Draft of a set of markers/metrics for a healthy entrepreneurial ecosystem. Comments/critiques MOST welcome: norris.krueger[at]gmail.com

1. Ecosystem Markers
Is there a term we use as much as “entrepreneurial ecosystem” without defining it, let alone measuring it?
(Besides “entrepreneurial mindset”, of course.) However, just as it is absolutely critical to nurture a more
entrepreneurial mindset, communities really need to nurture a more entrepreneurial local economy. That means
an entrepreneurial ecosystem that works to support increasing quantity (and quality!) of entrepreneurial activity.
What are the markers of a healthy ecosystem? This is a first ‘go’ to identify a reasonably comprehensive
scorecard, crowdsourced via some great entrepreneurs, scholars & educators, that is intended to be
developmental, not punitive.. please use it to spur discussion in your community!
Supporting Emergence of Opportunities
So… What do we know? (Other than we all have a relatively fuzzy mental model of a healthy entrepreneurial
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ecosystem.) My favorite soundbite is “a healthy entrepreneurial ecosystem provides a robust, friendly
framework for opportunities and entrepreneurs to emerge.”
Entrepreneurial Potential = f (Potential Entrepreneurs)
The entrepreneurial potential of any community (or organization) is quite clearly a function of the quantity &
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quality of its potential entrepreneurs . In turn, that means we need to focus heavily on what encourages and
supports potential entrepreneurs to see opportunities. To act on them. To keep going.
The infrastructure for entrepreneurship has critical elements that are tangible and entrepreneurs will tell us, if
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we’re listening. But the most powerful elements are intangible: What supports entrepreneurial thinking?
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The very best global data that we have argues there are two, maybe three potent predictors of entrepreneurial
activity – across different time periods, across countries, across different types of entrepreneurship.
Entrepreneurial human capital: How many are personally prepared to start a business?
Entrepreneurial social capital: Supportive social/cultural norms? (Fear of failure?)
(Plus a form of entrepreneurial political capital: How hard is it to start, run or grow a business?)
Strategy good; implementation better: If you can ask only one question, make it this one. Are we doing the right
things the right way and for the right reasons? (And realize that probably means the right people?)
These markers have been crowd-sourced, so credit my friends & colleagues for anything brilliant (and blame me
for any stupidities or egregious omissions!) This draft is intended to be critiqued (savagely, if need be) so please
feel free to email or tweet me ANY changes, additions, etc. The indented bold items will be put into a formal
survey once the roster of markers is finalized, we then can start using this roster of markers to spur discussion!
I. Policy Formulation
If an entrepreneurial ecosystem is developing in healthy directions, then it should be easy to see how
entrepreneurship-related policies are themselves being developed. Three markers of healthy ecosystem
development relate then to policy formulation.
First, is there a coherent/cohesive strategy to serve as an umbrella to facilitate the emergence of new
actionable opportunities or is it a grab-bag of sexy (“ooh, we could try that!”) tactics cobbled together ad hoc?
Second, is the policy formulation driven by bottom-up input or top-down design? In other words, how
much of the policy formulation represents a broad cross-section of the entrepreneurial community or is this the
province of major institutions and/or “power players”?
Third, a good way to see this is whether the form of new initiatives are driven by the new functionalities
or are they shoehorned into existing governmental/non-governmental structures. (If there is an Iron Law of
organization design, it is “form always follows function.”)
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From Thierry Volery of St Gallen (Switzerland) & I fear I may have embellished it a little ;)
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Krueger & Brazeal (1994), same title
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Cornelia & Jan Flora’s seminal work on entrepreneurial social infrastructure; my work on cognitive infrastructure
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Paul Reynolds’ awesome re-analysis of the Global Entrepreneurship Monitor data (see ‘drivers’ in my blog)

2. Cohesive strategy or collection of tactics?
Was the policy formulated top down or bottom up?
Does form follow function?
We also look to see if policy formulation is driven by proven practices, not what we want to be best
practice. Yes, every community has its unique characteristics but our “best” need not be remotely the best
option. Also, there are lots of “best” practices. Have we ensured that another community’s best practice is the
one that best fits our needs? (Not wants, needs.) Finding one plausible model to copy is NOT enough.
