How Can KPIs Accelerate and Improve Startup Ecosystem Development?
Key Performance Indicators (KPIs) serve two essential purposes in startup ecosystem development:
- Modeling Startup Ecosystems: Ecosystem developers, policy makers, and development financiers can use KPIs to model startup ecosystems. These models can be used to identify problems, design policies, make predictions, and determine resource allocations.
- Measuring Outcomes: KPIs can also be used to measure policy outcomes, provide success benchmarks, and compare different solutions within or across ecosystems.
Modeling Startup Ecosystems
Here is an example of a systems thinking model demonstrating that startups are a renewable resource in ecosystems:
The orange circles represent KPIs, or variables, that can be used to make predictions and test assumptions. Systems thinking models provide a tangible mechanism for visualizing the relationships between KPIs.
Policy and funding decisions should only be made after ecosystem KPIs, as well as the relationships between them, have been established.
Ecosystem developers, policy makers, and development financiers can use KPIs to measure outcomes of their decisions. This enables them to accomplish three key tasks:
Accounting for Delays:
When using KPIs to measure outcomes, it is vitally important to account for delays in the system. For example, if a specific KPI increases today, it may take days, weeks, months, or years before other KPIs are impacted. For example, investment in an early-stage startup may not affect investor profits for several years since the startup will take time to mature and exit. This is a major reason for why startup ecosystem development is a long-term game.