Corporate incubators work with intrapreneurs and entrepreneurs who are proposing disruptive solutions to existing problems, or solutions which the company cannot otherwise pursue. They provide lean innovation training, idea prototyping, mentorship, partner networks and facilities. Typically, incubators will recruit and accept teams before training them, helping them ideate and prototype, and develop their prototyped ideas over a period of 4-18 months.
The most successful teams are often given the opportunity to continue developing their innovations through various key pathways. Teams may be invited to 'spin in' and join the corporation, or in some cases, they may be fenced off for an extended period while the corporation contributes further investment to keep them going. Other startups may be offered investment from the corporate's VC arm or other business units and asked to continue working outside the corporation. Remaining teams will be left on their own to rais money from other funding sources such as institutional VCs. The ideation, mentorship, and prototyping assistance that teams received during the incubator, however, will be a crucial launchpad for the next phase of their journey.
Strategy behind the Play:
The core idea of the incubator is to encourage employees to come up with ideas, and give them the opportunity to pitch their ideas. By providing employees with experimental capital, and the time to test and prototype these ideas, the company can discover new, novel ideas and replicate successful ones.
"Given the pace of change that threatens established businesses, incubators are becoming more and more important to create growth options" -- Stephen Wunker, managing director and U.S. office head of New Markets Advisors.
Incubators are most effective when it comes to exploring ill-defined or open-ended ideas and areas, particularly those which are typically associated with long-term ROI timelines (greater than seven years). This focus on long-term ROI timelines is an important component in a corporation's innovation pipeline, and using incubators as a tool can help uncover many of these long term, high impact, disruptive innovations.
Limitations & Risks:
Initiating the Play:
Launching this play requires a moderate initial capital outlay.
Key steps to initiate:
Running the Play:
Incubators are a moderately resource-intensive play.
Typical variations of this play include:
Corporate incubators are one way to keep employees on their feet and engaged.
Play in Action:
LinkedIn recognised the importance of allowing employees to have the time and space to work on independent projects. By creating a structured incubator system, they are supporting approved projects for up to three months through the process of ideation, validation and prototyping.
The LinkedIn [in]cubator gives employees an opportunity to pitch projects which they think are worth developing to LinkedIn executives. Approved project teams are given three months to work on it. According to project sponsor Kevin Scott, “[in]cubator was inspired by hackday, a Friday each month when employees are encouraged to work on just about anything they want.”
The aim of their incubator was to create more support for internal opportunities and employee ideas.
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