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When a company systematically breaks a law, we are often surprised. We shouldn’t be.

Every business leader is taught that success depends upon creating an organizational culture with a shared sense of purpose and values between employees and leadership.

Uber’s ongoing allegations of hostile and unfair treatment of female employees and Wells Fargo’s secret creation of millions of unauthorized deposit and credit card accounts at the expense of customers show that company culture can actually incite coordinated illegal activities. How does this happen?

Jack Ewing, author of “Faster, Higher, Farther” looked at this issue in connection with the fraud surrounding Volkswagen’s corporate decision to sell hundreds of thousands of cars with diesel engines that did not comply with environmental regulations. Over many years, VW systematically built engines designed to cheat on emission tests and to obscure inspections on just how toxic they were.

How it got to this point is instructive. It begins with the corporate culture.

A “corporate culture is never written down; it’s just what everyone knows,” Ewing told me. CEOs who do not tolerate failure or who are not interested in dissenting opinions rapidly create an environment where issues of legality or social norms become irrelevant against the broader goal of growth.

Tension inevitably builds because at some point in any large organization, employees will have to exercise judgement and decide for themselves what is right or wrong. When faced with that choice, will employees do the right thing?

As an observer of business culture, Ewing says the answer is clear: employees will not always do what is right, that “it’s up to management to set an example.”

My experience in the business world very much supports what Ewing observed through his research on Volkswagen. Leaders must encourage employees who might have bad news to deliver to speak up, and create an environment where subordinates can express themselves about uncomfortable situations. A mercurial founder who makes it clear he or she won’t tolerate contrary opinions is less likely to hear about important issues.

For VW and its substandard diesel engines and Uber with its perceived negative treatment of female employees, we have learned in retrospect of ample opportunities for the companies to change their paths and do the right thing, but employees didn’t feel safe to raise their concerns, and leadership didn’t show an interest.

It really does start at the top.

Stories like these serve as a reminder that without rules governing conduct, we should not assume that businesses will always act ethically. Business leaders are generally evaluated against the twin metrics of profitability and their ability to achieve effective collective action. If a company is justifiably motivated to pursue profit, we should not expect that every business will act in society’s best interest.

Let’s be fair to our business leaders; their job is to maximize profits and work within the rules, not to create new ones.

If we want to eliminate pollution, benefit from a fair financial services industry, and enjoy equality in the workplace, it is wise to have rules for business to follow.

We do not assume that citizens will always do the right thing — that’s why we have laws to regulate conduct. Why assume that it is any different for businesses?

A company can be objectively well-managed, yet willfully violate the law. Like a well-schooled crew team, frantically stroking as it tips over a waterfall.

This column originally appeared in The Washington Post.

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We as a society need to be schooled on how today’s young people learn, why technology and gaming are not the enemy, and that traditional classrooms with rows of desks and 30 sets of eyes directed toward the same blackboard are outdated.

The computer gaming industry is booming, and we should better harness its power. Whether it is augmented reality Pokémon Go or massive multi-player games such as World of Warcraft, the opportunities for start-ups are mind-blowing. In 2015, the global computer gaming market was worth $70 billion.

Capturing the imagination and encouraging gamers to engross themselves completely is a very rewarding skill for designers, who have learned how to balance the attributes of a successful game including playability, plot and engagement. The best ones create a feedback loop between game and player; the more the user participates, the more rewarding it is.

When it comes to education, many parents still see video games as the enemy of learning. Nothing but a time suck. Yet, a growing number of educational experts are proving that the attributes of popular computer games get high scores when applied to learning.

EverFi co-founder and chief executive Tom Davidson felt that the education sector was missing an opportunity to adapt gaming principles for positive effect. Founded in 2008, EverFi is one of the fastest-growing education technology companies in the United States. When I interviewed Davidson on my radio show “What’s Working in Washington,” he explained how the top-down model that prevailed 100 years ago was clearly not the way to teach today’s computer savvy students. The 21st century classroom needs to provide a more personalized educational experience — one where students learn at their own pace.

Davidson wants to expand education into areas defined by life skills: don’t teach just math, science and reading — include everything else necessary to be a successful member of society. He says EverFi’s mission is to tackle this country’s “most intractable issues, from financial education and sexual assault prevention to workplace health, diversity and inclusion.”

