According to the Global Innovation Hubs Index 2022, the innovation ecosystem’s top 10 cities/metropolitan areas are San Francisco-San Jose, London, New York, Guangdong-Hong Kong-Macao Greater Bay Area, Beijing, Toronto, Geneva, Boston, Paris, and Singapore. But, what is an innovation ecosystem?
An innovation ecosystem is made up of enabling policies and regulations, accessibility of finance, informed human capital, supportive research, markets, energy, transport, and communications infrastructure, a culture supportive of innovation and entrepreneurship, and networking assets, which together support productive relationships between different actors and other parts of the ecosystem. – says the International Development Innovation Alliance
And if you’re wondering if we will reveal tips & tricks for creating an innovation ecosystem in today’s blog, the answer is yes! Fortunately, McKinsey & Company has developed a six-step method by which you can create a successful innovation ecosystem! So let’s go!
1. Set the aspiration and a bold vision
Imagine that you or your group of friends are opening something new. For it to be successful, you need to have a clear idea of what you want your business to become and what goals you want to achieve. Right? Innovation ecosystems also need to have a clear identity. It’s not all about the cool name or the logo of your business. It is necessary to have a vision of what we want to achieve. For example, Cortex in St. Louis wants to be an “inclusive economic engine” and Boston aims to be the “capital of the scientific revolution.” It’s about having a vision or a big idea for what the group wants to accomplish. Besides, having a clear vision of our identity, ‘forces’ other people to join us because they have an idea of what we do!
2. Focus on specific sectors, partners, and anchor tenants
According to McKinsey & Company, an innovation system is more likely to succeed when local leaders and developers leverage existing skills and institutional advantages of the region. In addition, as mentioned earlier, innovation systems can be focused on specific sectors or subsectors and can also concentrate on functions, such as artificial intelligence. Two questions that can help you identify the value of the region and ideal anchor institutions are: What unique advantages can the region exploit? Which universities, research incubators, investors, and companies can be anchored institutions?
Certain areas excel in specific fields due to expertise, education, and developed infrastructure. They can adopt a “right to win” strategy, leveraging existing advantages. Alternatively, a “want to win” approach capitalizes on current trends. Established institutions, such as companies or universities, can contribute to success by collaborating with local startups or expanding teaching and research capacities.
National Landing, with a 17-million-square-foot development spanning multiple Arlington County neighborhoods, is one of the largest innovation ecosystems currently being developed.
3. Catalyze a critical mass of VC capital and start-ups through a strong innovation backbone
Start-ups and early-stage companies often develop innovative ideas with the potential for real financial and economic returns. Innovation ecosystems can increase the chances of success by fostering a critical mass of start-ups and VC funding through the development of a “backbone” in the four key areas of the integrated innovation funnel – idea generation and research and development (R&D), commercialization, development of start-ups and early-stage companies, and growth.
Increasing R&D, both academic and private, can ensure a strong continuity of innovations. A robust mix of companies is also crucial for building a healthy innovation funnel because it allows start-ups to improve their ideas – from applied research to the commercialization of the final product or service – by collaborating with large research institutions.
4. Develop an ecosystem talent and workforce strategy
To achieve a successful ecosystem, we need a coordinated talent attraction strategy. However, a talent shortage can limit ecosystem growth. In knowledge-based industries, location decisions often depend on talent availability and the ability to attract qualified candidates. Traditionally, organizations and local leaders have relied on businesses and schools to attract talent. However, large ecosystems should have strategies to convince potential employees that these are environments where they want to live and work.
Once we attract workers, it’s crucial to retain them and provide development opportunities. To ensure that universities, research institutes, etc., have a strong talent pipeline, leaders should consider developing a coordinated, cross-sector regional workforce strategy that translates the ecosystem’s brand, goal, and ambition into something tangible. Additionally, talent retention may involve launching new or expanded degree programs, student loan forgiveness, coding courses, and similar initiatives.
Once we attract workers, it’s crucial to retain them and provide development opportunities.
5. Design high-quality real estate, infrastructure, and livability
For an ecosystem to be sustainable, it must be appealing to businesses, institutions, and workers. Long-term attractiveness is based on two types of infrastructure: first, physical and virtual infrastructure aligned with the needs of specific sectors, and second, “placemaking” infrastructure that shapes the quality of life. While most leaders focus on physical and virtual infrastructure, we must not forget about the second type. Each component should be designed to avoid the negative externalities that arise from growth.
6. Cultivate a vibrant, diverse community and a sense of place
Did you know that less than 20 percent of employees in engineering jobs are women? Even though women earn the majority of undergraduate and advanced STEM degrees? McKinsey & Company research indicates that, at current rates of change, racial and ethnic parity in higher education will only be achieved in 70 years!
To address this imbalance, ecosystems can work on promoting diverse, inclusive community building. Leaders can start by gaining a solid understanding of their current position to advance equality goals. They can initiate programs with community stakeholders and schools, ensuring residents’ voices are part of the ecosystem’s development. Opportunities should benefit all, not just newcomers.
We’re not sure about you, but after this, we’re ready to change the world! So, join us this summer at ABC Silicon Valley, where you will learn about disruptive technology trends, the significance of Angel Investors and Venture Capitalists (VC), and how to adopt an innovative mindset. 3, 2, 1 – go!
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