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TO THE POINT

This spring, NBIA will release a revised version of one of its perennial best-sellers. Read on for some excerpts from Best Practices in Action: Guidelines for Implementing First-Class Business Incubation Programs, 2nd Ed., to learn how several incubation programs around the world are implementing innovative industry practices.

Best Practices in Action: Excerpts from the all-new updated, revised and expanded edition

April/May 2010

In May, NBIA Publications will release Best Practices in Action: Guidelines for Implementing First-Class Business Incubation Programs, 2nd Ed., by Corinne Colbert, Dinah Adkins, Chuck Wolfe and Karl LaPan. The book is the culmination of a three-year effort to examine industry best practices and find examples of how incubators are putting them to work.

The book will be available through NBIA’s Bookstore soon, as well as at NBIA’s International Conference on Business Incubation in Orlando, Fla., in May. For now, though, here’s a look at some of the practices and examples you’ll find in the book’s pages.

Governance: Strategic Plan on a Page, Northeast Indiana Innovation Center, Fort Wayne, Ind.

Karl LaPan, president and CEO of the Northeast Indiana Innovation Center, has developed a strategic planning process that has the depth of a traditional strategic plan but not its (literal) weight; that engages his board without overwhelming them; and that ties strategic goals to the incubator’s mission and to a handful of measurable results.

LaPan’s Strategic Plan on a Page (SOAP) workbook walks users through a process to think through strategic goals as they relate to mission and to focus on the most important measurable outcomes. Then all the most important information is gathered on a single legal-sized sheet of paper.

The single-page approach has been especially helpful in keeping his stakeholders informed about NIIC’s progress. “Most of these people don’t understand the nuances of incubation, and they don’t want to,” he says. “They don’t spend enough time in the organization to get into the nitty-gritty.” SOAP highlights the three most important goals for the year; at each board meeting, LaPan reports on how the staff is progressing toward achieving each goal.

LaPan also ties staff performance to the plan. “In our goals for each year, every person’s key measurable goals are connected to one of the five key goals of the organization,” he says. “It’s great for building ownership, accountability and for simplifying thinking.”

That’s important, he says, because it’s easy for busy incubator managers and staff to focus so much on their daily to-do lists that they forget to consider the big picture. “We have to work on ourselves as agents of change and connect our to-do list to results,” he says. “If all we do is come in and do all the tasks of the day, we never have time to do that strategic thinking.”

And that’s what LaPan was after: a process that would allow him to think big. “Most of us put together strategic plans that are incremental — ‘We’re going to do 3 percent more than last year,’” he says. “SOAP encourages me to think in a dynamic way that says, ‘What if?’”

The result is that single page, which LaPan laminates and keeps on his desk. “Every morning I think, ‘What are the three to five things I can do today to advance us toward our objectives?’” he says. “SOAP ... helps me do that.”–Corinne Colbert

Staffing: Entrepreneurial Personality Tests, Powerhouse Ventures, Christchurch, New Zealand

When hiring management staff for its three incubation programs, Powerhouse Ventures looks for individuals with entrepreneurial skills, technical background and prior management experience with start-ups. Currently Powerhouse employs 14 people, nine of whom are management team members.

Since early 2006, the incubator has been using a commercially available entrepreneurial personality test to determine job candidates’ entrepreneurial traits. Powerhouse staff learned about entrepreneurial personality testing from a client company with expertise in recruitment screening tools. That client’s product wasn’t suited to Powerhouse’s requirements, so the incubator found another commercial product.

Powerhouse uses two testing options, ranging in price from NZ$50 per test for a basic report to NZ$480 for more extensive reports. One of the tests assigns a primary and a secondary color to each candidate on the basis of entrepreneurial traits. In brief, Powerhouse seeks red (highly entrepreneurial), blue (analytic) and yellow (people-oriented) individuals. Additionally, Powerhouse seeks individuals with a strong technical background and whose industry sector strengths complement those of other staff members.–Meredith Erlewine

Finances: Planning for Sustainability, William M. Factory Small Business Incubator, Tacoma, Wash.

The William M. Factory Small Business Incubator of Tacoma, Wash., prepares a five-year financial plan, which is approved by its board of directors. Updated annually, the financial plan includes a summary of actual expenses for two to three years and projections for five years. In addition, the incubator has a narrative business plan that is updated as needed, generally every two years. Updates include information on how the incubator has tracked earlier plans as well as projected future activities. The plan uses short paragraphs, numbering and bullets that ensure key information is easy to find.