Nobody designs the perfect system. Without immediately throwing out the cliché of “we need to engage
in design thinking”, it is imperative that we are learning. Are we learning from our mistakes? Are we OK with
making mistakes to learn from? Is it our strategy to assume this is an iterative, trial-and-error process?
Are we really looking for proven practices in a variety of locations?
Do we act to embrace this as an intense learning process?
Do those involved get design thinking or do they want to get it perfect first?
This is the tough one. Would you rather be the “windshield” or the “bug”? (Does anyone ever say “bug”?)
Two important truths: (1) much as we’d like to avoid the windshield/bug choice, we cannot. If you do not choose
to be the windshield, you will be the bug. Your choice: Disrupt or BE disrupted.
(2) This unavoidably requires bold action and a firm, visible commitment to take bold, disruptive action
even if it also disrupts long-established ways of doing things. As I said, this one is a toughie.
Is there a passionate commitment to bold/disruptive action, no matter whose ox is gored??
(or do policy makers seek to avoid disrupting existing personal & organizational relationships?)
II. Networking/Collaborations
Healthy economies are heterarchical: A fancy way of saying they are much more bottom-up than top-
down. They have top-down elements but the top-down institutions serve the bottom-up emergence of
opportunities, not dictate what can and cannot happen. That means the economy is best represented as, well,
as ecosystem: A complex, ever-changing mess of networks and collaborations with a lot more players than we
normally consider.
Do our institutional players, especially those with the most power, act to serve the networked nature of
the economy. Do they serve the bottom-up activities or try to control them (even with best of intentions)?
One marker of this is how immersed are the institutions in the ecosystem. Universities aren’t the only
‘ivory towers’ out there, How much are the institutions embedded deeply in the community; more important, how
deeply embedded is the community in the institutions? Are institutions co-embedded with one another?
Do they play well together? Ask yourself which of your key institutions behave as if collaboration (even
with seeming rivals) is the norm. Most organizations think they are team players; in realty, very few are.
Are key institutions immersed in the ecosystem? Co-embedded? (who is, who isn’t?)
Do institutions play well together? (which do, which don’t?)
Who guards their turf and clout? (In public sector? Private sector?)
Another way to diagnose this is: Are there broad, deep (or both) networks that arise bottom-up? Or are
the most prominent networks driven by institutions? Do institutional players actively support the bottom-up
networks?
One critical role in healthy networks are ‘connectors’ – do the institutions actively support these
individuals (always people and they always surface bottom-up)?
Are your connectors more than just passive/reactive connectors responding to requests or are they
proactive, “pushers” of information and introductions. The latter have the delightful name of “liaison-animateurs”,
both fair broker and agent provocateur!
Are bottom-up networks supported visibly?
Are connectors supported visibly?
How many of your connectors are true liaison-animateurs?
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3. Does policy formulation and implementation recognize the networked nature of the entrepreneurial
ecosystem? Here is another toughie, but a very important diagnostic question to ask. Different roles/tasks are
needed to grow the economy. How do we decide who does what? (Please don’t say “Whoever did it last year”)
In strategy terms, this means focusing ruthlessly on distinctive competence, not core competence. (Core
competence = what you’re best at; distinctive competence = your sustainable competitive advantage.) In a
healthy ecosystem, we do NOT assign roles/tasks by what you do best. We look at the task and ask “OK, who is
THE best in our community at X?” That means I am unlikely to do what I think I do best, I do what adds the most
value to the ecosystem. (Just like in the marketplace!)
It also has the painful consequence that I am definitely unlikely to get to do what I want (or feel entitled to
do). We call this “alignment” (And we call the people & groups that press to do what they want “seagulls”, from
the birds in “Finding Nemo” who only say “Mine! Mine! Mine!”)
Is your community committed to alignment (DC not CC)?
Are you plagued by “seagulls”? (Are there visible sanctions?)
