Business - Incubator Business - Evolution HowDo 20240312 V7 - 1

Business Evolution
This Free Masterclass Helps You Drive Innovation-Led Growth In Your Business
Business Incubator
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Overview: Business Incubator
What does the masterclass cover?
→ Why Participate? • Step 3: Select Program Length • Step 8: Conduct a Post Review
→ Underlying Theories in Support • Step 4: Select the Location → Incubator Metrics and KPIs
→ How to build an Incubator • Step 5: Select the Learning Program → What Does Success Look Like
• Step 1: Select Model • Step 6: Select your Tenant
• Step 2: Select Industry Focus • Step 7: Manage your Incubator
This masterclass will reveal how business incubators can significantly reduce your operational risks and
How does this help you? provide essential resources, such as mentorship and network access, to navigate the early stages more
effectively; whether you are a startup or an internal idea at a Fortune 50 company.
Business Incubators connect you with experts, investors, and entrepreneurs, providing a structured
How does this
support system to evolve early-stage ideas into market-ready businesses quickly, ensuring you lead in
accelerate your growth?
technology and customer growth.
Incubators provide customer discovery and validation, helping tailor your offerings to enhance user
How does this
delight your customers?
satisfaction and engagement, ensuring your products meet customer needs effectively enabling early-
stage traction and growth.
How does this Incubators enhance your team's innovation and collaboration, equipping them with the skills and clarity
empower your team? to creatively overcome challenges and grow your business.
Where is this Masterclass The free masterclass and playbook are available at:
available? https://howdo.com/masterclass/tools/business-incubator/
Business Evolution | Version 7.1 | Created by West Stringfellow https://www.linkedin.com/in/weststringfellow/ | Access videos, full text, & more topics at HowDo.com. Slide 2 of 30
Business Evolution
MASTERCLASSES
Overview
Slide 3 of 30
Business Evolution Teaches You Innovation – for Free
What Is Innovation?
Innovation is the process of introducing new solutions to your business.
Solutions can be products, platforms, processes, services, technologies, experiences, and brands.
How Does Innovation Help You?

Innovation helps business leaders:
• Grow revenue by identifying untapped markets and creating new solutions. E.G.: Amazon created the cloud computing category by launching AWS.
• Decrease operating costs through automation, continuous improvement, supply chain optimization, and efficient resource use. E.G.: Toyota reduced
waste and costs with lean manufacturing and just-in-time inventory.
• Delight customers by improving customer service, anticipating needs, and personalizing experiences. E.G.: Netflix keeps users engaged with AI-based
content recommendations, increasing engagement and reducing churn.
• Mitigate risks by proactively identifying and addressing potential threats. E.G.: Siemens uses AI-powered sensors to predict maintenance and prevent failure.
• Empower teams to increase productivity by automating tasks while accelerating creativity. E.G.: Google’s innovation policy led to the creation of two of their
most popular products: Gmail and AdSense.
• Attract investors. Investors prefer innovators. E.G.: The most innovative companies are consistently the most valuable companies: Alphabet (Google), Amazon,
Apple, Meta (Facebook), and Microsoft.
Business Evolution Gives You a Comprehensive Curriculum
These Free Masterclasses Walk You Step-By-Step Through the Innovator’s Journey
01 02 03 04
Mindset Plan Tools Team

