Engage strategically with innovation ecosystems
Where startups, researchers and investors come together, opportunities to accelerate business innovation abound.
Philip Budden and Fiona Murray
Reading time: 17 mins
Competitive pressure to innovate pushes companies to seek new ideas far beyond their own walls. But sponsoring an occasional hackathon or having ad hoc, uncoordinated interactions with a startup accelerator won’t do much to build an organization’s innovation capabilities. Many companies miss an opportunity close to home by neglecting or failing to effectively harness the innovation ecosystems in their regions.
Receive innovative strategy updates
The latest insights on workplace strategy and execution, delivered to your inbox once a month.
Please enter a valid email address
Thank you for signing up
These ecosystems occur where innovation and entrepreneurial activity is highly concentrated. As we define them, ecosystems are places that engage five types of stakeholders – research institutions, entrepreneurs, businesses, investors and governments – bound by a strong social fabric of mutual interest, complementary needs and resources, and trust. . (See “Complementary Stakeholders in Innovation Ecosystems”.)
Our research shows that new innovation ecosystems are emerging globally, beyond well-known hubs. Although often smaller or more specialized than, say, Silicon Valley, these hubs expand regional opportunities for business engagement in new places. At the same time, digital interactions enable broader participation across geographic borders.
To achieve their innovation goals, companies must take a systematic approach to identifying and securing competitive advantage by working with these innovation communities.
The framework we present here, developed from our global work with hundreds of business leaders, provides a practical approach to such strategic engagement.1 It helps leaders avoid common pitfalls of deciding how and where engage before they have identified what they need, and decide who to engage with before they have determined which ecosystem actors are critical to building relationships.
Imperfect approaches to exploiting ecosystems
Many companies looking to leverage innovation ecosystems fall into a series of pitfalls and end up with little to show for their efforts. In addition to causing considerable internal frustration, the following missteps – which usually occur because leaders have not established clear goals for their interactions – often mean reduced benefits for companies and lost opportunities for the ecosystem. in general.
First, we find that business leaders spread their efforts too thinly, not only across different locations, but also across different businesses. They engage in a host of superficial activities that often seem transactional and performative to startups and venture capital providers.
1. We have taught and learned with gratitude from business leaders through MIT Sloan’s Executive MBA program, MIT’s Global Regional Entrepreneurship Acceleration Program, and MIT Sloan’s Executive Education, especially our courses of business innovation.
2. B. Aulet and F. Murray, “A Tale of Two Entrepreneurs: Understanding Differences in the Types of Entrepreneurship in the Economy”, PDF file (Kansas City, Missouri: Ewing Marion Kauffman Foundation, 2013), www.issuelab.org; and P. Budden, F. Murray, and O. Ukuku, “Differentiating Small Enterprises in the Innovation Economy: Start-Ups, New SMEs & Other Growth Ventures,” MIT Lab for Innovation Science and Policy Working Paper (Cambridge, Massachusetts: MIT Sloan School of Management, January 2021), https://innovation.mit.edu.
3. The MIT Sandbox Innovation Fund program is based with similar units in MIT’s new InnovationHQ.