If you have been in the entrepreneurial world for very long, you have likely heard the words “Entrepreneurial Ecosystems” pop up more and more in the last few years. And for good reason! Ecosystem theory has begun to change the way we think about entrepreneurship in general with the Kauffman Foundation, CoStarters, InBia, and others leading the way in the US. Ecosystem thinking is also transforming the way we do BAM, in that the development of entrepreneurial ecosystems is understood more and more as a powerful way to foster local business ownership, impact economic development, and expand the influence of the Kingdom in the marketplace of local communities around the world.
So, what is an Entrepreneurial Ecosystem?
Generally an ecosystem is an interconnected, interdependent network of elements, living and nonliving, that make up a supportive environment for a particular type of creature or entity. The word “ecosystem” is a biological term, originally used to describe the environment of a type of animal (or group of animals) that enables it to thrive. So a prairie could be an ecosystem for foxes because it provides other foxes, prey like mice, food for the prey like seeds, water, predators that inspire defensive behaviors, a favorable temperature, sunlight, a place to live, etc..
Outside of biology, the word ecosystem has been very fluid in its meaning. It can apply to a lot of different kinds of networks, such as networks of similar organizations, political environments, or ministry connections. Even the term “entrepreneurial ecosystems” is sometimes used to describe global networks across particular industries, networks of BAM practitioners, or networks of entrepreneurs in a local context.
For our purposes, and the purposes of this discussion, we will use the term “entrepreneurial ecosystem” to refer to the local networks of entrepreneurs, business leaders, local investors, and mentors in a single community or local area. For most entrepreneurs, most of the emotional support, resources, and customers come from such a local environment. It is the elements in that local environment that, when interconnected and supportive of entrepreneurs, allow entrepreneurs to thrive. Elements of that ecosystem can include resources like knowledge capital, other entrepreneurs, established businesses, places to operate like co-working spaces, markets, and even cultural attitudes.
“Building” an Entrepreneurial Ecosystem
So if entrepreneurial ecosystems are our focus, we may rightly ask how one “builds” an ecosystem? In reality, ecosystems are never really created. Every community has some kind of environment or “ecosystem” for entrepreneurs, just not always one that is conducive for thriving. Debilitating competition from big business, resistance from banks and other lenders to lend, lack of knowledge resources on how to start a business, and a culture against risk-taking or profit-making can all conspire to make entrepreneurship difficult. As a result, a potential entrepreneur, even if he/she had a great idea, may never attempt to start a business, not because they lack ideas, but because they don’t know how, don’t know how to find resources, and (perhaps worst of all) feel all alone. When conditions fail to support entrepreneurs in an area, great ideas die untried, and solvable problems remain unsolved.
If, on the other hand, a potential entrepreneur had access to good training in business creation, knew that there were resources available, and had a community of supportive entrepreneurs around them, then suddenly great ideas seem possible. And as an ecosystem grows, the pathway to entrepreneurship becomes easier and more attractive to other potential entrepreneurs, which begins to create dynamic growth. And as that growth continues, it can substantially alter a city’s image, making it a more attractive place for other businesses to move into. Ecosystem growth thus creates a ripple effect that makes local economic growth self-perpetuating. This is why we believe in ecosystems: they are the vehicle for comprehensive, localized economic development.
So, How do you Build an Ecosystem?
There are a number of different organizations that talk about “building” ecosystems. Some of them are trying to build a community around entrepreneurship while allowing new business creation to occur spontaneously and organically from within the community. Others focus primarily on incubating new businesses, and then hope that the alumni and others who are connected to the incubator will eventually fall into a network in such a way that the ecosystem develops as a welcome, though somewhat accidental, byproduct.
We believe that the most effective way of creating ecosystems is by both incubating some businesses while at the same time fostering those connections that support the ecosystem around the entrepreneurs. This has to start by getting the existing business leaders on board and excited about improving the economies of their community through the creation of new business. Those leaders are the ones that can both identify new entrepreneurs and harness essential resources. But they have to be convinced that improving the ecosystem is good for them as well as the whole community.
In this way, building an ecosystem is a little like teaching a cooking class… you can’t teach cooking without cooking something. You have to gather your class around a dish and have them enjoy the smells and tastes of the dish as you teach them how to cook it. But that dish itself is not the point of the class; it will be eaten later that night and be gone. The point of the class is the community of cooks you are creating who want to cook more because they see the value of the process. In the same way, the incubated businesses of a new ecosystem are not the point. It is the community around those businesses that creates the environment where entrepreneurs can thrive.
The Power of Ecosystems for Kingdom Impact
When Kingdom leaders, including the church and BAM practitioners, take the lead in forming positive entrepreneurial ecosystems, they are engaging in something the marketplace easily recognizes as a good thing. As it grows, the ecosystem creates influence on a much deeper level than what can be done through mere social campaigns or relational ministry. So when a community sees how positive that change is, relationships of substance are created, and communication is fostered because an effective and powerful investment is made by Kingdom people into the lives of the people in that community. We call this “Kingdom-centered” entrepreneurial ecosystems, because when the Kingdom is at the core of the leadership, the transformation that occurs is not just economic or social, but spiritual.
Tom is the CEO of a nonprofit organization focused on building local, Kingdom-centered entrepreneurial ecosystems in developing and unreached parts of the world. He spent 9+ years as a BAM practitioner in the unreached world.
If you are interested in building entrepreneurial ecosystems in your part of the world or just interested in hearing more, click here and The BAM Review team will make sure your request is forwarded on.