His business has grown, educating millions of students through games that instill valuable knowledge and insights. Recently, EverFi received $190 million in venture capital funding to expand its business and products. This impressive financing sets up the company for success, but is also indicative of another trend.

To Davidson, this is part of a larger story. The greater Washington region is a hotbed for education technology startups.

“There is literally no better place in the world to launch impactful education companies,” Davidson says, citing as examples Blackboard, 2U, Laureate Partners and Ellucian. He heaps praise on the region, predicting even more valuable education tools sprouting here because this “is the best place on earth to hire great educational leaders.”

Nurtured learners become leaders themselves eventually. Davidson speaks with several former students, including one who became financially literate through EverFi’s products, helping his family avoid financial ruin, and another student who navigated a highly-charged personal crisis through life skills he had learned.

For Davidson, this double bottom line — the combination of meeting the challenge of being an entrepreneur, and hearing how EverFi products impact students — provides a rewarding experience that “shoots him out of bed in the morning.”

It also reminds us of another fundamental truth: opportunities to make tangible impact through technology abound in the D.C. region. The unique cross-section of policy makers and technologists is fertile ground indeed.

This column originally appeared in The Washington Post.

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Everywhere, lines between business and political values have blurred, and often the actions of commerce challenge us to “take a side” in a political debate.

To this point, greater Washington’s tech community has largely stayed out of the fray. However, a group of well-respected start-up leaders is looking to change that, forming a group to respond to political issues through a grassroots initiative called the Capital Tech Coalition. They are taking a big risk while at the same time creating a huge opportunity for our start-up ecosystem.

I recently spoke with three members of this group’s steering committee about their hopes for its activities.

I learned that from its inception, the Capital Tech Coalition has had a political position and viewpoint. It originally came together to generate a letter expressing its position on Trump Administration policies on immigration and travel.

“We decided that we needed to speak together to represent our community of D.C.-area companies,” says Joshua Szmajda, the chief technology officer of Optoro, a Washington company that helps retailers deal with excess inventory.

Dan Berger, chief executive of the event-planning software company Social Tables, says taking a position on political issues is something large companies have done for a while yet smaller businesses in the D.C. region have been slow to embrace. To him, it is an inevitable outcome of a workforce becoming “more civically active.” Berger says he saw a growing number of tech employers realizing that their employees expected them to “take on more advocacy work.”

However, for this group, there is not only a need to provide employees with a sense that their employers are engaging in advocacy, but a broader need for star-tup leaders to be vocal about political issues.

From the perspective of Rosy Khalife, chief operating officer of the children’s gift-box service Surprise Ride, start-ups have a “responsibility to speak up on issues that impact our businesses, employees and community.”

I am sympathetic to the mission of this new group. Entrepreneurial people find meaning in their work. Yet, as we have learned in other parts of our society, once a discussion of values is introduced into business, dysfunction and distrust may also result.

For a community priding itself on collegiality and inclusiveness, this may be the largest challenge of all. Will the open nature of D.C.’s tech community withstand the introduction of discussions of values?

Last week in a blog post, Donna Harris, co-founder of 1776 and a leader in the D.C. tech community, suggested discussing values need not be divisive if opinions are respected, differences honored and “enough of us decide that kindness will win over fear.”

Will the newly-formed Capital Tech Coalition provide a template for resolving conflicts of values that shape our society? Time will tell.

This column originally appeared in The Washington Post.

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Greater Washington is not the dysfunction of “House of Cards.” It has an entrepreneurial culture that is distinct and is a dynamic place to live. Yet many refuse to see all the amazing things going on here. When we launched a podcast I host called “What’s Working in Washington” in January 2017, we were all engulfed in the constant drumbeat of political tension that for many Americans appeared to be the only story line for our community.

The producer of the show and I felt strongly that there were untold stories and unsung heroes here — that the Washington that wasn’t grabbing national headlines was much more than political infighting.

We were right. The diversity of stories reveal a community engaged and brimming with opportunity. The Washington we are learning about is not slow-moving and mired in political dysfunction at all.

