Networks, Clusters and Ecosystems: Taking Regions to the Next Level with Open Innovation

Agile Strategy Lab
School of Engineering
Technology
NETWORKS, CLUSTERS AND
ECOSYSTEMS
TAKING REGIONS TO THE NEXT LEVEL
WITH OPEN INNOVATION
Ed Morrison

Director

Purdue Agile Strategy Lab

FORWARD Networks, clusters and ecosystems are rapidly becoming central
challenges to building a economies of shared, sustainable prosperity. This
report explains why.
Our global economy has been rapidly moving toward knowledge as a
central source of value. The Internet, our first interactive mass medium,
accelerates the trend and opens new doors of opportunity. We now can
build dynamic, entrepreneurial economies almost anywhere.
But these opportunities are only open to those who can shift their thinking.
That is the aim of this report: to introduce you to new perspectives, based
on extensive practitioner experience. Prosperity will emerge only in those
companies, communities and regions that recognize the fundamental shift
underway.
“Jumping the curve” represents a helpful metaphor for embracing new
ways of thinking, new ways of behaving and new ways of doing complex
work together. Traditional linear, hierarchical, command-and-control
mindsets are becoming increasingly outdated. Yet, they still dominate
many viewpoints in too many places.
By contrast, organizations, communities and regions that embrace the
complexities of open networks will learn the amazing power of
collaboration. Places that master the deep skills of collaboration will be
more prosperous. They will spot opportunities faster, they will align their
assets faster, and they will act faster.
This report summarizes12 years of work at Purdue exploring and
developing these new approaches. We invite you on the journey, as we
continue to design “what’s next” for our organizations, communities and
regions.
Ed Morrison
Director

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AWordon
Terminology
This report explores an emerging area of theory and practice from a
practitioner’s viewpoint. Scholars in economics, strategic management, and
other fields are grappling with a fundamental shift underway in out economy:
the emergence of networks.
Settling on terms is a tricky business. Not only do we have multiple disciplines
involved, the whole phenomenon we are trying to grasp is relatively new. The
central question remains: How do we build a shared, sustainable prosperity in
an increasingly interconnected world?
To grapple with this question, we have a wider range of terms at our disposal:
innovation networks, open innovation, open innovation 2.0, triple and
quadruple helix, clusters, regional innovation systems, entrepreneurial
ecosystems and innovation ecosystems.
We are trying to describe what Eric Beinhocker, in his master work, The Origin
of Wealth explains as a new form of economics. “Economies are not just like
open systems; they are literally and physically are a member of the universal
class of open systems”. A new field of complexity economics is emerging to
explore this shift in our thinking.
In this report we will focus on how regional economies can use networks to
become more entrepreneurial and innovative. We will refer to clusters,
ecosystems for start-up companies and ecosystems for growth
companies. All of these are complex systems of networks, embedded in other
networks.We are not struggling to define these terms precisely.
Rather from the practitioner view, we are distilling lessons accumulated over
25 years of struggling with the shift underway. This report distills experiences
from large metropolitan areas, clusters, regions, rural counties and inner city
neighborhoods. The important point is this: We have learned enough to say
that we can design and guide networks that open economies to new
possibilities. We can transform these economies with new skills, disciplines
and tools. This report provides a starting point to what we have learned.

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Backgroundonthe
FieldWork
The field work underlying this report started in 1993 when Ed Morrison, now
director of the Purdue Agile Strategy Lab, began experimenting with new
strategy models, specifically designed for open, loosely connected networks.
The first experiment, the transformation of Oklahoma City, was successful, as
was the second, the launch of th eCharleston Digital Corridor. During the
1990’s, these ideas also evolved with 23 rural counties in Kentucky, counties
that had been left out of the growth corridors of Louisville, Lexington and
Bowling Green. In 2005, these experiments in strategy — called Strategic
Doing —shifted to Purdue. The emerging lessons embedded in this report are
learned from the following cases:
• Oklahoma City (regional transformation over 7 years)
• Kentucky (23 cases of rural counties over 7 years)
• Charleston, South Carolina (launch of a software cluster)
• Space Coast, Florida (NASA Shuttle shutdown, launch of a clean energy
cluster)
• Milwaukee, Wisconsin (launch of a water cluster)
• North Central Indiana (regional workforce innovation over 4 years)
• Rockford, Illinois (launch of an aerospace cluster)
• Muscle Shoals, Alabama (launch of a startup ecosystem)
• Cape May, New Jersey (launch of a UAV cluster)
• Flint, Michigan (neighborhood regeneration over 5 years)
• Shreveport, Louisiana (neighborhood regeneration over 10 years)
• Sunshine Coast, Australia (launch of regional innovation ecosystem)
• New Jersey (technology and innovation management; 5 cases over 3
years)

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TableofContents
6 16 20 26 30
Chapter1 Chapter2 Chapter3 Chapter4 Chapter5
Background: The
Shift to Networks
The New World of
Networks
The Structure of
Networks
Developing Shared
Collaboration Skills
Designing and
Guiding Ecosystems
39
Chapter6
The Challenges of
Commercializing
Technology
42
Chapter7
Case Studies
Testimonials and
Next Steps

Background: The
Shift to Networks

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TheStartingPoint:
MoneyFlows
To start down the path of building a shared
prosperity, we first need to get some basics
under our belt.
Here is a convenient and simple way to think about how a
regional economy prospers. The performance of a regional
economy can be characterized with three flows of money.
“Good Money” flows into the economy from businesses that
have markets outside the geographic economy. These firms
are often called “traded businesses”.
“Neutral Money” circulates within the economy when
businesses buy and sell from each other.
“Bad Money” flows out of the economy when people make
purchases from businesses outside the economy.
This leads us to a simple explanation of how to build prosperity
within a regional economy:
1. Expand the volume of Good Money;
2. Increase the velocity of Neutral Money; and
3. Reduce the flow of Bad Money.
If you think this notion is too simple to start, please don’t. We
learned this approach to explaining from David Morgenthaler,
founder of Morgenthaler Ventures, and an iconic Silicon Vally
venture capitalist. He believed that too few people had this
grounding.

