Ecosystems, Clusters, Incubators and Accelerators.
What the heck are they talking about?
You’ve probably heard these words. Your eyes may have glazed over. You may have even said these terms don’t apply to your life.
They actually do and here’s why.
I’ll start by defining these terms.
Clusters:
Clustermapping.us defines clusters as: A regional concentration of related industries. Clusters exist where the economic activities in a set of related industries in a given location reach critical mass.
- They serve markets in other regions or nations.
- They are concentrated in regions that afford specific competitive advantages.
- Example industries: aircraft manufacturing, management consulting, and iron ore mining.
Airbus set up a plant in Mobile to build airplanes. Companies that supply components and support for airplanes set up shop nearby. This is a cluster. These suppliers are dependent on Airbus to continue to function.
This is a successful strategy to build a structure that creates jobs and economic value to a region. However, there are those who say an ecosystem is a better strategy than a cluster.
Ecosystems:
The talk around ecosystems is often with regards to entrepreneurial ecosystems or innovation ecosystems. These are cultures and ways of thinking and doing.
In biology an ecosystem is defined as: Community together with its environment, functioning as a unit.
The National Science Foundation defines an innovation ecosystem as: Entities in a community whose functional goal is to enable technology development and innovation.
We all know about Silicon Valley. This is the go-to example of an innovation/entrepreneurial ecosystem. It is not dependent on one big player but all players depend on each other. According to Steve Blank from ThinkGrowth.org, those in Silicon Valley describe their culture as one that helps, networks, connects strangers and “pays it forward.”
There is collaboration on a huge scale. Engineers get together to discuss technical problems and solutions. They set up clubs based around various interests with the goal of helping everyone in the group. Executives mentor the next generation. Founder/CEO of Intel, Bob Noyce mentored Steve Jobs.
Entrepreneurs who start up new companies often start at the kitchen table or their garage. Many communities seek to create incubators or accelerators to help these startups grow and succeed.
What’s the difference between an incubator and an accelerator?
Incubators:
Techrepublic.com states, “Incubators "incubate" disruptive ideas with the hope of building out a business model and company. Incubators are often more focused on innovation. In most cases, startups accepted into incubator programs relocate to a specific geographic area to work with other companies in the incubator. Within the incubator, a company will refine its idea, build out its business plan, work on product-market fit, identify intellectual property issues, and network in the startup ecosystem.”
Accelerators:
Techrepublic.com goes on to say that accelerators "accelerate" growth of an existing company. They focus on scaling a business. Accelerator programs usually have a set timeframe in which individual companies spend anywhere from a few weeks to a few months working with a group of mentors to build out their business and avoid problems along the way.
The National Science Foundation lists many of the players in an ecosystem that work together to create the culture and work together to help new businesses startup, grow and flourish:
- The material resources (funds, equipment, facilities, etc.)
- The human capital (students, faculty, staff, industry researchers, industry representatives, etc.)
- The institutional entities participating in the ecosystem (e.g. the universities, colleges of engineering, business schools, business firms, venture capitalists (VC), industry-university research institutes)
- Federal or industrial supported Centers of Excellence,
- State and/or local economic development and business assistance organizations
- Funding agencies, policy makers, etc.
Most of us fall into these categories. We are all a part of an ecosystem. A region/community must create a culture of helping and collaborating for these strategies to be successful.