Ecosystem approach to start and grow innovative technology companies Tony Bailetti, Ph.D. Carleton University Vitesse OTI August 6, 2008

2 Motivation More serial technical entrepreneurs Innovation is key to making money Innovation is distributed globally Harnessing innovation distributed globally requires cash, talent, partnerships and approaches/tools that scale Barriers to entry are lower ICT has made world flat Successful companies use “ecosystem approach” to grow Serial technical entrepreneurs are regional treasures, how to best enable them and benefit Ottawa?

3 Couple serial entrepreneurs with ecosystems and establish keystones in Ottawa Opportunity Clarity act to make market act to align with existing market Acting earlier results in more value created globally and appropriated locally Time Benefit

4 Next steps TFN to organize meeting with serial entrepreneurs and ecosystem builders Set economic goals Establish keystone of keystones in Ottawa Establish as many keystone organizations in Ottawa as it makes sense Ensure tight coupling between serial entrepreneurs and global ecosystems

5 Approaches to value creation and appropriation ModelTech transfer ClusterEcosystem Method Focus on research Invest to move research to line of business Pick a winning domain Invest to grow domain Align investments in distributed innovation, find mutually supportive roles, and move towards shared vision Invest in ecosystem health Focus # of patents and licenses to existing firms or spin- offs and patent process Goals of bureaucrats that make a living running 4 th pillar organizations and cluster size Orchestrate innovation around the world and lever local strengths to create and appropriate value Attributes Poor commercialization skills with high overhead Difficult to scale Weak company- academic relationships IP controlled go-to- market strategy Ineffective given investment required Static relationships Difficult to scale Slow and inflexible Fails to uncover growth niches Does not evolve co- dependence No customer empowerment Leadership role is valued and process to identify leaders is transparent Strong relationships based on co-dependence Strength from risk sharing, diversity with common purpose, and size Scalable Innovative SMEs and customers play central roles Self-adjusting and flexible

6 Company Large Competitor Customers Early Customers x x x x x x x x x x Components + prototype environment $ + people lead project Business plan expert Research 5. Business Development 2. Entrepreneurial 3. Commercial Services 4. Knowledge & Dissemination 1. Sandbox Whole product Substitutes Complex networks Keystone Members Orchestrator Coral CEA Ecosystem Example

7 Example of groups in an ecosystem Company Suppliers Inputs Competitors Complementor 1 Complementor 2 Customers + Intermediary stage 2 Outputs Substitutes Intermediary stage 1 Leader Influences Inputs

8 Main benefits of entrepreneur- ecosystem coupling Aligns entrepreneur’s energy with resources from large number of diverse companies, organizations, and individuals all over the world Combines entrepreneur’s contributions with those of others to create significant value for customers Increases likelihood service providers and suppliers will share risks with entrepreneur in return for long term relationships Increases entrepreneur’s legitimacy and options to grow market Increases likelihood of selling to governments Decreases investment to enter new markets, adopt and advance technology as well as raise capital Reduces cost of recruiting excellent teams Fosters collaboration with other serial entrepreneurs Provides gateways to relationships in other ecosystems

9 Ecosystem approach requires technical entrepreneur to: Use community’s shared vision and then contribute to it Launch market offers using ecosystem’s foundation platform Compete for leadership positions in space, niche and governance Draw on talent around the world Develop capability to collaborate Incorporate ecosystem realities into: –Managing product interdependencies –Accelerating adoption of company’s products –Raising funds –Working with talented teams distributed worldwide –Creating and appropriating value Open development and commercialization processes to customers

10 Ecosystem collaboration is not outsourcing Collaborate toOutsource to Grow revenueReduce costs Create new assets that deliver value to customers Produce existing product at lower cost Access skills dispersed globally, share risks Procure commodity assets Build capabilities to differentiate offers for which customers pay Avoid investing in capabilities for which customers will not pay

11 Keystone organization What is it? Advances foundation platform which anchors economic community –Combined base of: technologies, architectures, designs and assets used to build market offers; components, products and services; contracts; and processes Strengthens ecosystem health Enables value co-creation with customers Benefits? Increases awareness of global environment Reduces cost and time of coordinating innovation and collective action globally Supports all stages of growth, not just the start Increases trust among entrepreneurs' company, complementors, intermediaries, suppliers and leaders

12 Thank you!