Improving Corporate Venturing Processes - the role of incubators
Facts & Main Elements
In the project, 4 research questions were studies:
- How and why were the different ideas initiated?
- How were the different ideas financed?
- How did the decision-making look like?
- What was the key factors for the success?
The Dual Dimensions of incubation
A framework that helps evaluate existing and potential incubation projects and determine when and how to use investment in projects as an instrument of strategic growth. Incubation defined by two characteristics: Main objective (Strategic or financial) and the degree it links (tight or loose) to the operations capabilities of the company. Clearly, neither of these two dimensions of corporate investing—strategic versus financial and tightly linked versus loosely linked—is an either-or proposition. Most investments will fall somewhere along a spectrum between the two poles of each pair of attributes. Still, overlaying the two dimensions creates a useful framework to help a company assess its current and potential investments.
RQ 1. How and why were the different ideas initiated?
The ideas have been initiated and motivated by needs or requests from customers and the internal organization but not as a part of a business expansion or development process. Overall, what could be said regarding the Idea generation is thus that the ideas have been initiated in an ad hoc way, rather than being planned or associated with a strategy development. The ideas have further been initiated by individual employees.
RQ 2. How were the different ideas financed?
The business models for the ideas are all different. One is based on a part ownership of the Energy Cluster that co-owns the initiative. Another is based on a Power Purchase Agreement, where TV AB owns 20 percent and an infrastructure fund the other percent. And a third is financed through R&D development, Patent fees and recruitment of a new employee, the business model is moreover based on a license agreement with partnership company as a license holder.
RQ 3. How did the decision-making look like?
The decision-making process have in detail been different for the different ideas. However, on a higher level two projects could be said being similar as they were based on internal decisions whether the ideas should be taken action on, then the TV AB board and the Municipal Council had to agree on the decision. What can be mentioned about the decision-making process is that it was slowed down by the fact that it had to go through the Municipal Council. In order to speed up the process, the ideas could be managed and owned by an owner structure similar to the Energy Cluster instead. Although for the third case, the decision was made in the Patent Council and partly by the former CEO. Further in regards of the project´s time frames, the ideas show similarities.
RQ 4. What was the key factors for the success?
The ideas can be said being very different in their nature, they were initiated through different needs, they have different business models and the process of the development of the ideas is differing. Moreover, it is difficult to evaluate whether the business ideas have been successful or nor, since not all of them are commercialized and their success have not been analyzed and evaluated. More important, the ideas have mainly been driven by individuals with personal interest in the specific field or business model. This have most likely been crucial for the idea’s success. For the different ideas, the preconditions for an efficient intrapreneurial activity has been different. Support from management, Goals and Values of the Company, Inner motivation and knowledge of the employees have been important. Sometimes intrapreneurs also expressed a resistance against Intrapreneurship in the organization and that the employee instead has to fight for the projects, something he claims not all employees can handle. This confirms the suspicions that there are low rule breaking tolerance, low support from management and that the working conditions do not favour Intrapreneurship. Moreover, what can be concluded is that the analysis model of Stage-Gate was not so applicable to analyse this type of radical ideas that are developed iterative and without any governing process surrounding. The Incubation Process from Vinnova however, is better suited to analyse these, more iterative processes.
Lessons learned & Plans for Future
How can one further develop the working process and thus accelerate the “Incubation role”?
In order to develop the working process of the Incubator role, the right preconditions need to be in place. By fostering a good working culture where the employees become the right tools and coaching so that the employees possess the right knowledge, skills and creativity. Additionally, the inner motivation and the attitude of the employees are important, which could be displayed clearly in several cases of success. In order to strengthen and improve these preconditions even more, it is important to attract suitable resources, establish networks, training and mentor sessions for the potential intrapreneurial employees.
Moreover, the goals and the values can as in the examples, be of importance to foster Intrapreneurship and by communicating and integrating these in the organization. Additionally, what is crucial for generating Intrapreneurial activities and thus accelerate the Incubation role, is support from the management in combination with an agility and rule breaking tolerance. This could in the interviews, be very important and is something that has been working well, but in some cases needs to be even better.
To improve this, a combination of “carrots and sticks” could be implemented. Tin order to speed up the processes, there also must be a clear and efficient decision-making process and what can be concluded from the projects is that the process, including decision-making both in the board and the Municipal Council, was rather slow. Moreover, the decision-making process must be clear and well known, so the Intrapreneur and other employees easily can navigate through the process. In those cases, where investments can be done outside of the company, the investments should be done in the way the Energy Cluster was done.
This project is conducted by 4 employees of Tekniska Verken: Emelie Detert, Matilda Skeppsby, Ingela Lindahl, and Erik Olsson.
More information: Erik Olsson, Tekniska Verken (Erik.Olsson@tekniskaverken.se)