people working with you than peers or other small businesses or because he is experimenting with anyone else.”5 with large companies. with you. Customers who can actually, even if you only have Large-scale open innovation is now a prototype, take it to a level possible because the technology, especially social media and the cloud, exists to where they help you, they support participation by a large number work with you.” of geographically dispersed participants.
Figure 2: Entrepreneurs collaborate with a large variety of partners to innovate
Customers Key partner for innovation 14% 39% 47 % (E.g., co-creation) Some experience of collaboration No experience of collaboration
Peers / Other SMEs 27% 43% 30% Sample base = All respondents (N=1,080)
Large companies 28% 43% 29%
Academics / Universities, etc. 32% 40% 28%
Public Institutions / Government 34% 40% 26%
Non-profit organizations (e.g., foundations) 36% 43% 21%
R&D institutes 40% 37% 23%
Incubators / Accelerators 45% 34% 21% Chapter 1: Entrepreneurs thrive on digital open innovation 15
Bridgemakers—especially large Large companies, in particular, are Procter & Gamble is well known for its companies—play a critical role in extending their partnerships with leadership in open innovation.7 However, entrepreneurs to accelerate impact. other major companies across industries today’s open innovation ecosystem increasingly are providing entrepreneurs One of the hallmarks of open innovation Many continue to collaborate with with opportunities to collaborate on is the ecosystem that develops to entrepreneurs on innovation. For instance, innovation. For instance, General Electric foster and support ongoing efforts to 29 percent of entrepreneurs surveyed hosts an “Ecomagination Challenge” and conceptualize, develop and commercialize said large companies are key partners “Healthymagination Challenge,” open new ideas. This ecosystem, which is for innovation and another 43 percent innovation platforms that collect ideas for illustrated by the framework on page 16, have some experience of collaborating new projects from any potential partner, encompasses three key parties: those that with large companies. including individuals and small enterprises. demand innovation, those that supply it and Philips’ open innovation program draws on the parties that link the two groups, called For large corporations, collaboration on the capacities of individuals, organizations the “bridgemakers.” open innovation efforts can provide greater and even small start-ups from around the access to new technologies and highly globe to gain new insights and access to Bridgemakers play a critical role in skilled talent and decrease the cost of new technologies. Arla Foods collaborates today’s open innovation ecosystem: they R&D. In the process, it helps boost closely with universities, particularly many connect innovation supply with demand competitive advantage and lower the of the schools their researchers come to help entrepreneurs take a promising risk of being disrupted. For start-ups, from, by awarding young scientists at idea from concept to reality. Two types advantages include access to greater these schools an opportunity to get “pre- of bridgemakers—business incubators/ production and distribution scale, as well competitive knowledge” that can prepare accelerators (see page 17) and large as finance, mentoring, potential “charter them for their jobs after graduation. companies—are especially important in clients” and more robust marketing and And Danone Baby Nutrition focuses on helping entrepreneurs translate their sales resources, including additional finding partners that can bring relevant ideas into marketable offerings that credibility. It also gives start-ups a solutions to a pressing consumer need customers can purchase. connection to established brand names increase convenience to the consumer, 8 with market recognition and massive differentiation and competitive advantage. potential for increased revenue generated due to an influx of new and diverse ideas. Some corporations are going even further in their efforts to partner with entrepreneurs by leading or participating in an accelerator program (see page 19). 16
The framework for capitalizing on open innovation: bridgemakers connect supply with demand
Demand In fact, the supply side of the innovation • Foundations increasingly are playing a marketplace has never been more varied more active role in fostering innovation— The demand side of the innovation equation or more vibrant. Traditionally defined moving from simply providing includes the groups that require a constant, entrepreneurs and start-ups are major funding in support of innovation and fresh supply of innovation. While interest innovation suppliers, as are universities and entrepreneurship to making broader in the “new and improved” has always companies that employ teams of people to commitments to doing hands-on work been high, demand for innovation arguably pursue promising new ideas. Today, with the on innovation-related initiatives. has never been greater among the two growing use of open innovation, individuals primary groups that benefit from it: • Universities increasingly are themselves, acting as a customer, citizen consumers, who are looking for new complementing their role as a supplier of or student, also can be a significant products and services from companies innovation with bridgemaking assistance source of innovation. to improve their lives; and governments, in the form of various programs. which are seeking ways to help move society • Business incubators and accelerators forward through economic growth and job Bridgemakers have both become vital resources for creation and serve their constituents better Bridgemakers are the vehicles that facilitate start-ups. They offer a wide range through the use of innovative technologies the transfer of innovation from the creative of resources, such as office space, and practices. side to consumption side; in other words, professional services and business they help bring ideas to market. There are advice, and hands-on assistance that Supply many different types of bridgemakers across entrepreneurs need to succeed. the innovation spectrum: On the supply side are the entities • Corporations have broadened their role and people responsible for developing • Traditional venture capitalists (VCs) may from simply a supplier of innovation to innovations that meet the needs of the provide funding to help get start-ups bridgemaker. They can play different market. Supply of innovation is no longer off the ground. roles from traditional corporate limited to “ivory tower institutions”—labs, • Non-government organizations (NGOs) funding to participant or leader of an universities and corporate R&D units, also can be powerful catalysts for accelerator program. although those remain powerful suppliers innovation, forging relationships of innovation. It now can come from between the public and private sectors many different sources. to advance a particular goal.
INNOVATION BRIDGEMAKERS INNOVATION SUPPLY DEMAND
ENTREPRENEURS • High risk CAPITAL • High change velocity RESOURCES • Delayed economic value • Seek disruption EXPERTISE
THE NEW BRIDGEMAKERS • Labs • Venture Capitalists • Corporations • Universities • NGOs • Customers (consumers • Global reach and distribution • • Corporate R&D Foundations and businesses) • Access to local talent and skills • • Start-ups/entrepreneurs Universities • Governments • Economies of scale • Individuals (customers, • Incubators/accelerators citizens, students) • Corporations Chapter 1: Entrepreneurs thrive on digital open innovation 17
Incubators/accelerators endure as vital resources for entrepreneurs
Business incubators/accelerators have long become vital resources for start-ups. They offer a wide range of resources such as office space, professional services and business advice, and hands-on assistance that entrepreneurs need to succeed. In some cases, they may act as early-stage investors by taking a small financial stake in the companies they are helping.
One example of an accelerator is RocketSpace, based in San NGOs and governments understand cutting-edge technologies, Francisco, which provides technology co-working spaces that and how to utilize these technologies to positively impact connect tech start-ups, global brands and entrepreneurs billions of people.”6 through innovative community and accelerator programs. As Scott Armanini from RocketSpace said, “In order to achieve In developed markets, the benefits of such incubators/accelerators mass-market acceptance, start-ups need to be well connected is well documented. In emerging markets, where institutional to corporations. Corporations have millions or tens of millions voids often prevent economic growth, they also play a very of customers that these start-ups need in order to get validation, critical role in shaping the entrepreneurial ecosystem. That’s the get that level of traction. Our role is to help them connect with outlook from Rajesh Sawhney, founder of GSF Accelerators, the global brands, members of our corporate innovation program who Indian start-up accelerator behind Little Eye Labs, which was can then help them with that mass-market adoption. And so we’re acquired by Facebook in early 2014. ”I think in a globally working on consulting partnerships between start-ups and the connected world it’s important that equal opportunities are global brands to make that magic happen.” provided to talent across the world to create change, especially the changes that affect a large part of humanity,” Sawhney said. Another example, Singularity University, is a hybrid accelerator: “That’s the mission we have at GSF. We want to provide a school, a fund and future model of innovation. Singularity is talented, innovative technology start-ups not just from India an unaccredited university in Silicon Valley that “provides but from an emerging world with the same opportunities that educational programs, innovative partnerships and a start-up start-ups have in Silicon Valley and elsewhere. I think that will accelerator to help individuals, businesses, institutions, investors, be the biggest homogenizing change in a connected world powered through technology.” 18
These company-led accelerators rarely Although there is no “best” collaboration provide funding but, rather focus on model, it appears that entrepreneurs mentoring, providing access to a network, benefit most when large companies play co-designing products and co-selling. the role of bridgemaker in a truly holistic way. “Larger companies and start-ups are Purchase of the start-up by the larger interdependent,” noted Apurva Shetty, co– company is not necessarily part of the founder and COO of Sensegiz, an innovative initial ambition of these accelerators, entrepreneur in the wearable technology although it may be part of the outcome. space. “If we have to grow in this digital Another distinctive feature of these world, we have to walk hand-in-hand to accelerators is their international save time and reach the market in time dimension: They provide access to a because it is a global marketplace.” global network of accelerators that This means going beyond mere funding is highly valued by entrepreneurs. and addressing several dimensions of the relationship, including a clear Companies such as SAP and Unilever commitment to mentorship at a senior have established independent venture management level and alignment with organizations that provide entrepreneurs the large corporation’s strategic agenda. with capital, as well as access to resources and expertise of the parent company, to help promising businesses scale and grow. Such venture organizations can play a key role, especially in emerging markets. “What [India] suffers from is the lack of exits,” explained Parag Dhol of Inventus Capital Partners, an India venture capital firm. “The venture capitalist ecosystem, angel ecosystem, is crying for exits. While exits can happen through IPO and secondary sales (to other larger VC/private equity funds), strategic sales would be a significant portion of overall exits. The only way these strategic sales can happen is when large companies interact and partner with some of these smaller companies and consequently do M&A activity for start-ups.” Chapter 1: Entrepreneurs thrive on digital open innovation 19
Corporation-led accelerators are gaining prominence
Target, the US-based retailer, chose India as the first country to kick off its global accelerator program, where it has selected a few start-ups.9 Target is backing start-ups that are focused on the five themes relevant to Target’s business: search, personalization, data, social and mobile.
Coca-Cola, as well, has unveiled accelerators in Sydney and San Francisco as part of its own nine-city accelerator program.10 The objective is to co-design and build new products and services and with start-ups and bring them the ability to scale businesses at the global level.
Microsoft Ventures, also launched in 2013, counts several accelerators worldwide and offers workshops on customer development, branding and strategy, as well as the chance to meet venture capital investors, angels and other entrepreneurs.11 20
The exponential growth of the Forbes estimates that $3.5 billion in Shareyourmeal’s pool of users is growing at “sharing economy” illustrates revenue will have flowed through the a rate of 60 to 120 members per day, with sharing economy as a whole in 201313 and more than 35,000 users in the Netherlands the momentum of digital open the exponential growth in the sharing and 8,000 in Belgium.14 Furthermore, money innovation across the globe economy can be seen in a variety of areas. raised through crowd-funding platforms In the past few years the entrepreneurial In the lodging industry, pioneer AirBnB in 2013 was expected to double, reaching world has seen the explosion of start-ups reached the 10 million customer mark $5.1 billion.15 This represents approximately with an innovative business in the so- in December 2013, just six years after one-sixth of venture capitalists’ investment, called sharing economy. Although it its launch—much faster than it took for which only grew by 7 percent in 2013.16 lacks a common definition,12 the sharing well-known hotel brands to do the same. Kickstarter, one of the major crowdfunding economy generally includes three key Blablacar has now topped 6 million users. platforms, has reached $1 billion in total elements: passive consumers turned In the food-service sector, the online dollars pledged to Kickstarter projects by into active ones (“prosumers”), the marketplace Shareyourmeal, founded in more than 6 million backers. disintermediation of the middle man and 2012, provides “home cooks” with the new technologies unlocking the value of opportunity to sell their home-cooked under-utilized assets. meals to interested neighbors.
