innovation: How to build a unified innovation ecosystem

New York, Stockholm, Tel Aviv, London, Tokyo and Singapore. These are just a few different geographies that are united in their quest to become powerful innovation hubs. These cities are fueling the local economy and disrupting the global innovation landscape by nurturing a new type of digital startup. According to the Global Startup Ecosystem Report 2021 by Startup Genome, they invariably dominate the global ranking of startup ecosystems. Also on the list of growing ecosystems of the world are Hyderabad, Bangalore, Delhi and Mumbai.

What do these trends say?

Despite the pandemic – or perhaps because of it – these geographies have strengthened their positions as vibrant innovation clusters and are increasingly seen as a viable alternative to Silicon Valley. As innovation ecosystems become more agile and dynamic, leaders seek to create an integrated landscape that helps startups grow, enables corporations to invest in talent and research and development, and engage other stakeholders to participate effectively in collaborative environments.

However, the question remains: what creates or destroys an innovative ecosystem that builds sustainable business and stimulates economic growth? Here are the key factors that contribute to the formation of a single innovation ecosystem:

Reliable financing environment

Funding an innovation ecosystem is critical to creating innovative products and services. Entrepreneurs can build sustainable businesses only if they have proper access to finance and financing options. Some thriving ecosystems – more than others – have put funding first on the agenda so that entrepreneurs can find innovative solutions to unique problems.

For example, funding is key to creating Tel Aviv’s thriving technology scene. In addition to supreme support for venture capital, Israel also receives sufficient funding from the government. It raised a total of $ 6.55 billion and held 19 IPOs even amid the twilight of the 2020 pandemic. The maturation of startups in the country is ripe for investors seeking to diversify their portfolio in the field of artificial intelligence, cybersecurity and other high-tech areas.

As the example of Israel shows, a sustainable and sustainable financing environment that facilitates the conclusion of transactions is paramount to the long-term success of the ecosystem.

Culture of cooperation

The cornerstone of the innovation ecosystem is communication and collaboration between key stakeholders. Competitive advantage can only be achieved if a culture of cooperation and interdependence is encouraged to support innovation.

In addition, only through mutual cooperation between stakeholders can new markets be created and customer needs better met. For example, as ecosystems around the world have shown, reliable collaboration of corporate startups will democratize and foster innovation. This is especially true in Germany, where the changing nature of corporate innovation has led to several partnerships of corporate startups in the field of robotics, MedTech and FinTech. The German multinational engineering company Bosch has launched Startup Harbor, an open and innovative program that promotes collaboration between the corporate business units and startups.

Industry associations such as FICCI, CII and The Indus Entrepreneurs (TiE) are also key contributors to the innovation ecosystem. They open the doors of the network to entrepreneurs and connect them with people who matter in the industry. Membership in such associations can also help startups build their brand and reputation in the wider innovation ecosystem.

Connected ecosystem

The entrepreneurial spirit of ecosystems can only be supported if stakeholders provide adequate infrastructural support for startups. Ecosystem builders need to focus on building innovation capacity that promotes policy initiatives to strengthen startup cultures. Entrepreneurial ecosystems can only thrive if the government is actively involved in developing policies that meet the needs of all ecosystem stakeholders.

Capacity-building measures include the implementation of an innovation policy that focuses on R&D to meet new market needs, especially after a pandemic.

In recent years, Japan has become an innovation hub for several reasons. It has forged organic ties with local and foreign startups and adopted digitization to consolidate its presence as a key player in the global ranking of ecosystems.

Ecosystem development also depends on the role of the media in supporting entrepreneurs. The mainstream media are obliged to cover local and national innovation ecosystems in their reports, to form a public image of entrepreneurship. In the digital age, social networks also play a big role in promoting local businesses and startups.

A collective platform for knowledge sharing

The best innovation ecosystems protect the intellectual property rights (IPR) of entrepreneurs and innovators and focus on building partnerships with desired stakeholders. Silicon Valley is a great example of how a mature innovation ecosystem prioritizes the protection of its innovators ’valuable IPR assets. The Silicon Valley ecosystem has experience in litigating high-profile IPR disputes and fostering innovation and technology failures. Its favorable policies and rules make it a preferred destination for startups from around the world.

The best ecosystems are also those where entrepreneurs are actively investing in the return of the startup community through mentoring initiatives. I firmly believe that mature entrepreneurs need to pay upfront to ensure that early startups don’t make the same mistakes they do.

A trusted pool of talent

According to the Global Startup Genome Report 2021, Telangana was ranked in the top 15 Asian ecosystems by available talent among the 280 ecosystems of entrepreneurial innovation and 140 ecosystems analyzed. This highlights the urgent need for ecosystem builders to focus on bringing together talented people to work on innovative ideas.

If ecosystems seek to attract more investment to their region, they need to cultivate a diverse set of talents to increase productivity and competitive advantage. They need to look for talent both within the geography in which they work and outside the regions. In an increasingly complex business environment led by disruptive technology startups, a strong talent ecosystem that supports diverse skill sets is undoubtedly a necessity of the times.

Cities such as New York and Boston are a magnet for attracting world-class technology talent that supports their mission to become innovation hubs.

Overcoming barriers and moving forward

In order for startup ecosystems to exceed their weight and take advantage of new growth opportunities, they need to overcome serious barriers that hinder innovation. First, a poorly implemented innovation strategy hinders innovation. This leads to a lack of clarity about the role that each stakeholder must play to achieve the ecosystem’s innovative goals. Second, the lack of agility in testing ideas delays the speed of market entry and limits the possibilities of iterations. Third, when ecosystems rest on their former laurels of innovation success, they refrain from using their strengths to build a roadmap for sustainable innovation processes. Finally, an innovative ecosystem strategy does not have to be internal and multi-layered. Stakeholders need to be customer-oriented and adept at identifying new revenue streams and approaching innovation from an interdisciplinary perspective.

An inclusive and thriving innovation ecosystem must embrace a global worldview to innovate on a scale and speed. In my opinion, only when leaders are proactive and begin to see value in creating such a cohesive ecosystem will innovative entrepreneurship flourish.

(Writer – CEO of T-Hub)

(Universal destination for MSME, ET RISE provides news, views and analysis on GST, export, finance, policy and small business management.)

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