Develop the mindsets Grow your business by Boost growth using Build talented teams that
that drive business designing solutions that proven tools from top act with urgency to drive
innovation and growth. customers need. companies. growth.
• Growth Mindset • Customer Analysis • Key Performance Indicators • Talent Acquisition
• Resilience • Competition Analysis • Weekly Business Reviews • Corporate Culture
• Continuous Learning • Market Analysis • Product Management • Team Experience
• Data-Driven Decisions • Solution Analysis • Startup Accelerator • Mentorship
• Customer Obsession • Business Incubator • Communities of Practice
• Mergers and Acquisitions
You Are Here • Research and Development
Accelerate your growth with educational videos, full text, and masterclass updates.
Register today on https://howdo.com or follow HowDo on YouTube, LinkedIn, Facebook, X and Reddit
Business Evolution was Created by an Innovation Expert
West Stringfellow created Business Evolution. Dear Innovator,
West has over 27 years of experience growing startups and To help you grow your business using innovation, I’m excited to offer you
HowDo’s free Business Evolution Masterclasses.
Fortune 500s with innovation:
These Masterclasses contain actionable insights that you and your team
• Innovation Leader can use to grow your business today. They distill the growth formulas
used by the world’s most innovative companies into step-by-step guides
• Amazon: Senior Product Manager designed to transform your business ideas into profitable realities.
• PayPal: Senior Director, Product & Platform Innovation
Having spent nearly three decades navigating the highs and lows of
• Rosetta Stone: Chief Product Officer innovating in Fortune 500s and bootstrapped startups, I designed these
Masterclasses to work for your business, regardless of size or budget.
• Target: Vice President, Innovation and Entrepreneur in Residence
I am sharing these Masterclasses as
• Techstars: Created & led the Techstars + Target Startup Accelerator part of my ongoing commitment
• Visa: Vice President, European eCommerce & Innovation to democratize innovation.
• Inventor: Awarded five patents for advertising, payments, and social technologies Wishing you the very best,
• Entrepreneur: Sold two patents to a Fortune 50 company

• Coach: Empowered hundreds of entrepreneurs, executives, and teams
West Stringfellow
West founded HowDo in 2017 to democratize innovation. Founder & CEO, HowDo
Creator, Business Evolution
Business Incubator
Masterclass
Slide 7 of 30
BUSINESS
INCUBATOR
CONTENT
→ Compared to Other Tools
→ Why Participate?
→ Underlying Theories in Support
→ How to build an Incubator
Step 1: Select Model
Step 2: Select Industry Focus
Step 3: Select Program Length
Step 4: Select the Location
Step 5: Select the Learning Program
Step 6: Select your Tenant
Step 7: Manage your Incubator
Step 8: Conduct a Post Review
→ Incubator Metrics and KPIs
→ What Does Success Look Like
Business Evolution | Version 7.1 | Created by West Stringfellow https://www.linkedin.com/in/weststringfellow/ | Access videos, full text, & more topics at HowDo.com. Slide of 30
INCUBATORS COMPARED TO OTHER TOOLS
Comparison of startup support institutions
Incubators Angel Investors Accelerators Hybrid
Duration 1 to 5 years Ongoing 3 to 6 months 3 months to 2 years
Cohorts No No Yes No
Investment; can Investment; can

Business Model Rent; non-profit Investment
also be non-profit also be non-profit
Competitive, Competitive,
Selection Non-competitive Competitive, ongoing
ongoing cyclical
Venture Stage Early or late Early Early early
Ad hoc, human Various incubator and

Education None Seminars
resources, legal accelerator practices
As needed Intense, by self Staff expert support,
Mentorship Minimal, tactical
by Investor and others some mentoring
Venture Location On-site Off-site On-site On-site
Source: Brookings
INCUBATORS COMPARED TO OTHER TOOLS
Typical Program Duration is between 3-6 months Incubators operate over a longer cycle
than accelerators
→ They interact with startups
→ Provide physical space
→ Offer education programs, mentorship, and networks. → Startups participating in these programs tend to work on more experimental
ideas and require more time to develop their product and business model.
But the goals and operation of these
programs are much different.
→ Because of these traits, the majority of incubators are non-profits, often
working with local governments or universities.
Don’t be discouraged of longer cycles!
→ Non-profit incubators succeed in building innovation ecosystems in local

communities.
→ Corporate incubators strengthen innovation ecosystems inside

companies.
→ Incubators also help companies commit to long-term strategy in a world

focused on short-term gains.
Source: Brookings
WHY PARTICIPATE IN AN INCUBATOR?
Benefits for Startups
There is a long-term commitment to experimentation is essential if
companies are to stand a chance. Incubators can house these types of
ideas. → Possible access to later venture funding
→ Lower personal and financial risk
Business incubators leverage the unique advantages and perspectives → Ready-to-use infrastructure such as office space, IT tools, and
of startups, which established companies often lack. administrative business support services
→ Mentorship and training, which can include individual coaching,
presentation, and negotiation skills
→ Assistance with business management, technology, and legal services
→ The opportunity to build relationships with potential investors, suppliers,
and industry experts
Benefits for Corporate Sponsors