The impact of the sharing economy on the global economy is already being felt (Figure 3).
Figure 3: The exponential growth of the sharing economy: an illustration through AirBnB, Blablacar and Kickstarter Unit: million of users
16
14 $3,5BN 12 SIZE OF SHARING ECONOMY IN 2013 AirBnB 10 Blablacar Kickstarter 8
6
4
2
0 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Accenture Research analysis based on public information Chapter 1: Entrepreneurs thrive on digital open innovation 21
The phenomenon is spreading across Another example is the relationship In the service fee platform business the world, from the US to Europe between eBay and Patagonia, known as model, the company gets compensated for and Asia. In India, more than a dozen the Common Threads Partnership, which successfully matching two parties: buyers crowdfunding platforms have sprung operates a marketplace for the outdoor and sellers, hosts and guests, borrowers up in the past year to 18 months, riding clothing maker’s used jackets, fleeces and lenders. The fee taken varies across the rising wave of entrepreneurship and and other gear. Rather than buying new marketplaces—from 5 percent to 40 the internet to become magnets for Patagonia goods, eBay users can buy percent, depending on the value of the people looking for money—and those and sell old Patagonia products to each transaction and the services offered. willing to donate for a cause. Initiatives other. The Common Threads Partnership in the arts and social causes, as well as launched in 2012 in the US, where it Despite the uncertainty around regulations technology start-ups seeking funding now has 60,000 members selling more and around which business models will and even projects at university labs, than 53,000 items. The two companies eventually succeed, the trend seems are all flocking to these platforms. launched a similar program in London in large and strong enough to ensure some 2014, establishing its presence in Europe.18 sustained successes. Companies that might New business models also attract think the sharing economy is a passing fad large companies, which can develop There are, however, still many risk suffering the same fate as the retailers collaborative arrangements with unanswered questions when it comes that refused to believe people wanted to entrepreneurs in the emerging sharing to how the sharing economy will affect purchase things online a decade ago. economy. For example, General Electric established markets and companies and is teaming up with Quirky, a well-funded what existing enterprises should do in As entrepreneurs participating in the start-up for crowdsourced inventions, to response. Some, like Jeremy Rifkin, think Accenture survey indicated, innovation— create a platform that enables consumers the sharing economy illustrates a paradigm and especially open innovation—is vital to control all of their internet-connected shift in which new internet platforms to their success. Countries that are able devices. Dubbed Wink, the app is being open opportunities for a new generation to create an environment that nurtures positioned as a “command center” that to think of themselves as “social and supports entrepreneurial innovation— “makes sure all of [consumers’] entrepreneurs.” For these people, he said, especially in the area of the sharing connected things work with all of their “being both entrepreneurial and social economy—will be better positioned to other connected things,” explained is no longer an oxymoron but rather, create jobs, restore growth and enhance Quirky CEO and Founder Ben Kaufman. a tautology.”19 Others highlight that the overall quality of life for their citizens. “With GE’s scale and Quirky’s speed, business models are still being tested we have the ability to connect a and refined to ensure long-term viability: lot of things super quickly.”17 more and more entrepreneurs are moving away from the all-free business model to a “freemium” or, more frequently, a service fee platform business model. 22
Chapter 2: The rise of entrepreneurs that are “born global”
Innovation clearly is critical to entrepreneurs’ ability to grow and create jobs. Many of these entrepreneurs see opportunities to bring innovation to customers outside of their home markets and these individuals expect their firms to grow even faster and create more jobs than those whose sights are set primarily on their local market.
Yet firms, especially small ones, face While smaller firms certainly face more Figure 4: considerable barriers to expanding challenges in expanding outside their home Sixty percent of entrepreneurs abroad—barriers that bridgemakers markets than their larger counterparts can help entrepreneurs overcome. do, it is worth noting that smaller firms believe international expansion are thinking seriously about targeting is important International expansion is on the overseas markets. One of the reasons so Importance of international expansion to many entrepreneurial firms of all sizes minds of most entrepreneurs grow business and create jobs are looking outside their home markets is Overall, six in 10 entrepreneurs surveyed better revenue growth opportunities: firms indicated international expansion is a key that considered international expansion a 14% priority for their business (Figure 4). One priority expect faster revenue growth than might expect larger firms to be likely to their locally focused peers. Accenture’s hold that view and that is indeed what survey showed that of the entrepreneurs Accenture found in its survey: more than who expected hyper revenue growth in 60% 75 percent of larger firms (those with 100 2014 (that is, greater than 15 percent), a to 250 employees) considered international vast majority (73 percent) also considered 46% expansion important to growing their international expansion as either critical or business and creating jobs. What was important to growing their business. On the remarkable was that a similar percentage contrary, the majority of firms (66 percent) (76 percent) of smaller firms (with 10 to 99 that expected revenues in 2014 to decrease employees) had the same aspirations. or remain stable considered international expansion as not very important or not important at all. 22%
18%
Sample base = All respondents (N=1,080)
Critical
Important
Not very important
Not important at all Chapter 2: The rise of entrepreneurs that are “born global” 23
Figure 5: New entrepreneurs are born global The percentage of entrepreneurs saying that international expansion is important or critical to grow business and create jobs—by age of firm
LESS THAN LESS THAN 10 YEARS 1 YEAR OLD 5 YEARS OLD OLD
70% 63% 49%
Interestingly, the tenure of the firm—how These results indicate that the new Accenture’s survey also revealed that long it had been in business before deciding generation of entrepreneurs thinks much going global can have a huge impact on to expand outside its home markets—is more globally than their predecessors. a firm’s job-creation potential. Firms with not directly correlated to a desire for This is especially true for entrepreneurs international activity were more likely to global expansion. In fact, surprisingly, in the sharing economy, where achieving expect to create jobs than firms that were a very high proportion (70 percent) of critical mass and being the first entrant is primarily locally focused. Importantly, younger firms—those launched in the a primary criteria of success and viability international expansion does not mean past 12 months—are already thinking of (as is the case in similar “winner take all” jobs will be created only in overseas international expansion. These are the “born markets, where the value of the network markets. On the contrary, more of these global” entrepreneurs. Conversely, a smaller is a predominant value creation factor). new jobs would be created at home: more percentage (only 49 percent) of firms that Internationalization increases the size than 80 percent of these firms expected are more than 10 years old considered of their addressable market, reduces to increase the workforce in their home international expansion as important revenue source risks and increases the country at a faster pace than the to growing their business (Figure 5). value of their firms.20 workforce outside the home country. 24
“New technologies have opened up the markets and completely speed up internationalization.”
Jenny Tooth, Chief Executive of UK Business Angels Association
Digital technologies open up As an entrepreneur from the UK Figure 6: put it, “Mobile technologies, cloud markets and dramatically reduce Digital technologies are technology, email, instant messaging, the costs of international expansion videoconferencing, etc., have ensured critical to the success of More and more, entrepreneurs are taking that we can disseminate information on international expansion advantage of digital technologies to help any facet of our business to all four Importance of digital technologies in the them achieve their global expansion goals. corners of the globe instantaneously. success of your international expansion Indeed, digital provides a global springboard Business decisions can be made there for entrepreneurs with innovative products and then, resulting in cost savings and and solutions to launch themselves in the the ability to capitalize on opportunities. 20% world’s leading markets. It not only offers The importance of technology can access to cross-border financing, but also a never be underestimated.” deep immersion into global ecosystems. However, while digital technologies Almost three-quarters of entrepreneurs are in many ways the key enabler of in the Accenture survey felt that digital entrepreneurs’ global expansion and provide 73% technologies were important to the success entirely new opportunities, the current of their international expansion (Figure 6). paradox is that the mobility of data across 53% Firms now can access digital technologies national boundaries is often more difficult and are leveraging them in international than the mobility of goods or services. expansion—for example, to create virtual Considerable obstacles can impede progress offices, digitalize key business processes and partially inhibit crucial innovation and and engage in e-commerce at scale and revenue growth (see page 25). at speed. 20%
7%
Sample base = All respondents (N=1,080)
Critical
Important
Not very important
Not important at all Chapter 2: The rise of entrepreneurs that are “born global” 25
The mobility of data: what is at stake?
The digital universe is doubling every two years and is expected to grow to 40 trillion gigabytes—more than 5,200 gigabytes for every man, woman and child—in 2020.
