1871, the business incubator in Chicago, ranks first business incubators in the US, up from 9th place last year. A tremendous achievement. Business incubators offer startups more than a place to grow, they give them the network and tools to grow. 1817 is especially good at this, excelling in value for Chicago, value for its clients, and attractiveness as measured by past success. 1871 is able to offer startups the nourishing ground they need to become companies.
Established companies often look at startups with envy. They envy their agility and how innovative they are. But they can integrate this agility by marry two opposing forces. On one side they need to keep business running as usual, keep their operations run smoothly, satisfy client’s demands. On the other side, they can’t rest on success of the past and need to innovate their products and services. This can be a tweak here and there, or the creation of a complete new product or service.
John Kotter, renowned change management and leadership scholar, advocates for companies to have two operating systems. The first is the traditional operating system, the one that takes care of daily business. It has the people, tasks, and processes in place to make sure clients are satisfied. Next to it, a second operating system should exist. This one agile and flexible, creates innovations. While the first system is management drive, the second one is strategy driven. The strategic initiatives are at its heart.
Companies can learn how to create and maintain this strategy driven operating system by looking how 1871 became the number one business incubator in the US. First, companies need to support the knowledge necessary to create innovation and provide answers to the companies strategic initiatives. This means creating courses, open their networks, and provide money. It is not enough for companies to create a repository of relevant and engaging professional development courses. Companies need to instill in employees the value of daily learning. For example, companies could make use of MOOCs to teach specific knowledge. Employees could watch the lectures together after work or during lunch, discuss the exercises as a team and support each other. As so often with those fuzzy intangible concepts as having a learning mindset it is up to the management at all levels to demonstrate this mindset. This means managers have to invite others to join their “learning clubs”. Managers have to create learning lunches. In addition to mentoring, 1871 hosts a number of events and workshops in their space.
To open one’s network means to connect people with the right individuals to advance in their projects. Every person has a social capital, tied to the people he or she knows and their knowledge, resources, and power. To make this second architecture work, employees need to have access to the social capital of their leaders. Of course, money is the ugly bottom line. Especially if diverted from the budget of the traditional operating system, conflict can arise. But innovation is risky and requires investment. A budget should be available for it, a budget that will not be cut during times of bad business. The budget is more than just necessary, it sends the signal to employees that experimenting with new products, processes, and services is valued.While not providing money, 1871 provides intangible resources (know-how, networks) to support startups. These intangible support structures help people to keep on going.
The last step to create this second operating system is to track the success of the innovations. Success is not only increased financial performance, but also lessons learned. Projects only fail if no lessons are being learned. Companies need to track what they learn from projects that meet and not meet their goals. A project while aimed at a strategic initiative can miss its goal because it was before it times. By logging this project, its goals, what they created and what lessons they learned, somebody in 5, 10, or 20 years may pick it up again. This time succeeding, because time is ripe for that project. 1871 provides special membership for alumni, making sure that they stay connected.
Once this is in place, two things will happen. 1871 impacted the economy of Chicago. It created jobs and helped to attract and retain talent. While the office spaces at 1871 were initially empty, they filled up and now Chicago is one of the best places for startups. Companies that create this second operating system and tie its to the long-term strategic agenda of their company will create the necessary scaffolding for employees to work on projects to innovate the company and maintain day-to-day businesses.