→ Established companies that sponsor an incubator stand to gain new
business activities and competitive advantages
→ Increased visibility as an innovator and the ability to attract top talent
→ Innovation development from internal and external relationships
→ A controlled investment opportunity
→ Access to new ideas, competencies, and technologies and internal
knowledge and technology transfer
→ Reduced time to market for new product commercialization
→ An extended organizational strategic vision
Source: Wiggins & Gibson, HBR
WHY PARTICIPATE IN AN INCUBATOR?
The figure, below, summarizes the rationale for business incubators, highlighting the value derived from networks
in terms of knowledge resources, access to financing, and community support.
Concise program milestones On-site learning

with clear policies & procedures and leveraging of resources
Access to financing
Tie to a university
and capitalization
Selection process for tenants Incubator In-kind professional support
Perception of success Community support
Entrepreneurial Education Entrepreneurial networks;

regional, national, international
Source: Wiggins & Gibson, HBR
UNDERLYING THEORIES IN SUPPORT OF THE BUSINESS INCUBATOR CONCEPT
Mathew J. Manimala and Devi Vijay of the Indian Institute of Management Bangalore presented
seven theories that explain and conceptualize incubator functions:
Structural Support Social Network Dyadic Theory Cluster Theory

Theory Theory
Entrepreneurs “operate in Builds on structural support
New ventures can overcome The effect of internal
an inter-dependent theory: similar high-tech
common problems with and external network
co-production dyad” with firms in the same value
startups if costs for connections and social
business assistance chain cluster stimulate
infrastructure and overhead networks increase the client
provided by the sponsor. faster knowledge sharing
is reduced and pooled. firm’s network density and
and growth using each
support the development
other’s capabilities.
of the startups
New Venture Real Options Resource-Based

Creation Theory Theory View
Network access and The selection of startups or Incubators provide both

community support for entrepreneurs for the tangible and intangible
entrepreneurs increases incubator creates an option, resources to client firms.
their legitimacy and chances and the injection of required
of venture funding and resources, monitoring, and
survival. assistance are also options
Source: Aspen Institute
HOW TO BUILD AN INCUBATOR
3 “For incubators to live up to their full economic
potential, they need to overcome two pitfalls:
2 they need to provide real value, not just office
space, and they need to measure success in
Select the Select the more than just outside funding.”
Industry Program
Focus Length 4
2013
Select the
Incubator Select the
Location
1 Model
Conduct a
Select the
Learning
Program
Post-
Program
8
Review
Select your Manage your

5 Tenant Incubator
Building an Incubator is a multi-step process to

foster a successful environment for its startups
while ensuring the program itself is effective 7
6
Source: HBR
STEP 1. SELECT THE INCUBATOR MODEL
Internal Incubator/ Accelerator Developing Intrapreneurs
→ Most common → Includes both internal and external → Entrepreneurial teams incubate
→ Built inside parent corp., startups entrepreneurs solutions and test business models
are spun out after graduating within the organization
→ Corp receives equity ownership → Appropriate when host
→ Entrepreneurs recruited to manage organization wants access to early- → For companies that can’t leverage
startup stage concepts, has metrics set up, existing business units
→ Increase chance of entrepreneur open to risks
success
External Pay-It-Forward New Work Environments Testing
→ Host organizations find external → Host provides facilities and training → Sponsoring company provides no
entrepreneurs infrastructure
→ Exposes teams to actual industry
→ Provide location, infrastructure, problems with support to solve → Intended for corporation that want
and resources them to test startups without risk of
creating an external startup team
→ Cooperation level varies → Sponsoring host receives no equity
Source: PwC, TechCrunch, Henry Chesbrough, Department of Commerce, HBS
STEP 2. SELECT THE INDUSTRY FOCUS
Having an industry focus ensures the available skills and resources are optimized and targeted
Trends
→ It is increasingly common for Incubators to be oriented

toward knowledge-intensive activities
→ Universities are increasing involvement, joining

customers and suppliers as valuable contributors to
incubator projects
→ Mixed use or general-purpose incubators that are not

within a specific industry nurture growth of all types of
companies without fitting into any specialized role
Source: Bloomberg, Springer Link
STEP 3. SELECT THE PROGRAM LENGTH
Corporate Incubators, unlike accelerators, don’t have a strict duration
Examples
→ Duration is based on how long the