To truly unlock the value of data, companies need to start treating Consider the adoption of cloud computing in the EU. The current data as a supply chain, enabling it to flow easily and usefully regulatory framework—particularly regarding data protection— through the entire organization and throughout each company’s poses several barriers for both cloud users and providers. A lack ecosystem of partners, at the country and at the international of harmonized requirements across the EU means that cloud level.21 Data are the core of many “born global” entrepreneurs’ users—and by extension, their cloud services providers—are subject business models and, therefore, regulations of international data to many country-specific data protection and data security flows will have a critical impact on their development and ability obligations, with many countries placing restrictions to create jobs. on data location. The associated compliance and liability concerns mean that the cloud market in the EU is not reaching Data regulations are generally not anchored on a common its full potential or scale, thus limiting the benefits of cloud, global standard and are often outdated. In today’s globalized including lower IT costs and flexibility in IT usage, greater and data-driven world, traditional regulatory approaches are speed and the ability to fully leverage new and innovative being challenged as the evolution of technology outpaces technologies and services. the regulatory response. 26
Figure 7: Main obstacles faced by entrepreneurs in their international expansion
TOP TEN OBSTACLES
Logistics costs 37%
Challenges to find local partners-alliances 35%
Access to international finance-funding 32%
Lack of sucient local market knowledge to identify opportunities 32%
Specific local regulations 28%
Trade barriers 27%
Cultural di erences (especially in negotiations) 27%
Finding local skilled resources to support the local–regional markets 27%
Foreign direct investment restrictions 20%
Concerns on intellectual property 19%
Sample base = All planning to expand internationally
Yet significant challenges Ability to handle logistics at scale Entrepreneurs can therefore struggle to build trust with overseas prospects. In This was ranked as the number-one Accenture’s interview with TechStars, the to global expansion remain concern by entrepreneurs across company’s CEO Jon Bradford echoed this As attractive and promising as international geographies, in mature and emerging point: “Start-ups often underestimate how expansion is, entrepreneurs still face major markets, but especially by smaller hard it is to globalize and the importance of challenges in supporting it. According to firms. Of the firms ranking this as their local market,” he explained. “Start-ups the Accenture survey, several challenges are their top concern, most were either have an inherent advantage in their local particularly prevalent (Figure 7): logistics small or micro firms. costs, finding local partners, access to markets and are ordinarily less competitive at the international level.” finance and lack of local market knowledge These concerns are understandable. to identify opportunities. Contrary to some Overseas customers often demand strong expectations, the global Internet village is proof of concept at home and smaller not becoming flatter for many companies, entrepreneurs often have to furnish high- hence the need to understand and adapt profile endorsements from established 22 offerings to the diversity of contexts. local customers, whether from the private or public sector. Chapter 2: The rise of entrepreneurs that are “born global” 27
Finding the right partners and “The main obstacle we face is the lack of Access to international talent abroad and developing knowledge of foreign markets due to the finance and funding fact that they evolve continuously and A third key international expansion local markets insights spontaneously and only companies challenge is gaining access to funding, Among entrepreneurs planning to expand on the ground can know the true although this was deemed a bigger internationally, challenges in finding internal dynamics,” noted one issue by entrepreneurs in Latin America, local partners and talent abroad was the entrepreneur in France.”23 second most frequently identified key Asia and Africa than in North America or Europe. And funding challenges are challenge, often combined with the lack The value of local partners’ knowledge not limited to younger firms. In fact, of of sufficient local market knowledge to is reinforced by the experience of the firms ranking access to funding as identify opportunities. This was especially another entrepreneur, this one in the their number-one concern, less than half true of smaller firms: Forty-nine percent of apparel business, who collaborated (45 percent) had launched in the past the firms that struggled in this area were with local experts with knowledge three years. The majority of firms (55 micro firms (fewer than 10 employees) of specific global markets. “Without percent) facing this problem have been and 40 percent were small (10 to 99 the assistance of these experts, we in business for more than three years. employees). This was again true across would have faced insurmountable geographies, suggesting the potential difficulties in gaining a foothold in To be sure, there are very few incentives need for better cross-country partnerships these markets,” the entrepreneur for investors to co-invest across borders. enabled by appropriate policies. explained. “As the scope of our company Emphasizing the challenge was the changes, there may be a greater need observation from one entrepreneur, Entrepreneurs need help to develop for such workers employed, especially who lamented the lack of international specific foreign-market knowledge, in foreign markets in the future.”24 learn how to position their own internal partners who “do not want to risk capabilities and assess whether or not investing in a foreign market because investments made in one region can easily they do not know if they are going to 25 be deployed in other regions. have a real return on investment.” 28
Multinational companies Unilever recently declared it would back Another notable effort designed to support are key bridgemakers to seven innovative digital companies as part entrepreneurs’ global expansion is Piano of its “Go Global” program. Unilever will Destinazione Italia, which is considering accelerate entrepreneurs’ give each company funding, mentorship incentives to spur large Italian corporations international expansion and a range of services in exchange to escort Italian spin-off companies As described in chapter 1, bridgemakers for a customized digital marketing pilot through the globalization process by provide the critical link between for its brands, covering the areas of taking them “on board” in international innovation supply and demand. But they content, mobile or connected devices. The trade missions.27 also can play a valuable role in helping campaigns will go live across Africa, Asia, entrepreneurs establish international Europe and North America.26 Growing and creating jobs can be difficult business relationships. Whether they are for any entrepreneur. It’s especially large corporations, cross-country business Unilever’s approach reflects a broader challenging for those who seek to expand accelerators, trade bodies or international focus among larger firms on finding more beyond their home market. Indeed, global networks of VCs, these bridgemakers can innovative technology solutions from expansion carries with it numerous barriers help entrepreneurs launch new products start-up ecosystems across the world. For that are often hard for entrepreneurs to in target markets and increase credibility example, the chief information officers overcome. But if they can work through by connecting entrepreneurs with peers, (CIOs) of top global companies such as the challenges—with the support of digital mentors and potential long-term advisors Colgate-Palmolive Co., Procter & Gamble technologies and bridgemakers—the payoff from around the world. They can also Co. (P&G) and Citigroup Inc. convened in will be worth the effort: faster growth involve entrepreneurs in high-profile India recently to explore the possibility of and more robust job creation, both in activities related to foreign investment doing business with the country’s fledgling entrepreneurs’ home country and in the and even help entrepreneurs gain vital software product ecosystem—the first foreign markets they serve. endorsements from established companies. such concerted initiative. For these large companies that are looking to expand in One example of such bridgemaking is the markets like India and China, it makes increasing development of partnerships sense to consider some of the innovative between multinationals and smaller start- solutions that are emerging from the ups to leverage digital technologies in ecosystems in such countries. overseas expansion. As large companies grow, they sometimes lose the ability to In addition, multinational companies, stay on top of cutting-edge innovation. including Microsoft and Google, are setting By teaming with start-ups, they can take up a global constellation of accelerators in advantage of these firms’ nimbleness and such cities as Paris, Beijing, Bangalore and innovation to make forays into newer Tel Aviv to help entrepreneurs bring their regions, using newer digital channels. innovations to a global audience. Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries 29
Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries
Entrepreneurs are playing a critical role in the creation of jobs for youth in the G20 countries. They can potentially create 10 million more jobs if several significant barriers to job creation were removed.
The youth International Labor Organization estimates According to the ILO, more than 44 million unemployment challenge that during 2013 employment figures were young people in the labor force in G20 62 million lower than they would have countries are unemployed. In 20 years, While the global economy is growing been had pre-global financial crisis trends the youth unemployment rate rose by stronger, unemployment levels are still in output and employment continued. The nearly 3 points to a 2013 peak of 13.3 high in many countries and obstacles to drop in employment during and after the percent (Figure 8).28 employment growth remain, especially for crisis disproportionately affected young young people. For the G20 as a whole, the and disadvantaged people.
Figure 8: Youth unemployment has dramatically increased since 1992 Youth unemployment rate trend 1993–2013 % 14.0
13.5 13.3 13.1 13.0 13.0 13.0 12.8 12.6 12.7 12.5 12.4 12.5 12.3 12.2 12.0 11.9 11.9 12.0 11.8 11.8
11.5 11.4 11.2 11.3
11.0 10.9 10.9
10.5 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Source: ILO Global Employment Trends 2014 30
Figure 9: In the past decade young firms have increased jobs every year Net job growth, younger versus older firms, 2001–11 (Average across 15 countries—% net job growth)
% 6
4
2
0
-2
-4
-6 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Young Firms (5 years old or less) Old Firms (6 years old or more) Total
Source: OECD (2013), OECD Science, Technology and Industry Scoreboard 2013: Innovation for Growth, OECD Publishing.
Entrepreneurs are the G20 Several studies have confirmed the fact The OECD looked at a wide set of countries that young firms, predominantly created and found similar results. Its research31 countries’ job creators and developed by entrepreneurs, have a across 15 countries, published in 2013, critical role in job creation. shows that new firms (those five years old Entrepreneurs play a central role in or younger) generated nearly half of all new jobs in the past decade (Figure 9), combating youth unemployment John C. Haltiwanger, Ron S. Jarmin and Javier Miranda concluded in a paper although they accounted for only about in the G20 countries published by the National Bureau of 20 percent of non-financial business While there are no easy answers to Economic Research (NBER)29 that start- sector employment. This was true in nearly the youth unemployment challenge, ups in the United States continue to ramp every period and country considered32, there is plenty of evidence to suggest up, growing faster than more mature especially during the crisis, when most of that entrepreneurs can play a vital role companies and creating a disproportionate the jobs destroyed were the result of older in re-energizing youth employment. share of jobs relative to their size. The businesses downsizing while net job growth Entrepreneurs themselves believe they Kauffman Foundation, which regularly in young firms remained positive. can have an impact on unemployment: publishes detailed data on the US economy entrepreneurs create jobs for themselves and recently the State of Kansas, both point (see page 31 on under-served young towards the same direction.30 entrepreneurs), and a large majority of entrepreneurs (85 percent) surveyed were very confident of the role they can play in creating jobs in their country. Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries 31
Youth Business International: enabling job seekers to create their own job throughout the world.33
Youth Business International is a global network of independent non-profit initiatives helping young people start and grow their own business and create employment.
YBI members assist under-served young entrepreneurs with a combination of training, access to capital, mentoring and other business development services. In 2013, YBI’s members helped 14,406 young people start their own business and gave entrepreneurship training to nearly 200,000 young people.
The interventions depend on the local context. For example, Aosite Going forward, YBI aims to support 40,000 young entrepreneurs Education was founded by a young entrepreneur supported by in starting and growing a business per year by 2017 in at least 60 YBI’s member, Youth Business China. This after-school tutoring countries. company operates across the Chinese city of Chengdu. The founder, Huaping, worked in a teaching institution and was determined to Increasingly, organizations are collaborating to advance pursue his vision of opening his own center. However, he could not entrepreneurship. In its role as bridgemaker, Accenture convenes find support from the banks. Where commercial lenders had seen strategic partnerships for its Skills to Succeed initiative, which will unacceptable risk, Youth Business China (YBC) saw potential and equip 700,000 people around the world by 2015 with the skills to stepped in to support the young entrepreneur. YBC provided a low- get a job or build a business. One of those partners is YBI. interest loan and matched Huaping with an expert mentor with highly relevant experience in the education sector. Huaping now runs more than 11 training centers and employs more than 100 part-time and 50 full-time staff. 32
Entrepreneurs are Using such collaboration platforms offers Figure 10: entrepreneurs access to a significantly Three-quarters of entrepreneurs confident in their larger pool of resources they can deploy to help them find new customers and expect to create jobs ability to generate opportunities and keep their operations Do you expect to create new jobs in 2014? very efficient. As described by a revenues and create NO participant to one workshop: “We’re the jobs in the future, brand in front of the customer but we now have this kind of unlimited resource 26% within their companies pool that’s available on demand, that and beyond. we can tap into, similar to the cloud environment for highly skilled engineers.” 74%
Eighty percent of entrepreneurs surveyed expected positive revenue growth in YES 2014 and 33 percent expected double- Sample base = All respondents (N=1,080) digit revenue growth—well above general Figure 11: economic trends. Seventy-four percent of Sixty seven percent of entrepreneurs entrepreneurs surveyed say they will recruit young talent in 2014 (Figure 10). complement their work force Plans to develop external collaboration The more innovative, the more likely (e.g., crowdsourcing, freelancers, contractors) entrepreneurs are to create jobs: ninety- as a complement to recruitment in 2014 one percent of those who said innovation is critical or important to them also plan to create jobs in 2014—compared with 61 percent of those who don’t find 24% innovation critical or important to their business. Overall, most entrepreneurs are optimistic about their ability to create jobs for youth in their company. 67% The creation of jobs by entrepreneurs 43% does not stop at the doorstep of their companies. In fact, to a large extent, counting the number of jobs created by the number of workers on the payroll is under-estimating the number of jobs created by young firms. An increasing number of these companies also employ freelancers, contractors or leverage 33% crowdsourcing to complement their needs. Just under 70 percent said they plan to leverage external collaboration mechanisms such as crowdsourcing, freelancers and Sample base = All respondents (N=1,080) contractors as a complement to formal recruitment (Figure 11). Such mechanisms To a large extent—external collaboration will be are becoming more prominent as online broadly leveraged global networks are developed and offer access to diversified talent through To some extent—external collaboration will be leveraged flexible working arrangements. but remain limited
We do not plan to develop external collaboration Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries 33
Are entrepreneurs becoming “social entrepreneurs”?
The relationship between entrepreneurs and the ecosystem in which they operate is a complex, multifaceted relationship, as companies can only thrive in the long run if their ecosystem is flourishing, and the development of the ecosystem depends to a large extent of the way companies contribute to an inclusive, environmentally and socially responsible growth.
