{"id":13454,"date":"2014-07-09T05:00:19","date_gmt":"2014-07-09T11:00:19","guid":{"rendered":"https:\/\/tested-neuron.flywheelsites.com\/?p=13454"},"modified":"2015-02-16T16:55:16","modified_gmt":"2015-02-16T23:55:16","slug":"chile-teaches-the-world-a-lesson-about-innovation","status":"publish","type":"post","link":"https:\/\/unreasonablegroup.com\/articles\/chile-teaches-the-world-a-lesson-about-innovation\/","title":{"rendered":"Chile Teaches the World a Lesson About Innovation"},"content":{"rendered":"

Chile launched a grand innovation experiment<\/a> in 2010:<\/strong> it paid foreign entrepreneurs to come and visit for six months. It offered them $40,000 plus free office space, Internet access, mentoring, and networking. And, by the way, they would get to live in one of the most beautiful places on this planet, where housing was relatively cheap and corruption and crime were almost nonexistent. All Chile asked in return was that the foreigners interact with local entrepreneurs and consider making the country their permanent home.<\/p>\n

It seems too good to be true, doesn\u2019t it? Indeed, many people thought that the idea was crazy. But Chile was making a bet \u2014 that the foreign entrepreneurs would transform its entrepreneurial culture by teaching the locals how to take risks, help each other, and form global connections.<\/p>\n

The experiment, called Start-Up Chile<\/a>, was such a runaway success that, in an Oct. 2012 story, The Economist dubbed it \u201cChilecon Valley<\/a>.\u201d<\/p>\n

Santiago is today buzzing with entrepreneurial activity; university students often look to join start-ups rather than big companies; Start-Up Chile has gained brand recognition in innovation circles worldwide; and local entrepreneurs are becoming more ambitious and looking for opportunities abroad. This is what I have personally observed during my trips there.<\/p>\n

Start-Up Chile has also been flooded with applications\u2014more than 12,268, from 112 countries. According to Start-Up Chile\u2019s executive director, Sebastian Vidal, 810 startups from 65 countries have so far been admitted into the program. The first 199 companies that visited Chile and returned home reported that they had raised a total of $72 million in funding. A batch of 132 companies that chose to stay there reported that they had raised $26 million. Several start-ups have had successful exits, and hundreds of others expect to make it big.<\/p>\n

This is pretty good by entrepreneurial standards, considering that Chile has invested only about $35 million in this experiment. Other countries have spent hundreds of millions \u2014 even billions \u2014 of dollars in their efforts to create technology hubs.<\/p>\n

Legions of consultants have been advising regions to build science parks next to research universities and to offer financial incentives to selected industries to locate there, touting Harvard professor Michael Porter\u2019s cluster theory<\/a>. Porter had observed that geographic concentrations of interconnected companies, specialized suppliers, and service providers gave certain industries a productivity and cost advantage. His followers postulated that by bringing these ingredients together into a \u201ccluster,\u201d regions could artificially foment innovation.<\/p>\n

They couldn\u2019t. The formula doesn\u2019t work. The top-down industry cluster is a modern-day snake oil. Chile proved that it is people, not industry<\/a>, who power innovation.<\/p>\n

The formula doesn\u2019t work. The top-down industry cluster is a modern-day snake oil.<\/i> \u00a0Tweet This Quote<\/a><\/span><\/p><\/blockquote>\n

Tens of billions of dollars have collectively been invested by hundreds of regions all over the world in top-down cluster-development efforts. Consultants have reaped hundreds of millions of dollars in fees. Yet there is not one proven success anywhere in the world. Clusters form naturally on a basis of a region\u2019s inherent geographical and economic advantages \u2014 and of entrepreneurs\u2019 hard work. Innovation springs not from industry but from motivated risk-takers \u2014 from people. The Start-Up Chile experiment\u2019s purpose was to learn whether a technology hub would follow from importing entrepreneurs and providing them with the right networking support and mentorship.<\/p>\n

I helped design the Start-Up Chile program and serve on its advisory board. My involvement with Chile began in 2008, when the Chilean government asked my research team at Duke University to review Chile\u2019s engineering-education system and its I.T. outsourcing cluster. I told the government<\/a> that the cluster would not create the innovation or employment it hoped for, because Chile lacked the numbers of engineering graduates. Instead, I advised it to focus on entrepreneurship and emulate Israel and Finland: small countries with highly skilled, highly motivated innovators.<\/p>\n

The challenge Chile faced, however, was that \u2014 like most regions other than Silicon Valley \u2014 it didn\u2019t have an entrepreneurial culture that tolerated failure and encouraged information-sharing and experimentation. So I suggested that the country import what it needed; that it take advantage of America\u2019s foolishness in turning away the world\u2019s most innovative entrepreneurs. Because of flawed immigration policies, the U.S. is experiencing an exodus<\/a> of highly skilled entrepreneurial talent. Chile\u2019s Minister for Economy, Juan Andr\u00e9s Fontaine, to whom I pitched it, was skeptical of the idea that these foreigners would come to Chile. But he sanctioned an experiment and had his innovation chief, Nicolas Shea, lead it.<\/p>\n

Start-Up Chile has survived two government changes and is going to form the basis of major new innovation initiatives, according to Eduardo Bitran, recently appointed to head Chile\u2019s economic development agency, CORFO. In a Start-Up Chile advisory-board meeting at Stanford University, he said that the project was of national importance and a model for the rest of the world.<\/p>\n

There surely are lessons for regions all over the world in Start-Up Chile\u2019s success. To foster economic growth and innovation, the focus needs to be on people. They need to be empowered, enabled, and connected. There is also an important lesson for America: it needs to wake up and fix its immigration policies before Chilecon Valleys sprout up all over the world \u2014 powered by the people it has turned away.<\/p>\n","protected":false},"excerpt":{"rendered":"

Chile has made a bet that the foreign entrepreneurs can transform its entrepreneurial culture by teaching the locals how to take risks, help each other, and form global connections.<\/p>\n","protected":false},"author":91,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[476],"tags":[2247,1397,1284,498,329,1398,290,349,17,1408,1420,1424,383,119,1404],"class_list":["post-13454","post","type-post","status-publish","format-standard","hentry","category-article","tag-article","tag-bfp","tag-chile","tag-culture","tag-economy","tag-intdev","tag-leadership","tag-lessons","tag-money","tag-profile","tag-prototyping","tag-south-america","tag-starting","tag-success","tag-wadhwa"],"acf":[],"yoast_head":"\nChile Teaches the World a Lesson About Innovation - UNREASONABLE<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/unreasonablegroup.com\/articles\/chile-teaches-the-world-a-lesson-about-innovation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chile Teaches the World a Lesson About Innovation - 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