CRITICAL ELEMENTS OF SUCCESSFUL BUSINESS INCUBATION: APPROACH AND MODELLING Ing. Giuseppe Cardoni Director Parco Tecnologico dell’Umbria - Sitech Loc.Pentima Bassa 21, Terni Italy From a research by Takis Damaskopoulos – CASIS – Paris and Giuseppe Cardoni PTU-Sitech

THE OPTIC …for new technologies that power the knowledge economy to be able to spread throughout the whole economy, thus enhancing innovation and productivity growth, business firms, the institutions and culture of society, and the factors engaged in the production process need to undergo substantial change …the agenda of research and policy on the dynamics of adoption of new economy practices, innovation, and economic growth needs to be expanded beyond the level of the firm. It needs to be built around the dynamic interrelationships between technological transformations, firms’ organisational and knowledge-creating capabilities, emerging market and industry structures, and public institutions

PERFORMANCE PARAMETERS OF BUSINESS INCUBATION 1.Governance and management of incubation 2.Enterprise development program of incubation 3.Marketing strategy of incubation 4.Physical facility and general business services 5.Financial model of business incubation 6.Technology transfer

THE CONCEPTUAL FRAMEWORK What is ‘new’ in the new economy: it is knowledge-driven it is global it is networked in terms of technology and organisation ‘Organisational capital’ Changing ‘type’ and ‘relevance’ of knowledge The ‘network enterprise’ ‘Clusters of innovation’ ‘Social capital’

HISTORICAL EVOLUTION OF BUSINESS INCUBATION

…AND WHERE WE ARE TODAY –acceleration and systematisation of creating successful businesses –provision of a comprehensive and integrated range of support –provision of services on a ‘one-stop-shop’ basis which enables overheads to be reduced by sharing costs –improvement of the survival and growth prospects of new start-ups –generation of a steady flow of new businesses with above average job and wealth creation potential Differences in stakeholder objectives for incubators, admission and exit criteria, the knowledge intensity of projects, and the precise configuration of facilities and services, distinguish one type of business incubator from another

BUSINESS INCUBATION MODELLING

WHICH APPROACH TO BUSINESS INCUBATION IN UMBRIA? Approach: A global ‘economic’ approach to business that covers every aspect of a firm Focus: May be high-tech, mid-tech, or low-tech or may even involve innovations of a non-technological ‘environmental’ nature such as the development of ‘ambient’ technology Key: identify different enterprises and systems of knowledge and technology at different parts of the value chain and create an environment that maximises synergies which contribute not only to economic growth of the companies themselves but also to the economic growth of the region Role: A ‘facilitator’ or a ‘village animator’

BUSINESS INCUBATOR MODELLING: which model? Market model: a general business incubator Financial model: a not-for-profit entity with a public mission that has a balanced representation of regional public authorities and private business community in its governing board Operational model: a physical incubator model but with added non-physical virtual elements included in its structure of service provision – wider geographical footprint

ELEMENTS OF A GOVERNANCE AND MANAGEMENT MODEL –a balanced private / public representation where the local and regional business community outnumbers that of the public sector –a shared understanding of the mission that the incubator is to achieve –roles and responsibilities for the governing body and the management team that are codified as part of the incubator’s organisational policy –a management team with demonstrated and relevant experience –management team in a position to concentrate most of its activities to working with the portfolio companies of the incubator

ELEMENTS OF AN ENTERPRISE DEVELOPMENT PROGRAMME –a mechanism to perform effective diagnoses on prospective client companies as part of the admission process –a full range of formal and informal to support the development of the whole enterprise –the provision of management development advice targeted to developing the skills of the portfolio companies’ management team –an effective monitoring / tracking management system which provides systematic feedback on the effectiveness of the enterprise development program –a graduation process which helps portfolio companies leave the incubator –an emphasis both on local development and international attraction of start- up companies

ELEMENTS OF A MARKETING STRATEGY –identification of the type of companies the incubation program will target –identification of the benefits the incubation program offers its clients –identification of the needs of prospective clients and proactively manage portfolio expectations through a carefully calibrated pool of service tools tailored to the need of the clients –development of the capacity to ‘package’ individual service propositions according to the needs of the portfolio companies – a 360 degree view of the client company is a must

QUALITIES OF PHYSICAL FACILITIES –a facility that is attractive to and compatible with the incubator’s target market and its client’s developmental requirements –a common social space for social integration and networking among the client companies and the wider business community –the facility must be consistent with the incubator’s financial model

ELEMENTS OF A SUSTAINABLE FINANCIAL MODEL –not be significantly tied up in facility rental, acquisition, maintenance and suchlike expenditures –[though the incubator might rely on public support funds in the initial phases of its operations], it should be run as a private business in that it should be expected to generate profit or at the very least break even - the incubator should not be seen as a funnel that channels public funds to start-up companies and other SMEs –be protected from internal risk stemming from excessive reliance for revenues on a single portfolio company. In other words, the incubator’s portfolio must be diversified enough to mitigate financial risk –must be protected from external risk stemming from dependence on singular external sources of finance such as regional government economic development programs

ELEMENTS OF TECHNOLOGY TRANSFER –assess the existing stage of development of the region in terms of technology transfer mechanisms and practices – with respect to R&D quality, technology acceptance, technology implementation, and technology application –engage the incubator into systematic relations with local and regional universities and research centres in order to identify key technology projects and their commercial potential –position the incubator as the facilitator or the main liaison mechanism that links the originators of the intellectual property attached to particular technologies and other actors that play a key role in the technology transfer process –develop informal links between the key actors involved in the whole chain of the technology transfer process

DESIGNING EFFECTIVE BUSINESS INCUBATION SERVICES –develop an integrated range of services that is tailored to local needs and offers the necessary flexibility for individual portfolio companies –provide a guiding hand to portfolio companies, advising them on which other means of support or service they could or should use –proactively promote networking among the portfolio companies but also among them and other business communities at national and international network –Trans-incubation: a leading trend

BUSINESS INCUBATION SERVICES TO THE PRIVATE SECTOR –evaluation of innovative projects and the entrepreneurs and management teams behind them –strategic advice and assistance in implementing business projects, by devising suitable, high-quality business plans –facilitating access to finance and partnerships –helping firms to internationalise their business and find partners and customers in markets outside their area (trans-incubation) –organising regional inter-firm cooperation (spin-offs, grouping companies, clustering, sub-contracting etc.). In this way business incubators help develop local innovative ‘business communities’ –providing specific ‘entrepreneurial’ training programs –monitoring the ongoing progress of the projects

BUSINESS INCUBATION SERVICES TO THE PUBLIC SECTOR –analysis of the needs of companies on behalf of the regional authorities and other bodies that assist small innovative businesses –implementing measures to support small businesses under regional, national of European Union development programs –launching schemes to stimulate entrepreneurship, detect original projects, disseminate innovation, organising conferences and other events dedicated to the promotion of local entrepreneurial culture etc. –networking with the local and regional business community

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