Interestingly, 70 percent of surveyed entrepreneurs (Figure 12a) Figure 12a: consider themselves as “social entrepreneurs” either because they Would you define yourself as a social entrepreneur? have a direct impact on their local community or because in their company profits are reinvested in the business itself (Figure 12b). NO In other words, many entrepreneurs who manage “for profit” businesses believe their mission goes beyond generating profits for shareholders. 30%
This applies to a large extent regardless of the location of entrepreneurs. Except in the US, UK, Australia and Germany, a large majority of entrepreneurs, whether based in mature markets or emerging markets, consider themselves social entrepreneurs. Such a finding is contrary to the conventional wisdom that 70% entrepreneurs collaborating for the good of their country or society are much more prevalent in emerging markets than in mature ones. Given the size of the challenges, especially related to youth YES unemployment, most entrepreneurs are willing to contribute to Sample base = All respondents (N=1,080) the development of their local community beyond their traditional commitment to grow their business and create jobs.
Figure 12b: What best describes your definition of a social entrepreneur?
Actively contribute to build the local community and/or develop solutions to social problems 56%
Financially self-sustainable company in which profits are reinvested in the business itself 30%
Non-profit activity 14%
Sample base = All respondents (N=1,080) 34
Figure 13: Main barriers that prevent your company from recruiting more young people Sample base = All respondents (N=1,080) BARRIERS RANKED HIGHEST BARRIERS RANKED LOWEST
Lack of availability of appropriate skills 62%
Lack of incentives 54%
Access to finance-capital 54%
Labor market inflexibility 48%
Government regulation and compliance 43% requirements
Support for innovation 39%
ARGENTINA AUSTRALIA CANADA CHINA FRANCE GERMANY INDIA INDONESIA ITALY
JAPAN MEXICO RUSSIA SOUTH AFRICA SOUTH KOREA TURKEY UK US
Can entrepreneurs create more In geographic terms, entrepreneurs in the Entrepreneurs’ specific needs also make it jobs? Skills shortage and lack US, Indonesia, Turkey and India expressed difficult to fill key roles. Participants in a particularly high concerns. Overall, six in 10 workshop in Paris described their hunt for of labor market flexibility are (62 percent) entrepreneurs said difficulty talent as “looking for five-legged sheep”— particularly important barriers to accessing the right talent was one of their employees who can do everything with creating more youth jobs. top recruiting concerns, regardless of their successfully. Small-company employees Several barriers prevent entrepreneurs from industry (manufacturing or services) or must be very flexible, be willing to take on doing more to spur youth employment size. Small and large firms face similar a multitude of responsibilities and be able across the G20 countries. Barriers differ skills shortages, because they are to develop and implement processes from across countries due to the unique competing more and more for the same scratch—in short, be very entrepreneurial characteristics of local labor markets underdeveloped talent pool, especially employees. As an entrepreneur in the (Figure 13). STEM (Scientific, Technology, Engineering, UK puts it: “The ability for young talent Mathematics) skills, which are very much in to perform in all dimensions is rare and demand around the world. can be inconsistent with frequent highly Skills shortage hits entrepreneurs specialized graduate curriculum.” particularly hard. Whether the firm is large or small, availability of appropriate skills is the single most important barrier to recruiting more young people. Chapter 3: Entrepreneurs can create 10 million new youth jobs in G20 countries 35
The lack of labor market flexibility is also Entrepreneurs could create 10 In fact, entrepreneurs view collaboration a significant barrier to hiring more young million new youth jobs across the public and private sectors as a employees, especially for entrepreneurs in potential game changer that may trigger A large majority of surveyed entrepreneurs countries such as France, India, China or a new wave of competitiveness and are confident that they could create Italy. Entrepreneurs sometimes feel that sustainable growth. Digital technologies more jobs in the future than they are the investment in training young people make this game change possible, especially already doing. This would require a new and building their business skills is too high given the substantial possibilities offered paradigm described by the “3+1” formula: given the lack of senior employees’ time by technology-enabled, open innovation. an active and sustained collaboration to train and coach new recruits in small But for this to happen, adequate policy among entrepreneurs, large companies firms. One entrepreneur succinctly frameworks must be implemented and the and bridgemakers, enabled by government described the challenge: “People who necessary technology investment must through relevant public policies. have just arrived on the job market after be deployed at speed and scale (which we graduating are usually skilled enough. discuss in more detail in chapter 4). What they lack is experience, which is Collaboration among these parties can take different forms, depending on the part and parcel of the business acumen. In this context—assuming entrepreneurs’ characteristics and most pressing issues They have to build their communication expectations are met—entrepreneurs’ job of the local ecosystems (such as open and business skills alongside their different creation potential would be unleashed, innovation, globalization, education or more work experience or temp positions.” resulting in 10 million new youth jobs general technology development priorities). potentially created across the G20 To help them compensate for some of the countries, according to an Accenture specific investment required to give young A large majority of entrepreneurs want estimate (Figure 14)34. This would help people the required skills to be productive, more support from governments, large drive the reduction of youth unemployment a large number of entrepreneurs would businesses and bridgemakers to help them from 13 percent to 10 percent35. (See appreciate incentives and a direct role in sustain their contribution to economic page 36 for details on Accenture’s job youth education growth and job creation. creation model.)
Figure 14: The promise of digital entrepreneurs: creating 10 million youth jobs in the G20 countries
48 IF BARRIERS WERE REMOVED 46 44.3 44.2 44.3 44.9 44 41.8 42 40 UNEMPLOYED 38 10M YOUTH NEW 36 (MILLIONS) JOBS 34 31.3 32 30 28 26 2011 2012 2013 2014 2015 2016 2017 If barriers were removed (Accenture estimates, millions) Unemployed youth — million (ILO historical) Unemployed youth — million (ILO forcasts)
Source: Accenture Research scenario based on historical ILO Global Employment trends2 36
Job creation model
The job creation model combines population and labor force statistics published by the World Bank, ILO and OECD and insights derived from Accenture’s primary research and modeling. The model is based on the following input for each G20 country and for the G20 countries as a whole:
• Current number of youth and evolution trend. This comprised • Comparisons of surveyed entrepreneurs’ expectations regarding all persons between the age of 15 and 24, based on World job creation in “business as usual” scenario vs. “if barriers Bank data were removed” scenario • Participation rate: percentage of the young population • Assessment of job creation direct impact in second scenario that is part of the labor force, based on ILO data at G20 level and in the G20 countries, compared to current trends • Youth jobs and youth unemployment data in the youth active population, based on ILO data • Projections at G20 level and in G20 countries, including test of results with ILO and OECD data and qualitative • Portion of youth labor force that is employed by cross-check with experts to ensure technical and entrepreneurs/SMEs based on World Bank data economic plausibility of results • Expected youth job growth and youth unemployment, based on ILO macro assumptions (macro economic NB: The enclosed model does not take into account another trends, labor productivity trends) critical dimension of youth job creation: the creation of jobs by young people for themselves, when they create their own • Expected youth job creation declared by business. Although this potential is hard to quantify precisely, surveyed entrepreneurs concrete examples such as the jobs created by entrepreneurs prove its importance. Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified 37
Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified
Since 2013, there’s a new momentum for public policies dedicated to entrepreneurship, as more countries adopt entrepreneur-friendly policies.
Governments recognize the important Innovative legislations include: 3. Access to digital infrastructure: role innovative entrepreneurs and start- investment in broadband infrastructure, 1. Access to funding: up ecosystems play in boosting an rules and regulations to encourage the acknowledging the need for a strong legal inclusive and job-rich economic growth, as private sector to expand connectivity framework around crowd-funding, ‘fail illustrated by the fact that the G20 heads fast’ procedures to alleviate liquidation of state and governments recognized procedures and remove the stigma from 4. Access to innovative talent: the role of entrepreneurs in youth job failing to gain future access to finance taxation policies on stock options are creation in their final communiqué of becoming more accommodating and several the 2013 Summit. countries introduced more flexible 2. Help in going global more quickly: labor contracts thinking beyond traditional finance- oriented export policies to set facilitation programs such as start-up visas 38
Australia helps young entrepreneurs’ ideas flourish
Australia has been described as the 11th easiest country in which The Student Entrepreneur Development program at NSi encourages to start a business. Australia has a number of innovative programs and facilitates UNSW students to become entrepreneurs and designed to help young start-ups become successful. leaders of the future. It does this by providing students with a suite of free business support services and access to its industry One Australian organization working in this direction is UNSW networks. Thus far, the program has been a resounding success: Australia and its technology transfer company, NewSouth More than 200 student-led start-up opportunities have been Innovations (NSi). NSi recently launched two programs to help through the program in its first two years. drive new innovations into society and the economy: Easy Access IP and the Student Entrepreneur Development program. These two programs are good examples of how a university technology transfer office has found a way to capture ideas from The Easy Access IP program offers UNSW research outputs to young entrepreneurs and give them the tools and support to society for free. What is unique about this program is that the flourish. The programs can serve as a model that can be used to university forgoes any claim to license revenues and does not help young entrepreneurs outside the university system to more collect any royalties from commercialization. In return for the easily navigate the entrepreneur ecosystem and find a market for free license, the partner must agree to do something with the their promising new ideas. intellectual property, must acknowledge that the intellectual property came from UNSW and must agree to let the university continue to do research on the intellectual property. Student entrepreneurs are encouraged to develop Easy Access IP opportunities. Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified 39
Figure 15: What do you think of the actions taken by your country’s government?