Entrepreneurs in this region regularly span the gap between public policy and entrepreneurial brilliance. This is a hot bed for both start-ups and larger businesses addressing societal challenges in education, energy, urbanization and healthcare. Our guests evidence this trend, such as Inova in Fairfax, pursuing personalized cancer treatment, EverFi, a business that recently raised $190 million to apply gaming technology to education, and Earth Networks, which has accumulated weather data from sensors around the world to make state-of-the-art meteorological advances.

Our region creates complex technologies and new industries. The expertise driving research and development of cybersecurity, artificial intelligence and machine learning, as three examples, are located in federal labs, universities and companies around the region.

The boundaries of revolutionary technologies such as artificial limbs controlled by thought, software that can learn from experience and augmented reality are being expanded daily right here in our backyard.

Entrepreneurial spirit is not limited to for-profit businesses. Many of our guests are driven to make a social difference and use principles of business — understanding customers, managing resources and mastering branding — to affect positive change. Regional chapters of national organizations such as Volunteers of America and United Way, and local efforts such Humane Rescue Alliance, AppleTree Institute or Stone Soup Films are led by individuals committed to advancing their organizations’ missions with zeal and effectiveness.

After six months of podcast episodes, we see a commitment to connection and growth. Efforts to provide mentorship and connections to grow businesses, increase diversity and locate businesses in all parts of the region are impressive. The willingness to do the hard work to break down barriers, whether by proudly promoting D.C. neighborhoods like Right Proper Brewing does, or the D.C. Bar Association Foundation providing for the disadvantaged access to legal counsel.

Our daily podcast is not Pollyanna, nor oblivious to the challenges we face. The lack of regional coordination is a recurring theme, as is the segmentation of our community and differences in economic opportunity. Affordable housing is an issue that must be addressed for our region to thrive.

Yet, the picture painted through our interviews is that both our successes and challenges are addressed with energy, commitment and a spirit of optimism that is heartening.

While the rest of the country — and the world — watch media reports that focus on the negativity of politics in Washington, D.C., for millions of our own citizens, the reality is very different. This is a place where things get done. Every day.

This column originally appeared in The Washington Post.

 

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“Do you ever regret a decision you’ve made in your career?” This is a question that gets to the root of the entrepreneurial journey. Entrepreneurs value autonomy and self-determination. But, how do they feel when things just don’t work out?

At a pizza lunch last week with some highly engaged young professionals, I was asked this important question: do I have regrets?

My initial thought was to answer “of course not.” I see successful friends provide this answer often, as a way to communicate the subtext that if you are confident and look forward, there is no reason ever to look back. We entrepreneurs tend to be an optimistic lot.

I also considered answering by saying “of course, I look back at prior decisions and sometimes regret that things didn’t turn out the way I would have hoped. I’ve seen entrepreneurs state this as a way to show that they have an element of self awareness. Successful entrepreneurs tend to value self-awareness.

Yet, while either of those answers would have been heartfelt, they would have been fundamentally unhelpful to the asker. It wasn’t about whether he could be like me, it was about how he could develop skills to make the best decisions for himself.

We all make decisions that in retrospect we will wish we had made differently, or had different outcomes. That’s what I ended up answering. Yet, to me, it wasn’t enough to acknowledge the zigs and zags of life, it was about doing two things: acknowledging that a decision was made with the best information available at the time, and owning the results.

The entrepreneurial mindset is to not pretend that all decisions were the correct ones, but to acknowledge that whether right or wrong, your decisions are your own.

Yet a bigger question remains unanswered. How does a young professional get the information and context to make the best decision? For insight, I turned to some local entrepreneurs.

For Elizabeth Shea, founder of Vienna public relations firm Speakerbox Communications, career development starts with taking as much responsibility as possible early in one’s career. Shea says she believes the best career decisions are made by people who are hungry for responsibility and always willing to learn. She tells young professionals to always “pick a project to run and own, ask questions when needed, and deliver.”

Eric Koefoot, founder of PublicRelay, a Tysons media monitoring and measurement firm, agrees. He added two goals for early career development: find out what you like to do and what you do well. The two are tightly entwined. If you like what you do, you’ll do it with more passion and commitment and with repetition, competence develops.

Being willing to take personal risks and push the outward boundaries of personal comfort was a recurring theme, as was the importance of gathering life experiences, which could provide additional context and valuable input into what would make a happy worker.

