The Beylat Tambourin report and innovation ecosystems.

A major element of the Beylat-Tambourin report (about which I have already published an article) addresses the concept of innovative ecosystems. Before mentioning some passages, here are two interesting references on this concept:

– Josh Lerner in his book Boulevard of Broken Dreams shows how entrepreneurs and investors have benefited from each other in situations of tension and collaborations in the 60-70s. He also shows the importance of public support at least in the early years (funding for the Cold War and support to venture capital – SBIR, Erisa) so that it can be said that “the public sector played a key role in the evolution of Silicon Valley”. Then he tries to show some errors: incompetence in the allocation of public resources, inefficient use of subsidies, by “organizations whose mandate is to help entrepreneurs” (“Seven incubators provided under 50% of funds for companies”- an example in Australia) and the SBIR program has reached its limits. Also, his recommendations are:
– enhancing the entrepreneurial culture [through the right laws, the access to technologies, tax incentives and training],
– increasing the start-ups attractiveness [through allowing partnerships, creating local markets, accessing human capital abroad],
– avoiding common mistakes: timing [be patient], sizing [not too small, not too large], flexibility [learn by doing], create the right incentives [and here it is a complex situation as perverse effects from good ideas often occur] and evaluate [which does not happen often enough]. Already in his introduction he writes that you need rules, experience, time, incentives and assessment. But with all his experience and knowledge about high-tech entrepreneurship, Lerner is very humble with the lessons: the topic is really complicated, all these advice have to be implemented together and it is really their careful interconnections which will make an ecosystem lively or not. There must obviously be a lot of talent.

Brad Feld gives the ingredients of start-up ecosystems:

startupcommunities 1. A Strong Pool of Tech Founders
2. Local Capital
3. Killer Events
4. Access to Great Universities
5. Motivated “Champions”
6. Local Press / Websites / Organizational Tools
7. Alumni Outreach
8. Wins
9. Recycled Capital
10. Second-Time Entrepreneurs
11. Ability To Attract a Pool of Engineers
12. Tent-pole Local Tech Companies

Back to Beylat Tambourin report : “Everywhere in the world, innovation is stimulated within networks of actors uniting training, research, young & fast growing companies (start-ups), service companies, large groups engaged in a policy of “open innovation”, professional coaching and innovation funding, and sometimes the hospital.”

The most emblematic examples are of course Silicon Valley, the Boston area or Israel. […] In Europe, most states began a decade ago to implement a policy of clusters: poles of competence in France (in addition to existing clusters), with a focus on collaborative R&D; more recently a focus on a small number of world-class Spitzencluster in Germany, etc.. The effectiveness of these networks is based on the fluidity and speed of “assets” of innovation skills (persons), technology, infrastructure, services and financing. Innovation is primarily a matter of stimulation and confrontation of different points of view. The role of clusters and innovative ecosystems, in this aspect of their business and not as factories of R&D projects, is critical.

The success of clusters at international level is now relatively well analyzed and relies heavily on a few factors:
– World-class universities
– An industry of venture capital aggregating institutional and private investors,
– A range of sophisticated services (HR, legal, marketing) to support the growth of young innovative enterprises,
– Professionals of high techonology
– A critical but intangible ingredient: an entrepreneurial culture.

Transfer processes and innovation are “naturally” complex for several reasons:
– The transfer takes place at the interface of two worlds with different logics, which requires to achieve and maintain a significant level of trade, trust, understanding of the issues and objectives of each other…
– Innovation can not be deployed within an “established” entity: this statement is largely based on the concept of open innovation (open innovation).
– The complexity of the transfer process and innovation also increases with the depth of research and the nature of disruptive innovation.
– The processes involved are not “deterministic”: set goals and define interim milestones is of course necessary to construct a “nominal” trajectory, but we must accept that the “real” path will be different, and it is better to be able to adapt than trying to predict the future.

-> The policy must finely understand the ecosystem dynamics: centralized methods are not effective, we must have a Darwinian system and continually assess.

The challenges of ecosystems

– The impossibility of identifying a “construction plan” of an ecosystem, from scratch or from some already present features: an ecosystem is built over time and then one notices it. The time required for its construction (often several decades!) just proves that any search for the “first cause” behind the ecosystem is futile. This is a hard point for governments who want to create an innovation ecosystem for a particular “field” on this or that “territory”. Local governments, national and European are generally funders but they must have the patience of investors.

– The complexity of measuring the effectiveness of an ecosystem: assessment is central, but difficult to implement. The evaluation of each of the players in the ecosystem is of course possible, if indeed they have clearly defined tasks and ways to fill them. However, all of these individual assessments is not an assessment of the ecosystem, according to Pascal’s principle that it is “impossible to know the parts without knowing the whole, nor to know the whole without knowing the parts”.

– An effective ecosystem is based on the acceptance of their role by each of the actors: all are necessary for the operation, but none can claim to be the sole cause of success. However, the temptation to declare oneself essential is much stronger as most actors depend on government subsidies and can consider themselves in competition for access to these resources. Each player must avoid both “sufficient and insufficient” and remember that one’s effectiveness depends largely on that of the ecosystem (or ecosystems) to which one belongs.

“Simplify” or “optimize” an ecosystem, let alone a complex of ecosystems, is irrelevant: we must accept “Darwinism”, think articulations, and continuously assess the dynamics to maintain and improve the efficiency of public investment. Proposals for simplification and optimization from some players and / or public authorities (local, national, European) actually consist of creating a new “object” that is supposed to respond to the noted deficiencies : it is the illusion of the “exceptional measure” that will change the situation of innovation, the creation of a device or structure, which explains to a large extent the accumulation of devices and structures in France. The challenge, however, is to define the positioning of any new “object” within the existing structure (for an ecosystem is built over time) and explain how it will improve the efficiency of the overall system.

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