Now we get to some fun stuff. HERE is an area where your state or city can build a terrific competitive
edge over other communities! If there is one tangible tool that every community needs and very few have, it’s an
accurate, detailed map (or maps) of the entrepreneurial ecosystem. To do it right, we almost always need
multiple maps. Everyone THINKS they have a map; usually they don’t and almost never have good ones. Where
communities do have maps, they are at best static “laundry lists” of those in the ecosystem (usually missing at
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least one important component) . It is imperative that such maps capture the most important dynamics, such as
who is connected to whom, what are the flow of information and other resources, etc. This requires big-time
social network analysis. (Good thing we know how to do that! We just need to DO it.)
Does your community have a commitment to develop great maps of the ecosystem? Do they recognize
that this is not something for amateurs? But that it will pay off handsomely??
Does the community share the map? Do different parts of the ecosystem have a shared (and reasonably
accurate) map of their world? It’s not that we want everyone to be a connector, but wouldn’t THAT be nice?
Committed to developing best-in-class maps of the ecosystem?
Are maps shared broadly?
So how do we get started? How does a healthy community build from the bottom-up… effectively? A
powerful tool that we see in almost every healthy ecosystem is a well-done process of listening across the
ecosystem. If the top-down vision for the future of your economy is to be driven bottom-up, then we need to
bring together the visions of the different parts of the ecosystem. “Visioning” is such a cornball, touchy-feely term
these days, but there are powerful tools that do just that in ways that prevent powerful voices (or just loud ones
like mine) from dominating the discussion. They also ensure that we focus on what we have, not whining about
what we don’t have.
Several years ago, in Twin Falls (Idaho) the Western Rural Development Center held one of over 100
listening sessions on how to grow rural entrepreneurship. Amazing process! What was intriguing is that most
communities were really successful and converged on ideas that resonated broadly (most frequent #!: More
youth entrepreneurship!) This can be replicated easily and… cheaply.
Where the process did not work as well, it had been hijacked by “seagulls” who wanted to make certain
that they would be the key players. Or the process focused on the negatives (our liabilities not our assets).
Where the process REALLY worked well, the communities (usually a state) took the results, combined
them with their ecosystem maps and held a “summit” (I know, another cliché word these days) to combine local
visions & flesh them out, creating a tangible action roadmap. In a couple states, they used this as a golden
opportunity to do alignment and everyone comes away with clear action items. Any city/state could do this.
Today.
Is your community committed to listening/visioning sessions?
Is participation truly bottom-up?
Is community leadership committed to go “summit-ing”?
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Note that at some level, even the most “entrepreneurial” ecosystem includes both newer & older firms, smaller & larger,
high tech & low tech, urban & rural, growing & shrinking, etc. Both private & public, for-profit & non-profit
Entrepreneurs, service providers & champions. Ecosystems are messy! Or why multiple maps are in order.
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4. III. Communication
This may seem obvious but we never communicate as much or as skillfully as we would like. And, we are often
unaware of where (and how) communications break down. Remember that communication depends on the
sender AND the receiver AND the medium. Get any one of those wrong and… oops.
Is it a conversation or simple ‘spray & pray’ one-way messages? Is everyone in the conversation? (Every
member of the ecosystem needs a voice.) A great marker of this is how active and how skillful is the online
presence of key players in the ecosystem – are websites up to date? Do key players really get the power of
social media? (Again, today we’re in the age of conversations not press releases.)
Is there frequent communication with and among the entrepreneurial community?
Is it a conversation or simple ‘spray & pray’ one-way messages?
Are all community/opinion leaders in the conversation?
Are entrepreneurs fully represented in the conversation, not just those who speak for them?
How significant (and competent) is the online presence of key ecosystem ‘players’?
How significant (and competent) are the key ecosystem ‘players’ at using social media?
IV. Governance/Leadership
Another clear marker for a healthy entrepreneurial ecosystem lies with public leadership. Do civic officials take
sides with the entrepreneurial community? Is entrepreneurial job creation “Job One” in economic development?
Do they communicate that? Do we see them at entrepreneurial events?
Does government have a clear, stated strategic intent to grow entrepreneurial activity?