Happiness with oneself, self-determination and access to a broad range of people to draw upon for advice when facing big decisions were also cited by experienced entrepreneurs.

“Your network is your net worth,” shared Tien Wong, chairman of Opus 8, an investment, advisory, and conference management firm based in Chevy Chase.

The message was clear: to develop a good career path is to create a base of experiences that are informative and enriching. Decision-making is enhanced by having skills and experiences.

So, should one have regrets with the professional decisions that we make?

Reflecting on a decision with regret is a waste of time. Reflecting on a decision made in ignorance is a tragedy.

This column originally appeared in The Washington Post.

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One thing Americans can agree on these days is that the Trump Administration is unconventional. But we should not lose sight of the fact that an erosion of conventional practices could very well undermine our economy.

Here’s how: commerce depends on predictability to create products and services, while business people rely upon a complex web of market practices called “business customs.”

People engaged in a business negotiation have a sense of how a “deal is supposed to go.” The shaping of this expectation occurs through business customs.

Take for example the purchase of a car. When you walk into a dealership, you to expect salespeople to offer a price higher than they will eventually sell and highlight the wonderful ways their car is different from the competition. They know you have a price that you are willing to pay, but that you won’t divulge.

So long as the negotiation conforms with the respective parties’ expectations of behavior, the parties will build up a relationship of trust and predictability, and then, a business transaction may occur.

Business customs are everywhere in our society. It’s what allows us to “shake on a deal” with confidence that a deal will occur with terms that are consistent with our handshake. It’s what keeps people from lying when they sell an interest in their company. It’s why, when a product doesn’t work, a buyer can justifiably return it with no questions asked.

Consider now how much more difficult it would be for a consumer not to be able to rely on any of those presumptions.

If you could not believe in the honesty and consistency of the process of commerce, would you be more or less likely to make a purchase?

Businesses that can connect with their customers in a trusted way expand customer relationships and grow. Many of our most prominent national brands reflect this strong feedback loop. Conversely, as we have seen recently, when companies are perceived to not be acting fairly or in a trustworthy way, consumer backlash can be rapid and harsh.

What is true for individual companies is just as true for the economy as a whole. If we believe that transactions are rigged, that interactions are not truthful, that we don’t share common viewpoints on how a deal is supposed to happen, our trust in others and commerce as a whole will be eroded.

Our economy is productive because we have been able to predict with some certainty how others will behave and the penalties for not conforming with these expectations.

International organizations such as the Organisation for Economic Co-operation and Development and World Bank, and economists here in the United States, have told us that unpredictability in business practices is inversely related to economic growth. The harder it is to create trust and predictability, the greater the friction on commercial activity.

Whether we like it or not, our politicians set a tone as national leaders for the mood of the nation. As they consider their conduct in the coming months, I hope they remember that a continued erosion of a respect for conventional practices will set a tone for the rest of us.

Business relies upon consistency and respect to both the written and conventional practices that shape society. A failure to appreciate this reality could have immeasurably adverse results on our national prosperity.

This column originally app read in The Washington Post.

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A few weeks ago, the world watched as a 69-year-old airline customer was yanked from his seat. The passenger was man-handled, but it was United Airlines that really took a beating. Suddenly, everyone had an opinion. But here’s my key question: in our pursuit of business efficiency, are we missing something important?

We know that efficiency can lower costs for customers in a competitive market. For many, this is enough. The primacy of efficiency underpins the intellectual arguments for lessening of federal regulation of business, the utilization of technology in substitution for human workers and an acceptance of economic concentration of many industries such as airlines or media.

But, is that right? Are efficiency and resulting lower prices all that matter to consumers?

Last week, I interviewed Thor Cheston, the founder of Right Proper Brewing Company on What’s Working in Washington. Right Proper makes beer and operates a brew pub in the Shaw and Brookline neighborhoods of Washington, D.C. Food and beer giants such as McDonald’s and Budweiser have proven that capturing efficiencies is rewarding. Yet, Cheston’s small business is succeeding as well.

The ingredients for his success are driven very much in the personal connection his business creates with its customers. Cheston says his customers can sense the authenticity because when they drink his brew or eat his food, they know that there is a person behind the product — and an intentionality in what they experience.

