It was about a year ago that Harvard Business School professor Michael Porter called me with an intriguing proposal: to create an annual listing of the 100 fastest-growing private companies in America's inner cities. The list, he said, could be modeled after the Inc. 500 and would focus public attention on the instrumental role that entrepreneurial companies play in rebuilding the economies of our inner cities, which is perhaps the single greatest challenge confronting our nation on the eve of a new century. He suggested that we structure the project as a joint venture between Inc. and the Initiative for a Competitive Inner City (ICIC), the nonprofit he founded in 1994. Together we could create a national awards ceremony.
He didn't have to go any further. I knew immediately that I wanted Inc. to be a part of the project.
Now, people are constantly approaching Inc. with ideas for listings, rankings, and awards programs of various types. What attracted me to Porter's proposal, however, was the themes it drew together.
One theme has to do with the issue that led to the ICIC's formation in the first place, the crisis of the inner cities. Here we are, in the ninth year of one of the greatest economic expansions in our history, and yet the inner cities continue to fall further and further behind. The consequences are tragic for the people who live there and shameful for the rest of the country. It's a situation that cries out for attention and receives a lot of it. What sets the ICIC apart is its focus on the root cause of the problem: the dearth of wealth generation and job creation in the inner cities themselves.
Beyond analyzing the crisis, Porter and his colleagues have identified the crucial element of a strategy for revitalizing the inner cities. If wealth generation and job creation are the problems, the ICIC has concluded, the solution is to support and foster the types of businesses that generate wealth and create jobs. The goal is to forge a sustainable inner-city economy, one that is not dependent on outside programs but instead driven by an ongoing process of entrepreneurial renewal. Growth companies are the heart and soul of that process.
And I'm not talking here about obscure little retail outlets or a few token growth companies that have bucked the odds. The Inner City 100 consists of an impressive array of businesses from a variety of industries. Nearly a quarter of the companies provide business products and services, and another 12% are in high-technology fields. The average five-year growth rate is 701%, and together the companies have created almost 4,700 jobs in the past five years. Most important, the companies have succeeded not in spite of their location but at least partly because of it. They've seen an opportunity overlooked by others and run with it.
Impressed as I am with the Inner City 100 companies, I'm equally impressed with our partner in this venture. The ICIC grew out of Porter's seminal work on the competitive advantages of inner cities. Today the organization conducts research on inner-city economies and runs mentoring programs to provide inner-city businesses with expertise that might otherwise be hard to come by.
The ICIC represents a new breed of nonprofits. I spend a lot of time working with such organizations, and they strike me as the philanthropic counterparts of Inc. 500 businesses. How often do we hear that today's economy is being transformed by companies that didn't even exist 20 years ago? Well, "social entrepreneurs" like the ICIC people are doing the same thing in philanthropy. They're reinvigorating the entire civic sector of our society, and they're doing it with none of the tools that people in business take for granted. In the process they're transforming the nonprofit world into a place that attracts the brightest and the best young men and women, just as government did in the 1960s, Wall Street did in the 1970s, and entrepreneurship did in the 1980s.
It seems particularly appropriate for Inc., which celebrates entrepreneurship in the business sector, to have undertaken such a project with an organization that exemplifies entrepreneurship in the philanthropic sector.