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How do we Create Entrepreneurial Ecosystems?

We need ecosystem builders.

Many communities have the elements of an ecosystem, but they remain nascent or disconnected. Their networks may be small, siloed, or fragmented. And their cultures may lack vibrancy, trust, and social cohesion.

When such gaps exist, leaders must consider the whole ecosystem and enhance each of its elements. In recent years, these individuals have come to be called “ecosystem builders.” Ecosystem builders connect, empower, and collaborate with others to build the whole system. They are system entrepreneurs, working to lift up the whole community to achieve its potential. They play multiple roles, including system architect, champion, advocate, convener, cajoler, traffic cop, air traffic controller, and storyteller.

Ecosystem building is emerging as a new profession at the intersection of economic and community development. Successful ecosystem builders must connect traditional, top-down economic development approaches with the grassroots, bottom-up, community-driven environments in which most entrepreneurs thrive.

Like entrepreneurs, ecosystem builders come in many forms.

Really, anyone can be an ecosystem builder – if they care enough.

An ecosystem builder’s job.

Entrepreneurial ecosystems, at their heart, are based on human relationships. Ecosystem builders are creating an invisible infrastructure in their communities to support entrepreneurs. It’s not like traditional infrastructure. It’s not about physical spaces, fancy buildings, pools of capital, or big institutions. Instead, ecosystem builders focus on building consistent, collaborative human engagement. It’s about process, not product. Context, not content. The journey, not the destination.

Seven design principles for building entrepreneurial ecosystems

At the Kauffman Foundation, we have identified 7 Design Principles for building ecosystems. These principles need to be top of mind and baked into everything ecosystem builders do to enhance the elements of their ecosystems.

  1. Put entrepreneurs front and center.
  2. Foster conversations.
  3. Enlist collaborators. Everyone is invited.
  4. Live the values.
  5. Connect people bottom-up, top-down, outside-in.
  6. Tell the community’s authentic story.
  7. Start, be patient.

Principle #1: Put entrepreneurs front and center

Traditional economic development sees to focus on the forest. But entrepreneurs are like new trees, or even weeds. They are pushing the edge of the forest, evolving to make the forest better. Our job is to focus on nurturing those emerging sprouts.

Let entrepreneurs be leaders.

Entrepreneurs are the heart and the leaders of entrepreneurial ecosystems. Venture capitalist Brad Feld writes, “The most critical principle of a startup community is that entrepreneurs must lead it.”28 Without this leadership, he writes, “the startup community will not be sustainable over time.” That doesn’t mean they’re the only leaders involved, but they are critical.

Design solutions that are entrepreneur-centric.

A thriving ecosystem must be built by entrepreneurs and for entrepreneurs – not for its institutions or investors. Ecosystem builders must remember that entrepreneurs should be the inspiration for initiatives, the most active participants in plans, and the ultimate beneficiaries of programs.

Listen actively. It leads to empathy and understanding.

Ecosystem builders need to talk to local entrepreneurs, listen to their stories, and ask them about the challenges they face. Experienced entrepreneurs are aware of the barriers they confront. Sustainable solutions come from the understanding and empathy that ecosystem builders develop in conversations with entrepreneurs. Those relationships serve as the foundation for all other efforts.

Principle #2: Foster conversations

The primary focus of an entrepreneurial ecosystem is to move knowledge and resources from the people who have it to the entrepreneurs who need it, and much of that transference happens through conversations with people.

It is also in these conversations that we inspire possibility and action. Author Peter Block shares a compelling idea: “The aspect of a community that gives it a new possibility is simply the conversation it chooses to have with itself.”29 In order to foster a more vibrant entrepreneurial community, we need to create more conversations that move knowledge and resources and explore notions of entrepreneurship and the possibility of entrepreneurial success.

Create interactions among peers.

Entrepreneurial ecosystems are horizontal social structures. That means everyone is a peer. Conversations happen in events, meetings, mentor sessions, phone calls, serendipitous collisions in coffee shops and parking lots, and every point in between. These conversations can happen between all different kinds of people, including entrepreneurs and mentors, founders and customers, investors and their friends, or aspiring entrepreneurs and their spouses.

Shift the conversation to hope.

It’s not enough to simply increase the amount of conversation. The nature of conversations matters, as each one contributes to the collective story a community tells about itself. As Block says, we must shift the conversation “from one of problems, fear, and retribution to one of possibility, generosity, and restoration.”30 In the most successful ecosystems, you can feel the joy and passion in the air. Positive conversations build social capital and foster trust and collaboration in the ecosystem.

Bias conversations toward action.

It’s also not enough just to have hopeful conversations. The key is to drive action. Human beings learn best by solving problems together. So instead of just chatting in a conference room, try building a physical prototype, visualizing ideas on a whiteboard, or putting a big piece of paper on the table that everyone can write on. Work toward active solutions together.

Principle #3: Enlist collaborators. Everyone is invited.

A thriving entrepreneurial ecosystem has a culture of invitation: Everyone is welcome. It doesn’t matter whether they have an entrepreneurial idea or don’t know much about business.

Be radically inclusive.31

Entrepreneurs’ age doesn’t matter – nor does their industry, the color of their skin, their dress, or the neighborhood they come from. It’s not about titles. It’s not about hierarchies. It is about where people are going, rather than where they’re coming from.

Ecosystems must live and breathe inclusion as a core philosophy. That’s because everyone has something to contribute. Ecosystem builders’ goal is to unlock the potential value in everyone in the ecosystem.

Enhance diverse connections.

An ecosystem builder acts by inviting. The first inclination for any new initiative should always be to invite new people and organizations into the community, to find new ways for actors to connect, collaborate, co-create, share credit, and find mutual benefit. Diversity takes intentional work, but the more collaboration that occurs between ecosystem players, the more entrepreneurs will benefit. Diversity is power.

