Introduction of a new model of regional economies: Innovation Ecosystem Stack

When it comes to driving economic growth, almost every region in the country seems to follow the same pattern, although they don’t always realize it.

Discovering the difference is your chance to win – and after literally 100 relevant conversations, I’ve come up with a new way of thinking about it. Forgive the jargon: I call it the Innovation Ecosystem Stack. It outlines how regions typically work to make their economies more dynamic.

This matters because most jobs are hired by new companies, and tech jobs have a larger knock-on effect than many others. In short, prosperity comes from invention, and strategies to make the most of regional inventions need updating.

What exactly is the Innovation Ecosystem Stack for Economic Development?

In software development parlance, a “technology stack” refers to all the components that make up a given tool—software, applications, and processes. This is a helpful way to evaluate complex systems at every stage of their development. The same applies to economic development.

Here’s my first pass to the Innovation Ecosystem Stack.

It presents three stages of the emergence of this style of economic development. Most of these will be familiar to economic development leaders individually, but not all of them are typically combined. These stages proceed as follows:

• Invention, entrepreneurs + labor: Programs and resources that encourage research and development, business start-ups and skills development.
• Community + identity: Tools to connect people who do it, inventing, starting and working.
• Attract + Boost: Strategies to inform people locally and elsewhere that such programs and tools exist and encourage them to visit and get involved.

Economic development leaders across the country have begun to put these pieces together. For example, travel agencies and chambers of commerce are working together more closely today than before the pandemic prioritized remote work.

Therefore, there are now service providers who specialize in each of these three stages.

Entrepreneur support organizations (such as tech accelerators) and labor providers (such as coding boot camps) have developed models that can be implemented locally. Local membership groups, meetings, data providers, and resource guides—e.g., EcoMap or SourceLink—are following increasingly consistent patterns across geographic regions. Traditional destination marketing, site selection and regional branding efforts, including campaigns by marketing agencies that specialize in this work – such as DCI and Edelman – often employ the language of innovation and entrepreneurship.

All this is well reflected in the landscape of local and economic industry associations.

This fall, when the International Economic Development Council hosted its annual conference in Denver, the agenda included special tracks, both on entrepreneurship specifically and on storytelling in general.

Founded in 1985, the National Association of Business Incubators changed its name in 2015 to the Global Network of Entrepreneurial Ecosystem Builders, or InBIA for short.

The Global Enterprise Network and other decades-old industry groups such as the Technology Councils of North America (TECNA), the National Science and Technology Institute (SSTI), and the University Economic Development Association (UEDA) have adopted the “ecosystem building” terminology here and there.

Why have entrepreneurship and technology skills become such a priority?

In the depths of the Great Recession, economic development leaders sought new ways to create jobs. The research confirmed that all net new jobs were created at new companies, and that rapidly growing tech jobs were lucrative and in demand. So smarter regional leaders have updated small business and workforce development programs to reflect new trends.

Income inequality, economic mobility, and even racial and gender wealth gaps seemed solvable with these local investments. In other countries, business and talent attraction leaders from governments and large employers have also joined the initiative.

Then, during the pandemic, there was a sharp increase in entrepreneurship rates that had long been declining, especially among previously underrepresented demographic groups, including even those in rural counties. Technology roles continued to be in demand even after the valuation crash and the launch of AI.

Entrepreneurship and workforce development programs were bipartisan, economically important, and broadly popular. No wonder they have become ubiquitous. In 2013, several U.S. states had at least one organization focused on “startups.” This term was used to describe new companies with ambitions and the ability to develop quickly and extensively. A decade later, virtually all states have some version of them, supplementing the sometimes outdated infrastructure around “small business” – which can sometimes mean purveyors of stale coffee and services hanging around a dimly lit boardroom at the local chamber of commerce.

This resulted in a change in the economic development strategy in a large part of the country. We used to struggle to relocate Fortune 500 companiessounds a familiar econ dev line, and now we are fighting to relocate entrepreneurs who will start the next Fortune 500 company.

The people who use this term most often increasingly identify as “ecosystem builders,” meaning they facilitate the creation of groups, events, and resources that make the local economy more dynamic. As the ecosystem metaphor suggests, this means that species of all sizes and kinds interact, whether they are aware of it or not.

How your “ecosystem stack” contributes to the strengths of your innovation economy

It can be helpful to have this definable ecosystem stack. It is much easier to diagnose the strengths and weaknesses of a region. Last year, in our inaugural State of the Tech Economy reports, we at Technical.ly introduced for the first time the framework we use to assess key elements of innovation in the region. We look at five categories: invention, commercialization, workforce, quality of life and reputation.

This so-called ecosystem stack and this evaluation framework are interconnected: The tools in the stack correspond to the requirements of the framework.

It’s no surprise that what stands out to me the most is the role storytelling plays. Nearly every self-proclaimed ecosystem builder I have ever met touts the importance of “storytelling.” At worst, it’s marketing code without a strategy or budget. More specifically, storytelling is the documentation of people’s stories and experiences based on data and facts to shape narratives and reputations.

This is even more important when every state and region is working towards the same goal: a more dynamic and representative economy, backed by advanced research, serious businesses, and a talented and happy workforce.

When the tools are the same, the people and their stories stand out.