Lessons about Entrepreneurial Ecosystems Learned from Our Natural Ecosystem

Last week, my family and I took a vacation to Estes Park, near Rocky Mountain National Park.  This was a beautiful, relatively secluded vacation during this time of viral pandemic.  It provided a fitting backdrop to my current reading and a theme that runs through my life frequently – comparing the economic world with the natural one.

I am currently reading a novel called “Overstory” by Richard Powers.  The story contains a plot that involves nine individual storylines that coalesce around the protection of forests and trees.  This has me thinking about the complexity of natural ecosystems.  It also caused me to read two delightful books – “The Hidden Life of Trees” by Peter Wohlleben and “A Walk in the Woods” by Bill Bryson.  Each discusses the natural world with beautiful poignancy, and frankly echo each other frequently but not completely.

A couple of things that struck me about the positions.  Richard Powers is a novelist, and his role is to evoke the plot and narrative, drawing us into the story.  But, he also is attempting to create a narrative that drives home the loss of the natural world around the belief that there is reason to hope for something better.  In this crowd, Wohlleben is the expert.  He is a long time forestry employee (in Germany) and has developed a deep understanding of the natural world through both research and experience.  Bryson is a passerby – but a delight to read.  He has written a variety of non-fiction stories that include narrative components about his own experience while providing a backdrop, context, and often learning about the topic at hand. 

So, as I sit here, thinking about the world.  I think each view is important – and valuable from an ecosystem development perspective.  An expert who is often an economist or long-suffering community builder (Chapman and Company, often fits this role).  A storyteller whose job is to invoke the importance of the ecosystem at hand while also explaining how it fits into the world.  And a connector who can tie the two together.

Experts are not valuable as invaders 

In the context of our work, Chapman and Company is often confronted with clients that desire simple solutions to economic development or entrepreneurial development.  The reality is that systems are extremely complex – both social and natural.  But, instead of understanding the role of an expert, most places simply hire the most expensive and let them do their work.  Then, they place the effort on a shelf because it is not actionable.  Experts need to step down to the roots of the forest and explain what is happening across the ecosystem – not just proclaim goodness in one element.

Throughout the books, I was struck at the interconnectedness of the natural world – and the need to have an expert guide, as well as narrative and insight from the non-expert.  This is often our task.  We know stuff, but we don’t know the place.  So, for example, in the context of trees.  I had no idea that the fungi at the base of the trees and the roots systems, interact in a way that allows the two to symbiotically exist.  I also did not know that they help ensure that the entire forest benefits.  In many ways, this is the same as ecosystem development.  Most places have silos.  These siloes exist in spite of and often to the detriment of the forest around them.  But, they often do not realize the negative impact caused by their apart-ness.  This negative impact is not just to individual startup trees, but also to the overall health of the forest.  This comes through in storytelling, resource allocation, and knowledge sharing.  Like the tree that combats the forest, the overall system is weakened. 

Ecosystems are complicated systems that involve many variables and moving parts.  Solutions to complex economic problems often involve small movements of elements that are not naturally connected to each other.  In our practice, we have attempted to simplify the elements of an ecosystem into some areas that we recognize as being repetitive and recurring.  So, in the case of this article, I’ll use an example.  Last week, I examined multiple news stories and social media posts.  For the most part, people praise the things that need the least amount of praise while ignoring important things happening that may need a touch of encouragement. 

In Nebraska, for example, Hudl (a sexy company that continues to grow but left startup world a while ago) continues to merit praise.  But, it is like praising a large tree as it reaches 50 or 60 feet, rather than seeing all of the other things happening in the ecosystem that are still struggling to grow.  Drop-in reports and safe social media do a disservice to ecosystems.  Instead, recognizing businesses and connecting your network to them is often the most important.  Share resources.  Share connections. Do introductions.  This is obviously an over-simplification of complex thought.  But, I struggle with people consistently being ten years behind the need and then acting like they “get it”.  Or talking only about their stuff…and acting like that is the ecosystem.  Or providing a context that puts them only in the best light – so that they can grow fast – at the expense of the other trees in a better position to utilize that light.