Do civic officials take advantage of the bully pulpit to encourage entrepreneurs?
Do civic officials have a visible presence in the entrepreneurial community?
Connecting to other states/countries is another important dimension. In part I, we asked if the community was
obsessed with learning from the experiences of others. Here we ask if the community’s leaders are not just open
to ideas from elsewhere but also do so proactively, through staying tightly connected with sister communities to
share successes (and, um, “learning experiences”).Personal contact is good but simply listening to expertise
from a wide range of cities, state & countries can be enough.
Does government actively promote exchanges of ideas with other cities/states/countries?
Do they listen and actually use information from diverse sources?
Accountability is clearly important too. Does government keep a close eye on the right metrics, quantitative and
qualitative? Are they clearly the right metrics, accurate/timely and not self-serving? Are these metrics easily
accessed by the public?
Does the community have the right metrics? (Good metrics on the right things?)
Has there been a rigorous, comprehensive effort to identify the best metrics?
Are these metrics well-communicated to the public?
Maybe most important: Does a community’s leaders truly and visibly “get it”? Do they really understand what
makes an entrepreneur tick? If a leader mouths the words but does not really understand what makes
entrepreneurs (and entrepreneurial job creation) “go”, then it isn’t likely that even great leadership skills will keep
the ecosystem moving forward.
In the eyes of the entrepreneurial community, do leaders “get it”? Visibly? Credibly?
How can leaders show that they “get it”? It’s important that they understand the economic dynamics of their local
economy. Do they know where jobs come from? (what % from startups, from growing firms, from migration?) But
do they also understand the social and human dynamics? Do they also understand the importance of the
entrepreneurial mindset? Do they understand that it is much different than skills or knowledge? Growing
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5. entrepreneurial human capital has little to do with teaching facts and even skills; it’s about moving citizens from a
more novice toward a more expert entrepreneurial mindset. Hence, you want to see that leaders (including
educational leaders) understand this is about deep cognitive change. And that they understand that we know
how to facilitate that. Do their policies push this very different educational approach? It’s a great way to look
smart to entrepreneurs.
Similarly, do your community’s leaders understand that a truly entrepreneurial economy requires an
increasingly entrepreneurial society? Do their policies reflect the reality that a healthy, growing entrepreneurial
ecosystem is about social capital and that means a firm focus on culture change? Are leaders OK that social and
cultural norms will be changing? Do they encourage it?
Doing the right things the right way and for the right reasons… do your community’s leaders encourage
bold, disruptive action? Do they take such action themselves? But do they do so for the right reasons – not
because of the threat of being disrupted, but rather because of the opportunities the community gets because
they take bold, disruptive action?
Do a community’s leaders support policies that emphasize growing the mindset (not skills)?
Do a community’s leaders support changing to a more entrepreneurial culture?
Is bold, disruptive action considered the norm in economic policies?
Is bold, disruptive action driven by threat or by opportunity?
Once I get ample feedback, a revised version will go out, accompanied by a survey instrument that includes the
indented items in bold.
Again, please send your comments by email (Norris.krueger[at]gmail.com) or Facebook or Twitter
[@entrep_thinking] :
What needs to be added?
To be cut?
To be changed? (including language, syntax/grammar and especially the ordering of items)
Equally important:
The intent here is to create a rough first cut at a set of diagnostics that communities can use to assess
the health of their entrepreneurial ecosystem. Intelligent, honorable people can (and will) disagree about how to
rate their community on many of these… so please consider this as a tool to spur discussion on what’s really
important about encouraging the most critical element of your local economy: Entrepreneurship!
(of course, if you want to use this to drive policy changes… let me know; I’ll join you on the barricades, LOL)
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6. Another (Shorter) Approach
If you want a shorter version, here is another (and easy to remember) way to assess your ecosystem.
