3 Tips to Building an Effective Innovation Ecosystem

A successful incubation program thrives on a robust environment, but sometimes one of the first tasks a program has is to begin building an ecosystem from scratch. Since arriving on the incubation program scene in 2002, INiTS has built an exciting, healthy ecosystem from scratch. In this article, we will share some of the knowledge imparted by Irene Fialka, CEO of INiTS, on building an ecosystem from scratch.

“INiTS was built in 2002, in Vienna, as an incubator, it was the first incubator there, and there was no ecosystem. Now, 15 years later, Vienna has really thrived as a startup hub in Central European region and the path to get there was stony, was difficult at the beginning.”– Irene Fialka, CEO of INiTS, Vienna, Austria

What is a business ecosystem?

A business ecosystem is a network of entities that get involved with each other, either through cooperation or through competition, with the end goal of delivering a specific product, idea or service. These entities can include distributors, customers, suppliers, competitors, government agencies, universities, and so on. The prevailing idea is that each entity affects and is affected by the other members of the ecosystem. The relationship is constantly evolving and all members must remain flexible for the ecosystem to survive and thrive.

What is a startup ecosystem?

Running parallel in many ways to a business ecosystem, a startup ecosystem environment also involves multiple entities who network together with a common interest or goal. This goal happens to be creation and scale of new startup companies. Not only are the incubator programs involved themselves, but they must also involve startups as well as various types of organizations, both physical and virtual. These organizations include funding organizations, universities, research organizations, legal service providers, financial service providers and large corporations.

“Incubation is really the starting point of new products and services, of innovations, in particular university associated and university managed business incubators. And these, they are the sources, so to speak, of innovation. And we can help corporates in their open innovation strategy in order to get faster, more efficiently, take up pace in open innovation.”– Irene Fialka, CEO of INiTS, Vienna, Austria

What is important to the startup ecosystem?

There are three considerations to a healthy ecosystem: relationships, strategy and value. A dynamic incubator ecosystem should include a diverse range of partners, some of whom may even compete with each other. For example, when needing to develop a new fuel cell technology, BMW and Toyota collaborated and combined resources to develop this technology together. They have since renewed their partnership beyond the initial 2011 partnership. In recognizing each other’s strengths and moving past the fact that they compete in the same market, both companies have enjoyed a higher success in high-tech sports cars.

Let’s take an in-depth look at those three considerations for a healthy ecosystem.

Relationships

More along the lines of alliances, the relationships that business incubators build must be diverse, as Irene has highlighted, but they must also complement each other. A successful program will be able to forge partnerships based on competencies and resources brought to the table by each entity. In turn, the incubation program must be able to ensure the startup will meet the goals set by the ecosystem. No matter the reason for each entity’s participation in the ecosystem, it is important that they all understand what their role is. The incubation program must balance trust and control to deliver a successful outcome on time.

“…being diverse, is very difficult in the end but is an asset on the other hand. Handling the diversity can also be learned from us.”– Irene Fialka, CEO of INiTS, Vienna, Austria

Diversity is important when considering participants in the startup ecosystem. In today’s tech-driven world, physical location doesn’t matter and shouldn’t stop any entities from participating. Digital platforms can connect participants and incubation programs are able to mediate relationships in incubator ecosystems as if they were in the next room. Incubator programs now have the freedom to consider unexpected partnerships within the industry, adjacent to the industry or even far-neighboring industries. Key point: quality is more important than physical location.

Strategy

In the beginning of the ecosystem, relationships have been forged and each entity knows their role and how they will be responsible for creating value for the ecosystem. The challenge for the incubation program is creating and exchanging sustainable value for all the participants. This complex relationship is known as a deliberate ecosystem in the world of business, and it is driven by a single entity, which is the incubation program.

Common goals, shared interest and strategies are nothing new in the business world. There is one major difference in incubation programs, and that is the openness of the ecosystem. Participants in a startup ecosystem must be open to change, including the addition of new participants and disruptions to existing relationships, partner roles and program value.

Value

We touched on this in the relationship paragraph: the value to the ecosystem of each partner and the value of the ecosystem to the participants. Over the lifecycle of a startup ecosystem, different phases of evolution occur. Through benchmarking, such as UBI Global’s World Benchmark Study, incubator programs are able to define the success of the ecosystem as a whole. They are also able to determine the value of the ecosystem for each partner including the startup.

Think of value as a seesaw; new startup ecosystems have more value in the partnerships rather than in the program itself. As the startup company grows with participation and innovation, the incubator program value becomes level. During scale up and maturity, the scales tip in the favor of the ecosystem and the partners are now realizing the value of the program in tangible ways. This is the reason that the ecosystem value itself means so much when analyzed. This value is a direct reflection of the size and performance of the ecosystem overall.

What does having a strong startup ecosystem mean?

“The opportunities of business incubation are to build more bridges to corporates, to existing companies to existing markets. Incubation is really the starting point of new products and services, of innovations, in particular university associated and university managed business incubators.”– Irene Fialka, CEO of INiTS, Vienna, Austria

For an incubation program to build a strong startup ecosystem, in addition to monetary-based value being shared across the program, the sharing of other valuable resources also occurs between the participants. This includes strong reputation, important services, insightful information and other forms of value, depending on the needs of the ecosystem. Essentially, the term “value” is not always defined in terms of profit and loss. Strong startup ecosystems increase the odds of a startup company’s survival. Not only about monetary value provided, a strong ecosystem must also have diverse talents and collective knowledge on the table. This means that any city in any country in the world can grow a successful startup ecosystem. Will yours be next?

UBI Global is able to offer Members guidance on how they can become more efficient and competitive. Whether you are part of a robust ecosystem or building an ecosystem from scratch, count on UBI Global for information and resources you can’t find anywhere else. We combine valuable tools, assessments and networking to incubation programs all over the world, and have created an extensive network of peers, corporations and startups. To become a Member of UBI Global, see our membership page here. To purchase a copy of our World Benchmark Report or Case Studies for 2017/2018, click here.