In the last couple of decades of the 20th century most people have associated incubators with babies; but in the first few decades of this century, they will be associated more with business development than anything else. John Wroe explains why.
In the UK business incubation is a relatively recent phenomenon that is considered by a growing number of influential people to be a key instrument in sustaining the growth of new companies. Furthermore the Harvard Business Review recently claimed that business incubation was the ultimate organisational structure for creating and growing new businesses. Speaking at the inaugural United Kingdom Business Incubation conference last year, Patricia Hewitt MP, now the Secretary of State for Trade & Industry said ?Five years ago the Government knew of only 25 incubators in the UK. Today there are 80, with new ones emerging all the time?. Twelve months on there are more than 150 incubation projects in the UK. As Regional Development Agencies wise up to their impact and strategic funds for their development are gradually brought on stream, it looks certain that we will see many, many more over the next few years.
What is a Business Incubator?
Walter Herriot, widely regarded as the single most experienced and influential Incubator Manager in the UK, prefers the more upmarket phrase of ?innovation centre? to ?incubator?. He runs the St John?s Innovation Centre in Cambridge, home to over 50 knowledge-based companies, which together employ over 1,000 people and have a combined turnover of more than £50m per annum. He describes the Cambridge centre as ?a property, comprising small units, which provides an instructive and supportive environment to entrepreneurs at start up and during early stages of business life. It aims to maximise the formation and survival of businesses with the potential for growth.?
According to Walter Herriot, key features of an innovation centre are:
? some form of selection or entry qualification to judge business viability and growth potential, e.g. a formal business plan,
? businesses are encouraged to leave or graduate when they have established sufficient market share or maturity,
? performance is judged not only by the number of client businesses, but more importantly by the ability of those businesses to grow, i.e. there is a focus in innovation centres on aspiration or high growth start-ups.
The manager of an innovation centre will normally have a hands-on relationship with client businesses, but in addition to providing services to tenants, innovation centres may also act as providers of help and support for early stage businesses in the community generally. They often link to appropriate Higher Education institutions in the catchment area, and tend to act as major players on the local economic development scene, raising the profile of the local economy and encouraging clustering.
Economic indicators
Each year the United Kingdom Business Incubator Association (UKBI) undertakes a national mapping survey of the UK incubation industry. Based on recent findings, it is clear that incubators have an important role to play in local and regional business support.
? an incubator?s client businesses will provide an average of 167 jobs (full time equivalents) per incubator,
? incubators are home to an average of 30 client businesses. Most (60%) incubators also operate outreach, helping and advising companies outside the incubator. Of those that operate outreach activities, the average number of additional businesses they support is 106,
? UK incubators have an average success rate of 84.4% as opposed to only 50% of new business.
Business Incubators and the Creative Industries
In the US, The National Business Incubation Association has over 900 incubators in membership (up from 12 in 1980).Among these are 6 ?arts incubators?, my favourite of which is the San Jose Arts Incubator. The City of San Jose is a national leader in fostering cultural diversity and excellence in the arts, and features the extremely successful Multicultural Arts Incubation Program.
Here in the UK there are also a number of facilities that, to different extents, focus on developing the Creative Industries. Kirklees Media Centre, Banks? Mills and The Custard Factory, for example, whilst not strictly defining themselves as incubators or innovation centres, provide specialist supportive environments to allow their creative tenant businesses to thrive. No two incubators are the same and whilst each has a different focus, they tend to share some common characteristics:
? they have waiting lists and they are all expanding, developing further space and services for tenants,
? they have usually been initiated by a single person or small group of visionary individuals,
? the managers of sites are fiercely proud of the achievements of their tenants,
? the managers have a sense of mission about their work and operate with a sensible balance of purpose and play,
? the Centres often become a major focus for regeneration in their communities,
? strategic links with Higher Education institutions are common, with students and artists both tied into these places; which is why, as business centres, they are so refreshing and vibrant to visit,
? they enjoy receiving visitors and are keen to share their knowledge.
Two things are, perhaps, a little surprising. Whilst Local Authorities are often very involved with these creative clusters, some Regional Arts Boards are much less so. Clearly incubators are a very fertile ground for growing creative businesses and they are here to stay. There is an urgent need for a strategic arts development bodies like the Arts Councils or the Department for Culture, Media and Sport to undertake research measuring their effect as centres of artistic, job and wealth creation and social regeneration.
John Wroe is Managing Director of Eastern Touring Agency (ETA). t: 01223 500202 e: john@e-t-a.demon.co.uk
He conducted research into networking in business incubators as part of his MBA. ETA is now working with St John?s Innovation Centre, Cambridge to investigate the feasibility of establishing Creative Industry business incubators in the East of England.
Further Reading
To learn more about US arts incubators, read ?Incubating the Arts ? Establishing a program to help artists and arts organisations become viable businesses? w: http://www.nbia.org.