Ten reasons why your internal incubator will fail within two years

I have been working for several years with large groups wishing to set up, or having already set up, an incubation structure for internal innovative projects. Some, seduced by the media and technological news of recent years, even venture to speak of acceleration. In any case, I am faced with a central problem: it seems like a good idea for the management of the large groups concerned, but almost no one really knows what they are doing with these tools, and the failures are frequent and very painful. If you are an innovation or strategy director, let's take a look through the hype and let me walk you through the ten reasons your in-house incubator is going to fail in less than two years. Make no mistake I don't do this entirely out of goodness of heart, I'm just tired of having the same discussions on every project. :)

1. You think it's a good idea

An internal incubator is on paper the best solution to the innovator dilemma you have. Christensen himself is running for years to convince industry to outsource their significant innovation in a relatively isolated cell from the rest of the business, and with a real autonomy. Easy.

So all you have to do is find a room in an open space, furnish it with nice desks and chairs, treat all the vertical surfaces with the paint used to transform them into white boards, a stock of multicolored post-its and a espresso machine ... and off you go.

All this will certainly be worth a few articles in the business press and then the problems will start to add up.

At this stage, in fact, I am always amazed at the complete lack of strategic vision of industrial. Except this publicity stunt, what are you serious about making this tool? You can imagine that if it was enough to put a dozen people a few months in a nice room by having them read the latest book by Eric Ries or Alexander Osterwalder, everybody would be thrilled.

What will immediately block you is that your group itself does not have a clear overall strategy to rely on.

You are customer intimacy fashion? Product Leadership? Operational effectiveness ? In fact, you probably have no idea what I speak. And as soon as your group has no clear vision of how you generate innovation and differentiate you in the market, how do you mount an incubation cell? It is there to help you with speed and agility:

• In exploring your market ahead of phase with other products (customer intimacy);
• Validate technologies and above all the design world, even to the other markets (product leadership);
• Or do a mix of all at a short horizon from your current toolbox of patents and expertise (operational excellence).

I summarize here obviously in broad strokes, but these logic will always little or less the same. Without structured and coordinated strategic vision with your core business, for the same budget as the sponsor du Rhum race. The fallout will be better and at least there will be some beautiful pictures to the key.

2. You do not anticipate connecting with your core business

As a result you will therefore often start blindly with a lot of good intentions (those with which hell is proverbially paved) and do something beside your core business. What do you think will happen if, by pure chance, one of the incubated projects becomes extremely interesting in 12 months? Imagine that you are an automobile manufacturer and that one of your “internal startups” has just figured out how to set up a simple, low-cost and devilishly efficient distribution network to finally allow the development of the electric car throughout Europe. What are you going to do ? Or more clearly: in how many days will the management of the business unit in charge of the development of electricity for 5 years, have it all buried? If you haven't planned how the developed projects will fit into your core business, what's the point?

Beyond the pure strategy, then we go into the discussion of knowledge which is the internal customer of the incubated projects? Quelle strate the direction? Quelle BU?

The added value of an internal incubator is to explore land too risky for conventional direction compartmentalized in its monthly reports. Without engagement letter or internal sponsors, with assets relay, these projects are doomed to be destroyed by antibodies standards of your group.

3. You want to innovate for sure

By continuing to take this logical thread you will see that without 1 points. and 2., we will eventually ask you to make innovation "serious". A copy tool in which the half-dozen projects that annual duel in your incubator will all need to be successful. The usual measure of success in this case is likely to generate at least 50 million in revenue within three years. Or something even more stupid as to take "1% of digital sausage market". The stupid part is the concept of 1% (ie. Thinking products and market share) which will lead you to defend those incubated projects Plans for business calls.

Since we say things and we're us, let me be clear: if you need to write a business plan is that you do not know what innovate. Or more likely that you have not the courage to explain things clearly to the Vice President over you.

Innovation fail is an ontological absurdity.

Rather, your role incubation cell is to generate risk, use, fail as much as possible and clearing the passage to your core business. By being fully rational, we should not even ask you to just fall from time to time, but simply to cancel over possible false tracks in the coming months.

4. You expect the ideas of your employees

At the stage of this fourth point, I normally lost 98% of internal incubators launched the industry 2009. And they will kindly continue to follow their logic by asking their employees to find "good ideas" of products, services, processes ... at this stage anyway all this no longer means anything.

