3 keys to creating innovation ecosystems

Europe’s innovation ecosystems do not only drive innovation, but also play a crucial role in developing, attracting and retaining human talent, promoting entrepreneurship and facilitating the adoption of new technologies through cooperation with firms, start-ups and spin-offs. However, despite their relevance, most companies have not harnessed the potential of these ecosystems. 

What is an innovation ecosystem?

An innovation ecosystem is a community made up of key components such as talent, culture, access to capital and an appropriate legal framework, a network in constant contact and with a continuous transfer of ideas and experiences between community members. Innovation ecosystems create opportunities for the community to access resources that are usually not easily accessible.

The power of the ecosystem lies in the fact that no single actor needs to own or operate all the components of the solution, and that the value generated by the ecosystem is greater than the combined value that each of the actors could individually contribute.

However, while entity managers see the importance of these structures, they do not always have the experience or the capacity to define and execute these ecosystems.

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What are the necessary steps to create an ecosystem?

Thanks to technology, it is easier to establish connections between people and organisations in different geographical areas. This has a direct influence on innovation processes because it has evolved from a model in which all innovation is produced internally, towards a model of open innovation in which external agents, research centres, universities, suppliers and even competitors are integrated.

Open innovation promotes the exchange of knowledge, improves innovative capacity, facilitates reaching the market and improves the competitiveness of organisations.

1. Define the ecosystem strategy

It is clear to organisations that being part of an ecosystem helps them to innovate, grow, internationalise their activities or sales and increase their customer base, but when it comes to setting objectives to design a strategy, they often find it difficult to answer the key questions.

This stems from the difficulty of integrating innovation into the company’s strategy and business plan: although most managers are aware of the importance of creating ecosystems in their strategy, 37% are still unable to balance current business while exploring new business.

2. Design the ecosystem business model

New business models are relevant, but to generate value with ecosystems, companies need a solid ecosystem business model that clearly identifies customers, markets, channels and the revenue model. If one of these areas cannot be delivered, the ecosystem will fail.

When discussing innovation ecosystems with executives, only 40% acknowledge having the capacity and experience to define the strategy, ecosystem business model, measure return and manage relationships. The rest either lack the internal capacity to manage an ecosystem or lack the experience.

3. Establish the operating model of the ecosystem

To innovate and generate new business models, an internal cultural and organisational change is necessary. Parcelling out work is vital to cover all areas, and a very restrictive control by the top management can put brakes on the generation of these ecosystems.

Another potential problem is the sharing and exchange of data between members of an ecosystem. This requirement, which is vital to the success of an ecosystem, is of great concern to the management of organisations. This problem could be solved by the development of cooperation frameworks, but this is not the priority for organisations when it comes to creating partnerships.