Relevant and ecient actions are taken 21% 25% 26% Actions are taken but they are not relevant or ecient No real action taken 44% 45% 44% Sample base = All respondents (N=1,080)
29% 35% 31%
ENTREPRENEURIAL ENTREPRENEURIAL JOB CREATION INNOVATION INTERNATIONAL EXPANSION
Accenture’s survey found that of policy actions entrepreneurs believe rise of sharing economy players entrepreneurs who started their business can help them boost innovation, expand and impeding the creation of new in the past 12 months are more confident globally, and create more jobs. activities and jobs. in the actions taken by their country’s government to support youth job creation 2. Develop tax incentives to encourage than “older” entrepreneurs. Five policy expectations open innovation. to foster open innovation Tax incentives for innovation are frequently However, most public policies are still mentioned as critical elements to support Although entrepreneurs’ expectations largely fragmented and considered as not the development of new businesses—such regarding innovation may vary from sufficient by entrepreneurs surveyed. as the tax R&D credit and tax reduction country to country and region to region Only about one-fourth of all entrepreneurs for “young innovative firms” in France, tax due to unique local differences, five priority think that actions taken by their relief for early-stage investments through themes emerged from the Accenture survey government to support entrepreneurial the “seed enterprise investment scheme” and discussions with local experts innovation are relevant and efficient, in the UK, and the R&D tax incentive in (Figure 16). one-fifth of entrepreneurs feel that their Australia. At the employee level, stock government has done enough to support options—still favored by many start-ups—do their international expansion and only 1. Simplify regulation. not benefit from a stable and encouraging one-fourth of all entrepreneurs consider “Red tape” is still a major obstacle environment in all G20 countries, which is the actions taken by their government to to growth in many countries, despite hampering entrepreneurs’ efforts to attract support youth job creation as relevant government commitments to address this and retain the top young talent. and efficient (Figure 15). topic, from reducing the number of days required to start a business to greater tolerance for failure. A typical example is Entrepreneurs in the Accenture survey the “sharing economy” where new entrants also have their own thoughts on what that create new business models face governments can and should do to help complex regulations that are slowing the them succeed. They identified a number 40
3. Focus on Small Business Acts and Financing for innovative start-ups is 5. Encourage systemic approaches that other similar mechanisms to open public complex, as different financing instruments enable entrepreneurs, large businesses, procurement to innovative small players are needed for various stages of a firm’s bridgemakers and government to foster and encourage open innovation with the development. Policymakers in a number open innovation and youth job creation participation of small companies. SBIR-like of countries have sought to address the at the local level. Investment in digital programs may enhance the investment prevailing seed and early-stage financing infrastructures to enhance access to made by start-ups in new technologies and gaps by intervening in multiple areas reliable and low-cost broadband, combined DARPA-like programs can enable innovation simultaneously. A systems approach is with adapted regulation on data and through a bottom-up, government-directed needed that covers both supply- and cloud, are typical examples of urgent network of agencies.36 Although frequently demand-side intervention as well as reforms expected by a growing number mentioned, SBIR and DARPA still have few framework conditions (see page 45). of entrepreneurs. Such reforms require equivalents across G20 countries. Equity crowdfunding is a particularly deep cooperation between various promising field for start-ups and should be stakeholders of the entrepreneurial 4. Develop better access to affordable encouraged by G20 governments through innovation ecosystem. financing, including through a flexible policies that facilitate market development approach to crowdfunding and an while protecting household investors. improved venture capital ecosystem.
Figure 16: What priority actions do you expect from the government in your country to support your innovation agenda? RANKED WITHIN TOP 3
Tax incentives 41%
Small business act 35%
Reducing red tape and regulation for entrepreneurs 30%
Development of public bank to finance entrepreneurs & small & medium enterprises 25%
Opening of public procurement to innovate small & medium enterprises 24%
Development of technology education & training 23%
Supportive environment for business angels & venture capital funds 23%
Public investment in technology infrastructure 20%
Development of local innovation ecosystems 18%
Public investment in R&D 17%
Sample base = All respondents (N=1,080) Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified 41
Policy expectations to 2. Boost international financing 4. Create more active communities foster entrepreneurs’ of young firms. and cross-pollination between G20 International financing—particularly, its entrepreneurs through a formal global development scarcity—was mentioned again and again “exchange” program. Entrepreneurs’ expectations regarding as impeding the international development In many countries, entrepreneurs can trade and globalization converge frequently of young companies. Many entrepreneurs benefit from specific local technology on key topics (see page 44), regardless are concerned that trade financing, for clusters; however, in most cases, these countries of origin, as entrepreneurs who instance, may be significantly inhibited by clusters are not connected internationally aim at developing their business at the Basel III requirements and, therefore, want to other equivalent clusters. At the bare international level face similar issues a renewed emphasis to ensure a dynamic minimum, the openness of clusters to and challenges. trade financing sector. “visiting” entrepreneurs—similar, to some extent, to the Erasmus program developed The priority themes can be broadly 3. Encourage the mobility of talent in the EU for students—might provide new grouped in four topics: by lowering barriers to immigration opportunities for cross-pollination and for entrepreneurs. ways to make G20 initiatives concrete to 1. Support the conclusion of Global Trade Several countries have adopted programs entrepreneurs. Already, communities of agreements and implement the recent to facilitate talent mobility. For instance, expatriates in Silicon Valley are helping trade facilitation agreement, with an Canada’s “Start up Visa program” will entrepreneurs with similar origins, such increasing focus on digital matters, to offer several thousand visas per year to as the South African expatriates grouped facilitate the rise of digital businesses entrepreneurs who secure funding from in the Sable Accelerator that help South across borders. designated Canadian investors, whether African entrepreneurs expand in global Entrepreneurs support the development of VC or business angel. The US “Skills Visa” markets. Beyond such targeted measures, global trade through the reduction of tariff act will also aim to expand the local talent the development of online and offline and non-tariff barriers. In this context, pool by allowing selected entrepreneurs communities may greatly reinforce the the rapid implementation of the Bali to remain in the US for three years if sense of belonging to the entrepreneurs’ package agreement on trade facilitation they demonstrate significant investment ecosystem and enhance the development is viewed as a step in the right direction or create more than four jobs. At the of international businesses. by many but far from sufficient. Due to G20 level, a commitment to facilitate the rising importance of digital businesses the mobility of entrepreneurs and workers and especially the businesses based on big with in-demand skills (such as digital data and analytics, the topic of “mobility expertise) though an accelerated visa of data” through national boundaries is scheme will help support entrepreneurs’ a critical one as regulations in this field international development. are considered to be largely outdated. Progress towards greater flexibility of data mobility, with a balanced approach toward innovation and the respect of privacy of individuals and a harmonization of cloud regulation and standards, will be key to further enhance the development of young firms at the global level. 42
Access to finance for young innovative firms Karen E. Wilson, OECD and Bruegel
Young innovative firms face many difficulties accessing seed and Many successful entrepreneurs are serial entrepreneurs, starting early-stage finance and these difficulties have increased over the more than one company. As they start new companies, they share past several years. Banks have been reluctant to provide loans to their experience, knowledge and networks with others. There is start-ups as a result of the financial crisis. Meanwhile, venture increasing evidence of the importance of social capital, both local capital firms have become more risk averse and, in many cases, and global, as high-growth firms need to grow beyond national have focused on later-stage investments. Angel investors have borders. International expansion and investment can be critical to become more visible and active through groups, syndicates and the success of these firms. networks and increasingly are playing an important role in seed and early-stage finance.37 The framework conditions in a country can perhaps have the most impact on the provision of seed and early-stage finance. The There has been increasing concern from policymakers around the development of financial markets and exit opportunities, whether world about the growing financing gap for high-growth firms, through IPOs on a stock exchange or mergers and acquisitions by particularly in the seed and early stage. As a result, governments other firms, directly influences the availability of seed and early- in many countries have sought to address the financing gap and stage financing. Bankruptcy regulations, labor market restrictions perceived market failures by supporting the seed and early-stage and other framework conditions also impact the creation and market.38 However, the objectives behind these interventions often growth of innovative firms. go beyond addressing financing gaps. Many countries recognize the critical role that young, innovative firms play in creating jobs and Regulatory barriers and administrative burdens on institutional economic growth and are seeking ways to facilitate the creation investors, venture capital funds, angel investors and high-growth and growth of these firms.39 firms can have a direct result on the provision of seed and early-stage finance. In particular, securities legislation and more Many policy measures have been on the supply side, ranging from stringent capital requirements on institutional investors could grants, loans and guarantee programs to tax incentives and equity reduce the supply of investment in venture capital from banks, instruments. Support for all of these programs increased from pension funds and insurance companies, traditionally three of the 2007 to 2012 as a result of the financial crisis. However, in equity largest types of private institutional investors. instruments, there has been a shift in focus in OECD countries from government equity funds that invest directly in start-ups to more Financing for innovative start-ups is complex, as different indirect models such as co-investment funds and fund-of-funds. financing instruments are needed for various stages of a firm’s These later approaches seek to leverage private investment through development. Policymakers in a number of countries have sought various incentive structures. to address the prevailing seed and early-stage financing gaps by intervening in multiple areas simultaneously. Therefore, policy The demand side is critical to success of seed and early-stage interventions should not be seen in isolation, but as a set of financing; however, it is often overlooked in favor of supply-side interacting policies. A systems approach is needed that covers actions. For firms to launch and grow successfully, human capital both supply-and demand-side intervention as well as framework development is important. This could be in the form of education, conditions. Evaluation and periodic adjustment of the specific training and/or on-the-job experience. policy instruments as well as the full policy mix is important, although it can be challenging in practice. Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified 43
Policy expectations to foster access 2. Develop STEM graduates. 4. Encourage entrepreneurship to talent and creation of jobs Entrepreneurs need access to a greater culture through new methods of talent pool for STEM graduates; hence, the education/learning. Entrepreneurs face many challenges in expressed need for the development of Many entrepreneurs are looking for new creating jobs. Often, these challenges STEM graduates at an accelerated pace in approaches to education, and learning can can be unique to a specific country or the G20 countries. The gap between supply be developed at scale to further enhance region due to prevailing public policies of and demand for STEM is widening and an entrepreneurial culture throughout G20 and regulations. However, entrepreneurs impeding the development of entrepreneurs’ countries. Examples include dedicated and local experts agreed on six broad businesses—whether focused specifically on Massive Online Open Courses (MOOCs); policy themes that could help entrepreneurs digital goods and services or not. specific university programs, such as find and hire talent and, in the process, the EXIST program in Germany (which significantly boost the number of jobs 3. Increase labor market flexibility. facilitates the development of new they create (Figure 18). Greater policy attention to the cost of labor businesses through financial grants for and labor market flexibility is particularly tech infrastructures created for start- 1. Support vocational training important to entrepreneurs, who seek ups by universities); and courses given by and apprenticeship. to boost youth employment but have no entrepreneurs in universities to encourage Vocational training and apprenticeships guarantee that their business will succeed. potential young entrepreneurs to create are now recognized as critical to helping Italy, for instance, recently adopted new their own businesses. develop new skills in existing talent pools. legislation that recognizes, for the first However, entrepreneurs believe current time, the unique needs of the start-up programs must be amplified, except in ecosystem by allowing flexible labor a few countries where they are either contracts (fixed terms lasting six to 36 recognized as well developed (such as months), specific variable pay packages, and Germany) or as being developed at scale tax benefits. Thus, a better match between (in the UK, for instance). skills supply and demand for skills is wanted by many entrepreneurs.40
Figure 17: What priority actions do you expect from G20 governments to support your international expansion?
RANKED WITHIN TOP 3
Reduce trade barriers 39%
Develop access to international finance-funding 37%
Facilitate identification of local partners-alliances 37%
Reduce red tape for exports 32%
Remove foreign direct investment restrictions 30%
Strengthen international rule of law (e.G., Intellectual property rules) 30%
Facilitate mobility of talents 30%
I do not know—I am lacking visibility on this issue 21%
Sample base = All respondents (N=1,080) 44
Figure 18: What priority actions do you expect from the government in your country to support youth job creation by your company? RANKED WITHIN TOP 3 Develop financial incentives (e.g., tax reduction) 38%
Promote vocational training— improve apprenticeship 33%
Increase labor market flexibility 29%
Develop entrepreneurial skills 29%
Improve equity and access for job seekers 29%
Enable lifelong learning & development skills 27%
Promote direct involvement of businesses in tertiary educational system 25%
Increase science-technology-engineering & maths graduates 25%
Remove red tape 22%
Facilitate mobility of talents 22%
Sample base = All respondents (N=1,080)
5. Encourage development of more agile 6. Facilitate development of new types of working environment and forms categories of companies focused on social of employment. outcomes as much as on economic and Innovative companies seek to develop financial ones. a more agile and flexible working In the US, “benefit corporations,” which environments that allow them to tap into are now recognized in 18 states, operate the best global talent while retaining as for-profit companies but are also flexibility to adjust. Regulations have often enabled to develop social and environment not fully kept pace with such arrangements. commitments. Around the world, new types Examples of more agile environments of companies are needed to recognize and include the use of freelancers and sub- strengthen social businesses as a specific contractors, easier access to visas to tap and promising type of business. into globally scarce skills and homeworking or job-sharing agreements. Chapter 4: Entrepreneurs expect G20 budding reforms to be amplified 45
What should Large Companies do: Define their strategy for Digital Open Innovation How to implement Digital Open Innovation in large companies
As large companies test different approaches to technology- One example is the Accenture Open Innovation program, which enabled open innovation, they can benefit from a rigorous operates as a bridgemaker. This framework, which includes three framework that can help maximize the impact of their open different phases (Discover, Engage and Success) can accelerate the innovation program and their relationships with start-ups. open innovation process, enable entrepreneurs to achieve concrete outcomes at speed and scale, and ensure mutually beneficial connections with other companies at every stage of the process.
