How thinking in ecosystems helps us to unleash the power of entrepreneurship as a tool for social change.
“Oh, and Anika! Don’t forget to tell people what exactly the issue is you talk about solving!”, Tara – my podcast producer – says at the end of our first meeting.
“Sure. No problem.”
I mean, OBVIOUSLY, I know why we need to build more ecosystems for social change, and why we need to be holistic in our approach, because I’ve been thinking and writing about nothing else for the last six years. But…. putting it in layman’s terms suddenly felt a little intimidating.
So I pulled out a sheet of scrap paper and started writing. Then I pulled out another one and tried again. And another one.
Then I ran out of scrap paper and had to hunt for an actual notebook with pristine, lined pages (gasp!). And again I wrote. And I still wasn’t getting to the core of the issue.
I must have written five different versions of what exactly is wrong with the status quo, why entrepreneurial ecosystem building is one answer, and why we need to approach this conundrum with much thought and care for the people implementing it.
I realized, and am ashamed to admit, that I’ve been so deeply steeped in the topic and surrounding myself with people who share my views that I had a hard time putting myself back in the shoes of someone who hasn’t spent that last six years reading every book, article, case study, interview and report with and about entrepreneurial ecosystem builders.
And that’s irresponsible.
We need more people who fully embrace the power of entrepreneurship for social change and who welcome the idea that their intentional impact in a complex, adaptive system mostly relies on guesswork (because humans are incredibly complex, duh!). And we have to make sure that these people don’t become martyrs for the cause.
So let us take a step back to square one of this idea:
- Why is entrepreneurship an important vehicle for community wellbeing in the 21st century?
- Why do we need an ecosystem approach to nurture these doers, creators, makers and dreamers?
- What personal challenges are ecosystem builders up against and how can we ensure they continue doing this work long-term despite said challenges (part 2)?
The power of entrepreneurship as a tool for social change
The Dan River Region in Southwest Virginia was once a tobacco and textile powerhouse. When manufacturing moved overseas and the tobacco industry moved away from the area altogether, the local economy collapsed leaving the community with few jobs and opportunities to thrive.
I heard a similar story in my interview with Matt Dunne from the Center on Rural Innovation. “Springfield, Vermont, was a community that grew based on innovation of its time. It had the highest per capita income in the state of Vermont for forty years based on a machine tool specialist company headquartered there.
Things were going well for a long time, the company attracted labor from all over the world which made its workforce quite international. Then, in the 1970’s, Machine Tool started to decline in the US and in Springfield. It continued to slowly recede until it pretty much went away for good in 2000 and the community collapsed.
They did not have a diversified economy to be able to withstand that kind of withdrawal by a few large multinational companies. It became ground zero for the heroin epidemic in the region. The dealer set up their operations in downtown itself. The economic base just fell out from under it and went on to become one of the highest poverty rates in the state of Vermont.”
The Dan River region and Springfield are no outlier cases. Many communities around the U.S. and beyond are struggling to keep up with the accelerated pace of digitalization and globalization. For decades, economic developers have worked hard to attract big business to struggling communities in hopes of revitalizing local economies. But this attraction-based strategy only works for a handful of communities leaving the majority behind in a competitive race to offer the highest tax incentives (read more about this in my conversation with Dell Gines).
From 2010 onwards, thought leaders like Victor Hwang and Greg Horwitt, Brad Feld and Michael Isenberg to name just a few, spearheaded the idea of focusing on local talent and grassroots efforts to revitalize and rebuild local economies. The reasoning is straight forward:
If local entrepreneurs start and sustain healthy businesses, they
- create jobs in the community,
- pay taxes locally increasing revenue for public spending, and
- build the entrepreneurial fabric of their community (knowingly or not).
Local entrepreneurship helps communities prosper and increase their quality of life. But the playing field for entrepreneurs is anything but level.
Re-defining what an entrepreneur is
There is this fixed idea about what a business is and what good business support looks like when in reality, we have so much entrepreneurial talent that doesn’t fit these outdated support models.Enoch Elwell, #1 Put entrepreneurs front and center
Silicon Valley has reinforced the idea that an entrepreneur is in his 20s, wears hoodies and sneakers, codes all day long in his dorm room or garage and lives off ramen noodles. It has planted in us the image that entrepreneurs are the Elon Musks and Jeff Bezos’ of the world when a look under the hood of our communities shows a different image: They are the dreamers, tinkerers and doers, visionaries and small business owners, people who turn their side hustle into a business and those who invent a new way to solving an old problem. Yes, entrepreneurs can build and scale startups but they can also sell goods out of their kitchens (hopefully FDA-approved), or co-working spaces or maker spaces.
