The innovation ecosystem explained

Innovation

According to Granstrand and Holgersson “an innovation ecosystem is the evolving set of actors, activities and artifacts, institutions and relations that are important for the innovative performance of an actor or a population of actors”. 

 

By this mouthful of a definition, it is clear that an innovation ecosystem is a complex entity. It involves not just a single business or product but a system of relationships between actors and entities and its output is not a product, but a business. This should be obvious also if we think of the definition of a system, which is not only a set of components, but also of relations between components. But first of all to understand what an innovation ecosystem is we should focus on the concept of innovation and distinguish it from the concept of invention. 

 

Innovation vs Invention

 

First of all, while invention refers to a single product or service, innovation is a process. Let’s think of the ipod: the object “mp3 player” was not invented by Apple. Apple introduced the innovation, namely the value system that went together with ipods (Apple music, Itunes, etc). In other words, innovation doesn’t have as an output something tangible (a product) but something more elusive (a new way of doing something, a business) and it’s always the result of a process. 

 

Furthermore, while inventions are singular (when you invent something typically you produce a prototype) with innovation you want to scale. You cannot say that you innovated if you produced just one item of something. You are instead looking for a way to reproduce your invention or your process on a vast scale and to deliver it to your customers. The scaling process is the heart of the innovation ecosystem. Also, an innovation – as opposed to an invention – should continue to have effect and to produce value through the years. 

 

Innovation as a system

 

A system is generally defined as a set of components and a set of relations among these components. A dynamic system transforms inputs into outputs through activities performed by these components (actors) in their interaction with an environment. When we talk about an “ecosystem” immediately a forest could come to mind, or some sort of natural environment where various life forms interact and find their sustenance. In fact the concept of ecosystem is subtler than that, and refers to the connection of living and non living subsystems and to their interaction as subsystems, through nutrient cycles and energy flows. 

 

So when we consider an ecosystem the core concept is that of interaction: interaction and relationships between the components of the ecosystems. When we consider innovation as a system, we are considering not only the output (the innovation) but the entire context that allows this output to happen. In this way of thinking innovation delivers value and this output is produced through a constant process which in turn is possible only as a result of the ecosystem in which it originates.

 

The innovation ecosystem

 

We defined innovation as a process through which something new is produced, something that represents a value. An ecosystem is a dynamic system in which different components (actors) interact (compete or cooperate) in the context of an environment and in a sustainable way. So an innovation ecosystem is a system that produces innovation in a renewable and sustainable way through the interaction of its elements. 

 

It’s the set of actors, activities and artifacts, as well as their relations, that make innovation possible, for an actor or a set of actors. To make this concept clearer let’s think about Apple’s strategy with the ipod and then the iphone. Apple didn’t control the market with only their devices: while rigidly controlling the hardware they managed to build an entire ecosystem of content providers and apps, with a balanced mix of competition and collaboration between the various actors and in this producing value for all the elements. An innovation ecosystem in this view is a system which delivers value through constant innovation and for all its actors (which can be research institutions, incubators, investors, the government, companies and organizations, professionals, etc).

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