Open Innovation Process
Conference enture Capital & Events V Universities Hackathons Accelerator Incubator Referrals
OUTCOMES DISCOVER Identify high quality Start-ups Build awareness & presence Scan, First Criteria, Education, Accelerator Database Establish ecosystem Meeting, Filter, Score Workshop, Engagement relationships Thesis Experience
OPEN INNOVATION ENDORSEMENT START-UPS
DEMAND FULFILLMENT
INNOVATION REQUESTED OUTCOMES
ENGAGE Drive towards commercial validation CO-INVEST & SCALE Engage, de-risk & scale early stage technologies
to large companies QUALIFIED INNOVATION OPEN PRESENTED INNOVATION CLIENT (B2B) QUALIFIED SOLUTION INNOVATION REQUIREMENTS PRESENTED
ENGAGEMENT AGREEMENT
SUCCESS OUTCOMES Strategic engagement PROOF OF CONCEPT between bridgemaker PILOT (eg: Accenture), INVESTMENT Start-up and large companies WIN M&A 46
About the research
To identify entrepreneurs’ views on the opportunities and challenges related to innovation within their business and understand their expectations related to G20 governments’ policies to support them in their growth and job creation, Accenture conducted a comprehensive research effort in close cooperation with the Young Entrepreneurs’ Alliance.
The research comprised six streams:
• An exclusive online survey of more than 1,000 entrepreneurs across G20 countries* • An online collaborative forum of entrepreneurs powered by crowdsourcing • Four workshops with entrepreneurs in the US, France, India and China • More than 20 in-depth qualitative interviews with subject matter experts • Analysis of the entrepreneur landscape in all G20 countries • Modelling analysis of job-creation opportunities
Online survey of more than Number of survey respondents 1,000 entrepreneurs US 164 The fieldwork for the online entrepreneur survey was conducted by Harris Interactive INDIA 63 in G20 countries between March 2014 and AUSTRALIA 59 April 2014. The detailed breakdown by country is as follows: ITALY 58 FRANCE 57 MEXICO 55 CANADA 54 CHINA 53 GERMANY 53 SOUTH AFRICA 53 ARGENTINA 51 RUSSIA 51 TURKEY 51 UK 51 INDONESIA 51 BRAZIL 50 JAPAN 50 SOUTH KOREA 50 SAUDI ARABIA 6 About the research 47
Online forum powered Four local workshops Job-creation model by crowdsourcing with entrepreneurs The methodology combines population and An online forum was created and To deepen the qualitative analysis, labor force statistics and insights derived maintained by Accenture in collaboration gather relevant country examples and from Accenture’s primary research. The with Harris Interactive to give develop actionable recommendations, process combines the following analysis: entrepreneurs an opportunity to express Accenture conducted four workshops their opinion and share ideas with other in April 2014 and May 2014, in San • Analysis of long-term trends related entrepreneurs on the opportunities and Jose (Silicon Valley), Paris, Bangalore to youth jobs, youth unemployment and challenges they face regarding innovation, and Beijing. Each workshop included role of entrepreneurs in creating with a focus on expectations for public between eight and 12 entrepreneurs. youth jobs in G20 countries, based policies and youth job creation. This online on publicly available data from sources collaborative blog was active for the Country analysis such as World Bank, OECD and ILO period throughout May 2014. Accenture created country profiles • Views of surveyed entrepreneurs focused on recent initiatives supporting on barriers that prevent them from Interviews with subject entrepreneurship in each G20 country, recruiting more young people and matter experts with a particular emphasis on innovation, on-job creation potential, should those barriers be removed Accenture conducted more than 20 trade/globalization, skills/employment in-depth C-level interviews with venture and ecosystem/funding mechanisms. • Projections at G20 level and in G20 capital firms, accelerators, business Accenture also cross-checked and countries, including test of results angels, universities and large corporations, reviewed its findings with many of the with ILO and OECD data and qualitative as well as with experts in institutes, local representatives from the YEA, who cross-check with experts to ensure across G20 countries. were able to provide additional insights. technical and economic plausibility of results 48
Acknowledgements
This report and the research would From OECD/Bruegel, we would like to Ozan Safkan, Deputy Secretary not have been possible without thank Karen Wilson for her contribution General, TUGIAD to the specific topic of “Access to finance the generous participation of for young innovative firms.” Karen Wilson Grégoire Sentilhes, President many people. authored the page dedicated to this topic. Citizen Entrepreneurs—France
Project team Queries relating to this report should Jean-Louis Grégoire, Partnership and Bruno Berthon: Managing Director– be directed to: Thought Leader Committee Chair and Accenture Strategy, [email protected] Sherpa, Citizen Entrepreneurs—France Cross-Industry Strategy Lead [email protected] [email protected] From the G20 YEA local networks, we Laurence Morvan: Managing would also like to thank Gene Lim, Kumara Director, Office of the CEO Young Entrepreneurs’ Guru, Luca Donelli and Başak İlisulu. Alliance Executives More broadly, this research would not have been possible without the support Francis Hintermann: Global Managing From the G20 YEA Thought Leaders of the local members of the YEA. Director, Accenture Research Committee, we would like to recognize the significant contributions of: Jitendra Kavathekar, Managing Entrepreneurs and Experts Director, Accenture Open Innovation Jeremy Liddle, CEO, Entreprise Network Our research would not have been possible for Young Australians—Australia without the contribution of more than Sybille Berjoan, Charlotte Raut, Anton 50 entrepreneurs, including those in San Pichler, Ajay Garg, Jonathan Anchen, James Igor Egorov, Sherpa, Center for Jose, Paris, Bangalore and Beijing. We Dickerson, Ajit Kallahally, James Hogarth, Entrepreneurship—Russia also would like to thank the following Paul Johnson, Georgina Lovati and Edvina people who kindly spent time with us Kapllani from Accenture Research Kevin Langley—Global Strategic during one-on-one interviews: Jenny Alliance Committee—Entrepreneurs’ Tooth (UKBAA), Jessica Stacey (NESTA), Barbara Mulert, Accenture Organization—USA Jon Bradford (Techstars), Molly Nicolas Marketing & Communications and Nicolas Pinaud (OECD), Richard Anton (Amadeus Capital), Éric Adam, Pascal Marsha Josephs, Director, Government Portelli and Benoit Joly (Technicolor), Also from Accenture we would like to Relations at Futurpreneur—Canada recognize the significant contributions from Steve Brodie and Joshua Flannery (New South Innovations), Hamish Hawthorn Accenture Technology Labs and Accenture Helen Osborne, Director Strategy (ATP Innovations) and Marc Jalabert and Open Innovation: Prith Banerjee, Sanjoy and Performance—The Prince’s Youth Roxanne Varza (Microsoft Ventures). Paul, Dong Liu, Christine Nguyen, Masoud Business International (YBI) Loghmani, Elizabeth Reynolds, Namrata Rao, Smriti Metikurke and Ester Li Wang. Sources 49
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7. Procter & Gamble is well known as one of 19. Details in “The Zero Marginal Cost Society 35. Accenture modelling based on ILO Global the pioneers of open innovation. P&G’s use – the Internet of Things, the Collaborative Employment Trends 2014. of open innovation led to the development Commons and the Eclipse of Capitalism”. http://www.ilo.org/global/research/global- of many highly successful products that Jeremy Rifkin, Palgrave Macmillan, 2014 reports/global-employment-trends/2014/ have since contributed millions of euros WCMS_234879/lang--en/index.htm 20. “Technology Innovation Management Review, to P&G’s top line. The company recently What Technology Start-ups Must Get Right 36. Cf detailed discussions on some of these took its efforts a step further with the to Globalize Early and Rapidly.” Tony Bailetti, levers in “The Entrepreneurial State.” launch in 2013 of pgconnectdevelop.com, a October 2012 Mariana Mazzucato, Anthem Press, 2013 website that directly links innovators to the company’s greatest needs and P&G business 21. Accenture, Technology Vision, 2014 37. OECD (2011), “Financing High Growth Firms: leaders to external innovation submissions. The Role of Angel Investors,” OECD Publishing. “[O]ur focus is on strengthening areas of 22. Details on the diversity of “internets” in www.oecd.org/sti/angelinvestors our open innovation work to deliver more “Smart.” Frédéric Martel, Stock, 2014 discontinuous, breakthrough innovations,” 38. Wilson, K. and Silva, F. (2013), “Policies for explained Laura Becker, general manager of 23. Quote collected from online forum Seed and Early Stage Finance,” OECD Science, Technology and Industry Policy Papers, No. 9. P&G’s Connect+Develop and Global Business 24. Quote collected from online forum Development, in announcing the site. “Part OECD Publishing. doi: 10.1787/5k3xqsf00j33- of that work means making connections 25. Quote collected from online forum en both easier and more effective.” http:// 39. Wilson,K. (forthcoming, 2014), “Policy www.pgconnectdevelop.com/home/stories/ 26. Unilever: http://www.prweek.com/article/ Implications of OECD Experience in Seed and cd-stories/20130207-pg-connectdevelop- unilever-puts-cash-behind-digital-global- Early Stage Finance” launches-new-open-innovation-website.html expansion-marketing/1285223 40. Detailed recommendations in “Australia: 8. “Open Innovation: What’s Behind the 27. Piano Destinazione Italia – 27. For Richer, For Poorer? Government’s Role in Buzzword,” Delphine Manceau, Valerie Moatti http://destinazioneitalia.gov.it/ Preserving Standard of Living.” and Julie Fabbri, Institute for Innovation and wp content/uploads/2013/10/ Competitiveness, ESCP Europe; and Pierre- destinazioneitaliaEnglishVersion.pdf Accenture, 2014 Francois Kaltenbach and Line Bagger-Hansen, Accenture, 2011. http://www.accenture.com/ SiteCollectionDocuments/PDF/Accenture- Open-Innovation.pdf#zoom=50 50
Survey results by country Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Russia Africa South Korea South Turkey UK US
How important is innovation to grow your business and create jobs?
