Ecosystems are networks of living organisms that interact with each other and their physical environment. The concept of an innovation ecosystem is attracting increasing attention but is not always well understood.

An Innovation Ecosystem is a model of how an economy works at a regional, national or international level and can also be used to describe a digital business ecosystem such as the network of service providers built around Apple or Android.

This article focuses on a regional innovation ecosystem and offers the following working definition:

“An innovation ecosystem describes how an economy works. It emphasises the role of human interactions, networks and key players including entrepreneurs, investors, service providers, education and research institutes. It also maps the region’s environment and resources – from culture to office space and internet connectivity – that support the key players’ activities.”

Silicon Valley Venture Capitalists, Victor Hwang and Greg Horowitt, offer another view of an innovation ecosystem, describing it as a Rainforest:

A human ecosystem in which human creativity, business acumen, scientific discovery, investment capital, and other elements come together in a special recipe that nurtures budding ideas so that they can grow into flourishing sustainable enterprises.’[1]

The basic idea is that business success rarely happens in isolation and that innovation is much more likely to happen when businesses interact, collaborate and tap into assets in the wider environment. It’s all about the people and the place.

An ecosystem can start with one place and one seed – one new business can grow and whether it succeeds or fails people typically move on to start or plant seeds for a whole new wave of businesses.

Components of an Innovation Ecosystem

In essence, an Innovation Ecosystem is about the interaction of the people and the place:

1.   The people

  • Talent: the entrepreneurs – who plant the seeds of new businesses; experienced mentors, skilled workers, a flow of new workers – including graduates – and their skills, attitudes, ambitions and ideas
  • Professionals: professional service firms – particularly lawyers, IP attorneys, accounting and marketing firms
  • Investors: informal and formal investors, their capital, connections and experience: business angels, venture capitalists and crowd-funding
  • Networks: interaction and collaboration between key people
  • Community: Collective knowledge, values, connections, experience and trust; organisations, activities and events

2.   The place

  • Physical location: city or region, neighbourhoods, culture, entertainment, overall attractiveness for entrepreneurs or the ‘creative class’[2]
  • Institutions: universities, research labs, government, large ‘mother-ship’ companies providing a common development experience, a training ground and a breeding ground for new businesses
  • Workspaces: office space, ‘third spaces’ such as cafes, broadband connectivity, business incubators, accelerators or science and technology parks

My next blog talks about the first four steps in developing an innovation ecosystem.

[1] Victor H Hwang and Greg Horowitt, The Rainforest: The Secret to Building the Next Silicon Valley, 2012

[2] A term popularised by Richard Florida, The Rise of the Creative Class, 2002

Colin Graham, Causeway Innovation

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