We have often been asked to shed more light on „excubation“ as a concept, what it means, where it comes from, how it compares. With this update we want to provide you with more background before we will dive into more depth and breadth in upcoming posts.
Excubation follows the paradigm of separating exploration from exploitation to the right extent (not too much, not too little) to enable corporate ventures flourish without being hindered by existing corporate processes and conventions. Seven excubate rules define exactly how the execution company and the innovation company should operate for innovations to be most successful (for a detailed discussion of these – please click here).
The critical element we propagate at excubate is the recurring idea and innovation flow between execution and innovation entities. This ensures not only the innovation entity being sufficiently supported with resources, but more importantly a certain part of the execution DNA being incorporated into new ventures which makes it much easier to re-integrate once it took off. This is the biggest challenge for most other approaches and more often than not results in a pure financial engagement in a startup firm.
To establish an excubation organization you don’t need to create and significantly fund a new legal entity right away. A first excubation pilot project to create and establish a first innovative product or business model running the process “like a startup” will help gain experience and build a repeatable model over the mid-term. This can then eventually lead to a separate entity to excubate new businesses in a recurring way.
excubation vs. other means of corporate entrepreneurship
Separating corporate entrepreneurship activities too much or too little from the core business has been proven to be one major hurdle for innovation success. Current approaches like intrapreneurship programs, corporate incubators or accelerators have been failing because of exactly this reason: Stalled and suffocated by the core business or starved as an external startup that couldn’t be integrated because of culture and process divergence.
We have screened a wide variety of companies and respective innovation approaches and collected a set of examples and showcases*. While there isn’t a clear pattern of companies running either approach, we’ve observed, directionally, that the more traditional innovators (GE, 3M, Nordstrom, even tech companies like Qualcomm and Adobe) tend to experiment with intrapreneurship models, while smaller companies and players with less history in traditional innovation (Otto Group, ProsiebenSat1, Commerzbank, Bayer) often run accelerator programs.
Excubation on the contrary tries to find a better balance along a set of key parameters, which we have grouped into “Innovation level and source”, “Anchoring within the organization” and “Financial engagement”.
Excubation takes a more balanced approach to the sourcing of teams and ideas, leveraging internal and external resources synergetically. Regarding anchoring, a more aggressive approach is proposed with high level of independence and decision authority with the startup team- different from what we found in intrapreneurship and incubator approaches. Looking at examples*, we find companies like Microsoft Techstars, BASF, SAP (Innowerft) and eon already running excubation-like approaches. Some have even already set up own innovation companies for recurring excubation.
Knowing where you stand: Corporate Entrepreneurship Index
Every company endeavoring into corporate entrepreneurship activities needs a clear picture of where they should go and, even more importantly, where they come from. To help understand the individual baseline and design the most effective excubation approach, we typically start out by measuring an individual company against the corporate entrepreneurship index (CEI) along a variety of relevant dimensions. This helps identify areas with most need for action (e.g. too conservative incentivation of innovation teams) in comparison across industries. This analysis is then linked with our experience of operational excubation activities and translated into a clear set of actions (e.g. a newly designed incentive scheme to achieve better motivation and lower attrition within startup teams).
The CEI is derived for each individual company via a thorough analysis of existing corporate entrepreneurship approaches (internal data and external perception), stakeholder interviews and indexed comparison with a broad set of other players. It results in a 5-10 page management report, highlighting and detailing need for action and suggesting action steps.
We are pleased to discuss the above topics in more detail with you and spend time on the phone or in person to help you run successful corporate entrepreneurship initiatives! Please get in touch with:
excubate® corporate startups
Dr. Markus Anding and Tammo Ganders, MBA
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*excubate outside-in analysis and assessment, based solely on publicly available information, subject to change.