→ Many incubators require 1–2-year time commitment, including
host expects to see value.
training and workshops.
→ As startups may not see returns for
→ Entrepreneur teams at Polytechnic Institute at New York
4-5 years, the must demonstrate
University spend about 18 months in the program.
some other quantifiable milestone
or accomplishment within 18
→ SPARK Regional Incubator in Ann Arbor is configured to have
months.
companies graduate in 2-3 years, after startups commit to a
one-year lease that is renewed on achieving agreed upon
→ This is due to the host’s typical
milestones.
budget cycle as budget operators
look for positive indicators.
STEP 4. SELECT THE LOCATION
Unique
combination
Early-stage of processes,
entrepreneurs services,
support infrastructure
and human
resources
Bundled Development While incubators can thrive

package of of raw ideas
services into viable in any location, it may be optimal
businesses to be located close physical
resources, knowledge, networks
and events - especially in the case
of virtual incubators
Process- Independence
oriented from physical
operational infrastructure
model and geographical
location
Virtual Business
Incubation
Source: World Business Incubation
STEP 5. SELECT THE LEARNING PROGRAM
Learning programs are a blend of the services incubators contribute with the needs each startup requires
Services Incubators Contribute Startup Needs
→ Revenue growth → Specific knowledge

→ Employment or job creation → Specific skills
→ Venture funding → Resources
→ Networking and alliance-building → Business proposal
Diagnosis of Needs
Result: Tailored learning experience for each startup
Source: Campbell, Kendrick, and Samuelson
STEP 6. SELECT YOUR TENANT
There are four types incubator tenants, and the host company must seek the right fit
Anchor Tenants Long shots
→ Mature entrepreneurs → Early-stage startup

→ Can contribute financially to incubator → Lack resources
→ Do not require host input → Require nurturing environment
→ Require co-production with host
Up-and-comers Superstars
→ Ahead of long shots in terms of maturity → Matured beyond up-and-comers
→ Run by entrepreneurs aware of resource gaps → Minimal co-production with host
→ Require co-production with host → Expected to graduate imminently
→ Role models for long shots & up-and-comers
Source: Tavoletti, Springer Link
STEP 7. MANAGE YOUR INCUBATOR
Incubators require strategic management, primarily because of their long-term horizons
Successful Incubator Leadership adopts following practices, The bigger the budget, the greater the success.
starting by hiring a strong entrepreneurial leader Breaking this into revenue vs expenses
Revenue
→ Receiving a large portion of revenues from client rent
and service fees is positively correlated with outcome
measures
Review client
Mission Charge for rent,
needs at entry
Statement service fees
stage
Expense
→ Investing more in staffing and program delivery, relative
to building maintenance or debt servicing, results in
improved client firm outcomes
Select
Showcase
clients based
clients to
on cultural fit,
community /
success
funders
potential
Source: US Department of Commerce, Aspen Institute, Emerald and Insight
STEP 8. CONDUCT A POST-PROGRAM REVIEW
Incubators (and accelerators) are considered successes based on how the program is managed after startups graduate.
Networks and relationships make or break these programs.
Both accelerators and incubators start to create

value after they have had time to develop
“In addition, the business models of many for-profit dot-coms failed

to consider that, on average, it takes slightly more than three years
→ Incubators are harder to
to successfully incubate a client firm—and perhaps up to six years
quantify in their early stages or more for that firm to realize significant growth.
→ Typically takes 4-7 years to However, interviews with former managers of dot-com programs
develop suggest that their business plans speculated that clients would
begin to turn a profit in 12 to 18 months—or even as few as six
→ To mitigate risks and get buy-in months. This flaw in the model most likely contributed to the rapid
from the board, incubator decline of the dot-com incubator.”
leaders must align implicit
benefits with business goals
2011
Source: US Department of Commerce, CB Insights
INCUBATOR METRCIS AND KPIs
Research is mixed when it comes to measuring success of incubators
Paper Findings
Eric Harwit, “High Technology Incubators: Fuel for China’s New Entrepreneurship,” 2002 87 percent of incubator graduates stay in business
Deborah M. Markley and Kevin T. McNamara,