The key to growing a more entrepreneurial ecosystem is to:
Celebrate
Educate
Initiate
In a healthy ecosystem, we miss few opportunities to celebrate what we have – not just entrepreneurs
but their allies & champions – not just successes but learning. We also miss few opportunities to educate, to
increase human capital across the community (again, not just entrepreneurs but the whole community). Finally,
in a healthy entrepreneurial ecosystem we see lots of things being initiated by community members – it’s not
just an entrepreneurial community, it’s a “happening” community.
Celebrate?
Are entrepreneurs & their allies/champions celebrated regularly?
In events, formal & informal? By the media? By civic officials?
Are the events both broad/Inclusive and deeply focused in key areas (like youth, rural, etc.)?
Educate?
Are we educating the public about entrepreneurship?
Educating opinion leaders?
Holding regular briefings/policy forums to share the state of the art?
Are we explicitly & intentionally growing entrepreneurial human capita?l
Are we obsessively emphasizing transformational learning (mindset, not skills)?
Are we getting youth entrep training across the state?
How broadly offered is entrep training - Targeting key groups?
Rural? Veterans? Women? Seniors? Creatives? Techies?
Initiate?
How much activity Is ‘bubbling up’ from entrepreneurs outside of organizations?
Does government actively support these autonomous initiatives?
Does the ecosystem intentionally focus on growing entrepreneurial human & social capital?
Human Capital: Do public (or public/private) activities focus on deep changes in the mindset/culture?
(not just learning ‘stuff’)
Social Capital: Do public (or public/private) activities focus on growing the ecosystem
(not just favored players)
Political Capital: How often do we ask about what entrepreneurs need/want? How often do we act on it?
Most important, is it the political/bureuacratic norm to encourage bold/disruptive action?
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7. …this set of markers has intentionally focused on relative intangibles…Consider this page to be VERY
much a work-in-progress! ;)
But Don’t Forget the Tangibles
“Show me the love” usually means “show me the money”… Even if money isn’t being spent well, spending
money is a way to “prove” that we are serious about it. Certainly across cities, states and countries, the amount
of public & public/private money spent per capita (or per job) varies wildly. Just as education spending per pupil
is not a predictor of student performance, the dollars spent on entrepreneurship or on high tech is not a great
predictor either. In fact, greater spending is often the consequence of tech-based entrepreneurship.
Having said that, there are elements of the infrastructure for job creation that are tangible and physical assets
are rarely free.
Readiness for the New Economy (e.g., Broadband)
For example, one of the best predictors we have for rural economic development is access to broadband. Even
impoverished urban areas can find some access but rural areas can be left isolated from the New Economy. And
as with electric power, the question is not whether there is access, but is there enough access? For decades,
youth entrepreneurship training has generally been considered the #1 “no-brainer” for economic development,
especially rural. However, entrepreneurial success requires ample access to the internet. (footnote for checklist)
How many entrepreneurs in your community would say that broadband access is easy, offers
enough bandwidth and is affordable?
Access to Tangible Resources
This is usually about financing. However, there are other barriers to resource acquisition that range from the
physical (e.g., location) to the political (e.g., regulation). Tax policy can also play a role. (In Idaho, there is a
property tax on business assets that presents both a tax burden and an often-oppressive paperwork burden.
How does this encourage firms to grow their fixed assets? In many industries, growth in fixed assets correlates
strongly with growth in employment.)
Is money available on reasonable terms?
At different stages of the firm’s life cycle? (Where are there gaps?)
Do lenders and equity investors really understand what entrepreneurs need?
More important, do entrepreneurs fully understand the game?
How hard is it to start a business? Run a business? Grow a business?
[www.doingbusiness.org has a detailed list of metrics on this]
Do entrepreneurs know how to access resources? Do they know where to find them?
[this overlaps with the earlier questions about connectors.. Do you have liaison-animateurs?]
Access to Talent
Maybe the most important tangible resource is talent. Surveys of existing firms rate their #1 headache as human
resources; this is even stronger for firms trying to grow.
Are there mechanisms in place for entrepreneurs to find the right talent?
Is the workforce development system responding quickly to talent shortages?
[Are entrepreneurs effectively communicating their needs?]
Is the workforce development system nurturing entrepreneurial employees, comfortable with
working in small, new or fast-growing firms?
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