The incubator has been in operation since 1986, so the business plan is clearly not that of a start-up operation. While it describes the incubator’s projected activities, including construction of a new Phase II facility (which began accepting clients in late 2009) and the new, expanded services it will offer, the plan demonstrates the program’s excellent achievements thus far. In doing so, it assures readers of the incubator’s history of sound management, thus giving confidence in its projections.

The five-year approach to its financial projections allows the incubator to prepare for future expenses — such as personnel benefits, increased telecom costs and building maintenance — and serves as a basis for increasing lease rates, which are currently raised by $1 per square foot per year. “This approach also enables the incubator to calculate — as part of our building expansion plan — which costs can be held to smaller incremental amounts versus which costs will increase proportionately to size” as the incubator expands, says Executive Director Tim Strege.–Dinah Adkins

Facilities Management: Transforming an Unused Store Into an Incubator, Innovation Depot, Birmingham, Ala.

The Innovation Depot offers 140,000 square feet of space in a former Sears store that sat empty for 20 years. The renovation emphasized features that would encourage networking and collaboration among clients and the public. Key features include:

  • A large atrium with an open staircase and glass-walls
  • A café with a gelato bar that opens into the atrium area and has its own parking and outside entrance
  • A courtyard garden with a boule court and a rooftop deck with tables and chairs, as well as informal sitting areas on the first floor
  • Shared meeting and board rooms with glass walls that may be covered with shades for privacy
  • The building’s original terrazzo floors, visible beams, cables and utilities in open areas, and other design features that both emphasize the history of the building and give it a sense of modernity
  • Large window walls and skylights to open up the building
  • A freestanding reception area
  • A “Main Street” corridor that extends from the parking lot entry through the “Town Center” to offices and conference rooms

Incubator clients and staff walking through the building’s public spaces can readily identify each other and grab informal opportunities to chat and share contacts, expertise and resources. And with 65 client firms and 400 employees in the incubator, there is a palpable feeling of “high energy.”

Williams-Blackstock Architects have won many awards for their work on the building, including the 2008 American Institute of Architects Honor Award for Alabama, the 2008 Overall Design in Architecture Award from the National Association of Industrial and Office Properties, and the 2008 Merit Award for Renovation and Adaptive Reuse from the Birmingham chapter of the American Institute of Architects.–DA

Client Entrance and Exit: 100-Point System, San Juan College Enterprise Center, Farmington, N.M.

At the San Juan College Enterprise Center, Director Jasper Welch expects clients to take responsibility for their own progress and success. To encourage their active participation in his program, Welch developed a 100-point scoring system to monitor client involvement.

“While [the system] does not guarantee business success, our results have shown that companies that are more involved in these business development activities tend to have greater success during the business incubation process,” Welch says.

Each client company is given an Excel spreadsheet listing 40 individual activities in nine areas: financials, operations, business plan, management, civic involvement, mentoring, marketing, time management and personal growth. For example, clients can get points for setting up advisory boards; attending incubator functions; taking classes; updating business plans; and undertaking insurance and banking reviews and assessments. Each activity is assigned a maximum number of points available for completing the activity. Some are as low as five points; the highest award is 55 points for completion of a NxLevel workshop. The maximum total points available for all activities is 520.

Clients self-score their sheets, which are reviewed by incubator staff. Staff can change the scores if they feel the client has over- or underrewarded points. At the end of the year, the three highest-scoring clients — usually with 250 to 450 points — receive awards at the annual Enterprise Center Incubation Celebration. Prizes have included paid company lunches, strategic planning retreats and overnight hotel accommodations.

Companies that score fewer than 100 points in the year are placed on probation. Failure to improve participation results in dismissal from the incubation program.–CC with DA

Leveraging Innovation: Commercialization Toolkit, Mississippi Technology Alliance, Jackson, Miss.

Originally developed for the NASA Regional Technology Transfer Centers, the Commercialization Toolkit has since been adopted by economic development organizations, business incubators and others around the globe. The model was developed by Randy Goldsmith, former president and CEO of the Mississippi Technology Alliance, which drives innovation and technology-based economic development for the state of Mississippi.

