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Shaking up the innovation ecosystem

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The truth is that the social, economic and commercial progress of any city is defined by the efficiency of ecosystems that lie within it. It, therefore, becomes imperative to ensure that these ecosystems are being built on sustainable models that are designed to deliver collective impact. Here, Abdulaziz AlJaziri, Director, Area 2071 presents his compelling case…

The innovation ecosystem consists of many stakeholders from corporations, investors and start-ups, who create many point solutions in the form of incubators, accelerators and studios. Each individual programme, organisation and initiative exists to solve specific, localised problems.

There is, of course, a need and space for this distributed model. However, the consequences of this model are ‘more of the same’ solutions and acceptance of the high failure rates in anticipation of one or two ‘winners’. It would take decades or centuries to start to change entire systems and sectors.

Despite occasional wins in the form of disruptive solutions, those which reshape entire industries or markets, significant and lasting change remains slow or unachievable. We thus need different models – models that are not centred on individual impact, but ones that are designed to deliver collective-impact.

Why: A model that owns and serves systems-change questions, not single entity change

Less of: The current model is largely focused on ‘my’ – my organisation, my industry or my problems. This incessant focus on ‘my’ is because there needs to be a clear path from idea to revenue or funding. As any start-up founder knows, efforts to address behavioural change or to educate customers or investors are more than often doomed for failure.

Furthermore, the issue with system-wide problems is that no single entity owns them. If there is no owner, chances are good that there is no immediate customer. With no customer, there is less likely to be an investor. As such disruptive experiments, which challenge fundamental questions, assumptions, relationships or norms, mostly die prematurely. We need less of models that serve single-entity problems, programmes or interventions that are here one year, but due to shifting priorities, disappear next year.

More of: We need a model that is focused on ‘our’ system-level problems. Some of these system-wide problems persist because there they have no “owner”. Take for example of the empty-mile-problem, where vehicles return ‘home’ empty after dropping off passengers or cargo. Individually this is a small waste. Collectively, this constitutes a billion-dollar system waste. We need a home to these types of system-level problems.

On the other hand, not everything can be framed as a problem or a need. There are opportunities to experiment on the redefinition of entire industries. For example, how do we create or leverage new distribution channels to reach the last billion, who are often in rural communities? Again, no single entity owns this problem. Yet, solving for this opportunity is of interest to the entire system, from healthcare to consumer goods organisations.

Who: Centred on experimenters, not start-ups

Less of: When designing a micro or macro-ecosystem, it is all too easy to say it serves everyone. This usually results in no one being served and a loss of clarity and purpose. We need less of serving of individual entities – start-ups, corporates, investors, or the government. Let’s face it, there are plenty of ‘providers’ serving at the entity level. Of course, there needs to be value that each of these entities give and take from the ecosystem, but they are not at the centre.

More of: Ultimately everything is a people problem. The people we need to serve are the experimenters. Regardless of the entity in which they sit. These are individuals or teams, who are already working on systems-change (the why). Some are working as self-labelled start-ups, others may be ScaleUps, government departments or corporates, and yet others may have hacked a homemade solution. However, their progress is stifled by regulation, lack of expertise, investment, customers etc. Very often, experimental ideas might take years to move forward, but we as a collective ecosystem need to and can help remove bottlenecks to make progress in weeks.

Most incubators and accelerators would not give these Experimenters a second look, because they either lack ‘traction’ or an immediate customer.

We need a model that actively seeks out these experimenters – the great minds, hearts, and hands – who seek to change the system, who are beyond the ideas stage and are out there making themselves vulnerable to failure, who need legitimacy and a different model of support than that is currently offered to them. This leads us neatly to the ‘how’. How: Deliver value through cocreators, not incubators

Less of: The world of accelerators and incubators is well established. They all largely follow the same model. They ‘accelerate’ or ‘incubate’, they take equity stake, and they are centred around a three-month program. The goal of almost every incubator is to help their portfolio of start-ups (bets) to get to so-called ‘next-step’ – the next investment or the next target growth level. They are organised into themes, technologies, or markets. They rarely ever have the remit of changing the systems or sectors. Then there are Startup Studios, which come in many flavours. One such flavour is that corporates outsource the design and development of new businesses, because they lack in-house potential, risk-appetite, or short term strategy alignment; StartUp studios do everything in-house. We do not need more incubators or accelerators, nor do we need more of ‘in-house’ models, if we are to serve a different ‘why’.

More of: We need a co-creator model. A backbone organisation which exists to co-create collective-impact. A model which mobilises the entire ecosystem, with each party doing what it does best, but for a collective purpose of systems-change. However, one cannot just throw many entities together without defining their roles that they will play for the benefit of the entire ecosystem.

Therefore, we need to create common goals, common outcomes and common indicators. We need to analyse and share data to track progress, visible to all stakeholders. We need to facilitate relationships through co-creation, over ‘networking’. We need to identify and then drive actions to address critical points of failure that are stopping systems-changing experiments from achieving scale. We need to create new roles that the ecosystem needs. All this, cannot and should not be done alone.

We need to co-create programming that is tailored to deliver on the ‘why’ of systems-change. Therefore, a 3-month cookie cutter approach won’t work. We need a longer program that support all the different transitions between an experiment (SearchUp) to a ScaleUp. We need programming that delivers not ‘mentorship’ but outcomes, a virtual-team model that co-creates, and experiences that expand the Experimenters’ mindsets to what is achievable. The value of co-creation is higher than the value of money. If money (investment) was the answer, we would see many more successful start-ups. If incubators were the answer, we’d see many more successful start-ups. The point being, there is no one single answer. The answer lies in bringing together programming value from all ecosystem stakeholders, so that the experimenters can choose their own cocktail mix that is important and urgent for them.

The What

One of the enablers to systems-change, is in the design and execution of System-Challenges. Although the type of System-Challenges we are focusing on will vary from year to year. Here is a sample:

Food: How might we feed the next billion?
Health: How might we systemise the distribution to the last billion?
Transport: How might we solve for the billion-dollar empty-mile problem?
Aviation: How might we create free air travel?
Education: How might we create an education system without school buildings?
Retail: How might we create a zero-ownership model?

These challenges are at the intersection of global, billion people+ needs and business needs. Each System-Challenge is driven by a corporate sponsor. Why? Because our hypothesis is that if big organisations have already validated the system-problems that they care about, for which they are willing to become early adopter customers, then this serves an incentive and clears the path for experimenters in SearchUps, StartUps, Corporates, and other organisations in the value chain to engage with the problem. In short, most corporates do not have the in-house capability and capacity to deliver on such experiments for their industry. Therefore, what’s needed is an external experimentation platform.

The future

In the first iteration of building an alternative model of collective-impact – we are asking ourselves how we leverage an entire ecosystem to serve system-level problems, questions, needs and opportunities. We shall start with the implementation of the System-Challenges. Once we have codified this, we will address other more complex questions. For example, almost every start-up follows the equity-funding model, even those who are initially bootstrapped. We need to ask alternative systems-changing questions, such as how might we develop an open-source start-up model?

In a nutshell, Area 2071 exists as a home to experiments that have the potential to deliver on systems-change.

Rushika Bhatia

Rushika Bhatia is one of the region’s leading commentators on business and current affairs issues. She is the Editor of SME Advisor magazine - the flagship title of CPI Business. She is passionate about infographics – with special emphasis on data, research and statistics. Rushika has a Bachelor’s Degree from Indiana University, USA and is also CIMA qualified.