Corporate incubators: nurture innovation potential

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Innovation does not come naturally to most companies, especially the kind of innovation that requires thinking outside its core business focus, as well as its culture and processes. However, as sectors are disrupted by new players and new approaches, this is exactly what many businesses need. To that end, corporate incubators are proving to be a successful strategy for organizations to develop new ideas, products and services — and ensuring long-term profitable growth.

A corporate incubator provides a protected space for ideas and topics that may otherwise be sacrificed to the core business’s demands.

In this article, we explain how the “innovation dilemma” faced by many companies, i.e., the decision whether to choose between maintaining and developing the existing business, or venturing into new areas,* can be resolved by the use of corporate incubators. Incubators are organizational structures that companies build outside their existing operational structures to facilitate innovation. We look at the benefits of incubators and explain how to build and run one, drawing on examples from existing companies.

If you are seeing new technologies, business models and players making their way into your industry, and you are aware that your competitors have already started seeking new business opportunities while your company lacks the innovation performance it could have, it may well be worth establishing a corporate incubator.

* C. M. Christensen, The innovator’s dilemma: when new technologies cause great firms to fail, Harvard Business School Press, 1997.

The article was written by:

  • Dr. Philipp Wagner
    Senior Consultant, Advisory Services — Strategy & Innovation, EY, Germany
  • Dr. Susanne S. Wosch
    Senior Manager, Advisory Services — Strategy & Innovation, EY, Germany

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