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The use of corporate business incubators in the knowledge economy

M.A. / The impact of the New Economy on the enterprise is major and the change drivers required for success are pervasive and significant. At the same time traditional geographic boundaries to the flow of information and commercial transactions disappear. To position for success, the requirement to develop the capability to manage risk and operate under high levels of uncertainty becomes as important as the capacity for change. This demands a paradigm shift in management’s approach away from “the answer” to an approach which allows for portfolio management and the ability to investigate, fund and manage approaches to multiple strategic and operational options. The strategic challenges lies in when to lead and when to follow, the organisational challenge then becomes building flexibility, environment-sensing capabilities and an internal capacity to develop, nurture and harness knowledge and innovation. Whilst the benefits of leveraging innovation as a strategic business growth driver is accepted, the management of the process of doing so is manifestly difficult in most enterprises. This is due to outdated management processes and organisational structures, cultural prejudices caused by the enterprise being more comfortable with core activities and a lack of adequate skills within the enterprise to research, develop and manage innovative ideas to fruition. Enterprises can manage this process of leveraging innovation in a number of ways by inter alia, staff management via continuing education and training, a corporate culture with such characteristics as: “Off-line” innovation time, internal competition, knowledge management tools, cross- functional meetings, a knowledge capture Intranet, etc. and an organisational accountability which relates to a well-defined process that affords the enterprise and its employees the opportunity to move ideas across organisational boundaries without being inhibited by the usual organisational politics and turf-protection. An approach to this is via strategic internal consulting groups or a “New Ventures” division – essentially entities set up to incubate and manage new business opportunities Such a new venture division or business incubator requires as a critical component an established process and evaluation methodology to effectively manage innovation initiatives. This research will focus on the development, application and management of such a new ventures division along the structure of a business incubator. It is an accepted adage that all “healthy” enterprises generate and use knowledge, but this is, as with the management of innovation, easier said than done. Whilst many enterprises will simply hire smart people and leave them to their own devices, research have indicated that successful knowledge generation initiatives not only address the processes but also focus on the team structure and the internally on the working circumstances. Businesses faced with disruptive technologies such as the Internet find it very difficult to redesign or rearrange their organisational structures to face the challenges of the New Economy. Also there has always been a measure of distinct tension, between the boardrooms of enterprise and the technical, scientific or other resources on which the former depends for the creation of new wealth – the net result is that the role of the traditional “Corporate R&D” is being diminished. There is a strong perception that views the arrival of the incubator as an approach for corporates / enterprises to set this mindset apart and to get some speed, vitality, action and urgency back into enterprises inhibited by, inter alia, excessive bureaucracy. Although the concept of incubators has now surfaced in Europe and in South Africa, it is not new. What today underscores the interest is the success that enterprises like Idealab!, eToys, GoTo.com and NetZero achieved. The more comprehensive intra-enterprise or corporate incubators offer a range of services that exceed that of the traditional venture capitalist. Corporate incubation grew out of the realisation that innovation and entrepreneurship were severely limited by the typical corporate environment. In addition enterprises realised that they were losing their brightest talent and best innovative ideas as people left to start their own businesses. To this threat they responded by offering employees’ incentives to either build their ideas as enhancements to the current business, extensions or entirely as new spin-offs. These incentives were modelled on share participation, a "safe" best practice rich environment and access to corporate resources that in many instances culminated in corporate business incubators. Corporate incubators constitute a logical extension to knowledge management, innovation and R&D, as a means of profiting from intellectual capital and extending competitive advantage. Indeed it has been said that the only sustainable competitive advantage is continuous innovation. Incubators of various types are sine qua non with the dot.com start-up ventures towards the latter part of the nineteen nineties. It was viewed as one of many approaches to capitalise on knowledge available and to allow for the fast tracking of innovative advances. Many of these start-up incubators failed and incubators became looked upon as not being the ideal vehicle for innovative quick-to-market and thus first mover advantage. Yet, the very nature of the approaches used in an incubator lends it to the harnessing of knowledge and innovation in an enterprise which can be applied as part of a process to gain a competitive advantage from engaging in such a process.

Identiferoai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:uj/uj:14795
Date15 January 2009
Source SetsSouth African National ETD Portal
Detected LanguageEnglish
TypeThesis

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