So you’ve got an awesome idea, you created the best business model around and you just need to test the waters before selling to an Angel. So you could pilot your idea and throw your concept into open waters, or you could look into a business incubator. Incubators are used in many domains and the idea is always the same: sit on some eggs and keep them warm until they hatch then sell them to a rich farmer.
So, I guess it’s not ALWAYS the same. Other incubators that a quick Google search uncovers are Dream Incubation –planting a seed in your mind to dream about a specific topic, Psychological Incubation – subconsciously thinking about a process while doing something else, and Biological Incubators- growing microbiological cultures or cells. This post is about business incubation – creating the right set of conditions to test and grow a business idea. If you didn’t figure it out, your eggs are you awesome product ideas and your warmth comes from shepherding your idea through a few challenges to the point where the right people start writing checks.
One problem I have with the idea of incubators is that they are supposed to maintain perfect conditions – ideal temperatures, humidity, pressure – but then the chickens and cells are on their own. A business model incubator should set up a business for success by challenging the ideas on which it was created, making sure that technology exists to support it, and customers actually want it. Of course an MBA grad might be able to do a quick once-over and improve your business model, but a business incubator can hatch your idea and bring it to market (puns!).
Tech firms are looking to incubators like Y Combinator are making big waves in the world of tech, supporting companies like Dropbox, Reddit, and Scribd become leaders of the dot coms. Y Combinator invests a bit of money in the company and works with them for 3 months to get them in shape for investors. One of the reasons this works is because technology development allows for incredibly fast turnaround cycles. If you’re trying to start a new service business, good look seeing hundred of users respond to A/B testing in 3 months. It’ll never happen. But, if you can get some Redbulled programmers, marketers, and entrepreneurial spirits together for 3 months and you can make huge progress.
In the healthcare space you’ve got companies like Healthbox, Blueprint Health, and Rock Health providing capital and mentorship to companies looking to grow. These types of companies thrive on fast moving open and collaborative environments. If you had one of these ideas sitting in a monolithic company like Aetna, it would never come out alive. And if it did it’d probably take 2 years, twice the cash, and show up after the rest of the market was saturated.
So, the lesson is you need to move quickly and provide awesome ideas the attention and resources they need to survive. The problems are the same no matter if you’re in a huge matrixed organization or if you’re just a little guy trying to get some respect in the valley. So what are your options? If you’re little fish, try connecting with an incubator. If you want to get creative, see if a local MBA program has a course that would dedicate some student minds to your ideas. If you’re a big company still looking for disruptive innovation, you have to delineate product development from true innovation between a stepping-stone and a slingshot. Create a team (like the Roundtable) – a group that transcends business units, thinks big, connects leaders to mobilize ideas and is dedicated to solving consumer problems. Incubators are successful when they combine a startup mentality, business model generation, and garner support. It’s time to start innovating.