In my previous blog (read it here), I introduced an overall view of innovation ecosystems. Now, let’s explore why companies join an innovation ecosystem (and stay in it), as understanding these motivations is key to attracting new members and retaining existing ones.

Companies join innovation ecosystems for different strategic reasons, aiming to enhance competitiveness, efficiency, and innovation. The decision to participate depends on several factors shaped by a company’s situation and goals. This highlights why joining an innovation ecosystem can be a strategic advantage for the company.

Based on our studies, the key motivators fall into five categories:

1. Strategic alignment: Companies join ecosystems that align with their long-term goals. These may include innovation, market expansion, or staying ahead of competitors.
2. Access to resources: Ecosystems offer shared technology, knowledge, and expertise, fostering collaboration and innovation. Additionally, access to talent and emerging technologies is also key.
3. Developmental opportunities: Ecosystems provide environments for testing, scaling, and improving products, processes, or business models. Developing innovation capabilities, learning, and benchmarking are also important motivators.
4. Financial support: Ecosystems offer access to funding, such as venture capital and grants, helping companies accelerate growth. Moreover, risk sharing and cost efficiency are central aspects.
5. Position, reputation, and status: Being part of a leading ecosystem boosts a company’s reputation, attracting talent, investors, and customers. It may open new markets and bring new opportunities. It also provides possibilities to shape industry benchmarks, policies, and regulatory frameworks.

Each category holds different motivators as described below:

Strategic alignment

In studying innovation ecosystems, we observe strategic misalignment in some companies, especially in traditional industries. Their focus on operational efficiency or market expansion may not align with the uncertain, long-term nature of innovation initiatives. Companies with a short-term focus may hesitate to invest time and resources in an innovation ecosystem. Returns on investment can be uncertain and long-term.

Furthermore, they may fear that new products or services developed within the ecosystem could compete with existing offerings. This could cause internal conflicts. However, if goals align, joining an innovation ecosystem can support strategic renewal and growth.

Access to resources

Ecosystems enable companies to form partnerships with others: potential customers, suppliers, and collaborators. These partnerships might lead to new markets, co-developed products, shared resources, and reduced R&D risks. Spanning multiple industries, ecosystems foster cross-industry collaboration, driving disruptive innovations that wouldn’t emerge within a single industry. Companies also gain access to highly skilled talent, tapping into experts in emerging technologies and business models. By participating, businesses stay ahead of technological trends, integrate new innovations, and enhance agility. This agility is essential, especially in fast-changing environments.

Developmental opportunities

Innovation ecosystems unite corporations, startups, universities, and research institutions, fostering knowledge exchange and access to cutting-edge research. Therefore, joining an innovation ecosystem accelerates R&D and supports open innovation. It allows companies to leverage external ideas and reduce development time.

Ecosystems provide continuous upskilling through knowledge sharing and training. They offer opportunities for companies to contribute to societal issues like sustainability. Companies also benefit from shared best practices and benchmarking against peers, helping them stay current and improve performance.

Financial support

Innovation ecosystems involve venture capitalists, angel investors, and government funding sources, enhancing companies’ access to funding for new initiatives and growth projects. Government support often includes financial incentives, grants, or tax benefits for those engaged in innovation.

By joining an innovation ecosystem, companies can share R&D financial risks, easing the burden of high-risk projects. Additionally, shared resources like labs and digital platforms help reduce overhead costs. Companies can share infrastructure instead of investing individually.

Position, reputation, and status

The final group of motivators involves enhancing a company’s position in existing and new markets. This includes exploring opportunities to enter new industries or expand geographically through ecosystem connections. Ecosystems provide access to a larger customer base, investors, and infrastructure, facilitating efficient growth and scalability.

Being part of an innovation ecosystem keeps companies informed about the latest trends and technologies. It offers a first-mover advantage in adopting innovations. Moreover, many ecosystems emphasize user-centered innovation, enabling collaboration with customers to co-create products that better meet market demand.

Active participation in leading innovation ecosystems enhances a company’s reputation as an innovator. It makes the company more attractive to partners, customers, and investors. In addition, companies can collectively influence policy and regulatory frameworks, particularly in rapidly evolving industries. They benefit from shared legal expertise to navigate complex regulations effectively.

Summary and next steps

Understanding the motivators outlined above is essential for developing the innovation ecosystem from various perspectives. Yet, companies may hesitate to join an innovation ecosystem or remain in one for several reasons, despite the potential advantages. To assist ecosystems in attracting and retaining members, we’ve created a tool for assessing key motivators and expectations associated with participation. This tool is based on the IEM—Innovation Ecosystem Motivator—framework mentioned above. It enables ecosystem stakeholders to evaluate their own and their peers’ motivators, expectations, and realization of objectives.

In the next blog, we will examine why ecosystems fail even when they have the knowledge to attract and retain members. We will also explore the FOMO* effect that some companies experience. It leads them to join an ecosystem despite significant misalignments in expectations, unclear benefits, and known barriers.

See you soon!

*FOMO – fear of missing out.