What Does An Innovation Ecosystem Really Mean?

I remember throwing this word out carelessly in the early days of my career in innovation strategy. It was great jargon, whether it confused my listeners (or readers as the case may be), or it gave them a better understanding of what the heck I was talking about, I really didn’t care. It was like the word “awesome”, or “platform”, or … the list went on — words that had found their way into our everyday vocabulary so much so that we hardly ever asked what it meant in every context we used it in.

I once heard someone say something to the effect that the attention we pay to words is a measure of our intellectual diligence. While you may not agree to that claim, there is definitely something worth exploring when it comes to semantic norms in the tech/innovation space. Paying attention to what we mean when we say certain words can help us clarify meaning, intent and goals. But more importantly, especially for words that speak of contribution of some sort — like “ecosystem” — attention becomes more of a duty, or an obligation that may rally together the collective effort of many.

After a while, I actually did ask myself that question- what is an innovation ecosystem?

It was at a point when I was saddled with the task of designing a new program. The outcomes were meant to be tangible, the consequences of failure were grave and the chances of misinterpretation was high.

So i gave it a lot of thinking, and this is what i came up with:

An innovation ecosystem is an incentive-driven engine through which problem(s) are identified, talent is mobilized to solve the problems, and solutions are created at a scale that tackles the problem(s) effectively.

Ok, I get that you are not into definitions and stuff like that .. so let’s break it down.

An ecosystem consists of three main components:

It is important to note that different contributors can/will play a role in each of these components, and there may be more than one contributor to a given component.

Problem-Solution Mix

The presence of problems is the raw material for the other components to thrive and for metrics to be assigned to the growth of each component. How will I know that the solutions (products, services offered by companies) I have created are effective? By a thorough understanding of the problems it solves — thereby defining what success looks like.

All of these signify that there are entities who have problems — people, businesses, governments. Hence solutions that are created are geared towards the actual needs of the entities in question. Due to the varying understanding of those needs, and the different amount of resources to address those needs, different innovators create competing solutions (products, services offered by companies). Competition therefore is an important characteristic of the problem-solution mix. Invariably a free market is needed for the proper orchestration of an ecosystem.

Talent

In the broadest use of the word, these are the domain experts (not necessarily synonymous to industry experts) who control the flow of value within each of the the other two components. For the purpose of simplicity, and to aid the concise definition of an ecosystem, talent may best refer to the innovators that create solutions (products, services) to address problems identified. These are the creators of technology solutions, or tech-enabled solutions. Many times, the presence of talent is usually hinged on the physical proximity of talent sources to the problems being addressed — such as the presence of universities and collages. Other elements that facilitate the availability and effective use of talent are favourable government policies, and talent programs that increase the access to high quality talent (e.g. wage subsidies, internship programs etc). Software development, marketing, finance, operations, sector experts, etc are classified as talent.

Risk Capital

This is the fuel that ensures the effective orchestration of an ecosystem. It is also a somewhat objective indicator or progress within an ecosystem. Capital that flows towards the creation of solutions don’t have to be from outside investors like VC (as solution development can be funded by the value derived from previous problem-solution transactions i.e. revenues), however due to the nature of disruptive innovation, and the experimental process that guarantees the development of breakthrough processes, risk capital from outside sources is needed to fuel innovation within an ecosystem.

Having worked in three different parts of the world — Africa, Middle East and North America, I have keenly observed how these three components (Problem-solution mix, Talent and Risk Capital) plays out in each region. Africa is still nascent — the problem-solution mix is tilted more towards problems, talent is present but risk capital is less. The middle east seems to be relatively slower in terms of the presence of talent and risk capital. In North America I have often observed an interesting problem-solution mix where you find solutions looking for problems to solve (product-market fit then becomes the main concern).

This means that each ecosystem has its peculiarities and gaps, and an attempt to defining what an ecosystem really means may be a good first step in clarifying those gaps and taking steps to closing them.

Venture Capital, Product Strategy, Emerging Tech. @PacerVentures @ElevateSIX