A Look at Corporate Incubation with Detecon CEO Daniel Kellmereit
Incubation is becoming a huge buzz word, yet it is a significant and crucial part of today’s innovation process. I sat down with Daniel Kellmereit, CEO at Detecon Inc in San Francisco to get his thoughts on corporate incubation.
Although the way incubation is implemented can and should vary from organisation to organisation, we pick on some common themes to help you incubate successfully.
Drivers for Corporate Incubation
Daniel see’s 4 main drivers for today’s corporate incubation efforts:
1. Gain access to ideas from the outside
2. Access to talent who can drive the idea forward
3. Positive brand image for the company
4. Low investment risk but with large upside potential
Essentially, any business model that could be disrupted by digitalisation or technology should look to leverage entrepreneurial talent and look to run the organisation more like a mini startup ecosystem. We touch on examples from Axel Springer Ventures, GE and Samsung.
Daniel specifically likes GE’s approach because they commit themselves to a medium to long term roadmap for innovation initiatives to generate returns, which most organisations heavily under estimate. Such initiatives leading to a successful “exit” can greatly increase the number of ideas and quality of talent that wants to innovate for the client – although it is still very early to case study large successes, Daniel says. I should have mentioned Intuit’s successful training approach to launch 100 start up teams with their own employees that generated close to USD 100 million in new revenue for the company
Daniel see’s the topics of mentorship, incentives and time lines being major challenges in implementing successful incubation strategies, but they are not impossible to over come and we discuss some tips. Before considering an incubation strategy, it’s important to assess how much risk the organisation is willing to take before designing a strategy. Over the recent past, Detecon has learned from failed incubation attempts and offers 4 common mistakes to avoid:
– Top Management Ownership: to have visibility to attract funding and talent, as well as allowing you to focus on disruptive solutions which might go against the grain
– Talented Leaders: The initiative should have a strong leader well versed in startup processes with talented individuals driving new ideas. This will also send a signal that you are serious about it.
– Willingness to Adjust, Fail and Pivot: Overall flexibility is needed to learn from the mistakes and to adjust – just how startups do
– Medium to Long Term Perspective: Consider the projects as seeds for the future and don’t expect significant ROI until 5-8 years later. In addition, you need to “stick to it” and not cut the initiatives out of frustration
We then spoke a little about Private Vs Public companies and the challenges they face and also how and when to incentivise the entrepreneurs / intrapreneurs with significant upside potential. Daniel also dives into some best practices on how to re-integrate the incubated project back into the organisation to ensure future growth and scale.
All in all, the budgets needed to drive incubation are a fraction of what is being spent on R&D and could have extremely large benefits, with the added notion of preventing some of your best people leaving the company. It therefore makes sense to allow certain employees to explore entrepreneurial careers within the organisation.