Intentionality and personal connection — where consumers connect with product creators — was the subject of a subsequent conversation I had with author David Sax. He recently wrote The Revenge of Analog: Real Things and Why They Matter.

Sax noticed that as music he enjoyed became easier to access online and through devices, his interest in listening to it declined. Music became a commodity that existed in the background of his life, rather than an experience in the middle of it. He found himself making a conscious decision — to acquire vinyl record albums by his favorite artists and take the time to read album covers, listen to the pops and crackles of a less-than-perfect sound, and hold the record in his hand.

This realization that business efficiency could actually devalue the experiences led him to wonder whether what he had experienced was more widespread. He learned that as a music lover, he was not alone: vinyl records sales were increasing dramatically. Physical book sales were growing while sales of e-books declined. Moleskin, a company making high-quality blank-paper notebooks, was sold for 500 million Euros.

His conclusion? “People will pay for an experience that is superior” to what they can get in the mass market. There is a difference between a thing and an experience. One can be possessed. The other can be felt.

Sax thinks our economic discussion around efficiency misses the point. People promoting efficiency are like Star Trek’s Mr. Spock, focusing on the “logic” of business, and assuming that efficiency is all that matters. In his view, we as a society are actually more like Captain Kirk: illogical, but driven to respond to “beautifully flawed things” that appeal to our humanity.

Efficiency can give us better stuff, but how consumers truly experience that stuff is where the real value is.

This column originally appeared in The Washington Post.

 

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Experts agree that to create conditions to boost economic growth, we must focus on a region’s expertise. Well, in the greater Washington region’s efforts to find clusters that define its identity and create a competitive advantage, it might be short-changing an industry that is very much part of the equation: advocacy.

Advocacy encompasses trade associations, social science research organizations, lobbying groups, philanthropic groups and firms. It employs more than 117,000 people in our region, according to data gathered by the Stephen Fuller Institute at George Mason University. It is one of our region’s dominant economic clusters, with twice as many professionals as in our healthcare industry and three times as many as in media.

Over the last two years, advocacy was one of only two economic clusters that enjoyed job growth in the greater Washington region faster than national averages, according to the Fuller Institute. If this industry is so important, why it is not more widely celebrated or viewed as a regional economic asset?

The industry is misunderstood, albeit with some justification, and suffering from a negative association with the process of government, according to Ivan Adler, a principal at McCormick Group. He says most people don’t really know what advocacy is, believing that it “is just buying influence for wealthy corporate interests.”

Rich Gold, leader of the public policy and regulation group at Holland & Knight, attributed the misconceptions to a broad societal distrust of intermediaries — whether a hedge fund manager or a car salesman. He says for many outsiders, using intermediaries creates a fear that power is being used for self-interest, with these fears being justified through media coverage of the actions of small numbers of “bad apples.”

Being good at advocacy may in itself create negativity. Stewart Verdery, founder of Monument Policy Group, observed that because being proximate to government provides an avenue for professional and entrepreneurial success, this creates a perception that our region’s professionals have a standard of living “unfairly detached from” the rest of America. Shows like “House of Cards” and “Veep” create an impression of Washingtonians that is out of touch with the daily realities of American life. It’s because of this negativity surrounding advocacy and its close relationship with government that so many people snub the industry as a source of job creation and growth.

However, advocacy is not just about corporate interests — it speaks for every significant social and economic issue facing our citizens.

“If you have a job, own a home, or a car or even have a pet, you have somebody in Washington representing your interests,” Adler says. “And this is a good thing and a right granted to us by the First Amendment.”

Let’s not forget that lobbying also creates opportunities for the creation of businesses in other industry clusters that benefit from proximity to lobbyists. Information technology, software, media and hospitality industries here all gain significant economic benefit from this accessibility.

Yes, I agree that if we want to grow as a region, we must continue to diversify — a good plan if we don’t want to be overly reliant on federal government spending. Like Pittsburgh or Detroit before us, we know that as our local industry changes, we must look elsewhere for economic opportunities.

However, let’s all take a deep breath here. Government itself is not going to disappear. The need to influence policy makers through advocacy will remain. We would be wise to separate our opinions of the entire industry of advocacy from the proven benefits it brings to our region’s economy and power.

