Importance of Natural Resources

The role of the innovation ecosystem (Stefano Mizio)

The aim of this lecture is to provide you
with some considerations about what could be the key ingredients needed to foster a
local entrepreneurship ecosystem. Early-stage startups are highly dependent
on their – let’s call it the External Factors: if we can create healthier startup ecosystems,
we can generate more successful startups. Once we address the internal factors that
could affect startup’s success, we need to turn our attention to external success
factors to quantify how they affect a startup‘s ability to succeed. In doing so, since 1980, cohort of researcher
and policy makers have tried to discover Silicon Valley’s secret of success, if any. What I personally learned is that the world
is not flat when we talk about Innovation – which means you don’t have to be in
Silicon Valley today, but we have to work to create local ecosystems and it takes time. In his landmark book, Startup Communities,
Brad Feld says that it takes about 20 years for a vibrant entrepreneurial ecosystem to
develop in a city or region. Building on prior efforts, Israel and Singapore
implemented innovative and aggressive policies in the 1990s to spur the growth of their startup
ecosystems. When we talk about ecosystems we tend to focus
mainly on the hardware – internet connections, quality of building, local policy… And it’s true, these things are important
but we overlook the most important factor: human behavior in innovation ecosystem. Human systems become more productive the faster
that the key ingredients of innovation – talent, ideas, and capital – are allowed to flow throughout
the system. people with ideas, people with talent, and
people with capital Today, the key rate-limiter is how quickly
people and resources can be assembled together to solve problems and find solutions. Innovation can be sparked to life by a particular
combination of people who happen to have ideas, talent, and capital. The key idea is that: “Human systems become
more productive the faster that the key ingredients of innovation – talent, ideas, and capital
– are allowed to flow throughout the system”, as stated by Hwang and Horowitt in their seminal
book “ The Rainforest”. So, how can we lower the invisible transaction
costs caused by social barriers based on geographical distance, lack of trust, differences in language and culture, and inefficient social networks? These costs make the difference between an
entrepreneur who has to make thirty phone calls and 20 meetings to get a first deal
done, versus one who can get it done with 5 calls. To overcome these transaction costs we need
a set of social behaviors. These social behaviors are the mechanisms
that are necessary to maximize the free flow of talent, ideas, and capital. Institutions – such as startup incubator
and accelerator – and some actors can help entrepreneurs make those connections that
can lower their transaction costs and promote greater innovation throughout the system. Mentors and previous entrepreneurs can play
a key role bridging between social networks to bind greater communities together. Let’s think for instance on how corporates
and startups can collaborate when there are cultural and language differences (with people
not understanding each other). Corporates are familiar with Traditional management
that focus on exploitation and efficiency and less with the Entrepreneurial Management
that must address exploration with different metrics, the kind of environment that is very
familiar to a startup. As previously mentioned, The Rainforest model
highlights the role of Keystone – individuals and institutions – that act like brokers of
social trust. We need Entrepreneurial Density which means
numbers of entrepreneurs plus numbers of people working for startups or high growth companies
divided by adult population. Startups experience is also a key driver. Over time an ecosystem and its labor force
accumulate know-how through the successful development of startups. This experience at the very beginning includes
entrepreneurs sharing their experience and knowledge of forming and structuring a startup,
the Customer Development and Lean Startup methodologies. Later it is about sharing expertise on how
to grow and scale a startup – how to build a scale-up both from a technical and from
a business perspective. This expertise is built in the ecosystem through
the accumulation of exits, investments, partnership with corporates, international soft landing
programs or collaborations with science park and incubators which, over time, drives up
ecosystem performance. We need corporates that are eager to collaborate
with startups; we need universities with students, professors, research labs, entrepreneurship
programs, and technology transfer offices; we need investment capital; we need mentors
that gained experience in corporates or as entrepreneurs who know startups methodologies
and culture and, last but not least, commonvalues rooted in how to learn to “get along.”. A community eager to start conversations with
new people, open to sharing information and ideas, eager to collaborate and with a rapid
style in which new ideas are embraced and attempted. So, from my perspective if you want to build
a fertile ecosystem start from people. The human capital: the only thing that can
make a huge impact. Doing this, you need to be curious and open,
you have to become a Keystone or help organization to act as keystone.

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