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Traditional
Approachesto
ExpandingMoney
Flows
As a professional practice, economic development traces
its roots back to the 1930s. States in the South, starting
with Mississippi, developed incentive programs targeting
manufacturing companies in the Northern states. By
relocating these manufacturing companies, these
southern states improved their Good Money flows.
This approach to economic development was remarkably successful. In the
years after World War II, with the advent of air-conditioning and a new
interstate highway system, southern states became remarkably more
competitive.
So, for example, in the 1950’s the textile and shoe industries moved
aggressively from locations in the Northeast to new, greenfield plants all
across the South. By the 1970s, northern states began copying the strategy.
By the 1990s, economists were raising serious concerns about this “economic
war among the states”.
Today, state and local governments invest over $45 billion in relocation
incentives, according to recent research by Timothy Bartik of the Upjohn
Institute. The evidence, however, is increasingly clear: these incentives rarely
pay off, and the economic development practice of relocating companies does
little to build a long-term prosperity within a region. In terms of our long term
prosperity, much of this investment is wasted.

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Globalization,
Knowledgeand
Networks
There are a number reasons why relocation incentives are
generally a bad investment. Most important, the
conditions of economic competition have shifted
dramatically since the 1930s. We can capture the shifts in
three words: globalization, knowledge and networks.
1950s and 1960s.— Globalization has its roots in the 1950s with the invention
of containers to carry freight. By the 1960s, dramatic improvements in
telecommunications and commercial air service opened new markets.
1970s.— Dramatic reductions in trade barriers beginning in the 1970s,
coupled with the resurgence of the postwar economies in Germany and Japan
intensified pressures for domestic industries like steel and automobiles.
Across Asia, rapidly developing economies in Hong Kong, Korea, Singapore
and Taiwan led to even more competition.
1980s.— Beginning in the 1980s, U.S multinational manufacturers began
globalizing their manufacturing networks. At the same time, China started to
open its economy. The Chinese government enacted joint venture laws to
encourage foreign direct investment. The integration of Hong Kong and
Taiwan investment into a Greater China economy accelerated China’s
manufacturing capabilities, which triggered even more outside investment.
1990s.— In the 1990s, the commercial Internet began shifting the terms of
competition even more dramatically. In an increasing number of markets,
knowledge and networks began to emerge as the key to competitiveness.

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OurChallenge:
JumpingtoaNew
SCurve
All economies change. S Curves
explain how technologies, business
firms, and regional economies go
through phases of early adoption,
rapid growth, maturity and decline.
In the broadest form, we are moving from
organizations that create wealth through
hierarchical command and control methods to
organizations in which wealth is created through
collaboration, knowledge and networks.
The connection between Three Flows of Money
and S Curves is straightforward. As companies
within the economy move through their S curves,
the business and technology foundations of an
economy shift. With these changes, the pattern
of money flows also shifts. So, for example,
when the steel industry in Ohio collapsed,
economies, like Youngstown, contracted. Civic
leaders had become complacent and did not
invest in new technologies that could give rise to
new S-curves.
Time
Prosperity
Wealth driven by hierarchical
business models
Wealth driven by network
business models
Industrial Capitalism
Network Capitalism
We are here

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NetworkstoJump
theSCurve
To survive and thrive, every organization, community and
region must now “jump the curve” to a new way of
thinking, behaving and doing work together.
The environment is shifting for everyone. The transformation taking place
requires each of us to gain a new understanding of the power of networks.
To prosper in the emerging world of network capitalism, we must break down
silos to improve the flow of information across organizational and political
boundaries.
Here’s the good news: We now have the opportunity to ignite a new era of
entrepreneurship and innovation, simply changing our focus and starting new
conversations.
Through new collaborations, we can overcome the inertia of sluggish decision-
making. We can uncover new opportunities from assets that are largely
hidden within our personal networks. We can jump from a hierarchical, linear
mindset to a environments that are far more entrepreneurial and innovative.
The organizations, communities and regions that find ways to "jump the curve”
will find pathways to a more prosperous future. They will spot opportunities
faster. They will align resources faster. And they will innovate faster.
The biggest mind shift involves spending less time trying to fix our current
problems and spending more time designing what’s next. As management
scholar Peter Drucker advised years ago, to confront an increasingly volatile
future, “starve your problems, and feed your opportunities.”

