WINDS OF CHANGE OVER BUENOS AIRES NURTURING ENTREPRENEURSHIP IN A DEVELOPING MEGACITY FRANCISCO CABRERA AND MARIANO MAYER Cities across the globe are complex webs of economic activity and centers of ideas and innovation where entrepreneurial activity can thrive when given the proper environment. With three of the world’s 28 megacities, Latin America is more urbanized than any other region in the developing world.1 In 2014, Buenos Aires was identified as one of the three, the others being Mexico City and Sao Paulo.2 Its metropolitan area is home to roughly 41 percent of the 41 million people living in all of Argentina.3 In recent decades, the abrupt advancement nition of each person as an individual and a of technology and expansion of globaliza- citizen of Argentina. tion have had a significant impact on the social and economic development of all When looking at our city from this stand- cities, and Buenos Aires is no exception. point, we recognized that too many citizens The digital reality of social interactions has were struggling daily to survive, let alone to reached a level at which no citizen, for bet- accomplish their dreams. The world is ter or for worse, is indifferent to global fluc- developing at a pace that will only increase tuations.4 This picture highlights the entre- this gap, and we needed a human-centered preneurial challenge governments face solution that would help to close it. We when designing public policy to foster the wanted our people to regain confidence in wellbeing of its citizens. their capabilities and develop the basic skills they needed to reach their goals. Even Buenos Aires has made a particular effort to though conditions in Buenos Aires were not promote collaborative value creation. The always optimal, we set out to design a sys- city’s complex social ecosystem must be tem that would reinforce risk-taking by developed with a well-defined plan, as with- establishing a rewarding social environ- out a clear purpose it is impossible to deter- ment, and thus to unleash the potential all mine where to start and what to prioritize. people have within. We wanted our city to Given this situation, the city decided to take function as a systemic force that would a human-centered approach to entrepre- increase value creation by facilitating posi- neurial development, the aim being a recog- tive interactions, such as connecting unskilled workers with retired experts, 12 innovations / Thriving Cities Downloaded from http://direct.mit.edu/itgg/article-pdf/11/1-2/12/705181/inov_a_00243.pdf by guest on 29 September 2021 Winds of Change over Buenos Aires skilled unemployed workers with entrepre- tions with the Querandí tribe, famine and neurs, and entrepreneurs with potential disease forced the remaining settlers to company cofounders or investors. After all, leave. Forty years passed before a second no citizen is entirely on their own, nor group of Spaniards, led by Juan de Garay, should they be. permanently settled in what would later become Buenos Aries. None of what fol- This essay explains how we designed a lowed would have been possible without human-centered approach that would nur- the first settlers’ efforts. In fact, the cattle ture an entrepreneurial ecosystem from and horses they left behind in 1541 flour- within the walls of Buenos Aires’ Office of ished in the rich environment, creating Entrepreneurship (GOE). We begin by unique conditions that enabled the second explaining the origins and history of the group of settlers to succeed. The concept of city, which connects to the challenges we creative destruction has guided our city’s experienced upon taking our posts as the development ever since. main promoters and facilitators of an entre- preneurial culture in Buenos Aires. We But history also left its scars. The political then discuss some of the contemporary instability and economic rollercoaster of challenges Argentina faces to contextualize recent decades stressed the city, and the the issues our citizens face and describe infrastructure did not keep pace with fluc- how we changed limitations into opportu- tuations in population caused by rapid nities and executed a strategy that has sup- urbanization and waves of migration.5 The ported significant growth and entrepre- chasm between basic social needs and the neurial activity across Buenos Aires. The deficient infrastructure and governmental execution of this strategy laid the founda- capability has only widened over time, sig- tion for a cultural shift that continues to nificantly increasing the diseconomies of spread across Argentina. scale that stem from population growth. This combination of factors caused the city to expand well beyond its original bound- THE ORIGINS aries, which has increased the number and From the beginning, Buenos Aires’ exis- complexity of coordination requirements tence has been based on entrepreneurial between intra- and inter-municipal