Flirting with high flyers.
Google replaces the production line.
Imagine that you are the boss of an engine factory. You have your own, clear vision of the engine of the future – big, stationary and for highly-specialised applications. Your production manager, however, has an entirely different idea: he dreams of small, mobile and extremely versatile engines. Would you give your production manager the freedom to develop his ideas?
When Nikolaus Otto, the owner of the Deutz gas engine factory, fired Gottlieb Daimler in 1882, he could never have dreamed exactly who he had just thrown out – an absolute high-flyer and the father of personal mobility. Would Nikolaus Otto have acted differently if he had known that Daimler was in the process of changing his business model from a business-to-business approach to a business-to-customer model? Would he have changed his mind if he had had the chance to try out Daimler’s ideas in an in-house incubator and see them achieve maturity?
Stabilisers for ideas.
In effect, all parents are incubators, for instance when they teach their children to ride a bike. The bolt a pair of stabiliser wheels to their first bikes, ride beside them as a role model and motivate them to carry on – even if they fall off every now and again. When the children have learned how to ride without help, they astound their parents with BMX stunts that they could never have dreamed were possible. In principle, incubators are just like stabilisers, but for ideas rather than bikes. An incubator hatches young enterprises that are, so to speak, still in the egg: It offers them protection and optimum conditions for growth in their formative phases. They are established to kindle the unexploited potentials of innovation drivers within the concern. In them, employees are, for example, given the opportunity to work on their own ideas and projects. Red tape is removed, barriers are lowered and these talented colleagues are given all the resources they need: mentoring, places to work, network contacts, time and financial support.
Incubators are not simply window-dressing to make a concern look more innovative. In the globalised present day, where entrepreneurial thinking and willingness to accept and adopt change are more important than ever before, incubators have become an essential factor of life. Between Stuttgart, China and Silicon Valley, concerns battle to get the best developers, knowledge experts, manufacturing specialists and innovation drivers onto their own teams. They need some form of intrinsic motivation before they can develop their full potential and put it to use. Incubators are where they can find this motivation.
The 80/20 rule.
Not so long ago, Area 120 Google’s own in-house incubator was hot news. The name relates to Google’s so-called 20-per cent rule. This says that company employees should dedicate 20 per cent of their time to their own project ideas. Individual teams were given an opportunity send in their idea as an application for a place in the incubator.
Promising ideas would be given the financial backing to be realised in a startup with Google as a stakeholder. The objectives of this in-house incubator are to help Google to tie talented employees to the concern and simultaneously guarantee access to innovative new services, products or business models.
Germany still rides with stabilisers.
If you count all the state-sponsored, university and private enterprise startup centres, there must be in the region of 10,000 incubators around the globe. Sadly, only around 500 of them are located in Germany. Nevertheless, it is good to see that they have recently been popping up like mushrooms more or less overnight. The best known of them are: 1st Mover, Greenhouse Innovation Lab from Gruner + Jahr, Telekom’s hub:raum-incubator Berlin, main incubator from the Commerzbank, Media Lab Bayern state-sponsored by Bavaria, Project Flying Elephant founded by the early-stage-investor WestTech Ventures, Rheingau Founders set up by Rheingau Ventures and Mountain Partners and STARTPLATZ, a venture run by Gräf Holding. The projects differ widely in their focal points and the extent of financial backing. Telekom’s Hub:raum incubator provides up to 300,000 euros per team, while, at the other end of the scale, the incubators of the Commerzbank main incubator have to make do with a meagre 25,000 euros
Disruptive and paperless.
Imagine you were an established insurance company. You are highly respected for your integrity and dependability. You are ranked among Germany’s top five insurers. You have a problem – filling out the forms for a policy simply takes too long and is losing you potential customers. How can this problem be solved? Step one: Do away with the laborious forms. Step two: Find a partner who can profit from your image, who needs your core competencies and makes you more agile and digital. In short, someone who can create a real-life application scenario for taking out insurance with a single click. An innovation that generates a win-win situation for everyone involved. Drivy and Allianz SE have made it happen. The insurers started a collaboration with the peer-to-peer car-sharing service and the new, specially-developed, ad hoc insurance policy is now selling like hot cakes. The policy includes third-party liability, third party fire and theft and fully comprehensive insurance with a deductible. On top of this, rental customers also get a free 24-hour breakdown service. Suddenly, Allianz is a big name in a completely new market segment – and that’s what the first, successful step into digitalization can look like for a major concern. At the same time, it’s also precisely one of the main reasons why concerns need incubators: in addition to increased awareness and a better brand image for the concern, it also brings the creation of new products and services and valuable insights into the workings of startups and new workflows.
Out with the stabilisers, get up to warp speed.
PS: In Internet literature people seem to like tarring incubators and accelerators with the same brush. It would be simply imprecise to unknowingly describe Startup Autobahn as an incubator. This accelerator programme from Daimler AG has been actively supporting startups in many ways since 2016. Metaphorically speaking, incubators may be likened to training programmes like Daimler’s CAReer programme. A place where participants can above all sharpen their profile. Translating this into terms applicable to incubators, it means that participating teams must sharpen the cutting edge of their business idea in the course of a sponsoring programme. In contrast, accelerators can be better compared with assessment centres. Here, a committee or panel discusses how a free position in the concern can best be filled and subjects candidates to a series of tests. Translating this into terms applicable to accelerators, it means that startups first have to make a presentation to a committee or panel to have their ideas assessed. This is familiar, for example, from the Selection Day of the Startup Autobahn Accelerator. Here, teams selected in an earlier round present their ideas to an audience of experts in a brief pitch. The aim of the pitch is to convince the jury and the audience that the business model is a viable proposition.
In summary, this means that accelerators sponsor and support existing startups and their business models when they are considered to have achieved a certain degree of market maturity. These business ideas no longer need stabilisers to keep them upright, they are already on the way to learning how to play the professional games the grown-ups play. For instance, when a company from abroad wants to strike root in the German market. What they want is a warp drive to expand their universe. These startup accelerators are frequently the first customers for the products developed and the key that unlocks the doors to global markets. In addition, they may provide start-up funding, coaching, working spaces, and assistance with PR and marketing activities. In return for this, the providers of most programmes demand a stake in the startups they sponsor.