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Networks,Clusters,
OpenInnovationand
Ecosystems
Beginning in the 1990s, the economic development
profession began focusing on the phenomenon of clusters.
Since that time, we have learned the “Why” of clusters
(why they matter), but we have struggled with the
“How” (how to design and guide them).
In the early 1990’s, Michael Porter, a business professor at Harvard, proposed
that clusters are critical for understanding and improving the performance of
regional economies. The regional economy is composed of a portfolio of
clusters. A cluster, in turn, represents a group of businesses and related
organizations that benefit from being connected and located close to one
another.
For over 20 years, economic developers and policymakers have experimented
with a wide range of initiatives designed to build clusters. Regional
development strategies now typically start by understanding the unique clusters
of a region and building from these strengths. In addition to analysis, cluster
development engages members of a cluster in a dialogue about how they can
collaborate to compete. But figuring out how to do that has proven to be tricky.
More recently, concept of ecosystems has emerged as a way to promote
regional development. Its application to regional economies is connected to the
development of the concept of “open innovation”. Introduced in 2003 by
business professor Henry Chesbrough, open innovation describes how
companies rely on outside partners to accelerate their innovation productivity.
The notion of ecosystems in regional development can also be traced to the
pioneering work of AnnaLee Saxenian. In her landmark book, Regional
Advantage, she pointed out that competitive regions are more networked.
These networks enable assets to flow more quickly across organizational
boundaries.
In Europe, the concept of Open Innovation
2.0 captures the concept of ecosystems.
Left standing is the question of how to
design and guide these ecosystems.

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Networks,Clusters,
OpenInnovationand
Ecosystems
More recently, concept of ecosystems has emerged as a
way to promote regional development.
Ecosystem is a metaphor borrowed from ecology. It is an effort to describe an
economy from the perspective of open, loosely connected networks.
Its application to regional economies is connected to the development of the
concept of “open innovation”. Introduced in 2003 by business professor Henry
Chesbrough, open innovation describes how companies rely on outside
partners to accelerate their innovation productivity.
The notion of ecosystems in regional development can also be traced to the
pioneering work of AnnaLee Saxenian. In her landmark book, Regional
Advantage, she pointed out that competitive regions are more networked.
These networks enable assets to flow more quickly across organizational
boundaries.
Scholars are now focusing on ecosystems, but their work is only beginning. In
contrast, Purdue’s practitioners have been working in this field for over 20
years. In a word, practitioners “learn by doing”.
This report focuses on the lessons from Purdue’s practice, based in the Agile
Strategy Lab. The experimental and inductive methods that characterize
“reflective practice” are particularly well-suited to addressing complex
challenges, like building ecosystems. The balance of this report shares these
insights.
We start by proposing a clarification. Scholars refer to both “entrepreneurial
ecosystems” and “innovation ecosystems”. The terms remain cloudy. As a
working definition, this report will distinguish between ecosystems designed to
accelerate start-up companies and ecosystems that support growth by existing
firms. Both, we contend, are designed to support entrepreneurs.

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Startupand
Innovation
Ecosystems
Ecosystems represent
networks that speed the
deployment of resources
across organizational
boundaries to both startup
and existing firms.
A startup ecosystem encourages the
formation of new firms. It typically
involves incubators, accelerators,
angel capital networks, mentoring
initiatives.
An innovation ecosystem focuses on
speeding resources to existing firms to
promote more productive innovation.
These ecosystems are focused on a
different type of investor, open
innovation initiatives, and transforming
internal innovation practices.
Dynamic regions need both startup and innovation ecosystems.
Often, these ecosystems are anchored by community colleges, universities, and research
organizations. These institutions provide continuous flow of new ideas and brainpower that
can be converted into wealth through new and expanding businesses.

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IntroducingOurCivic
Economy
To understand how to develop
ecosystems, it’s helpful to see our
economy from a new perspective.
We are used to thinking about our economy in
terms of a public sector and private sector. In
addition, we include a third sector of voluntary, non-
profit organizations. In ecosystem development,
it’s easier to characterize our economy in terms of
a market economy and a civic economy.
A market economy includes all the organizations,
investments and activities that are publicly valuable
and privately profitable. The civic economy
includes organizations, investments and activities
that are publicly valuable, but not privately
profitable. So, our civic economy includes
government, education, most healthcare,
philanthropy, and nonprofit organizations.
Ecosystem development is most critical at the
boundary between our market and civic
economies. On the boundary, we are using
networks to speed the flow of resources among
organizations to encourage the expansion of a
sustainable, equitable market and civic economies,
taken together.
Our
Market Economy
Our
Civic Economy
Economic development —
the development of start-
up and innovation
ecosystems —
takes place
on the boundary of the
civic and market
economies

Adjusting to the New
World of Networks

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NewPatternsof
Thinking,Behaving
andDoing
To speed the development of healthy
ecosystems, we need to build new, shared
habits. We are moving our orientation from
hierarchies to networks.
Shared habits take time to develop. Many of us are deeply
oriented toward hierarchical organizations that function on the
basis of boundaries with command-and-control systems.
Hierarchical organizations foster a pattern of thinking and
behavior that often runs against collaboration.
To build a culture of collaboration within the organization,
community or region, we need new habits of thinking, behaving
and doing work together.
• Thinking differently involves exploring across
organizational and political boundaries.
• Behaving differently suggests that we can advance our
own interests by behaving in a way that builds trust and
mutual respect.
• Doing differently involves a willingness to take shared
risks and experiment together.
New patterns of collaboration cannot emerge without a
willingness among participants to think differently, behave
differently to work together differently.
Most of us have been training to think and act in
hierarchical organizations. Networks are different. They
require us to adopt some new mental models, trustworthy
behaviors, and new approaches to getting things done.
This fact is especially true in the civic economy, where no
one can tell anyone else what to do.

