A new model for thinking about how to grow regional economies: the Innovation Ecosystem Stack

When it comes to boosting economic growth, just about every region in the country seems to be following the same playbook, but they don’t always seem to realize it. 

Figuring out the difference is the chance at winning — and after literally 100 relevant conversations, I’ve put together a new way of thinking about it. Forgive the jargon: I call it the Innovation Ecosystem Stack. It charts how regions are commonly working to make their economies more dynamic. 

This matters because most jobs come from new companies, and tech jobs have more knock-on effects than many others. In short, prosperity comes from invention, and strategies to get the most out of regional invention need an update.

What exactly is the Innovation Ecosystem Stack for economic development?

In the vernacular of software building, the “tech stack” refers to all the many components that go into powering a given tool — the software and applications and processes. It’s a helpful way of evaluating complicated systems by each step of its development. Same goes for economic development. 

Here’s my first pass at an Innovation Ecosystem Stack.

It depicts three stages of how this style of economic development occurs. Most will be familiar to economic development leaders separately, but they’re not all typically put together. Those stages go like this:

• Invention, Entrepreneurs + Workforce: Programs and resources to encourage research and development, business starts and skills development.
• Community + Identity: Tools for connecting the people who are doing that inventing, starting and working.
• Attraction + Amplification: Strategies for informing people locally and elsewhere that these programs and tools exist, and incentivizing them to visit and engage.

Economic development leaders from across the country have begun piecing these components together. For example, tourism agencies and chambers of commerce are working together more closely today than before the pandemic pushed up remote work priorities. 

And so there are now service providers specializing in each of these three stages.

Entrepreneur support organizations (like tech accelerators) and workforce providers (like coding bootcamps) have firmed up models that can be deployed locally. Local membership groups, meetups, data providers and resource guides — think EcoMap or SourceLink — follow increasingly consistent patterns across geographic regions. Traditional destination marketing, site selection and regional branding efforts, including campaigns from marketing agencies that specialize in this work — like DCI and Edelman — frequently incorporate the language of innovation and entrepreneurship.

All this is well reflected in the landscape of locally-geared, economic-focused trade associations.

This fall, when the International Economic Development Council hosted its annual conference in Denver,  programming featured dedicated tracks both on entrepreneurship specifically and storytelling generally. 

Founded in 1985, the National Business Incubation Association rebranded itself in 2015 as the Global Network of Entrepreneurship Ecosystem Builders, or InBIA.

The Global Entrepreneurship Network and other decades-old industry groups like the Technology Councils of North America (TECNA), the State Science & Technology Institute (SSTI) and the University Economic Development Association (UEDA) have all adopted the “ecosystem building” terminology in one way or another. 

How did entrepreneurship and tech skills become so prioritized?

In the depths of the Great Recession, economic development leaders sought new ways to create jobs. Research confirmed that all net new jobs came from new companies, and fast-growing tech jobs were lucrative and in-demand. So smarter regional leaders updated small business and workforce development programs to reflect new trends.

Income inequality, economic mobility and even racial and gender wealth disparities all seemed addressable by these local investments. Elsewhere, business and talent attraction leaders from governments and big employers got on board too.

Then in the pandemic, long-declining rates of entrepreneurship boomed, especially among previously underrepresented demographic groups, even including those from rural counties. Tech roles remained in demand, even after valuation collapse and the AI starting gun.

Entrepreneurship and workforce development programs were bipartisan, economically important and broadly popular. No surprise they’ve become ubiquitous. In 2013, a handful of US states had at least one organization geared toward “startups,” a term used to describe new companies with the ambition and the ability to quickly grow big and fast. A decade later, virtually all states have some version of them, complementing the sometimes dated infrastructure around “small business” — which can sometimes imply stale coffee and service providers hovering around a local chamber of commerce’s poorly lit conference room. 

This has remapped economic development strategies in much of the country. Once we fought to relocate Fortune 500 companies, goes the familiar econ dev line, and now we’re fighting to relocate the entrepreneurs who will start the next Fortune 500 company. 

Those most likely to use that line increasingly identify themselves as “ecosystem builders,” a term implying they facilitate the groups, events and resources that make a more dynamic local economy. As the ecosystem metaphor implies, that means species of every size and type interacting whether or not they know it.

How your ‘ecosystem stack’ contributes to your innovation economy’s strengths

Having this definable ecosystem stack can be helpful. It’s much easier to diagnose a region’s strengths and weaknesses. Last year in our inaugural State of the Tech Economy reports, we at Technical.ly first introduced the framework we use to evaluate a region’s innovation chops. We look at five categories: invention, commercialization, workforce, livability and reputation.

That so-called ecosystem stack and this evaluation framework relate: The tools in the stack address the demands of the framework.

No surprise that what stands out most to me is the role storytelling plays. Just about every self-described ecosystem builder I’ve met cheers the importance of “storytelling.” At its worst, this is code for marketing without a strategy or a budget. More properly storytelling is documenting people’s stories and experiences, informed by the data and the facts, to shape narrative and reputation. 

This matters even more when every state and region is chasing 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 story are what stands out.