Critical 18% 27% 20% 30% 15% 11% 9% 27% 22% 19% 28% 24% 2% 38% 12% 16% 27% 22%
Important 76% 46% 74% 48% 79% 65% 68% 70% 76% 72% 46% 69% 73% 55% 72% 69% 41% 49%
Not very important 4% 20% 2% 11% 6% 19% 15% 3% 2% 7% 20% 7% 25% 8% 14% 12% 25% 21%
Not important at all 2% 7% 4% 11% 0% 5% 8% 0% 0% 2% 6% 0% 0% 0% 2% 4% 6% 9%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
What best reflects your views regarding the importance of open innovation as an enabler of innovation for your business? By open innovation, we refer to joint innovation with external partners including large companies, start-ups, universities, government agencies, etc. Open innovation is a major enabler of innovation in my business 41% 25% 46% 26% 38% 18% 28% 52% 63% 33% 28% 44% 31% 25% 22% 43% 37% 24%
Open innovation is an enabler but 47% 49% 48% 35% 60% 51% 42% 43% 33% 41% 30% 29% 55% 45% 56% 39% 41% 37% not a major one Open innovation is not an enabler of innovation in my business 12% 25% 6% 39% 2% 32% 30% 5% 4% 26% 42% 27% 14% 30% 22% 18% 22% 39%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
To what extent do you collaborate with each of the following organizations when it comes to seeking innovation for your business?
Public institutions—Government
To a great extent—key partner for innovation 31% 24% 24% 26% 32% 19% 25% 33% 51% 26% 28% 27% 33% 15% 24% 22% 18% 20%
To some extent—some experience 39% 46% 42% 22% 62% 49% 36% 32% 35% 33% 28% 40% 43% 43% 62% 57% 39% 32% of collaboration Never—no experience of collaboration 29% 31% 34% 52% 6% 32% 40% 35% 14% 41% 44% 33% 24% 42% 14% 22% 43% 49%
Academics—Universities, etc.
To a great extent—key partner for 35% 25% 30% 20% 36% 19% 19% 33% 51% 31% 22% 47% 27% 23% 22% 33% 22% 20% innovation
To some extent—some experience 37% 37% 50% 20% 62% 42% 38% 46% 37% 33% 34% 36% 47% 36% 48% 45% 33% 40% of collaboration Never—no experience of collaboration 27% 37% 20% 59% 2% 39% 43% 21% 12% 36% 44% 16% 25% 42% 30% 22% 45% 40%
Social technologies (e.g., social media, social collaboration platforms, etc.)
To a great extent—key partner for 41% 49% 38% 30% 53% 32% 30% 62% 76% 48% 36% 51% 33% 62% 24% 41% 39% 40% innovation To some extent—some experience of collaboration 43% 15% 36% 26% 42% 30% 30% 17% 18% 33% 22% 31% 35% 21% 44% 35% 22% 20%
Never—no experience of 8% 25% 14% 31% 6% 26% 23% 16% 4% 9% 24% 13% 22% 17% 18% 16% 25% 30% collaboration
R&D institutes
To a great extent—key partner for innovation 18% 17% 22% 15% 42% 19% 21% 46% 47% 19% 24% 24% 22% 13% 22% 22% 20% 15% US 9% 41% 41% 18% 47% 16% 16% 37% 14% 37% 10% 73% 24% 23% 26% 45% 34% 29% 62% 49% 34% 100%
UK 41% 31% 31% 16% 16% 24% 27% 25% 27% 33% 35% 25% 22% 39% 45% 43% 45% 59% 55% 20% 20% 100% Appendix 51 Turkey 8% 6% 51% 31% 61% 14% 24% 18% 37% 16% 57% 24% 25% 25% 25% 55% 55% 20% 49% 20% 59% 100% South 6% 18% 14% 16% 14% 24% 24% 52% 22% 28% 34% 34% 34% 34% 48% 56% 20% 46% 54% 50% 50%
Korea 100% South 9% 8% 51% 21% 15% 19% 19% 42% 42% 26% 25% 28% 26% 38% 36% 62% 38% 30% 49% 64% 40%
Africa 100%
Russia 2% 6% 41% 41% 51% 31% 47% 37% 47% 27% 27% 37% 24% 22% 22% 33% 65% 20% 29% 20% 49% 100%
Mexico 9% 11% 11% 51% 31% 15% 27% 24% 25% 42% 38% 36% 33% 45% 38% 36% 20% 60% 40% 44% 40% 100%
Japan 18% 18% 42% 42% 32% 22% 26% 32% 22% 26% 38% 34% 34% 26% 38% 30% 34% 48% 30% 44% 40% 100%
Italy 41% 41% 41% 31% 21% 17% 17% 12% 14% 47% 24% 36% 22% 38% 53% 22% 38% 45% 40% 40% 40% 100%
Indonesia 0% 41% 12% 12% 12% 18% 18% 47% 57% 25% 10% 35% 67% 22% 35% 22% 35% 43% 53% 90% 100%
India 2% 11% 41% 37% 27% 24% 27% 24% 35% 33% 38% 22% 35% 22% 30% 29% 49% 54% 30% 40% 44% 100%
Germany 9% 21% 13% 19% 32% 36% 23% 45% 23% 43% 36% 43% 36% 38% 26% 43% 34% 40% 40% 40% 40% 100%
France 21% 21% 12% 47% 14% 19% 37% 19% 42% 37% 23% 32% 23% 23% 23% 49% 54% 44% 40% 60% 40% 100%
China 9% 9% 4% 8% 4% 11% 11% 15% 15% 47% 47% 57% 38% 53% 34% 43% 45% 53% 45% 66% 43% 100%
Canada 41% 41% 17% 15% 13% 19% 37% 19% 26% 22% 39% 22% 22% 33% 26% 65% 26% 39% 59% 43% 63% 100%
Brazil 12% 18% 18% 14% 14% 16% 26% 62% 52% 22% 26% 34% 20% 54% 30% 46% 46% 48% 40% 40% 40% 100%
Australia 8% 15% 15% 37% 47% 37% 19% 42% 19% 27% 25% 22% 29% 20% 56% 34% 29% 53% 49% 54% 44% 100%
Argentina 6% 31% 12% 47% 47% 14% 24% 16% 37% 27% 37% 24% 67% 22% 35% 29% 33% 39% 43% 49% 43% 100% Non-profit organizations (e.g., foundations) (e.g., Non-profit organizations How important is international expansion to grow your business and create jobs? Incubators—Accelerators Customers (e.g., co-creation) Customers (e.g., Peers—Other SMEs Large companies To a greatTo extent—key partner for innovation To someTo extent—some experience collaborationof Never—no experience of collaboration To someTo extent—some experience collaborationof Never—no experience of collaboration Important Critical Never—no experience of collaboration To a greatTo extent—key partner for innovation To someTo extent—some experience collaborationof To a greatTo extent—key partner for innovation Total Never—no experience of collaboration To someTo extent—some experience collaborationof Not important at all Not very important To someTo extent—some experience collaborationof Never—no experience of collaboration Never—no experience of collaboration To a greatTo extent—key partner for innovation someTo extent—some experience collaborationof To a greatTo extent—key partner for innovation 52 Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Russia Africa South Korea South Turkey UK US
How important are digital technologies in the success of your international expansion?
Critical 22% 24% 24% 15% 13% 19% 11% 16% 25% 9% 18% 25% 6% 19% 6% 14% 27% 11%
Important 53% 34% 60% 35% 62% 28% 30% 57% 63% 57% 34% 53% 53% 40% 44% 57% 33% 30%
Not very important 12% 17% 6% 13% 15% 25% 32% 19% 10% 19% 20% 9% 25% 8% 32% 16% 12% 12%
Not important at all 2% 7% 2% 7% 6% 9% 4% 5% 3% 10% 4% 12% 4% 8% 6% 4% 6%
Not applicable—We do not plan to 12% 19% 8% 30% 4% 19% 23% 3% 2% 12% 18% 9% 4% 30% 10% 8% 24% 41% expand internationally
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
What are the main obstacles faced by your company in its international expansion?
Logistics costs 33% 32% 30% 35% 15% 28% 36% 38% 41% 38% 28% 45% 18% 26% 32% 27% 24% 17%
Challenges to find local partners- alliances 27% 27% 32% 24% 21% 26% 19% 41% 33% 33% 18% 31% 25% 25% 30% 31% 37% 20% Access to international finance- funding 37% 12% 32% 17% 17% 28% 17% 35% 35% 34% 20% 36% 31% 28% 26% 33% 20% 14%
Lack of sufficient local market 12% 32% 28% 24% 36% 23% 26% 30% 22% 21% 34% 31% 27% 17% 34% 14% 27% 20% knowledge to identify opportunities
Specific local regulations 27% 24% 30% 20% 28% 14% 17% 22% 27% 19% 22% 25% 25% 19% 28% 18% 16% 20%
Trade barriers 25% 14% 36% 24% 23% 18% 15% 19% 22% 28% 22% 24% 37% 25% 18% 27% 24% 12%
Cultural differences (especially 31% 15% 16% 17% 38% 23% 19% 14% 33% 21% 16% 16% 25% 23% 28% 27% 12% 18% in negotiations) Finding local skilled resources to support the local—regional 14% 20% 18% 13% 36% 21% 21% 19% 41% 31% 32% 13% 22% 17% 28% 25% 20% 12% markets Foreign direct 29% 8% 20% 7% 15% 19% 13% 16% 16% 16% 16% 18% 27% 13% 18% 22% 16% 9% investment restrictions
Concerns on intellectual property 10% 19% 12% 11% 25% 12% 17% 10% 16% 12% 10% 11% 25% 11% 18% 20% 16% 15%
Obstacles to mobility of talents 18% 10% 22% 13% 25% 19% 4% 17% 8% 17% 4% 11% 18% 6% 16% 20% 8% 12%
At least one of these obstacles 88% 71% 92% 69% 92% 77% 68% 87% 98% 90% 74% 87% 94% 70% 92% 88% 73% 56%
None of these obstacles 12% 29% 8% 31% 8% 23% 32% 13% 2% 10% 26% 13% 6% 30% 8% 12% 27% 44%
Do you expect to create new jobs in 2014?