offices. drive. In 1536, a convoy carrying the first As a result, people sought alternative solu- Spaniards from Europe settled in a nearby tions to fill unmet housing and labor needs, riverbed. After five years of adverse rela- which further complicated existing prob- ABOUT THE AUTHORS Francisco Cabrera is Argentina’s Minister of Production. He previously served as Minister of Economic Development for Buenos Aires. Mariano Mayer is the National Secretary of Entrepreneurs and Small and Medium Enterprises in Argentina’s Ministry of Production. In September 2013 he was appointed head of the General Direction of Entrepreneurship of Buenos Aires City, which is part of the Undersecretary of Creative Economy; both were established as part of the city’s new Innovation Plan. © 2016 Francisco Cabrera and Mariano Mayer innovations / volume 11, number 1/2 13 Downloaded from http://direct.mit.edu/itgg/article-pdf/11/1-2/12/705181/inov_a_00243.pdf by guest on 29 September 2021 Francisco Cabrera and Mariano Mayer lems. These and other issues decreased pro- government positions, we recognized that ductivity in Buenos Aires and reduced the social anxiety would increase over time, efficacy of public and private efforts to regardless of any efforts we made to estab- improve the population’s health, education, lish long- and short-term goals. The coun- and economic development and growth. try was coming out of the great agricultural commodity super-cycle of the past decade, which increased the fiscal surplus used to fuel inefficient social welfare policies that did not achieve their objectives, as they When we looked at our failed to create equal social development for all our citizens.6 This merely moved the city, we recognized that problem ahead in time. too many citizens were This lost opportunity to achieve greater equality had been at the top of the agenda struggling to survive and for most Latin American government offi- cials for the previous five years, which was accomplish their dreams a warning to Buenos Aires about its poten- on a daily basis. Our tial for long-term value creation. But given the gap we faced and our historical reliance people needed to regain on agricultural commodities, due to our underdeveloped economy, we had no confidence in their choice but to leapfrog these barriers and focus instead on our strengths—our great- capabilities and develop est asset was our people—and our cultural resilience. In other words, we decided to basic skills to reach their tap into the city’s deep entrepreneurial goals. The world was and roots and to harness the original spirit of Argentina to gain traction with our citi- continues to develop at a zens. pace that only increases this gap, and we needed THE SOLUTION Buenos Aires collapsed socially and eco- a human-centered solution nomically as a result of the 2001 economic and debt crisis, and yet it has come back to to close it. produce four of the six current Latin American unicorns.7 Against this back- drop, we set out to create a center of inno- vation and entrepreneurial activity in the city of Buenos Aires that could benefit all These historical challenges continue to have of Argentina. an impact in modern-day Buenos Aires. To increase the city’s collective productivity, In 2008, after decades of bipartisanship in dramatic improvements are needed in a the Buenos Aires government, a new politi- number of areas: infrastructure, urban plan- cal party—the Republican Proposition, of ning, transportation, health care, and access which we are members—gained control. to equal employment opportunities and We repeated the feat at the national level in skills development. Given the magnitude of November 2015. The original 2008 govern- these challenges when we took our current mental experience of the GOE focused on 14 innovations / Thriving Cities Downloaded from http://direct.mit.edu/itgg/article-pdf/11/1-2/12/705181/inov_a_00243.pdf by guest on 29 September 2021 Winds of Change over Buenos Aires gaining connectivity at all levels of social to tap into the economic revolution the rest interactions. The heart of the new city gov- of the world was experiencing. ernment’s strategy was that, the more citi- zens interacted and collaborated socially The new team started by designing a and economically, the more value they human-centered strategy that would adopt could create. Citizens needed a proper the incipient trends that were creating a ecosystem that allowed them to overcome new approach to building and scaling com- the city’s social and economic fragmenta- panies. Trending initiatives like design tion. A range of strategic guidelines materi- thinking, the lean startup movement, and alized into initiatives that included moving the business model canvas were parts of a city offices into impoverished areas, creat- new management wave intended to help ing and promoting business districts, pro- entrepreneurs fulfill their dreams.