incubation funnel

Increasing Investment

The Incubator Model is designed to minimize early investment requirement as the new idea is vetted and goes through the early stages of incubation. Too much is still unknown to justify a full-blown effort to gather sufficient capital for the Go-To-Market stage. Early investment is often in the form of seed dollars, sweat equity of the Steering Arm and contributed intellectual capital from the network.

As initiative certainty increases and prototype implementation starts to prove the initiative meets the compelling business proposition and fulfills network planks, investment requirements will increase. However, the elimination of project ambiguity and proven results from 1st and 2nd movers make capital acquisition easier for initiative – and less risky for the investor.

Decreasing Uncertainty

The problem with most ideas is that the interested parties want to eliminate all ambiguity too early in the incubation process, Stage 1 or 2. Identification of all the barriers before any of the work done in later stages will guarantee that nothing happens. Too much risk for the risk-averse, too much work for the lazy or uncommitted.

Let the process work and ambiguity will be dealt with and eliminated slowly through each incubation stage, leveraging the intellectual capital of the network.

Explore the Incubation Factory Funnel Stages

Idea Input: Feeding the Networked Idea Funnel

Building a shared database of ideas, research materials, reference information, market studies, web sites, etc.

Once the network identifies a new idea to build on it is vital that all involved have an opportunity to enter the process with a shared and common level of knowledge.

This repository becomes the searchable resource for all input gathered on that idea or topic.  This supports and expedites the market-space decision and the speed of Steering Arm activities.

This end of the funnel needs to be as “open” as possible to a wide universe of contributors.

CEO meetings feed the networked idea factory:

CEO Strategies Roundtable

Annual Leadership Conference

Board Meetings

Pricing Focus Group

Strategic plans feed the networked idea factory:

This is one reason why it’s so important that individual credit union strategic plans be posted.  The whole network can start to identify common strategies and objectives that could lead to new ideas for the incubation model.

Market research feeds the networked idea factory:

More like random internet browsing, looking outside the credit union bubble for new strategies.

For instance, Googling “building trust on the internet” turned up GlenUrban/MIT research docs, which ended up as Experion Systems and now Plan Provider – also a $3M return on a $0.5M investment.

Entrepreneurs feed the networked idea factory:

The existence of a networked incubator will being to attract new entrepreneurs in the network’s market space, with new ideas that can feed the factory.

Build a rep for execution and the ideas will come from a universe of many.

Strategic partners feed the networked idea factory:

New ideas and topics of interest come from cuasterisk.com Network partners.

“Virtual Idea Teams” at partner credit unions feed the networked idea factory:

Internet-savvy employee teams willing to take the time to identify opportunities that belong in the idea database.

For example, two people use different keywords to look for internet-based banking solutions.  The search results are very likely to show a significant number of different sites to research.

INCUBATION STAGE

1

FIND IDEAS

New ideas can be categorized for easier access by participants:

New Product Ideas
New Business Models
Business Process Improvement
Decision Point #1
Market Space Decision

The network makes a Market Space Decision based on identification of strategic importance to network.

Primary decision criteria:

1. Value to individual credit union owners (members)... absolute for all
2. Value to the network of credit unions... required by a majority
3. Value to credit union industry as a whole... nice to have

Required Question
If we don't fulfill these criteria, then why are we doing this?

INCUBATION STAGE

2

DESIGN PARAMETERS

Promulgate a compelling business proposition.

Fulfill network planks.

Adopt fast-time-to-market (FTTM) practices as tactical path:

1. Default-to action
2. Early identification of 1st and 2nd Movers
3. Leverage all due diligence
4. Use of contingent contract concepts
5. Accept delegated authority
Decision Point #2
Create the Steering Arm

1. Members who identify market space decision as strategically important to them, their organization and the broad marketplace.

2. Bring individual skills or "own" access to skills necessary for incubation process.

3. Willing to be first movers within the network.

INCUBATION STAGE

3

STEERING ARM RESPONSIBILITIES

The Steering Arm:

1. Performs and directs due diligence on possible participants, all functions and stages of incubation process.

2. Identifies a pool of strategic partner options in or out of network.

3. Makes selection of strategic partner, based on and driven by criteria supporting successful implementation of the Compelling Business proposition.

4. Reduces break-even time, strives at every decision point to “pull back” delivery schedule.

5. Develops and authorizes Budget and approves all contracts.

6. Owns all Delay Drivers and accepts responsibility for overcoming barriers.

7.“Pay to Save a Day”: Favors expenditure to overcome barriers of the risk of extending delivery times or in order to speed to market.

8. Uses vigorous analytics and objectives of a Venture Capitalist; fulfills applicable network plank.

9. Develops 360-degree benefit analysis for all identified stakeholders.

10. Designs and documents the prototype.

Decision Point #3
Prototype

• Network evaluation of Prototype.

• Go or no-go decision to next Incubation

• Network owns all work product and intellectual capital created through all stages.

• If no-go for network, work product is available for individual network participants to play with.

INCUBATION STAGE

4

ACTION ARM RESPONSIBILITIES

The Action Arm:

1. Carries over interested parties from the Steering Arm, adds specific identified skill sets and individuals at the implementation level.

2. Continues due dilligence of parties, process, contract, budgets, etc.

3. Sets initiative design specs (to meet network planks).

4. Develops implementation template for 1st movers.

5. Employs all fast-time-to-market (FTTM) practices and principles.

Decision Point #4
Go To Market with 1st Movers

1. Network evaluation of Action Arm outcomes.

2. Go or no go decision to next Incubation Stage 5.

3. Evaluation of Action Arm efforts to decrease initiative uncertainty and justification for increased investment.

INCUBATION STAGE

5

GO TO MARKET WITH 1ST MOVERS

1. First Movers implement.

2. Test, evaluate, adjust and provide feedback to Action Arm.

3. Standardize process and contracts; assist with FTTM practices.

4. Identify and develop process improvement together with Action Arm.

5. Test and evaluate against the compelling business proposition and network planks.

Decision Point #5
Go To Market with 2nd Movers

1. Network evaluation of 1st Mover implementation.

2. Determination that all market, technical, financial, and regulatory ambiguity has been identified and eliminated.

INCUBATION STAGE

6

GO TO MARKET WITH 2ND MOVERS

1. First Movers implement.

2. Test, evaluate, adjust and provide feedback to Action Arm.

3. Standardize process and contracts; assist with FTTM practices.

4. Identify and develop process improvement together with Action Arm.

5. Test and evaluate against the compelling business proposition and network planks.

Decision Point #6
Go To General Market

1. Network evaluation of 2nd Mover implementation and results.

2. Test against compelling business proposition and network planks; still valid?

3. Determine that sufficient investment resources are available for viable and effective expansion of initiative into General Market.

INCUBATION STAGE

7
GO!