Defining the Incubator´s Operational Model

Objectives

Defining the operational model establishes how the incubator will be organized and operated. As Lavrow and Sample stress, the operational model “defines the structure of the incubator, the scope of the services offered, financing possibilities and external alliances.” The operational model is influenced by the incubator’s focus or the companies’ area of activity, and the incubator’s structure/services may vary.

The following operational models are suggested by current literature:

• Bricks and Mortar (BAM): the most traditional model of the incubator is centered on offering physical facilities to those using it. The entire incubation process and services offered are concentrated in a building. An advantage of this model is that interaction, the formation of partnerships and resolution of common problems can be stimulated by the proximity of the entrepreneurs. Depending on the incubator’s focus, this is the “natural” model and is widely used amongst traditional incubators.
• Virtual: also called a Portal or “Without walls”, this incubator model does not provide a building for the incubated businesses. Support and services are offered over the Internet. An advantage of this model is that entrepreneurs from different regions can be integrated. This model has been used to support the generation and development of “dot com” companies.
• Mixed: an incubator that offers a building to house some entrepreneurs and also supports the generation and development of companies over the Internet. Some authors designate this the “HUB/Venture Incubator” model.

Normally, definition of the operational model imposes conditions on the types of services to be offered by the incubator. The BAM model can offer the services of a virtual incubator but may choose to emphasize services offered in its own building/office. The tendency, with widespread use of the World Wide Web, is that incubators will offer many services over the Internet.

Key Issues

Significant to the definition of the operational model is:

• Services: for incubators to be successful, the services offered by the incubator must be adequate to its area of activity and to its stage of development. As already stressed, BAM incubators offer a limited quantity of services, since these are restricted to the incubator’s office/building. Virtual incubators are not limited in the same way, as they do not provide offices but center on offering services over the Internet.
• Network of Relations: a key aspect in incubator success is the quality and scope of its network of relationships. What may occur is that BAM incubators limit their networks of relationships to their physical area of activity. This can reduce the quality of the network of relationships. On the other hand, since they do not have an office/offices, virtual incubators can highlight improvements in the quality and scope of their networks of relationships.
• Financing: lack of finance may lengthen a company’s incubation period. BAM incubators generally do not offer financial support from their own resources to incubated companies. On the other hand, virtual incubators may seek to provide financing alternatives, based either on their own resources or those of third parties.

Responsible Parties

The team that is developing the incubator project must define the incubator’s operational model. At least one representative of each organization should be involved at this stage of the project. This ensures that the interests and points of view of all the institutions involved are taken into consideration.

Results

Definition of the incubator’s operational model aids in the definition of the services and support offered to incubated companies. This includes the network of relationships as well as financial options.

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