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TheStrategicRole
CivilityPlays
In networks, civility - the commitment to behave in ways
that build trust and mutual respect - is strategic. Without
civility, participants in the network cannot do complex
thinking together. They become paralyzed to act. They do
not adapt and learn. They do not innovate.
Within our organizations and teams, a commitment to civility provides
"psychological safety”. Participants in a network share a belief that they can
reveal their thinking without fear of negative consequences.
Civility provides the cornerstone for the formation of trust. When Google
completed a two-year study on high-performance teams, the results revealed
that the most effective teams that one characteristic: psychological safety.
In practical terms, psychological safety translates into establishing rules of
civility: how members of the team behave toward each other. “Jumping the
curve” and breaking down silos will require people to form new collaborations
and to work together in new and different ways.
With agreed-upon rules of civility, members of the team can form
collaborations more quickly. Their energy is more focused toward shared
outcomes. In other words, civility accelerates innovation.

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TheQuestionsthat
GuideCollaboration
Collaboration begins with conversation. Collaborative leaders learn that they
can design and guide these conversations by asking simple questions. As
participants in a collaboration learn to ask and answer these questions, a
complex collaboration begins to emerge and grow.
The process is not too dissimilar from a flock of birds or a swarm of bees. In
either case, the individual bird or bee follows a handful of simple rules out of
which complex patterns emerge. The same thing happens with productive
collaborations. By following simple rules, participants can design and guide
their own complex collaborations.
At the Purdue Agile Strategy Lab, we have discovered the simple rules that
lead to complex collaboration. These rules are embodied in a conversation
around four questions:
• With the assets and resources each of us have, what could we do if we
combine these assets in ways?
• Among all of the things we could do, what should we do?
• Once we decide what we should do, what will we do to get started?
• When are we coming back together again to evaluate what we have
learned and what we’re going to do next? (We call this our 30/30. In other
words what did we do the last 30 days and what will we do the next 30
days?)
By asking and answering these four questions — and moving from talking to
doing — a complex collaboration can emerge.
Leadership in networks involves asking
insightful questions, listening, seeing patterns,
and asking still more questions.

The Structure of
Networks and Core
Teams

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TypesofNetworks Not all networks are the same. To jump
the curve, organizations, communities
and regions need to form innovating
networks. These are networks in which
participants share assets to create
something that no individual participant
can create alone.
Network-based thinking is more subtle and deep than
most people realize. Donating networks evolve over
time as participants develop the trust needed to share
and combine assets to innovate. An interested
community, such as all the fans of an athletic team or
all of the alumni of a university, share an interest, but
they hardly know each other.
A community of practice is a tighter network in which
members of the community know each other by name,
but they are each pursuing their own individual
definition of success. They help each other learn.
Innovating networks are the most sophisticated and
productive. While they are also learning networks, into
something more: participants work toward a shared
outcome. Trust levels have to be higher, because
participants are both committing their own resources
and incurring some risk of failure. Yet, forming these
innovating networks is critical. They enable us to "jump
the curve.”
Interested
Community
Community of
Practice
Innovating
Network
Innovate
Together
Learn
Together
Advocate
Together
Trust
level
Time

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TheStructureofan
EffectiveInnovation
Network
Innovating networks share several characteristics in
common. They have tight cores and porous boundaries.
Boundary spanners within the network continuously
search for new opportunities to link to other networks.
Tight cores enable an innovating network to stay focused and organized.
Typically, this means that the network is managed by a core team. The core
team relies on frequent communication to translate ideas into action.
Porous boundaries to the network ensure that information flows both into
and out from the network. In practical terms, the network is open to new ideas
and learning.
Boundary spanners look for opportunities to increase the scale of the
innovating network by linking to people embedded in other networks.
The concepts of "top-down" or “bottom-up" do not apply to networks, since
networks do not have tops or bottoms. (These appear in hierarchies, but not
networks.)
Instead, effective innovating networks balance both leadership guidance from
the core team and open participation through porous boundaries and
boundary spanning.

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CoreTeamsand
Networks
As we move toward networks, clusters and
ecosystems, we start to see the importance
of a core team.
Effective networks, clusters and ecosystems sure to
common characteristics. They have a tight leadership core
that designs and guides the network at the same time, they
have porous boundaries that enables the network, cluster
or ecosystem to grow and adapt.
The importance of core teams shifts our thinking about
leadership. In hierarchical organizations leadership is
positional. The higher you are in the hierarchy, the more
important your leadership position. In addition, we think of
leadership as being embodied in a single theater.
Networks, clusters and ecosystems are different.
Leadership is collaborative. Leadership is embodied in
roles, not positions. These roles reflect individual
strengths.
As the network, cluster or ecosystem grows and adapts,
leadership rotates based on the circumstance. High levels
of trust within the core team enable these leadership
transitions take place quickly.
Effective core teams are cognitively diverse. They have also
learned to behave in ways that build trust and mutual respect. A
good core team models the behaviors for others to follow.