The model emphasizes product, process and service innovations that are investor-focused, high-growth, intensive (innovative enterprises that can shape the economy), and not lifestyle-based ventures. It uses an interactive and dynamic Web portal that assists in rigorously:

  • Identifying attributes of the potential entrepreneur
  • Quantifying the product’s risk profile and venture opportunity
  • Assessing the quality of the business plan from an investor’s perspective
  • Prioritizing commercialization strategies
  • Creating valuation model scenarios to assist entrepreneurs in negotiating with investors at each stage of investment (preseed; A,B,C Rounds; Mezzanine)

“Entrepreneurs need all the tools at their disposal to successfully commercialize high-risk, high-performance ventures,” says Goldsmith, who has employed the toolkit at several incubators where he has worked. “Entrepreneurs who can successfully navigate the process of moving from concept to market with the fewest number of missteps are the ones most likely to succeed.”

Using the toolkit, Goldsmith creates an independent and objective snapshot of each venture’s strong and weak points; potential stumbling blocks; and insights into the coaching, mentoring and product development path for the venture’s technology platform. But the tool is only as good as the data entered into it, Goldsmith warns. “The more honest the entrepreneur and his/her team can be in their answers and in the thinking process leading up to their answers, the more valuable the tool,” he says.

The toolkit also is the start of an ongoing discussion of the company’s potential and how the incubator can help. “At the same time, we often assess the venture and compare our readiness assessment to theirs,” Goldsmith says. “This facilitates a rich conversation about what it is going to take to move the venture forward in a significant way.”

The intensive nature of the toolkit is key to its success, Goldsmith says. While the odds of funding a venture in the United States average around 2 percent (one in 72), those completing the toolkit “stand a 50 percent chance of getting funded,” he says.–CC with Karl LaPan

Client Services: Kitchen Cabinet, Virginia Biosciences Development Center, Richmond, Va.

Clients of the Virginia Biosciences Development Center are matched with a heavily vetted and targeted group of local experts, dubbed “kitchen cabinets” after the nickname given to a group of unofficial advisors to President Andrew Jackson in the 19th century.

From the moment he meets a prospective client, Executive Director David Lohr starts thinking of the skill sets that start-up will need; by the time a company becomes a VBDC client, Lohr has a pretty good idea of what the company needs. Shortly after joining VBDC, the client meets with Lohr to hone its list of needs. Then Lohr combs his database of contacts to create a list of about 12 people — by name, position and company — who might be on the kitchen cabinet. He then goes over that list with the client to make sure the suggestions are satisfactory, both professionally and personally.

“If I have someone on there who’s a former brother-in-law, that’s a problem,” Lohr says. “Or someone they did business with before and it didn’t work out well, we don’t want that.”

With the client’s approval, Lohr sets out to recruit members of the kitchen cabinet from that list, starting with a potential chairman. He keeps working until he has eight people signed up. “With fewer than eight, you don’t get critical mass,” Lohr says. “More than nine gets unwieldy.”

Once Lohr has assembled the cabinet, Lohr’s assistant takes over, setting up two initial meetings within a four-week period. The first is a get-acquainted meeting and an opportunity for the client to introduce his or her company. Lohr facilitates the meeting to ensure that cabinet members don’t give advice, but only ask questions.

At the second meeting, the company updates the cabinet on developments, and then Lohr facilitates what may be the most important discussion of the process: asking cabinet members what they like about the company, what they don’t like and how the cabinet can help.

After those two meetings, Lohr steps back and lets the cabinet and the client take the lead. His assistant coordinates the meetings. Clients are encouraged to provide some kind of refreshments to show their appreciation for the free mentoring.

The kitchen cabinet model benefits everyone involved, Lohr says. The incubator manager gets free coaching and a bevy of engaged stakeholders, many of whom either have been or will be kitchen cabinet members. The cabinet members get to give back to the business community and, in the case of service providers, a steady pipeline of new customers. And the clients get a network of high-level connections they wouldn’t otherwise have met.

“When you bring that many bright people with the right perspectives together, you get great outcomes,” Lohr says.–CC

FEATURED SOURCES

Randy Goldsmith, former president and CEO, Mississippi Technology Alliance, Jackson, Miss.

Stephen Hampson, CEO, Powerhouse Ventures, Christchurch, New Zealand

Karl LaPan, president and CEO, Northeast Indiana Innovation Center, Fort Wayne, Ind.

David Lohr, executive director, Virginia Biosciences Development Center, Richmond, Va.

Susan Matlock, president and CEO, Innovation Depot, Birmingham, Ala.

Tim Strege, executive director, William M. Factory Small Business Incubator, Tacoma, Wash.

Jasper Welch, director, San Juan College Enterprise Center, Farmington, N.M.

Keywords: best practices, budget – incubator, client services – general, facility management, incubator management – general, staffing – incubator, strategic planning, technology commercialization

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