What is an Innovation Ecosystem? Five Useful Definitions to Get You Started.
What are the key ingredients of innovation ecosystems? What features are most important? Researchers, consultancies and NGOs weigh in. So do we, with a definition emphasizing action.
The Groundbreakers innovation ecosystem definition:
An innovation ecosystem is (1) a designed region featuring: (2) specialized actors (e.g. researchers, innovators and entrepreneurs, universities, government, business, economic development, capital providers, mentors, chambers of commerce/boards of trade, civil society and the media); (3) an intentionally high rate of actor interactivity (e.g., knowledge creation and transfer, competition and collaboration); and is measured by (4) successive, evolving, dynamic waves of increasingly diverse and economically complex products and solutions; (5) quality of life improvements (culture, health and wellness, employment) for actors, their community and their fellow citizens; while (6) contributing to and supported by relevant external and internal built environment infrastructure (such as communication networks, transportation systems, research facilities, incubators, collaborative workspaces and more).
Specific definitions of innovation ecosystems–and there are many– vary for good reasons. One of these is the straightforward observation that people’s roles and perspectives vary; correspondingly their needs and priorities vary. From your perspective, for the work you do, the community you serve and are part of, the most applicable definition should answer basic questions as usefully as possible. For instance, should innovation ecosystems prioritize a specific domain of expertise or a geographic region?
For that reason this post supplies several definitions with observations about their utility. It also includes The Groundbreakers definition, which draws upon existing definitions and represents this publication’s philosophy while offering considerations absent from many definitions.
Key Questions.
While definitions vary, the following questions must be addressed:
The components and structure of the innovation ecosystem: What are the main elements and relationships that constitute the innovation ecosystem?
The dynamics and evolution of the innovation ecosystem: How does the innovation ecosystem change over time and respond to external factors?
The outcomes and impacts of the innovation ecosystem: What are the main benefits and challenges of the innovation ecosystem for its actors and stakeholders?
Applying these to geographically-based innovation ecosystems, the effectiveness of physical, social and economic connections among the key actors—researchers, innovators and entrepreneurs, universities, government, corporations, chambers of commerce and boards of trade, capital providers, mentors, research parks, civil society and the media—become critically important.
The reason for this is obvious: a well-designed and resourced geographic innovation ecosystem encourages collaboration and problem-solving among the key actors while reducing local barriers and impediments. A direct consequence of this is a high level of collaboration and interaction among specialized individuals with the know-how to solve the sorts of complex problems societies worldwide increasingly value.
When considering domain innovation ecosystems, where the key actors may not be located in the same area, the emphasis shifts to the need for communication and coordination, featuring robust networks, and tight yet flexible integration and stellar information sharing processes.
Four Innovation Ecosystem Definitions.
With those factors in mind here are some definitions to consider:
In their article, Innovation ecosystems: A conceptual review and a new definition, Grandstrand and Holgersson define an innovation ecosystem as the “evolving set of actors, activities, and artifacts, and the institutions and relations, including complementary and substitute relations, that are important for the innovative performance of an actor or a population of actors.”
The seven key components:
Actors: The individuals or organizations that participate in or influence the innovation process, such as entrepreneurs, researchers, customers, investors, policymakers, etc.
Activities: The actions or processes that contribute to the creation and dissemination of innovation, such as research and development, prototyping, testing, marketing, etc.
Artifacts: The tangible or intangible outputs or outcomes of innovation, such as products, services, patents, publications, etc.
Institutions: The formal or informal rules and norms that shape the behaviour and interactions of the actors, such as laws, regulations, standards, culture, etc.
Relations: The connections or linkages among the actors that enable or constrain the exchange of resources and information, such as collaboration, competition, complementarity, substitution, etc.
Complementary relations: The relations that enhance the value or performance of an actor or an artifact by providing additional or missing capabilities or resources, such as partnerships, alliances, networks, etc.
Substitute relations: The relations that reduce the value or performance of an actor or an artifact by providing similar or alternative capabilities or resources, such as rivals, competitors, substitutes, etc.
Elizabeth Hoffecker of MIT D-Lab focuses explicitly on the geographic perspective to define innovation ecosystems as “place-based communities of interacting actors engaged in producing innovation and supporting processes of innovation, along with the infrastructure, resources, and enabling environment that allow them to create, adopt, and spread more effective ways of doing things.”
This definition is rooted in complex adaptive systems theory to encompass the unpredictable and potentially outsized outcomes produced by innovation ecosystems’ actors, resources and enabling environment.
Hoffecker also notes that innovation ecosystems vary dramatically, from nascent to established, and feature significant regional differences. Guadalajara and Kampala have features and needs distinct from Boston.
