The Ecosystem Trap: When Collisions Replace Results
When Dr. Dell Gines was at the Kansas City Fed, he released a presentation entitled Building Entrepreneurship Ecosystems: Policy & Practice. Dr. Gines is a well-respected scholar and practitioner in the field who now works at the International Economic Development Council (IEDC). In the presentation, Dr. Gines defines an entrepreneur ecosystem as:
"How communities are organized and connected to support or hinder entrepreneurs as they start and grow companies... there are two main pieces: the things in a community that support entrepreneurs (business context), and how those things connect with each other and with entrepreneurs (networks) to create synergy."
Dr. Gines frames ecosystems and ecosystem building as a next stage in the economic development industry. He advocates that Economic Development Organizations (EDOs) and community leaders shift resources and attention away from industrial attraction and traditional business development. Instead, Dr. Gines champions ecosystem building and believes this economic development strategy is the best option for wealth creation, wealth preservation, and enhanced quality of life. If you look at the actions of regional, state, and local, economic development organizations across the US you can clearly see that these ideas are taking hold.
It is a compelling, noble vision that has the capacity to expand what economic development means, who benefits from economic development practices, and how economic developers support local organizations. But in practice, we’ve run into a significant problem: There has never been consensus on what ecosystem building means.
Because there is no standardized definition or credentialing, the field is open to anyone bold enough to claim the title. I’ll admit it: I have referred to myself as an ecosystem builder in the past. It’s an easy hype to get caught up in. The logic is seductive: All we need to do is generate collisions. If we pull enough entrepreneurs into a room it will inevitably produce economic development returns.
How do we know it’s working? We point to the vibe. We look at the number of coffee meetups, the energy at pitch nights, and the sheer volume of colliding that is happening. In this framework, if we don’t see actual economic results - new jobs, increased tax base, or scaled companies - we blame it on a lack of density or complain that the stodgy smokestack chasers are hogging all the resources.
By focusing so heavily on the networks and synergy Dr. Gines describes, many EDOs have inadvertently created an accountability vacuum. Unlike traditional economic development where you can count the square footage of a new warehouse or the number of jobs at a relocated headquarters, ecosystem building is often measured by vanity metrics.
We track attendance, newsletter open rates, and engagement. But while we are busy facilitating these social connections, the core, unglamorous foundations of economic health often fall by the wayside. An ecosystem is meant to support entrepreneurs as they start and grow, but growth requires more than a coffee meetup. It requires a city that works. If an EDO is so focused on hosting the next networking mixer that it ignores the fact that local permitting is a black hole or that workforce housing is non-existent, then it isn't building an ecosystem - it’s hosting a social club.
Still, all of that is not to entirely discount the true work of ecosystem building. This work centers on putting the entrepreneur at the core of local or regional economic development efforts. This does not have to come at the expense of existing businesses or those wishing to relocate or expand into an area.
Creating a friendly and resource-rich environment to launch and scale an entrepreneurial endeavor is strategically smart. But that environment must offer more than networking events. You need smart infrastructure that provides office, lab, and manufacturing space right sized for startups. You need a regulatory environment that encourages entrepreneurs to take the leap and start a business. And you need the traditional gatekeepers to stand aside and allow for messy interactions between entrepreneurs, funders, government, and private interests.
When an EDO goes all-in on just collisions, they neglect the fundamental responsibilities that actually help an economy thrive:
Business Retention & Expansion (BRE): It is much more exciting to court a series A tech startup than it is to help a 20-year-old local manufacturer navigate a supply chain crisis or a lease renewal. Yet, the latter is often the bedrock of the local tax base.
Regulatory Navigation: A core EDO responsibility is ensuring that a founder, or any business, can get a business license, a building permit, and access to state funding and incentives without a six-month bureaucratic nightmare.
Workforce & Infrastructure: If the region lacks attainable housing for employees, updated infrastructure, thriving commercial and entertainment districts, and a good education system no amount of networking will keep a growing company from moving.
If we are going to follow Dr. Gines’ lead and prioritize entrepreneurship as our primary economic engine, we have to treat it with the same professional rigor as the industrial attraction of old. We need to stop assuming that collisions are a substitute for strategy.
Ecosystem building shouldn't be an excuse to neglect the core responsibilities of economic development; it should encourage them. Synergy is great, but at the end of the day it’s the hard work of fixing infrastructure, policy, and support systems that actually generates a return on all of those collisions.