Column originally appeared in The Washington Post.

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Maryland’s technology industry has never been short on talent or ideas, thanks partly to the federal government’s local presence. National Institutes of Health installations bolster a sizable biotechnology industry in Montgomery County, and the National Security Agency’s headquarters in Fort Meade supports a thriving cybersecurity sector in the D.C.-Baltimore corridor.

But most of that work is closely related to serving the federal government. Some regional economic experts would rather see a local technology industry linked to commercial markets, possibly enabling wealth creation of the kind seen in places like Silicon Valley. Efforts to create a broader commercial industry have been piecemeal, with some of the region’s most promising firms leaving for other cities in search of funding.

“This is a big problem that’s going to require a lot of money and a lot of concerted effort,” said Jonathan Aberman, a Virginia-based technology investor.

Maryland has tried to solve that problem by handing out small taxpayer-funded investments each year to promising start-ups in the earliest stages of development. Maryland’s Technology Development Corp. (TEDCO) hands out $100,000 investments in state-appropriated money to start-ups deemed to show potential.

But officials have found that the small investments, typically given to companies with only a few employees, aren’t enough for some firms.

On Tuesday, the state announced a program called the GAP Investment Fund. The fund is designed to make investments of $200,000 to $500,000. The plan is to cater to start-ups that…

Read entire news story in The Washington Post.

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As the greater Washington region prepares for the promised cuts in government spending, the question is whether the private sector will be able to pivot and provide new employment opportunities.

This will depend upon whether our region’s private businesses can grow. To help our local business owners get ready to meet this challenge, I asked the members of FounderCorps, a group of experienced entrepreneurs, for advice on this important topic: how do you grow a business?

For most of them, the answer is straightforward. To grow, a business must create something that people want and keep giving it to them. Alex Murphy, founder of WorkHarmony, a company that builds apps to bridge the skills gap, got to the heart of the matter: “Growth comes from doing something much better than anyone else.” What you offer a customer must “make a difference” to the customer.

Chris McAuliffe, co-founder of Theragen, sells medical products and innovations. For him, success always comes from the same place. “You must be better than your competition” in satisfying your customers.

Eric Koefoot, founder of PublicRelay, a public relations monitoring and analytics service, believes in “obsessing” about customers and whether they are happy with the product and services they are getting. If they are happy, they will tell their friends, new customers are created, and the company develops an even better reputation. For him the bottom line is simple: “without super happy customers, growth is virtually impossible.”

Mark Walsh, a board advisor to many well-regarded start-ups, adds that keeping customers happy is more efficient than finding new ones. “Taking care of your current customers is the easiest and cheapest path to growth.”

It’s also important to recognize that not every potential customer is necessarily a good one. Narrowing the customers on which the business will focus will accelerate the ability to achieve a higher level of competence.

Lee Weinstein, CEO of technology sales and consulting firm NewbridgeTuring and member of the board of directors of EagleBank, believes that the customers a business turns down are sometimes more important than the ones it serves. Having laser beam focus on customers’ needs makes it easy to satisfy their demands.

Many I asked pointed out that once a good customer fit is identified, the challenge is then on how to replicate this fit again and again, while growing the team, finding new customers and entering new markets. “There is no Miracle Gro for business,” is how Yonald Chery, chief technology officer of DataTribe described it. To succeed, there is no magic potion or secret sauce. Growing a business was just repetition of a formula that works.

The greater Washington region has a vibrant business community; indeed, it is the number one region for business formation in the United States. But, many of its most committed business owners are involved with serving the federal customer. Because of the nature of government purchasing rules, issues of customer attachment and building relationships are typically not part of the process of building businesses, because federal contracting rules are designed to eliminate the direct relationship between individual customers and vendors.

When we talk about having the region’s private sector grow, it is important to note the elemental truth of business growth in the private sector: connecting with the customer. It is not intuitive for a large portion of our workforce and business leaders here. We need to find as many opportunities for our region’s experienced business owners who sell to private customers to share what they have learned.

Is our region entrepreneurial enough to survive a shrinking government? It is not a lack of entrepreneurship that will challenge us. It is whether we can adopt to the dynamics of business growth through customer connection.

This column originally appeared in The Washington Post.

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