Be a keystone.

In biology, a keystone is a species that bridges gaps in the ecosystem. The same thing happens in entrepreneurial ecosystems. Keystones cross-pollinate people, ideas, and resources across barriers. They don’t fear being outshone. In fact, they welcome it. Keystones empower others to lead by inviting and encouraging. The more leadership is shared and multiplied, the more entrepreneurs will benefit from diverse connections and mutually beneficial collaborations.

Principle #4: Live the values.

An entrepreneurial community is a network, not a hierarchy.32 So it can’t, by its nature, have a strongman at the top. But this doesn’t mean an ecosystem doesn’t have leaders.

Walk the walk.

Ecosystem builders lead in a different way than we often imagine a traditional CEO or mayor might act. Effective ecosystem builders don’t lead by decree. Instead, they lead from behind by convening; empowering others; being thoughtful listeners and connectors; and mentoring and inspiring (and sometimes coaxing) others to help each other and engage. Because they are visible in the community, ecosystem builders can have an outsized impact on culture by modeling values. It is through our own behaviors that we show others how to behave. We need to model the future we wish to see.

Change values by changing behaviors.

The process of change takes time. As ecosystem builders create a community – whether by connecting people, designing programs, or organizing events – they need to focus on how those activities affect behaviors. Over time, the right behaviors will shape the right values. Cultural shifts happen invisibly at first, but as they accelerate they become powerful.

Make social contracts explicit.

Values are like an invisible social contract that guides the behavior of a community. Each community has its own underlying values. It helps to make these values explicit because it’s hard for people to follow rules they don’t know. For example, the office walls at Facebook still have big signs from its startup days that remind people to “Move Fast and Break Things.”

What are the cultural behaviors necessary for a thriving ecosystem? The list below outlines some key values ecosystem builders should embed in their work.

Principle #5: Connect people bottom-up, top-down, outside-in.

Change can create tension. There is often friction between the “bottom” (the grassroots) and the “top” (formal leadership). The bottom is made of entrepreneurs, inventors, artists, and other independent thinkers who dislike formal structures. The top consists of leaders and managers who oversee institutions, access large networks, control knowledge, and possess built-in social capital.

This friction between top and bottom can sometimes cause heated disagreements over scarce resources that sow division and retrenchment. But it doesn’t need to be that way. In successful ecosystems, people find ways to overcome parochial differences and build diverse networks of mutually advantageous relationships.

Bridge social boundaries.

The central element of a thriving ecosystem is a culture of trust, collaboration, and mutual gain. A divided community with a culture of mistrust doesn’t work. The key to building a thriving ecosystem is to connect a community across all its social boundaries: bottom-up, top-down, and outside-in. Ecosystem builders must seek opportunities for different groups in the community to come together, learn each others’ stories, and work together.

Build communities of trust.

Ecosystem builders need to construct new communities out of old divisions. The people often seen at the top have huge power to leverage existing trust networks and help those at the bottom succeed. They can open doors to customers, investors, or other mission-critical help for entrepreneurs. Or they can create access to resources or knowledge not otherwise available to entrepreneurs. Ecosystem builders need to find ways to bring these two groups together, help them get to know each other, and watch how each can inspire and help the other.

Build social feedback loops.

Creating stronger communities accelerates the flow of information, enhancing the mechanisms for social feedback. Ideas will flow faster. People will be more accountable to each other. And as a result, entrepreneurs will be more likely to succeed.

Principle #6: Tell a community’s authentic story.

Every community has its strengths. An ecosystem builder’s job is to uncover these strengths, publicize them, and leverage them to write a fresh positive narrative.

Create stories out of strengths.

Ecosystem builders need to get to know the entrepreneurs in their communities, identify the community resources for entrepreneurs, and bring them to light. They must have pride in their communities’ cultural strengths and be aware of their communities’ limitations – but not be cynical about them. We can discover the entrepreneurial DNA of our communities and learn about their history of entrepreneurship, their native companies (there are always more than we realize), and the positive conversations taking place on the streets and in local cafes. All that knowledge can be used to chart new stories for the community’s future.

Every community is unique. It is important to focus on the community’s specific story – rather than trying to be the next Silicon Valley or focusing on dazzling industries that are not rooted in the community’s own stories and strengths.

Build channels to share those stories.

Stories are transmitted differently in each community. This might happen through local television or newspapers. There might be newspapers or social media channels. Or perhaps information travels through word-of-mouth. Ecosystem builders need to engage those channels of communication to help share new stories. Or they might need to build new channels. For example, many successful communities have their own blogs and ecosystem news hubs for entrepreneurs that provide streams of valuable information.33

Elevate role models.

As ecosystem builders uncover the assets of their ecosystems, they will inevitably find successful individuals who can serve as role models for others. Every community has its secret entrepreneurial success stories. Ecosystem builders must recruit those individuals and elevate them as examples for others by highlighting their stories to others.

Principle #7: Start, be patient.

Ultimately, we can think about building entrepreneurial ecosystems in just two steps: Step one, start. Step two, be patient.

Ecosystem builders need to take a long-term view of change. It might take a decade or two to see any lasting results. That timeframe makes sense because building businesses take a long while. And culture change moves slow before it moves fast. Don’t count success only by statistics in traditional economic reports and political cycles. The real change should be happening well before those statistics ever show it.

A program that works in one city might fall short in another. Ecosystem builders must think and act entrepreneurially. They must try things, get feedback, and learn. Fail and persist. And try, try again.

The process of ecosystem building is emergent, not linear. And it is perpetual, so it never truly ends. It’s a marathon, not a sprint.35

You don’t need permission to be an ecosystem builder, you just have to care for your community enough to start.