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StrategicDiversity
WithinaTeam
We all see the world differently.
Complex challenges involve complex
solutions. No single individual has a
perfect perspective.
That’s why it’s important to promote different
viewpoints within a team. The challenges of
leadership within core team shift as circumstances
change. With a diverse set of viewpoints and skills
within a core team, it functions more productively.
At the Purdue Agile Strategy Lab, we use a simple
assessment tool to measure the “strategic
diversity” within a team. We locate members of
the team on an “S-curve". Some members of the
team are more comfortable with the open, creative
process that typically characterizes activities at the
early stage of innovation. Other members are
more comfortable focusing on issues related to
growth, scaling execution and efficiency. A high
performance, innovating team is strategically
diverse.

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Innovating Networks:
TheDynamicsof
Scaling
Innovating networks are in
themselves innovations. Like
any innovation, they take
time to develop.
Innovating networks form as “networks
of the willing”. They start from a core
team and build from there.
Starting with a core team, designing
and guiding the formation of innovating
networks involves relentlessly focusing
on “doing the doable” — translating
ideas into action. Scaling innovation
through networks involves continuously
experimenting with increasingly bold
experiments.
As evidence from these experiments
continues to grow, a “buzz” builds and
increasing numbers of people become
engaged. It’s when a core team moves
beyond its initial networks that the
innovation hits a tipping point and
begins to scale.
The "Chasm"
Percent of
regional
citizens
Sore heads
Passive
skeptics
Willing volunteers
"The Pragmatists"
Civic entrepreneurs
Their
close
network
Core
team
Scaling takes place when the core team
moves beyond its own networks and
engages “willing pragmatists”
Crossing the chasm embodies the
challenges of achieving scale. Many
innovations die when the core team does no
focus on these challenges early.
Skeptics can provide some useful insights
into what might not work. Soreheads, on
the other hand, add little to the
conversation and can be a distraction.

Developing Shared
Collaboration Skills

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Collaborationinthe
MidstofComplexity
In any large-scale
transformation of an
organization, community or
region, a large number of
individuals with a high
number of interactions
creates complexity.
Most of us know how to build trust one-
on-one. We are comfortable and face-
to-face meetings with a limited number
of people. But large-scale
transformation involves a large number
of people in many interactions.
How we build trust in these complex
environments? In other words, how we
build trust at scale?
To answer this question, the Purdue
Agile Strategy Lab began to test a new,
shared discipline to build trusted
relationships, collaboration, and
innovating networks.

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CrackingtheCodeon
Collaboration
Imagine a room full of people who have never worked
together before. Is it possible, in a few hours, for teams of
people to develop their own roadmaps to innovate?
The answer: Yes. However, the process they follow must be easily understood
and quickly practiced. Through "learning by doing”, participants must develop
new habits of working together.
Through dozens of field trials, the Purdue Agile Strategy Lab has integrated a
process called Strategic Doing. This protocol of collaboration moves
participants toward shared, measurable outcomes.
It teaches them to focus on moving ideas into action quickly and to experiment
with Pathfinder Projects. These projects help team members test their
hypotheses and assumptions about the innovation they are designing. Rather
than being deflected by excuses, they commit immediately to "doing the
doable”.
Each member of the team commits to making a small step to help execute the
Pathfinder Project. In this way, by aligning commitments to actions, members
of the team quickly begin building trust.
As members of the team learn by doing, they commit to making adjustments.
Most important, team members learn that they can design and guide strategy
quickly. The traditional hierarchical process of strategic planning is quickly
discarded. New, shared habits form to guide strategy.

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StrategicDoing:
4Questions,10Rules
and10Skills
Strategy in open, loosely connected networks needs to
start with a fundamental question: within a network,
what is strategy? The discipline of Strategic Doing
answers this question rigorously.
In Strategic Doing, strategy means providing clear practical answers to two
questions: Where are we going? and How will we get there? to answer these
questions within a network, we need to design a “strategic conversation”; that
is, a conversation that answers these two core questions of strategy.
To do that, we need to design conversations around four questions:
• What could we do?
• What should we do?
• What will we do?
• What’s our 30/30?
By answering these questions, a team can generate all of the components
they need for a strategic action plan.
These four questions are simple to remember but not easy to answer.
Underlying these four questions, 10 rules guide participants in developing their
strategy. These ten rules embody ten specific skills to complex collaboration.
Strategic Doing is a clear, shared discipline that takes practice to master.
Ten Skills
of Collaboration
Strategic Doing Cycle

Designing and
Guiding Platforms for
Ecosystems

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AStrategy
Frameworkfor
Ecosystems
At the Purdue Agile Strategy Lab we have devised
a framework designed to guide the development of
clusters and ecosystems. The framework explains
how regions must compete in an increasingly
connected economy.
First things first. No region can prosper in a knowledge economy
without brainpower. Brainpower generates the knowledge needed
to power the economy. This brainpower takes many forms, but it is
embodied in individuals. We can measure brainpower in in a variety
of different ways, such as educational attainment or, more narrowly,
research funding or patents.
Next, for a region to prosper, it must convert brainpower into wealth
through innovation and entrepreneurship. Most often, we think of
innovation and entrepreneurship in terms of incubators, angel capital
networks, and entrepreneurship programs. All of these initiatives,
working together, determine the capacity of a region to turn ideas
into wealth.
The third major component of a successful cluster or ecosystem
involves quality, connected places. Both people and firms are
mobile. They will not stay in a region that does not offer a quality
connected place for them to live and work.
The fourth component of a vibrant ecosystem involves new
narratives. These new narratives are critical because they point to
the future. They provide guidance and inspiring stories of how will
thrive. Lastly, an ecosystem needs continuous collaboration in order
to build the networks needed to power prosperity.
Brainpower Innovation
Entrepreneurship
Networks
Positive
Narratives
Quality,
Connected
Places
Collaborative
Leadership
Innovative Businesses
Innovative
People
Innovative
Clusters
Innovatiive Places

