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What Can Be Done To Fix Poorly Designed Corporate Incubators?

01/21/2014 05:15 EST | Updated 03/23/2014 05:59 EDT

While the concept of creating corporate incubators is sound, the numerous attempts at implementation have been beset by a number of issues, including lacklustre results. With so many of today's corporate incubators having significant problems creating positive results, what can be done to address these issues?

A number of the problems stem from core structural issues related to corporate incubator development. Hence, the only way to address these problems is to correct the structural issues in the following manners:

(1) Clearly Define Goals

(2) Employ the Right Corporate Incubator Personnel

(3) Utilize C-Level Support & Direction

(4) Develop a Clearly Defined Strategy

(5) Implement Critical Infrastructure

Clearly Define Goals

While this might seem to be a simple action item, many corporate incubators fail to set the right goals. The right goals for a corporate incubator have the following characteristics:

(a) Strategic Consistency: One of the biggest problems with corporate incubators is that their goals are completely misaligned with their strategies. For a corporate incubator to be successful, its goals must be completely aligned with its strategy.

(b) Consistency Over Time: There must be consistency in terms of goals over various timeframes. There is a mistaken belief that startups are successful due to the rapidity and flexibility they exude. Whether or not a startup pivots, the core foundational elements must remain stable. Since corporate incubators are core foundational elements, they must offer a sense of continuity to ensure that startups are properly grounded.

Employ the Right Corporate Incubator Personnel

Many corporate incubators are staffed with seasoned corporate executives rather than with startup individuals. The characteristics that enable corporate executives to thrive are antithetical to the functioning of startups.

The characteristics required of successful startup personnel are the following:

(1) Out-of-the-box thinking: While corporate ladder climbers rely on a predictable process, startup employees prefer a chaotic environment where they can leverage their out-of-the-box thinking.

(2) Ad hoc operations: Startup employees are used to constant change. It is the nature of the business environment they are in, one filled constantly with strategic pivots and changing operational priorities.

(3) Direct Impact: Due to the need for every employee to pitch in, startup employees are used to their actions having a direct impact.

Utilize C-Level Support & Direction

Just as it is necessary for a corporate incubator to have consistent short, medium and long term goals, C-level support & direction is just as critical. Without C-level support & direction, a corporate incubator will fail to achieve its goals.

Corporate incubators require the following in terms of C-level support:

(a) Strong C-level and organizational support: Particularly relevant for corporate incubators, it is necessary to have strong C-level support across the organization to effectively deploy programs.

(b) Consistency: One of the most critical C-level support requirements is the need for consistency, not only in terms of time but also in terms of overall direction. Without this consistency, a startup incubator will never gain the traction required to succeed.

(c) Strong personal relationships and attachment: Successful corporate incubators require a strong attachment from the C-level executives that sponsor them. Successful startups are run by entrepreneurs who feel passionately about their creations. Corporate incubators need to have C-level executives who are just as committed to their endeavors.

Develop a Clearly Defined Strategy

A clearly defined strategy is critical for corporate incubators to ensure that its goals are met. A clearly defined strategy consists of the following elements, including:

(a) Alignment with corporate strategic goals and objectives: For a corporate incubator to truly succeed in its primary goals and objectives, it needs to be fully aligned with the corporate parent's strategic goals and objectives. Without this alignment, a corporate incubator merely becomes another cost center instead of a center for innovation excellence.

(b) Picking one single strategic approach: It is extremely critical that a corporate incubator does not use the "mix and match" approach for its strategic vision. Corporate incubators need to have one concrete focus to be effective not only for the corporate parent but for the startups they are planning to implement.

(c) Consistency: Whether it is time or resources, another key element that corporate incubators must have is consistency. Without a consistent strategy that is sufficiently backed by a consistent application of resources, startups will not have a foundation for growth and corporate incubator backed initiatives will die if not given sufficient time to take root.

Implement Critical Infrastructure

Of particular importance to corporate incubators that adopt the startup approach is ensuring they have the right resources for their startups. The "right resources" for startups include the following elements:

(a) Independence: Having independent mentors is critical to startup-focused corporate incubators. Not only are these independent individuals free from corporate political distractions but they can offer unvarnished advice that will allow startups to plot market-ready strategies for growth.

(b) Real Startup Experience: Startups are not "mini-corporations" and cannot be treated as such. Mentors with corporate experience are incompatible with the reality of startups. For a corporate incubator to provide the right infrastructure for startups to succeed, available mentors need to have sufficient startup experience.

(c) Industry Experience: While startups can have a general idea of what their product or service can do, to truly succeed as a business they need mentors who can give industry specific advice that is directly applicable to their startup situation. What works in one industry may not necessarily work in another.

Many corporations believe that building a corporate incubator merely involves throwing enough resources at the problem, but the reality is dramatically different. As outlined above, to build a successful corporate incubator requires strategic and operational alignment that will enable the creation of the right ecosystem leading to conditions where both the corporate parent and startups benefit. Anything less is merely throwing away precious resources and wasting the potential of startups.