Charting the Innovation Ecosystem

Abstract

As Victor Hwang noted in an April 2014 article for Forbes , the term ecosystem has become "the next big business buzzword." Hwang's Google Ngrams demonstrate a dramatic increase in the use of the word in phrases like "business ecosystem" and "innovation ecosystem" in the last 10 years. Increasingly, authors, bloggers, and commentators use the term in place of such one-time favorites as network and cluster . The ecosystem- whether it's a business ecosystem, an innovation ecosystem, or a startup ecosystem-shows every sign of becoming the next business fad.Except, Hwang suggests, perhaps this is more than a fad. Perhaps it reflects a fundamental change in the way we think about business in general and innovation specifically. Although some writers use the term interchangeably with other words, ecosystem carries a very different set of connotations and implications than network or cluster . Networks and clusters are constructed; communications run along definable lines and it's mostly clear how activity in one part of the system will affect conditions elsewhere. They may be com plicated- consisting of many different parts and relationships-but they are not especially complex. An ecosystem, in contrast, is a complex, dynamic, emergent system that constantly adapts, sometimes in unexpected ways. As blogger Alastair Brett described it in a March 2014 blog post, ecosystems are "nonlinear complex adaptive systems where the same inputs don't always produce the same outputs, where the behavior of a system is not the sum of its individual parts, where there are disruptions and emergence, and where effects occur in far-from-equilibrium states."Perhaps one reflection of the organic, adaptive nature of the ecosystem is the lack of a single clear definition for "innovation ecosystem." The idea of an ecosystem is, of course, borrowed from biology where, as Deborah Jackson described it in a paper for the National Science Foundation, it refers to "a complex set of relationships among the living resources, habitats, and residents of an area, whose functional goal is to maintain an equilibrium sustaining state." A biological ecosystem is modeled by tracing the energy exchanges across the system, from plant to predator, to prey, and then back to the soil.The use of the ecosystem concept to describe the business environment originated with James Moore, who offered a definition of "business ecosystem" in his 1996 book The Death of Competition . In part, Moore describes a business ecosystem as "an economic community supported by a foundation of intera cting organizations and individuals-the organisms of the business world." In the business ecosystems, companies occupy niches, just as species do in a biological ecosystem, and the various members of the ecosystem co-evolve and tend to align themselves.A plethora of definitions has grown from the application of this basic concept to innovation. For Jackson, an innovation ecosystem is driven by economic dynamics rather than energy exchanges and is comprised of two separate, weakly coupled economies: the knowledge economy and the commercial economy. Erkko Autio and Llewellyn D. W. Thomas survey several definitions in their chapter in The Oxford Handbook of Innovation Management , each focusing on a slightly different set of characteristics and indicators, as do Susanne Durst and Petro Poutanen in their paper, "Success Factors of Innovation Ecosystems." Taken together, these surveys seem to converge to a particular set of elements that appear in most definitions of the concept: Innovation ecosystems are dynamic, purposive communities with complex, interlocking relationships built on collaboration, trust, and co-creation of value and specializing in exploitation of a shared set of complementary technologies or competencies. Strong innovation ecosystems, according to Autio and Thomas, are productive-they translate knowledge into increased value-and they are robust-resistant to disruption. …