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MappingAssetsat
DifferentScales
Use this framework to start
mapping assets within an
ecosystem. The same framework
can be used at different
geographic scales.
This flexibility reduces the complexity of
mapping assets. At the end of the day, its not
the mapping of assets that matters. It is
forging the connection among assets —
within new innovating networks — that opens
the door to new opportunities.
In three different counties, for example, each
county can begin mapping assets and then
exploring connections both within the county
and across county boundaries.
Brainpower
21 Century Talent
Innovation
Entrepeneurship
Networks
New Narratives
Quality,
Connected
Places
Collaborative
Leadership
5
21 3
4
1
2
3
4
5
Research Institute
Community College
Incubator network
Angel investor network
Council of Government
6
7
6
7
Tourism Bureau
Regional Alliance
Brainpower
21 Century Talent
Innovation
Entrepreneurship
Networks
New Narratives
Quality,
Connected
Places
Collaborative
Leadership
Organization
Ecosystem
Cluster
Community
Region

| 33
UsingStrategicDoing
toBuildEcosystems
By integrating Strategic
Doing into an ecosystem
strategy, regions can
begin developing their
ecosystem.
The process involves conducting
a series of workshops to form
collaborations that strengthen
the flow of resources to both
startup and growth companies.

| 34
CreatingPlatforms
forEcosystems
Ecosystems form on top of platforms. Ecosystem design
starts with platform design.
By designing the platform and guiding interactions on the platform, ecosystem
builders can encourage the formation of productive networks that link and
leverage assets across the ecosystem. Collaborations organize on the
platform.
Platform thinking is becoming essential in ecosystem development. The
platform model provides a valuable approach to convening willing participants
in a new network or ecosystem. Platform metaphor enables the ecosystem to
form without provoking an “immune response” from existing organizations.
Organization A Organization B
Organization C

| 35
AStrategicDiscipline
forthePlatform
Strategies for clusters and
ecosystems is different. Without a
strategy discipline, convening
people can degenerate to chaos.
Strategic Doing is a simple process for
building collaborations quickly and moving
them toward measurable outcomes.
Participants make adjustments as they learn
by doing. The discipline enables diverse
participants to develop a strategic action plan
quickly.
Companies, communities and regions are
using and sharing the discipline to develop
their own networks and ecosystems. As
participants master these shared skills, they
learn to design and manage their own teams.
This approach is fundamentally different than
strategic planning, which places a heavy
emphasis on analysis and “getting things
right” before actually implementing anything,
Strategic Planning
Hierarchies
Strategic Doing
Networks

| 36
HowNetworks
Develop
Networks take time to develop.
Designing a series of strategy workshops is the best process to guide the
development of the networks needed for clusters and ecosystems. As
participants “learn by doing”, they become models for how effective
collaborations can develop.
Time
Level of
Network
E!ectiveness
Horizon 4
Guiding strategy with
"exible, simple
strategic action plans
In"ection Point
Horizon 3
Learning new, simple habits of
strategic thinking and doing
in open networks
Horizon 2
Creating civic spaces to strengthen
"link and leverage" habits of building networks
Horizon 1
Changing the prevailing narrative
to re"ect an opportunity mindset

| 37
DesigningaStrategy
Processforthe
Platform
Using the principles of Strategic Doing, groups can
customize their strategy process to see their needs.
The process typically involves an on-going series of workshops. Between the
workshops, team members complete individual assignments. When the team
reconvenes, they update their strategy.
Dec Jan Feb Mar Apr May Jun
Design sessions
Workshop

| 38
DesigningaStrategy
Processfor
Ecosystems
Managing a network of initiatives involves designing a
process of continuous check-in meetings (30/30 meetings).
As team members become accustomed to using metrics as
learning tools, the process of shared learning becomes
embedded in the network.
Core Team Convening: Half day Strategic Doing workshops: every 6 months: Set 6 month outcomes
Path!nder Project Teams 30/30 team meetings to learn, align and adjust
Strategic Focus Teams: Quarterly 2 hour workshops to make midcourse corrections
Core Team
Strategic Focus Area Teams
Path!nder Project Teams
By following the
principles of strategic
Doing, organizations,
communities and
regions can design
their own strategy
process.
Strategic Doing is a
data driven strategy
process. By focusing
on transparency and
shared learning, the
discipline accelerates
adaptation.