The popular image of a “typical entrepreneur” is a mere fraction of the wide spectrum of entrepreneurship. Entrepreneurs come from all backgrounds, ethnicities, educational and professional paths.
By working at the grassroots of their local community, ecosystem builders have their finger on the pulse of emerging entrepreneurial trends and minds. They have a deep understanding of the different shades of entrepreneurship and are intimately familiar with what support must look like for each entrepreneur.
Barriers to entrepreneurship
Even though entrepreneurship is a powerful pathway to self-actualization, innovation and prosperity in a community, it doesn’t mean that everyone has the same shot at pursuing it (read the full report Zero Barriers by the Ewing Marion Kauffman Foundation).
In 2017, U.S. entrepreneurs were 80.2 percent white and 64.5 percent male* – not at all representative of the country’s demographic make-up. Women, Black, Indigenous and people of color (BIPOC) as well as immigrants, veterans, people who identify as LGBTQ+, senior citizens, people of different abilities and communities in rural areas face greater hurdles at starting and growing successful businesses. They have a harder time accessing the training, support and funding needed to turn their ideas into thriving businesses. This systemic discrimination hurts communities, and it requires a far and deep reaching systemic solution.
Ecosystem builders build relationships with all groups within their community, irrespective of their race, ethnicity, education, sexual and religious orientation, gender, level of ability, age, etc. They work hard to build connection and mutual understanding among these groups to lower the barriers to entrepreneurship. By being deeply ingrained in each group’s entrepreneurial journey, ecosystem builders build onramps, make relevant connections and are able to tailor support to the individual needs of entrepreneurs.
Abundance and complexity > scarcity and hierarchy
Entrepreneurs are more likely to succeed when they are surrounded by support on all sides. No matter what stage a business is in, every founder benefits from mentoring, advice, work and retail space, a healthy business environment, favorable legislation, and access to a well trained workforce. In other words, entrepreneurs need equal access to information, resources and talent at all times.
It takes a village to build a successful business.
More and more communities are able to offer different types of entrepreneurial support such as incubators, accelerators, co-working spaces, innovation centers and investors (to name a few). But these organizations often have to compete for funding, support, space, goodwill and public recognition. The result? They operate in isolation and operate from a scarcity mindset in an effort to protect “their territoty”. That makes it hard for any entrepreneur to find their way around and know what support is even available to them, and how to best access it.
Entrepreneurial ecosystem builders look at the bigger picture of what entrepreneurs need instead of focusing on their needs or those of other stakeholders. They understand that through trust and collaboration within the community, the proverbial pie gets bigger (abundance mindset) which lessens the need for competition and silos.
Ecosystem builders also embrace the notion that communities are best understood as complex, adaptive systems instead of traditional hierarchies. They know they can’t control the overall community, instead they focus on small but meaningful interventions, leading from behind and connecting the dots.
Entrepreneurial ecosystem building: A systems approach to fostering local entrepreneurship
As soon as entrepreneurial communities adopt an ecosystem approach, magic happens: By putting the needs and challenges of entrepreneurs at the center of their efforts, ecosystem builders know what founders need at any given point in time. That information allows entrepreneurial supporters to become highly responsive and effective. Which increases entrepreneurs’ chances of building, sustaining and scaling resilient businesses. Which benefits the community overall. Everybody wins.
I promised you magic, didn’t I?
But there’s more. If entrepreneurial supporters are able to disband their sense of competition and instead focus on what each of them can do to contribute to the greater good of the ecosystem, they are truly beginning to move the needle. By shifting the focus from the “who” – the actors – to “how” – the quality of relationships among them, social capital and the overall value of the ecosystem multiplies. In a community in which stakeholders share a deep sense of trust and desire to collaborate, the opportunities are infinite.
The essence of an entrepreneurial ecosystem is its people and the culture of trust and collaboration that allows them to interact successfully. An ecosystem that allows for the fast flow of talent, information, and resources helps entrepreneurs quickly find what they need at each stage of growth. As a result, the whole is greater than the sum of its separate parts.ESHIP Playbook
In “Unlocking Ecosystem Building” we talk about the personal mindsets and mastery required to be an effective ecosystem builder.