One of the biggest challenges facing startup communities (or ecosystems if you prefer) is the inability of “feeder” organizations—such as governments, economic development authorities, corporations, and universities—to engage with an entrepreneurial mindset. The reason is simple: startups and startup communities are organized through networks. Feeders are structured around hierarchies.
Hierarchical organizations exist in a “complicated systems” paradigm, where input-output relationships are linear, outcomes are relatively stable and predictable, and the path to success is illuminated by rigorous planning, tight control, and flawless execution.
Feeders like control. They like plans. They like programs. They like clear lines between cause and effect, and a return on investment that is reducible to one number. Moreover, feeders often want to be the vehicle for change rather than an enabler of the change agents. But these are not the makings of vibrant startups or startup communities.
Startups and startup communities are “complex systems”, which means they are best approached through adaptive learning, an informed intuition, a heavy dose of humility, and a focus on shaping the environment so that the right solutions may emerge from the bottom-up. Change cannot be forced from the top down.
And so, startup communities get stuck in the Systems Trap. Feeders—armed with critical resources for startups and startup communities—apply the wrong framework, tackling complex problems through a complicated worldview. Opportunities are squandered, and progress is stifled in spite of best intentions. The cycle repeats in city after city.
What can be done? For starters, there is a need for a larger body of knowledge around these ideas—establishing key concepts and common language. I hope that my upcoming book, The Startup Community Way, will add substantively in that regard. The continual sharing of ideas between global startup community members will also produce new ways for thinking about, discussing, and ultimately, overcoming the inherent frictions between leaders and feeders in local startup communities.
A recent email exchange with my friend Joe Maruschak—an entrepreneur and startup community leader in Eugene, Oregon—produced an excellent way of framing the issue succinctly. Joe writes (lightly edited for clarity):
Ecosystem development is a 'pipe vs platform' problem. With an ecosystem, one is creating a platform for engagement. However, too many involved with ecosystem development are engaged with ‘pipe’ thinking— their focus is on how to we 'deliver' programming, and offer the services.
The role of feeder organizations in a startup community is not to “deliver” the community through endless programs and activities. Instead, their job is to enable and support the startup community as a platform.
Bill Janeway, a venture capitalist and economist, describes the entire digital economy in similar terms in his book Doing Capitalism in the Innovation Economy. About the sizable U.S. federal government role in enabling the development of many of today’s core digital technologies through wartime spending, he writes: “the federal government funded construction of a platform on which entrepreneurs and venture capitalists could dance.”
That’s another helpful way for thinking about how governments or other feeders can engage with startup communities in a healthy way. It’s ok to participate in the creation and ongoing maintenance of the startup community dance floor. In fact, it’s necessary. Entrepreneurs need help. But at the end of the day, you have to let the dancers dance.