The Special
Challenges of Moving
Technology to Markets

| 40
Commercializing
Technologyis
Challenging
Technology
Development
Market
Opportunities
OLED
Displays
Emergent
Artiﬁcial
Intelligence
Sensors
Genetic
Engineering
Military
Health Care
Construction
Automotive
Financial Services
Opaque,
permeable boundary
Technology in search of a market ﬁt
Markets in search of technology solutions
5G
Networks
RoboticsBioplastics
Additive
Manufacturing
Drones
Precision
Agriculture
Conductive
polymers
Nanomaterials
Lithium Air
Batteries
Technology and innovation management must overcome
the opaque boundary. Platforms can help develop the
networks, clusters and ecosystems to bridge the boundary.

| 41
Commercializationis
Challenging
Technology and innovation management must
overcome the opaque boundary. Platforms can help
develop the networks, clusters and ecosystems to
bridge the boundary.
Adding powerful tools developed by Fraunhofer IAO to a collaboration
platform can speed the development of technology and innovation.
The Purdue-Fraunhofer IAO team continues to pilot these tools and
frameworks in New Jersey with the New Jersey Innovation Institute.
Technology
Development
Market
Opportunities
Technology in search
of a market !t
Markets in search
of technology solutions
Opaque, permeable
boundary
Technology Management
and Innovation Management
Smart Data Tools on the Platform
Market-facing companies
collaborate with technology
developers on the Platform
Technology
developers work
with companies
on the Platform

References, Cases
and Proof Points

| 43
CaseStudies This approach to developing strategies of networks,
clusters and ecosystems developed over 25 years. The
initial application took place in Oklahoma City beginning in
1993. The work now continues through the Purdue Agile
Strategy Lab.
We can provide background information on the following regions where these
approaches have been applied:
• Oklahoma City
• Milwaukee (The Water Council)
• Rockford, IL (Rockford Area Aerospace Network)
• Flint, MI (neighborhood regeneration)
• North Central Indiana (workforce development innovation)
• North Alabama (regional innovation)
• North Carolina (manufacturing cluster)
• Space Coast, FL (clean energy cluster)
• Sunshine Coast, Queensland (regional strategy)
• Charleston, SC (Charleston Digital Corridor)
• Bozeman, MT (manufacturing cluster)
• Newark, NJ (defense suppliers)
• Cape May, NJ (UAV cluster)
• Shreveport, LA (neighborhood regeneration)
• Granite City, IL (City regeneration)
Strategic Doing is an open source discipline
that is taught through an affiliated network
of colleges and universities.The core
intellectual property of Strategic Doing,
developed by Ed Morrison, is held by a
nonprofit organization, the Strategic Doing
Institute.
Purdue University, through its engagement
mission, has generously supported the
development of Strategic Doing since 2005.

| 44
UEDAAwardswith
StrategicDoing
Each year, the University Economic Development
Association conducts a peer-reviewed awards program to
recognize leading edge university initiatives in building
dynamic ecosystems.
UEDA has recognized the work of several universities using Strategic Doing.
They include:
• University of North Alabama (http://www.shoalsshift.com/)
• University of Northern Illinois (NIU Engineering@RVC)
• Lehigh University (Kern Entrepreneurial Engineering Network)
• New Jersey Institute of Technology (New Jersey Innovation Institute
MarketShift)
• Selkirk College (Regional Workforce Development in Rural British
Columbia, Canada)
• Purdue University (Pathways to Innovation)
You can learn more about the UEDA Awards of Excellence program here.

| 45
Transforming
Engineering
Education
Can fifty universities form teams and begin transforming
their undergraduate engineering curriculum? That was the
challenge that the Lab took on with the Pathways to
Innovation project, an NSF funded initiative, led by
Stanford University.
Over a period of three years, 50 university teams launched over 500
collaborations to integrate innovation and entrepreneurship training into their
undergraduate engineering programs.
Background on the Pathways to Innovation initiative are available here.

| 46
Testimonials In today's collaborative management culture Strategic Doing offers a tool that
allows team members to advance ideas to implementation quickly
Janyce Fadden 
Director, Strategic Initiatives
University of North Alabama
Strategic Doing allows a business to quickly identify an interested ecosystem
of local businesses to solve a defined customer problem.
Todd Tangert
Former Combat Systems Architect
Lockheed Martin
I’ve worked with large companies trying to do open innovation, but the
Strategic Doing process is unique. This is the most clear and concise open
innovation process I’ve seen.
Mark Scotland 
Chief Operating Officer
4.0 Analytics
The best methodology I have seen in 20 years.
Paul Collits, PhD 
Former President
Australia New Zealand
Regional Science Association

| 47
Testimonials Strategic Doing gives us the power to change our lives, our neighborhoods and
our communities.
Bob Brown
Associate Director
Center for Community and Economic Development
Michigan State University
The Strategic Doing (SD) approach might be one of the most effective ways of
implementing change on campus.
Ilya V. Avdeev, Ph.D. 
University of Wisconsin-Milwaukee
Strategic Doing’s core principle of linking and leveraging assets for greater
impact is at the heart o f the success of the Rockford Area Aerospace Network.
Strategic Doing has helped regional leaders understand that they need only to
look to one another for solutions.
Rena Cotsones
Associate Vice President for Engagement
and Innovation Partnerships
Northern Illinois University
The reality of our innovation-driven world is that companies need to collaborate
to compete. This as not a natural orientation for Lockheed or the companies in
the NJ defense supply chain. Strategic Doing gave us a roadmap - a set of
protocols to start forming the behaviors companies need to compete in the 21st
Century.
Michael van Ter Sluis
Executive Director, Innovation Services
New Jersey Innovation Institute