The disastrous process that seems to make sense is exactly the same as the idea box of the 80 years: ask your employees to send their good ideas and if they are retained (see the objectives of the point 3.) You may propose to become the own entrepreneurs of this idea, in your incubator.

Unfortunately no. Firstly it is rare (in the sense of quintuplets homozygous same time obtaining a doctorate in nuclear physics to twelve) that your employees have good "ideas." Yes, I know put it literally, is not very friendly, but as I'm not in a reality TV show, I guess it's at least tolerable. I remind you especially when we talk about innovation, not to improve the efficiency of a process on an assembly line at Toyota. So, any employee who is at home in more than three years has been sterilized in small steps in all ten monthly meetings in which it participates and where the consensus culture "we tried", "it does walk ever, "insisted questionable truths. For over 350 meetings and this is one of the main sources of the innovator's dilemma.

You can not solve the innovator's dilemma, with one of the issues that constitute it. This is circular reasoning.

And when rare resilient enough employees who might have "good ideas," I see often in Executive MBA in getting ready to leave. This is a very logical choice.

5. You are in a pipeline logic

This one is pretty special. If you followed all the steps I said so far you'll necessarily from the idea of ​​select ideas, to lead to a certain maturation phase (or enrichment as terminologies) and to the market and if they survive a kind of launching a budget "design" and "marketing" to get everything clean.

But even the best incubators that I could rub and went very deftly through all these pitfalls will still think pipeline. I'm always surprised.

If in terms of best practice, you take the trouble to consider the business model of a firm of venture capitalists, you will see that they manipulate flow hundreds investment in startups over three years. Most fail in 6 12 to months pass in profits and losses, and many new are immediately chosen to reinvest. Over three years, there will be a dozen successful paying expenses, and one or two critical successes that relate a lot of money.

But above all it is not a pipeline strategy. It is a portfolio strategy.

Unlike a standard incubator or nursery where each folder account and defended to the end (in theory, but that's another story), an incubator of great group must accept the case. As I said even earlier, it should primarily be assessed on its ability to generate maximum continuous case.

Every failure is a nugget of information for your core business.

For the most skilful of our customers, let me say we are going beyond a pure risk strategy portfolio, where fifty projects are prototyped a year. We do what we call the "reverse pipeline" starting from a base of a project, we can generate 6 12 to actual explorations.

But without going into the details, you probably understand why it usually is enough to ask how many projects are being carried by an industrial incubator. The usual response is of the order of at 6 8, this means that their ability exploration is practically zero, and it will take them to statistically 30 50 years to perhaps garner success.

6. You set up a standard training

In the simple consequences that follow from all this, the team that manages the internal incubator will have to set up a training plan, an integration seminar, or any other educational action intended to give the employees involved a new understanding innovation. On this point I will try to keep it short because I will repeat myself: if you do not know what you are doing, no one can bring you magical training.

There is no method, there is no book, there is no software, there is no common recipe reproducible. It is each time a process extremely specific to your group. 

The day before yesterday everyone was doing open innovation, yesterday lean startup, today design thinking… All of this is pure agitation without focus on your part. The worst is often enough to call on management schools, which already have trouble understanding how you manage your core business, and which should provide educational advice on the most specialized and risky part of your innovation process? Why not.

7. You have time to grope

All these difficulties are not very mysterious. You'll even get to unlock them as you go. The process of trial / error in my experience will take about two years (I'm pretty optimistic is often three years and then stops your tool).

On paper this is actually not too bad. I think I was well taken five years before starting to think I'd rather understand where were the pitfalls and how to avoid them.

The problem is going to be human.

First of all the incubator team will be exhausted and it will start thinking about getting back into the organization more effectively (including you). Then the tool will be put under pressure by the management above you and we will ask you more and more "results", so business plan, projects that will "this time" succeed, etc. And most importantly, the few dozens of employees who have played the game with you, incubate and carry a project in agile mode, will themselves be demotivated and will end up bad news internally.

You've spent all your champions. This is a negative spiral that you will not leave.

8. You put HR and communication in the loop too early

In the structuring of an internal incubator, two early interlocutors are often bad game about. It is therefore of human resources, and communications or marketing department.

