Time is now to disrupt and redefine traditional meaning of “Business Incubator”.
A business incubator in business speak is a company that helps new and startup companies to develop…
[link – wikipedia.com]
Issue I have with this wikipedia definition of Business Incubator is that it only helps “new” and “startup” companies to develop. This is not entirely true – at least not anymore.
We’ve always had this traditional mindset that only new and startup companies can benefit from being treated as incubators – to effortlessly adapt to exponential growth, soar high with innovation, breaking new ground, and disrupt industries.
Typically this is true, because large companies like Wal-Mart, GM, Ford (list goes on) have grown to this enormous size that does not allow them to easily change, adapt, or pivot. They are simply too large for ever-faster moving world of Technology to effortlessly assimilate, adopt current trends, or harder yet – set new trends themselves to gain competitive advantage.
You also probably know many companies that are not nearly as large as Wal-Mart, yet they struggle to change most simple of business processes due to bureaucracy, red-tape, self-imposed rules, tradition, and general brain-drain culture within, and quickly stifle any nuance of change.
What typically happens to large companies that fail to innovate?
Large company will acquire a smaller one, on the upswing where it sees potential for innovation, or complementary vertical viable to integrate within.
Large company will lazily stagnate out of existence (12 Major Retailers Closing Stores Like Crazy – time.com). Keep in mind that some retailers on this list are closing stores as they pivot to new business models, so not all is dark and gloomy for everyone on this list.
Large company will innovate within (Apple, Amazon, Google, Samsung) if they are well managed and know they must culture innovation to survive, and able to sustain innovation, and attract best talent.
What typically happens to medium size companies that fail to innovate?
Medium sized companies attempt to innovate within (become masters of all) or pivot (sometimes in wrong direction), are plagued by bad management and lack of foresight. Some can be successful correcting course, depending on their size, pre-existing models, and leadership – but these success stories are far few between. Whatever leads them down this path is cancer that can not be removed. Perfect example is current state of affair, and in my opinion eminent failure, of RIM.
Medium sized companies degrade, or are mismanaged to a point where value becomes insignificant, and are usually bought out for their IP or remaining market share. Nortel being perfect example, likely RIM down the road.
Medium sized companies can more easily create new strategic partnerships or acquire companies outside their core expertise to fill gaps and grow. This is where success becomes purely based on their ability to integrate and assimilate effectively – all becomes finesse of integration execution.
Medium sized companies can use external expertise such as vendor/service based companies that specialise, and provide products or expert services to augment internal expertise, fill gaps, enable growth, and provide competitive edge over other slower moving companies in same market space, and potentially experience modest steady or prolific growth.
I know my LinkedIn “friends” are going to love that last one! Every day I’m being pitched another great new service! In all honesty, there are definitely some amazing vendors/partners out there! For you amazing bunch, keep believing – you CAN change the world!
So, what typically happens to small size companies that fail to innovate?
Well, we all know 90% of startups fail – the rest are ones that all of us would love to be a part of 😉
So, innovation within? No Way!
We all know the metaphor of a large company being large like an elephant, or whale, or ….. pick any other large slow moving mammal of your choice and fill in the blank.
Having my core background in Technology shaped early on in my professional existence by Silicon Valley start-up, amongst many great benefits I’ve picked up – I’ve always been a huge proponent and advocate (for years!) in creating incubators within well established and mature companies.
Large, well established companies are rich enough (generally speaking) to incubate – provide capital, mentor, and guide small startups, which they create to serve their own purposes.
Wal-Mart Unveils ‘Store No. 8’ Tech Incubator in Silicon Valley
[link -bloomberg.com]
– Focus will be on virtual reality and automated delivery
– Jet’s Lore is leading overhaul of retailer’s e-commerce team
In my opinion, this is an amazing idea Wal-Mart has decided to pursue, and for me personally it means a lot – having my intuition, ideas, and pursuit of disruption validated by Mark Lore.
Why not just purchase startup instead? Well actually Facebook did just that with Oculus. This is however not meant to morph/augment their core business – Oculus is still in a way a stand-alone company. Idea is to use incubator you create with intent to give it direction, and support, and have it deliver something of value to your core business. For Wal-Mart, they require silver bullet for a showdown (that might actually even be late in game).
Wal-Mart is much better equipped to compete with Amazon – “Walmart can beat Amazon once it starts copying what Amazon does best”
[link – recode.net]
“We’ll be bringing in entrepreneurs and giving them capital,” said Lore. “And give them the opportunity to change the course of retail five or 10 years out.”
[link – forbes.com]
Success of this setup will really depend on how true Wal-Mart stays to treating this as venture capital fueled startup, and level of innovation they are able to attract (or will this be attempt at a straight copy?). There will still be real issues attracting right talent, and some integration or accommodation must take place in their core business to adjust, and it can not be five to 10 years out. Wal-Mart will definitely feel the strain, but will need to endure it!
I don’t trust Amazon will sit by either and let this unfold quietly. One thing is for sure – we are in for quite a show!
What about forgotten underdogs – Yahoo and Alibaba?