Incubators create jobs and sustain U.S. businesses
“Economic and Fiscal Impacts of a Business Incubator,” 1995
Fidelis A. Ayatse, Nguwasen Kwahar and Akuraun S. Iyortsuun, There are no acceptable performance measures
“Business Incubation Process and Firm Performance: An Empirical Review,” 2017 in the incubation literature
Michael Schwartz, “A Control Group Study of Incubators’ Impact to

Incubators are homogenous and cannot be compared
Promote Firm Survival,” 2010
José L. Barbero, José C. Casillas, Mike Wright, and Alicia Ramos Garcia, “Do
Output differs depending on the type and quantity of incubators
different types of incubators produce different types of innovations?,” 2014
Sean M. Hackett and David M. Dilts, Incubators can be analyzed with five outcome states
“A Systematic Review of Business Incubation Research,” 2004
Chaffik Bakkali, Karim Messeghem and Sylvie Sammut, Suggests the balanced-scorecard by Harvard Business School
“Pour un outil de mesure et de pilotage de la performance des incubateurs,” 2013 as a measure of incubation success
INCUBATOR METRCIS AND KPIS
Without objective measures,
firms must create their own:
→ revenues
→ finance
→ venture capital funds
→ graduation from incubation program
→ firm survival
→ networking activity
→ innovative firms
→ organizational or firm growth
→ job creation
→ sales growth
→ profitability
→ patents registered
→ number of patents application
→ alliance
→ technology transfer
→ employment growth
→ technology growth or development
→ research and development productivity
→ ability to share knowledge and technology
→ high-tech employment
WHAT DOES SUCCESS LOOK LIKE FOR A CORPORATE INCUBATOR
Financial
The balanced scorecard approach determines what

overall success of the company looks like and Internal
derives measurable activities to reflect these goals. Customer Vision & Business
The activities are categorized by strategic focus: Strategy Processes
Learning
& Growth
Source: QuickScore, Hackett and Dilts, Aspen Institute
WHAT DOES SUCCESS LOOK LIKE FOR A CORPORATE INCUBATOR
What Success for the Startup Looks Like:

What Success for the Non-Profit
There are five mutually exclusive outcome states, Incubator Looks Like:
though what is considered a successful exit differs by startup
The long-term goal of a non-profit incubator is to set up an entity

The incubatee is surviving that can sustain the creation of value in a local economy.
01 and growing profitably.
Impact of the incubator can be measured by tracking jobs,
revenue, return on investment, and social impact.
The incubatee is surviving and growing

02 and is on a path toward profitability.
The incubatee is surviving but is not growing,

03 not profitable, or is only marginally profitable.
Incubatee operations were terminated while

04 still in the incubator, but losses were minimized.
Incubatee operations were terminated while

05 still in the incubator, and the losses were large.
Source: QuickScore, Hackett and Dilts, Aspen Institute
Congratulations on Completing the Masterclass!
Your path to innovation doesn't stop here — it's just getting started.
Click below to continue learning with free world-class innovation masterclasses.
01 02 03 04
Mindset Plan Tools Team