The communication service is just the latest to warn of the initiative that you lead. You will have a lot of pressure to "monetize" the tool in terms of articles, fairs innovation, or other opportunities to show that you are very sharp in your market approach.

The same stakeholders in your group looking to generate a halo effect around your current products will also be the first to shoot you in the back when your incubator will skate.

Procrastinate, start your operation and try to have the support of the steering committee to stay under the radar. Remember, you do not want to show a new product remarkably sexier than what your company usually generates. Looking to demine the future. It is likely that you will not have success presentable on the outside. It is not the goal.

On the other hand, from the start HR may want to help you quickly to mount a training plan your teams incubation. Politely refuse or procrastinate again as long as possible. The tool that you ride is too exotic for him to fall into the usual grids internal or external trainers that you normally have. You will lose time and in the best case lead to frustration. In the worst case, you will think you did the right thing and your teams will work with totally unsuitable tools, or too simplistic (lean canvas and others).

9. You put HR and legal in the loop too late

However you probably have underestimated or completely evacuated is that employees who come to work for a period of 6, 12 or 24 months in your incubator, need clear reasons for doing so. And no, enthusiasm alone will not suffice for a long time - especially for those who are the best at this game of risk.

Although this seems cumbersome at first, you need to ensure that there is a real "HR pack" for each of these employees.

I mean,

• A clear detachment duration of their current service to your incubator, with renewal terms of this duration;
• A clear budget allocation for the company they represent you and their service;
• Premiums on realistic goals related to incubation tool (and I emphasize realistic, that you are not in the mistakes of 3 item.)
• clear exit conditions of the two types of tool: the return to their service (or another according to the case and their request) ... or the possibility of leaving the band to pursue an outside project.

Because yes, starting in a real innovation process, you may ripen the opportunities that your group does not wish to pursue for many reasons. If you have five people who worked on a project that is promising, demonstrating a first possible traction with key customers and you stop this project ... that will happen to you? It is reasonable to expect that some will be ready to go to try their luck.

So in the HR pack I'm talking about you also have to provide for this, this time with the legal (or M&A) department to be able to offer a very friendly excubation contract. In this contract, you will specify the conditions for the transfer of intellectual property, the share of capital that you will take in the created startup (less than 5% if possible), what you agree to provide as technical or industrial support at start-up, capital to help your employees take the plunge (50K will not weigh heavily for the group, but will be a real godsend) ... And above all, in addition to all these gifts, you will in a certain way commit to taking these employees back into two or three years, if their project fails.

Does this seem to you of a crazy generosity? It's probably that you still have not figured out what's going to be for a working incubation cell. Because yes, you want to see employees leaving on some of these projects. Not for projects, which will not always have much interest, but for what they can learn outside, and what they can bring you back to regenerate your internal skills if you've been supportive enough with them from the start.

10. You think that an internal incubator is used to produce innovations

An internal incubator will not create business models of tomorrow for your group.

I hear it too often and it is mathematically absurd, since you will not be able to generate 300 incubations over three years. Of course nobody can dismiss the stroke of luck. But given the budgets involved, I suspect that taking hundreds of Euro-million cards every week would be more promising.

You have the final two major requirements governing the construction of such tools:

1. Explorer risks

We often talk about it to market scouting: imagine the possible directions of your current pipeline of innovation - or things radically opposite - and test them now. Eliminate, eliminate, eliminate, eliminate as many of these possible. Every quarter, every week if possible. And adjust in small doses, preemptively industrial navigating your ship.

Your accumulated failures, if you are able to capitalize on it, to objectify them, document them and to relay, will release a new construction area of ​​success.

Think about the budget you have probably spent to buy a famous generation expert system managing the ideas of your employees ... How much have you spent to establish a basic understanding of what you have tested incubation and share it with other leaders ?

Unfortunately, most of the time your logic is backwards.

2. Regenerate your internal culture

This is for me the key point. All of this, should primarily serve to increase the skills of your organization.

Spread enough employees in a functional internal incubator let them go as an entrepreneur, promote their return aiguillez them into positions where they can make things happen, and within five years your company will find a innovative DNA.

When everyone in Europe seeks the secret sauce of Silicon Valley, yet it is long before our eyes: mobility.