No 22% 29% 16% 44% 13% 32% 30% 5% 4% 38% 42% 13% 16% 19% 16% 14% 49% 43%
Yes 78% 71% 84% 56% 87% 68% 70% 95% 96% 62% 58% 87% 84% 81% 84% 86% 51% 57%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
To what extent do you plan to develop external collaboration (e.g., crowdsourcing, freelancers, contractors) as a substitute to recruitment in 2014? To a large extent—external collaboration will be broadly 24% 25% 36% 26% 43% 16% 21% 32% 43% 28% 32% 24% 27% 13% 12% 22% 27% 13% leveraged To some extent—external collaboration will be leveraged but 41% 37% 48% 33% 51% 47% 34% 37% 49% 45% 32% 49% 55% 57% 62% 69% 31% 27% remain limited We do not plan to develop 35% 37% 16% 41% 6% 37% 45% 32% 8% 28% 36% 27% 18% 30% 26% 10% 41% 60% external collaboration US 41% 51% 17% 13% 15% 19% 57% 57% 23% 76% 26% 39% 36% 39% 45% 55% 43% 29% 46% 40% 100% 100%
UK 8% 31% 51% 14% 37% 24% 37% 57% 25% 35% 67% 22% 45% 45% 55% 45% 29% 63% 20% 59% 100% 100% Appendix53 Turkey 31% 31% 51% 71% 18% 14% 37% 37% 57% 24% 57% 25% 22% 55% 29% 29% 86% 20% 59% 20% 100% 100% South 10% 32% 22% 22% 36% 52% 52% 20% 34% 20% 30% 30% 56% 66% 64% 50% 50% 40% 40% 40% 100% Korea 100% South 2% 51% 21% 21% 81% 13% 47% 42% 57% 25% 77% 23% 28% 28% 36% 62% 53% 53% 30% 64% 100% Africa 100%
Russia 41% 41% 31% 16% 37% 24% 24% 24% 25% 25% 33% 33% 67% 53% 29% 29% 65% 49% 49% 69% 100% 100%
Mexico 31% 51% 71% 13% 18% 47% 24% 24% 24% 42% 33% 22% 29% 29% 58% 56% 44% 60% 44% 44% 100% 100%
Japan 18% 24% 42% 28% 28% 26% 72% 28% 22% 22% 36% 38% 62% 30% 30% 54% 46% 48% 44% 64% 100% 100%
Italy 7% 9% 17% 47% 16% 57% 57% 33% 22% 72% 28% 36% 26% 36% 55% 29% 66% 48% 50% 60% 100% 100%
Indonesia 6% 41% 41% 31% 31% 16% 37% 75% 27% 75% 10% 57% 35% 35% 25% 55% 43% 43% 20% 84% 100% 100%
India 2% 71% 19% 37% 27% 27% 27% 75% 35% 35% 25% 35% 38% 22% 62% 59% 48% 46% 44% 44% 100% 100%
Germany 21% 21% 17% 17% 13% 15% 47% 47% 32% 36% 34% 53% 58% 34% 49% 43% 53% 49% 60% 60% 100% 100%
France 11% 47% 47% 19% 37% 16% 42% 42% 32% 25% 33% 72% 28% 26% 26% 39% 63% 65% 60% 44% 100% 100%
China 9% 13% 13% 47% 19% 19% 19% 23% 57% 87% 26% 38% 62% 34% 43% 43% 43% 30% 58% 60% 100% 100%
Canada 7% 41% 61% 15% 24% 19% 37% 52% 22% 39% 26% 70% 65% 20% 63% 48% 30% 48% 50% 44% 100% 100%
Brazil 12% 24% 24% 24% 24% 10% 28% 36% 52% 22% 28% 28% 38% 52% 38% 88% 66% 54% 54% 64% 100% 100%
Australia 31% 15% 15% 47% 47% 14% 47% 24% 27% 42% 25% 22% 39% 34% 59% 58% 59% 54% 54% 46% 100% 100%
Argentina 31% 47% 47% 37% 37% 27% 25% 57% 25% 22% 29% 45% 43% 29% 20% 49% 20% 49% 59% 80% 100% 100% With regard to supporting your innovationagenda, what priority actions doyou expect fromthe government your in country? Ranked 3 within Top What best describes your definition of a socialentrepreneur? What do you think of the actions taken by the government your in country to supportentrepreneurial innovation? What arethe main barriers that prevent your company to recruit more young peopleyears (30 Ranked old)? within top3 Would youdefine yourself as a socialentrepreneur? Tax incentives Tax Total ‘Small Business Act ‘ ‘Non-profit activity‘Non-profit Reducing red tape and regulation for entrepreneurs Actions are taken but they are not relevant or efficient Supportive environment for business angels and venture capital funds Development of technology training and education ‘Financial self-sustainable company which in profits are reinvested into the business itself. Development of public bank to finance entrepreneurs and small and medium enterprises ‘Actively contribute to build the local community and/ or develop solutions to social problems Relevant and efficient actions are taken Availability of appropriate skills Support innovation for Yes No Access finance-capital to Lack incentives of Government regulation and compliance requirements Labor market inflexibility Opening of public procurement to innovative small and medium enterprises Total 54 Argentina Australia Brazil Canada China France Germany India Indonesia Italy Japan Mexico Russia Africa South Korea South Turkey UK US
Public investment in technology infrastructure 24% 17% 22% 22% 13% 25% 28% 13% 18% 29% 18% 27% 18% 9% 20% 20% 18% 18% Development of local innovation ecosystems 12% 22% 18% 11% 34% 18% 11% 29% 14% 19% 16% 24% 22% 2% 24% 25% 25% 12%
Public investment in R&D 10% 14% 18% 17% 23% 19% 17% 24% 16% 9% 18% 11% 18% 13% 22% 16% 27% 19%
Improvement of Intellectual Property rights 16% 19% 18% 17% 30% 19% 17% 13% 20% 9% 8% 18% 27% 6% 16% 16% 10% 18%
Open Data promotion 18% 10% 18% 7% 32% 11% 19% 14% 20% 14% 22% 18% 12% 17% 18% 25% 8% 15%
Improve immigration policy for 4% 20% 20% 6% 13% 7% 19% 13% 16% 9% 14% 13% 16% 6% 20% 12% 6% 16% skilled workers
What do you think of the actions taken by the government in your country to support entrepreneurs’ international expansion?
Relevant and efficient actions are taken 14% 22% 28% 19% 43% 18% 13% 35% 35% 17% 20% 33% 14% 9% 18% 25% 22% 15%
Actions are taken but they are not 43% 39% 54% 31% 45% 44% 36% 41% 55% 45% 34% 42% 63% 34% 64% 53% 29% 37% relevant or efficient
No real action taken 43% 39% 18% 50% 11% 39% 51% 24% 10% 38% 46% 25% 24% 57% 18% 22% 49% 48%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
With regard to supporting entrepreneurs’ international expansion, what priority actions do you expect from G20 governments?
Reduce trade barriers 47% 31% 58% 39% 34% 37% 30% 41% 41% 43% 30% 47% 51% 49% 38% 43% 37% 30%
Develop access to international finance-funding 41% 42% 32% 46% 32% 23% 17% 54% 41% 59% 32% 58% 49% 43% 46% 41% 27% 20%
Facilitate identification of local 33% 37% 46% 31% 43% 33% 38% 49% 49% 43% 40% 47% 41% 30% 48% 45% 29% 19% partners-alliances
Reduce red tapes for exports 33% 37% 32% 31% 26% 30% 26% 35% 45% 36% 24% 35% 43% 42% 28% 20% 37% 27%
Remove Foreign Direct Investment restrictions 35% 29% 36% 22% 55% 28% 25% 40% 29% 34% 38% 27% 27% 28% 44% 37% 22% 18%
Strengthen international rule 24% 32% 32% 19% 43% 28% 34% 29% 47% 24% 28% 29% 20% 25% 30% 43% 31% 28% of law
Facilitate mobility of talents 39% 20% 46% 17% 43% 32% 34% 33% 35% 29% 24% 35% 33% 21% 36% 29% 22% 24%
At least one of these actions expected 84% 76% 94% 69% 92% 70% 68% 94% 96% 90% 72% 93% 88% 79% 90% 86% 69% 55%
None of these actions expected 16% 24% 6% 31% 8% 30% 32% 6% 4% 10% 28% 7% 12% 21% 10% 14% 31% 45%
What do you think of the actions taken by the government in your country to support youth job creation?
Relevant and efficient actions are taken 18% 25% 34% 20% 57% 18% 23% 41% 25% 17% 28% 33% 25% 11% 24% 37% 24% 13% Actions are taken but they are not relevant or efficient 45% 49% 52% 43% 28% 47% 42% 37% 63% 36% 28% 42% 57% 43% 50% 39% 39% 43%
No real action taken 37% 25% 14% 37% 15% 35% 36% 22% 12% 47% 44% 25% 18% 45% 26% 24% 37% 43%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% US 41% 12% 18% 18% 27% 37% 24% 35% 33% 22% 34%
UK 6% 31% 31% 12% 14% 37% 27% 39% 29% 29% 43% Appendix55 Turkey 31% 31% 16% 37% 37% 37% 24% 10% 25% 25% 25% South 24% 24% 28% 38% 28% 34% 34% 20% 20% 30% Korea 20% South 11% 17% 17% 25% 32% 26% 23% 26% 38% 45% Africa 40%
Russia 31% 31% 24% 25% 25% 35% 33% 22% 22% 22% 29%
Mexico 7% 24% 24% 27% 22% 22% 38% 38% 29% 29% 40%
Japan 18% 18% 24% 24% 32% 26% 26% 22% 34% 30% 46%
Italy 17% 14% 16% 16% 33% 28% 28% 28% 53% 29% 40%
Indonesia 31% 12% 14% 47% 16% 27% 35% 33% 22% 33% 29%
India 41% 21% 21% 17% 27% 25% 25% 32% 22% 29% 40%
Germany 21% 17% 15% 19% 19% 32% 32% 26% 38% 38% 43%
France 21% 14% 16% 47% 19% 19% 19% 25% 39% 40% 40%
China 11% 21% 15% 23% 36% 26% 36% 34% 34% 34% 30%
Canada 31% 15% 19% 37% 33% 26% 22% 33% 43% 20% 20%
Brazil 18% 16% 32% 32% 28% 32% 28% 28% 28% 28% 30%
Australia 5% 41% 14% 24% 27% 24% 25% 32% 25% 34% 49%
Argentina 8% 41% 18% 16% 24% 25% 33% 29% 43% 43% 20% What priority actionsdo you expect from the government your in country to supportyouth job creation by your company? Ranked within top 3 Promote direct involvement of businesses tertiary in educational system Enable lifelong learning and development of skills Increase Science-Technology- graduates Maths and Engineering Remove red tape Increase transferability of skills by standardizing certifications and qualifications Facilitate mobility of talents Develop entrepreneurial skills Improve equity and access for job seekers Promote vocational training- Promote vocational apprenticeship improve Develop financial incentives, e.g., tax reduction Increase labor market flexibility About Accenture About Accenture Research About Accenture Technology Labs Accenture is a global management Accenture Research is Accenture’s global Accenture Technology Labs, the dedicated consulting, technology services and organization devoted to economic and technology research and development outsourcing company, with more than strategic studies. The staff consists of (R&D) organization within Accenture, 293,000 people serving clients in more 200 professionals in economics, surveys has been turning technology innovation than 120 countries. Combining unparalleled and data modeling from Accenture’s into business results for more than 20 experience, comprehensive capabilities principal offices in America, Europe, years. Our R&D team explores new and across all industries and business functions, Africa and Asia/Pacific. emerging technologies to create a vision and extensive research on the world’s of how technology will shape the future most successful companies, Accenture and invent the next wave of cutting-edge collaborates with clients to help them business solutions. Using our knowledge become high-performance businesses and of the technology ecosystem, our Open governments. The company generated Innovation team help clients connect to net revenues of US$28.6 billion for the leading innovative startups to identify the fiscal year ended Aug. 31, 2013. Its relevant technology trends, fuel innovation home page is www.accenture.com. internally and develop transformative programs. Technology Labs help clients innovate to achieve high performance. The Labs are located in Silicon Valley, California; Sophia Antipolis, France; Arlington, Virginia; Beijing, China and Bangalore, India. For more information follow us @AccentureLabs and visit www.accenture.com/technologylabs.
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