Develop the mindsets Grow your business by Boost growth using Build talented teams that
that drive business designing solutions that proven tools from top act with urgency to drive
innovation and growth. customers need. companies. growth.
• Growth Mindset • Customer Analysis • Key Performance Indicators • Talent Acquisition
• Resilience • Competition Analysis • Weekly Business Reviews • Corporate Culture
• Continuous Learning • Market Analysis • Product Management • Team Experience
• Data-Driven Decisions • Solution Analysis • Startup Accelerator • Mentorship
• Customer Obsession • Business Incubator • Communities of Practice
• Mergers and Acquisitions
You Are Here • Research and Development
Accelerate your growth with educational videos, full text, and masterclass updates.
Register today on https://howdo.com or follow HowDo on YouTube, LinkedIn, Facebook, X and Reddit
West’s Closing Note to Innovators
For those driven by a passion to make an impact, solve large problems, and reap significant rewards,
successfully innovating stands as one of the most exhilarating and fulfilling pursuits. That said, just a friendly reminder:
Knowledge is Power. To empower you, I am sharing the knowledge I have gained from 27+ years of hands-on experience. Please do
not stop learning here.
→ Empower yourself with the right knowledge. Do not rely solely on my experience and knowledge. To determine what is right for you, your team, your
business, investors, and customers, do your own research. To help, I have curated thousands of links in Business Evolution’s Masterclasses. Use this as
the foundation for your further research.
→ Seek multiple experienced perspectives. Follow relevant experts who share their insights on YouTube, LinkedIn, X, StackOverflow, Reddit, GitHub, or
wherever they share their insights. The more you know, the more likely you are to make the right decision.
→ Stuck? Get help. Others have solved your problem before. They may have even written about it. You may be able to hire them. Or use a generative AI to
brainstorm (I'll show you how). In my experience, the joy of the journey is finding answers, learning and growing.
Innovation takes commitment and requires real time, money, and effort. INNOVATION IS HIGH RISK
→ Innovation involves real risks. If you fail, you risk your professional reputation, your credibility, your mental health, and your personal wealth.
→ Everyone fails at some point on their journey. But remember, every great success story 🎉 has its chapters of challenges overcome.
→ To reduce the risk of failure, hire experts and use data-driven decision making, customer-obsession, long-term planning, and continuous improvement.
→ When you fail, learn quickly from the lessons, ensure you don't repeat the mistakes, and forge ahead only if you assess it is safe to do so.
Time is our only non-renewable resource. Use yours wisely.

→ Please take time for yourself – especially your health and loved ones. It’s easy to get lost in innovation’s allure and lose track of what truly matters.
“Best Wishes Innovating! I hope the Business Evolution Masterclasses help you on your journey.” – West Stringfellow
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Business Evolution

Brought to you by:

How Does Innovation Help You?

Mindset Plan Tools Team

• Entrepreneur: Sold two patents to a Fortune 50 company

→ Underlying Theories in Support

→ How to build an Incubator

Step 1: Select Model

Step 2: Select Industry Focus

Step 3: Select Program Length

Step 4: Select the Location

Step 5: Select the Learning Program

Step 6: Select your Tenant

Step 7: Manage your Incubator

Step 8: Conduct a Post Review

→ Incubator Metrics and KPIs

→ What Does Success Look Like

Incubators Angel Investors Accelerators Hybrid

Duration 1 to 5 years Ongoing 3 to 6 months 3 months to 2 years

Investment; can Investment; can

Venture Stage Early or late Early Early early

Ad hoc, human Various incubator and

Venture Location On-site Off-site On-site On-site

Don’t be discouraged of longer cycles!

→ Non-profit incubators succeed in building innovation ecosystems in local

→ Corporate incubators strengthen innovation ecosystems inside

→ Incubators also help companies commit to long-term strategy in a world

Benefits for Corporate Sponsors

Source: Wiggins & Gibson, HBR

Concise program milestones On-site learning

Selection process for tenants Incubator In-kind professional support

Perception of success Community support

Entrepreneurial Education Entrepreneurial networks;

Source: Wiggins & Gibson, HBR

Structural Support Social Network Dyadic Theory Cluster Theory

New Venture Real Options Resource-Based

Network access and The selection of startups or Incubators provide both

Source: Aspen Institute

Select your Manage your

Building an Incubator is a multi-step process to

External Pay-It-Forward New Work Environments Testing

Source: PwC, TechCrunch, Henry Chesbrough, Department of Commerce, HBS

→ It is increasingly common for Incubators to be oriented

→ Universities are increasing involvement, joining

→ Mixed use or general-purpose incubators that are not

Source: Bloomberg, Springer Link

→ Duration is based on how long the

Bundled Development While incubators can thrive

Source: World Business Incubation

Services Incubators Contribute Startup Needs

→ Revenue growth → Specific knowledge

Result: Tailored learning experience for each startup

Source: Campbell, Kendrick, and Samuelson

Anchor Tenants Long shots

→ Mature entrepreneurs → Early-stage startup

Source: Tavoletti, Springer Link

Source: US Department of Commerce, Aspen Institute, Emerald and Insight

Both accelerators and incubators start to create

“In addition, the business models of many for-profit dot-coms failed