| 48
References Collits, P., & Rowe, J. E. (2015). Re-imagining the region. Local Economy,
30(1), 78-97.
Duval-Couetil, N., & Hutcheson, S. (2015). Nurturing an entrepreneurial
ecosystem in the Midwest of the United States. Entrepreneurship and
Knowledge Exchange, 7, 217.
Hutcheson, S. (2008) Economic Development 2.0: Innovation-Based
Revitalization Efforts. Western Illinois University Rural Research Report 19(4).
Hutcheson, S., & Morrison, E. (2012). Transforming Regions through Strategic
Doing. Choices, 27(2), 1-6.
McKenzie, F. (2015). Understanding regional cities: Combining quantitative
and qualitative methods in case studies of Orange and Goulburn, NSW.
Australasian Journal of Regional Studies, 21(3), 303.
Morrison, E. (1987), “Cities in a Global Economy”, Issues in Science and
Technology, Vol. 4, No. 4, Summer, 1987, 42-51.
Morrison, E. (1999). Southern Connections: Connecting with Each Other,
Connecting with the Future. The Final Report of the 1998 Commission on the
Future of the South Southern Growth Policies Board, Research Triangle Park,
NC. Available at https://eric.ed.gov/?id=ED435516
Morrison, E. (2007). The new opportunities for rural development. Western
Illinois University Rural Research Report Illinois Institute for Rural Affairs.
18(8).
Morrison, E. (2012). Strategic Doing for Community Development, in Walzer,
N. & Hamm, G., eds., Community Visioning Programs. New York: Routledge
Publishing Group., Ch. 9, 156-177.
Morrison, E. (2013). “Strategic Doing”: A New Discipline for Developing and
Implementing Strategy within Loose Regional Networks. in Australia-New
Zealand Regional Science Association International, Annual Conference (Vol.
3, p. 6).

| 49
References
Morrison, E., & Hutcheson, S. (2014) “Accelerating Civic Innovation Through
“Strategic Doing“, Stanford Social Innovation Review, (June 20, 2014).
Available at https://ssir.org/articles/entry/
accelerating_civic_innovation_through_strategic_doing
Morrison, E. (2015). “Network–based Engagement for Universities: Leveraging
the Power of Open Networks” in Carlot, C., Filloque, J., Osborne, M., & Welsch,
P., eds., The Role of Higher Education in Regional and Community
Development in the Time of Economic Crisis, (National Institute of Adult
Continuing Education, 2015).
Nilsen, E., Weilerstein, P., Monroe-White, T., & Morrison, E., (2016) “Going
Beyond ‘What Should We Do?’: An Approach to Implementation of Innovation
and Entrepreneurship in the Curriculum”, American Society for Engineering
Education Conference.
Nilsen, E., Morrison, E., Ascencio, R., & Hutcheson, S. “Getting “there”: how
innovation and entrepreneurship become part of engineering education,
American Society for Engineering Education Conference,
Nolan, C., Morrison, E., Kumar, I., Galloway, H. and Cordes, S. (2011) “Linking
Industry and Occupation Clusters in Regional Economic Development”,
Economic Development Quarterly, Vol. 25, No. 1, November 2011, 26-35.
Reid, N. (2016) Social Networks, Strategic Doing, and Sustainable
Management of Local Food Systems in Gatrell, J., Jensen, R., Patterson, M. &
Hoalst-Pullen, N., eds., Urban Sustainability: Policy and Praxis, (Springer,
Switzerland) pp. 77-98.
Sullivan, P., Pines, E., & Morrison, E. (2016) “Strategic Doing: A Tool for
Curricular Evolution” H. Yang, Z. Kong, and MD Sarder, eds., Proceedings of
the 2016 Industrial and Systems Engineering Research Conference.
Walzer, N., & Cordes, S. M. (2012). Overview of innovative community change
programs. Community Development, 43(1), 2-11.

| 50
StrategicDoing
UniversityNetwork
To expand the training in Strategic Doing, Purdue has
formed partnerships with colleges and universities to
teach the discipline.
Strategic Doing is an open source discipline that is shared among colleges
and universities committed to developing and expanding the discipline.
A list of trainings in 2018 is
available at
strategicdoing.net/events

| 51
StrategicDoing
Workshops:AGlobal
Reach
Since 2009, principals of the Purdue Agile Strategy Lab
have given workshops in 48 states and 7 foreign
countries.
Strategic Doing in Australia launched in 2017. Strategic Doing Europe and
Strategic Doing Canada are launching in 2018.

| 52
StrategicDoing
Credo
Strategic Doing, the discipline that
stands at the core of this work,
emerged over twenty years of practice.
Since 2005, the discipline has been developed at
Purdue University.
Since 2008, a core team of practitioners has worked
to strengthen the discipline.
In 2011, the practitioners drafted a credo that
expresses the “Why” of Strategic Doing. The core
team has founded a non-profit institute to accelerate
the deployment of this discipline across colleges and
universities internationally.
The core team of practitioners include:
• Bob Brown, Michigan State University
• Rena Cotsones, Northern Illinois University
• Janyce Fadden, University of North Alabama
• Kim Mitchell, Community Renewal International
• Tim Franklin, New Jersey Institute of Technology
• Nancy Franklin, New Jersey Innovation Institute
• Liz Nilsen, Purdue University
• Scott Hutcheson, Purdue University
• Ed Morrison, Purdue University

| 53
NextSteps The next steps are up to you. If you would like to learn
more about how the Purdue Agile Strategy lLab is
pioneering new approaches to innovation, collaboration
and strategy in open, loosely, connected networks, please
visit our web site and then contact us:
www.agilestrategylab.org
Ed Morrison
Director
edmorrison@purdue.edu
Scott Hutcheson
Associate Director
hutcheson@purdue.edu
Liz Nelson
Senior Program Director
nilsen@purdue.edu

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