No Such Thing as a Panacea in Ecosystem Building

The challenge is that over-simplification of complex systems often leads to thinking that a single element is a panacea.  Or that one success is the keystone to the ecosystem.  These are simply wrong-headed thoughts. In our experience, this is often around financial capital.  Usually, our clients or similarly situated individuals think that solving for venture capital is the most important, difficult element of the ecosystem construction.  Or that raising a round is in some way the accomplishment.  Capital is not the key (if there is one) – entrepreneurs are.  And entrepreneurs often are irascible and unpredictable.  They are like a forest.  Left to its own devices it will grow into something, but it is not the well-landscaped, planted, comfortable yard of a park.

This, in many ways, reminds me of thinking that if we simply plant enough trees then they will grow a forest.  In reading about forests over the last couple of weeks, I have discovered a lot that rings true to me about entrepreneurial ecosystems also.  In fact, the ecosystem requires some wildness and the out of control nature of…nature.  There is the ability to guide, at times.  But, often, we simply have the awareness to remark at the awesome nature of the different places we see.  Our job is less to figure out new plants and how to prevent too organized an approach.  This is antithetical to hiring a consultant.  We also write whitepapers – but we don’t plan.  We unlock things that are already busting at the dam – we don’t try to create rivers from whole cloth.

For example, there is growing scholarship that trees communicate with each other using pheromones and other tools.  These natural communication tools were unknown until the last half-century.  This type of information appears to be new to us, but it has always been true.  Economic development is attempting to reveal “new” truths.  But, the reality is that ecosystems have existed, persisted, and sometimes failed for generations of human civilization.  We have simply never known to look nor to understand what we were seeing.

Ecosystems are Complex

The reality of ecosystems is that we do not understand them.  To act as if they are simple or even simple systems is not true.  They are complex and will require generations of learning to better understand, and even then, we will probably only know a fraction of what we need to.  This is not to say that intervention is bad.  It is simply to admit that we do not know enough and that with that, humility and honesty are extremely important.

There are certain elements that appear very true – such as pruning trees to allow for sunlight appeared true in the early years of professional forestry.  It turns out that this causes trees to grow too quickly and they become brittle.  In other words, even in this new space, logic may be wrong, and we need to be willing to stop bad actions before they become cataclysmic.  

What I think is the most important element and one that appears to be really hard for people to trust is that 1) finding entrepreneurs is harder than you might think as not everyone has the high talent to be an entrepreneur, 2) the single most important thing that communities can do is work together to find and support entrepreneurs, but many organizations and individual actors try to isolate and receive credit for the entrepreneur’s success, and 3) the keystone to building an ecosystem is the need to help connect the entrepreneurs to each other and nourishing sources of resources. 

Entrepreneurs are the apex trees of regional ecosystems (super rare but very impactful), and the problem is that they need old-growth forests around them, including rich undergrowth that is not simply another apex tree – but many main street businesses who build small, sustainable businesses, people of great talent to fill out teams, and supporting capital.  They require the death of businesses to find talent, ideas, capital, and opportunities.  They require unrelated, independent sources of information, support, and opportunities to grow strong – not just what they can do independently but what the entire ecosystem does to keep them healthy. 

These types of ecosystems can be encouraged but not planted.  And many times the initial efforts are not where the ecosystem takes itself.  For example, Lincoln has created a number of high growth businesses in sports technology, including Hudl.  But, that creation is not specific to Hudl but the environment was ripe for those types of businesses to emerge – such as, Opendorse and Elite Form.  The reasons for each are numerous – but part of this was the University of Nebraska sports teams had many problems and the desire to solve them with technology.  This early customer helped drive businesses but it did not make them.  Those types of seedlings have been spotted in almost every college town.  It was the rest of the environment that helped them grow too.  In other words, these businesses were not the original goal, merely a by-product of the goal of creating opportunities for athletes and students, of being willing to spend money on stuff that might not work, of providing capital to young former athletes, etc.  Hudl was more of an accident than a singular intent.  Hundreds of similar companies have started over the years – but for whatever reason (I would argue strong, positive, resilient leadership) Hudl was the seed that became the apex tree of the forest. 

One can seed the old-growth forests with all of the right components, but one cannot choose the winners through pruning.  Leaders have to let ecosystems grow independently and without governors – they need free rein and encouragement and money and lots of other components.  And the first, most essential part is to find the entrepreneurs and trust that they can grow tall if you stay mostly out of their way.  The more seeds of high talent entrepreneurs that are in a community’s soil.  The more built-up energy and nourishment in the soil.  This is what we mean when we talk about the need for an ecosystem.  It is not a planned outcome – but an intent tied to putting as many “right things” into place and then seeing what grows.