McKinsey opens their definition by defining an innovation ecosystem subset, the innovation hub: “geographic areas that bring together R&D institutions (such as tech-enabled corporations, universities, and medical facilities), as well as venture capital, incubators, and start-ups.” They go on to note that innovation ecosystems usually encompass one or more hubs which usually feature well-developed built environment components such as “robust mobility options (including public transit), as well as a strong technological infrastructure and accessible spaces to play, connect, and live. All this promotes inclusive and equitable economic growth, innovation, and productivity.”
This definition explicitly notes the value and interconnectedness of the surrounding built environment to the purpose and success of innovation ecosystems.
The World Economic Forum defines innovation ecosystems as the “complex process that spans the generation of ideas, their translation into products, and the commercialization of these products to a large scale".
WEF notes factors such as a “business culture that rewards entrepreneurship, risk-taking and a will to embrace change, a set of regulations and administrative norms that incentivize this attitude, a strong knowledge-generation sector (universities, research centres and laboratories), and collaboration between these knowledge centres and commercial businesses. Innovation can be successfully steered towards applications particularly valuable to society (e.g. green energy).”
Note that WEF focuses more on the system—“complex process”—than the elements comprising the system.
Grandstrand and Holgersson capture the practical ingredients of innovation ecosystems extremely well. Hoffecker incorporates place and notes the role of complex adaptive system theory. McKinsey’s Davis, Safran, Schaff, and Yayboke identify the layered depth and complexity of well-established innovation ecosystems and their link to external infrastructure. And the WEF focuses on process, highlighting the dynamism that exists within innovation ecosystems.
These are all excellent examples. Suggesting they be modified in some way isn’t the goal of publishing our own definition; people may well feel ours is less helpful than those previously described.
In The Groundbreakers’ case, there is a bias toward place. Innovation ecosystems aren’t apart from the rest of the world: health, happiness and opportunity are universal desires absent in too many places, and difficult to acquire and preserve at the best of times. We can’t all live south of San Francisco; should we not therefore motivate Grandstrand and Holgersson’s actors to build and participate in innovation ecosystems anywhere–including where they are now–consistent with what makes that place unique or offers it the most advantage and the best prospects? What would that take? What would it look like?
For that reason, The Groundbreakers favours definitions that situate innovation ecosystems in place, integrated into the local community, contributing to the improvement of the surrounding built environment and, of course, relying on that infrastructure to help it thrive and succeed. Note that place-based definitions do not exclude domain specialization or deep linkages to groups not located in a given innovation ecosystem.
We also focus on a concept that emerges loudly and clearly from our interviews and research. Existing definitions sometimes include the concept of evolution in the output of products and services, sometimes it is implied. But they rarely address one of the truly important concepts within evolution: succession. The term originates from biology and refers to “the process by which natural communities replace (or “succeed”) one another over time. A close business term is “creative destruction” in which constant processes of innovation lead to the new replacing the old, more evolved forms succeeding prior versions. This is to suggest, if an innovation ecosystem is not producing consistent, successive waves of innovation, demonstrating increasing degrees of complexity and product diversification, it is an innovation ecosystem in name only.
This leads us directly to the final element within The Groundbreakers definition, economic complexity. Here is why that is important:
“Developing the capabilities to create and produce complex products is a viable path to secure long-run growth as these capabilities tend to evolve in self-reinforcing processes of recombination.”
Long-run growth. Self-reinforcing processes of recombination. These are the outcome and the input of creative destruction or, if you prefer, succession. An innovation ecosystem sustains and grows based on its ability to evolve, creating successively more complex and diversified products. It thrives when it does this at increasing scale and complexity.
The Groundbreakers Innovation Ecosystem Definition
An innovation ecosystem is (1) a designed region featuring: (2) specialized actors (e.g. researchers, innovators and entrepreneurs, universities, government, business, economic development, capital providers, mentors, chambers of commerce/boards of trade, civil society and the media); (3) an intentionally high rate of actor interactivity (competing and/or collaborating); and is measured by (4) successive waves of increasingly diverse and economically complex products and solutions; (5) quality of life improvements (culture, health and wellness, employment) for actors, their community and their fellow citizens; while (6) contributing to and supported by relevant external and internal built environment infrastructure (such as communication networks, transportation systems, research facilities, incubators, collaborative workspaces and more).
Note that our definition is active. Innovation ecosystems are often described as emergent and adaptive, nor are they managed by any single entity, but this does not mean they cannot be directed or influenced. Economic development professionals particularly should note that municipal economic development strategy, objectives, processes, and community connection are all available to adjustment and optimization. Our active definition leaves room for any town or region, anywhere, to design and initiate their own innovation ecosystem. This is an important consideration because, in an increasingly digitally transformed world, existing innovation ecosystems, and leading cities and regions, threaten to further drain talent from less resourced areas. The Groundbreakers definition obviously doesn’t answer this problem but perhaps it provides a hopeful starting point.
What do you think? Is there a definition you particularly favour? Why?