National Business Incubation Association; Your source for knowledge and networks in business incubation

Incubator sponsors, board members play important role

By Dinah Adkins

October 2008

Although incubator staff manage the daily tasks of running an incubator, board members, sponsors and other supporters also have a responsibility for ensuring the program’s success. These stakeholders should concern themselves with the following strategic issues to ensure that the incubator is able to help companies succeed for years to come.

  • If sponsors or supporters are represented on an incubator governing board, they (like staff) are legally bound by fiduciary responsibilities, including duties of care, loyalty and obedience. These responsibilities mean they must act in good faith, with the best interests of the organization in mind; give undivided allegiance to the organization (not putting personal interests above the interests of the organization); and act in accordance with the organization’s rules and bylaws. A board that fails to act on its essential responsibilities can doom a business incubation program.
  • Sponsors and supporters should consider whether sufficient board policies are in place. For example, does the board conduct a review to determine its relevance to the incubator’s current mission? Do board policies require term limits and rotation of board members? Can board members who don’t participate be replaced? Is conflict of interest appropriately managed? Is the full board committed to the program’s success?
  • Sponsors and the board also should have policies in place to cover how management would be replaced in the event of illness, departure or termination. Who has responsibility for reporting the departure of management? Who will be tasked with finding a replacement? Is the job description easy to access and up-to-date? Do sponsors or the board have a clear understanding of the priorities for hiring a manager? Effective succession planning will ensure future boards can hire appropriate management, capable of meeting the program’s mission.
  • Sponsors and supporters should examine the incubator’s organizational and reporting structure. For example, does the incubator manager report to another organization’s board whose concerns lie with the parent organization? Does he or she report to a single individual (mayor, dean, university vice president)? If so, it is possible that the larger organization’s board or a supervisor might abruptly withdraw support from the program or let it wither if a new dean or agency head is hired, if a financial crisis requires that decision-makers tighten purse strings, or if a politician sees the incubator as the work of an opposing political party. Incubators need sufficient champions who place high value on the incubation program and will work to ensure its continuance.

In short, supporters and sponsors should consider the long-term sustainability and continuance of the program and all the factors that could detrimentally impact its longevity. Investing in a program that is insufficiently funded, abruptly cancelled or mismanaged is a waste of resources.

Over the years, some high-performing incubators have been shut down or have been greatly diminished by not being structured for the long run. New mayors, university presidents or economic development agency chiefs; political issues; changes in incubator management; funding cycle downturns; and poorly performing boards – all have resulted in undermining or destroying quality programs. There are no guarantees of an incubator’s long-term survivability, despite its excellence in serving client companies, unless supporters and sponsors have thought of organizing and building a strong program that will stay around for the future.

Keywords: board of directors, sponsor, stakeholder relationship management

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