A Focus on the Incubator as an Enterprise (part 1)

Key points

  • An incubator must be managed appropriately throughout its life just like any enterprise;
  • A strategically constructed advisory board is critical to the success of the incubator.

An Incubator’s Lifecycle
Allen (1988) states that–similar to any other enterprise–the incubator itself goes through different stages in its lifecycle, namely start-up, business development, and maturity. Each stage is said to possess its own characteristics and challenges that must be managed if the incubator is to succeed in its mission. This file provides a summary of these three stages. It is important to note, however, that the findings of Allen may not always be the case for all types of incubators and that these should be matched against the type of the incubator being analysed. (This file provides some of the many types of incubators in the industry today)

An Incubator’s Advisory Board
The Allen Consulting Group states that “quality of management and governance is as important to incubators as to any business” (2003) while Hackett and Dilts (2004a) state that it is important for an incubator to possess an intimate knowledge of the potential incubatee’s market if it is to effectively evaluate the worthiness of the business idea. Also, an incubator must have considerable knowledge and experience in forming and developing new firms if it is to produce successful ventures. Finally, an incubator must possess the political capability to secure annual operating subsidies especially in its formative years when regular income can not be easily realised. A strategically assembled advisory board can imbue the incubator with these necessary skills and capabilities. Hansen et al. suggest to “create formal links with external experts by signing them in as board advisor” (2000).

For a backgrounder on the incubator-incubation concept and for a complete set of references, see my earlier post.

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