December 16, East Hartford, Conn. – A six-month study by the Connecticut Technology Council (CTC) to determine Connecticut’s competitive position as a location for hi-tech firms with high jobs growth reveals the state is in danger of losing these critical contributors to economic growth. The study, timed to be of assistance to the new Governor’s economic development team, combines interviews with CEOs of fast-growing firms and research on where jobs are coming from to provide key steps to keep top entrepreneurs and tech-oriented firms planted here. The study suggests why the state, despite many resources, has lagged the nation in new business start-ups and net job creation over the past decade.
“The troubling news is that even though almost all the CEOs we talked to lead firms actually founded here, and they like Connecticut personally, they have serious concerns about their ability to thrive in this state. We risk losing their future job growth to other states or countries unless we address the weaknesses these very successful business leaders are pointing out in our job development strategies,” said CTC President and CEO Matthew Nemerson. “With a very large fraction of all new jobs created by the fastest growing tech firms, we need to change this situation.”
The group suggested numerous cost-effective ways to address the state’s key weaknesses, either by modifying existing practices or adopting new policies from other locations that they admired. The areas they wanted addressed included: a lack of helpful networks to connect people in the tech world across the state and region; difficulty finding talented young workers outside Stamford and New Haven; a need for more early stage investment programs from state sources and more support for research links to the state’s universities.
The CEOs of the fastest growing firms are focused on how to help their firms grow effectively. Their overwhelming opinion was that while Connecticut is an expensive place for their businesses, it is the state’s poor performance in fostering an entrepreneurial environment that leads them to question their commitment to Connecticut. These CEOs see a weak culture of innovation and little drive to create strategies to build it. They see the government as generally indifferent to their growth, with actual interactions often defensive, incurious, not data-driven and rarely changing based on jobs impact. These CEOs see little state-level commitment to Connecticut’s doing a better job relative to other states or countries.
The study selected CEOs and senior technology officers from fast growing firms in key clusters including biotech, medical devices, software, internet and new media, advanced manufacturing, energy and defense technology. They range in size from start-ups to billion dollar operations with thousands of workers. They expressed their opinions in open-ended questioning and maintained them in follow-up surveys.
“Recent data from the Census Bureau shows that 40% of net job creation comes from the fastest growing 1% of firms in the U.S. In fact, the vast majority of new jobs are created by a small number of very fast-growing firms. Everyone is competing to start, attract and keep these companies and the leaders who create and run them. Our research says we are falling behind other locations in the sheer number of fast-growing firms and most alarmingly, even those doing well may decide to leave in the future,” said Christopher Kalish, Chairman of the CTC and Director of the GE Edgelab in Stamford.
“The good news is that this group of business leaders believes that if the new Governor implements the kinds of solutions they are recommending, we can become more competitive quickly,” Kalish said.
Leaders spoke of state agencies with little knowledge of their companies’ successes and of a government without plans to address their future growth. This was in stark contrast to phone calls and offers from other states – and often other governors – congratulating them and explaining the specific benefits of moving out of Connecticut. Many are concerned that the state has abandoned the cluster initiatives of past years and with it the opportunity to attract more firms in related technology areas.
The surveys and companion research were conducted over the past six months by a task force of the Connecticut Technology Council (CTC), led by senior technology executives from UTC, Covidien and Gerber Technology and supported by a team of graduate students from Yale and the University of Connecticut. The law firms of Day Pitney, LLP and Pullman Comley, LLP participated as well. The work was led by Yale MBA student Casey R. Pickett, whose studies focus on economic development and entrepreneurship.
“Successful CEOs see business environments as ecosystems, not political jurisdictions. For them, networks are like blood vessels, carrying the ideas, talent, money and support they need to grow,” says Pickett.
In addition to lively downtowns and fast transportation to attract young talent, global customers and savvy investors, the CEOs said they want a governor who is as entrepreneurial and resourceful as they are. Even those who say they need no assistance, expect the state to constantly build resources and institutions to make the regional environment more supportive of innovation and growth.
“The key take away is that these unusually successful technology entrepreneurs want to be in a place that can adapt and change to support them no matter how large they grow. This is equally true for small and large fast-growing firms,” added Kalish.
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