Incubation For Transformation
Our Lead Strategist Anna Laycock looks back at the 2016 Lab Fellowship and asks: do incubators work?
Today we celebrate the end of our first Lab Fellowship, a six-month programme of support for financial innovators with a social purpose. While the Lab team are busy putting the finishing touches to the event, I’ve been touring funders and investors to seek support for next year’s Fellowship. I’ve drunk a lot of cups of coffee and shared a lot of stories about the journey we’ve been through with the Fellows.
At one meeting I was asked an important question: do incubators work? Given the hype around supporting disruptive innovation, you’d be forgiven for assuming the answer is yes. The answer, from my experience, is a little more complicated: it depends what you define as success. (It also depends what you define as an incubator. I’ve gone into a little more detail on this here.)
Incubation for profit works within the norms and motivations of the existing market, even when focussed on commercial disruption. Our view is that the level of transformation needed in our financial system means that we need transformative, rather than incremental change, and this drives every aspect of the incubation process, including who we incubate, what we incubate, and what see as the end goal.
Who do we incubate?
We seek social, rather than commercial disruption – innovators who are working outside of the current paradigm and who have the potential to change the relationship between business and consumer, or (even better) industry and society. This means a greater focus on individual motivation, corporate mission, mechanisms for profit generation (are they fair or exploitative?), and social and environmental impact.
We aren’t just interested in potential to grow the business, because we’re looking for ideas with the potential to change the wider system. This can happen in a number of ways, including scale, but also including demonstrating the viability of new business models, casting light on the damaging practices of other business models, or changing the narrative about finance.
We also work at a very early stage, usually before a start-up has received external investment. This is key, because visionaries who want to do finance very differently will face a barrage of advice from ‘experts’ who tell them it can’t be done. This can lead to a ‘weeding out’ of more visionary ideas before other sources of support (financial or otherwise) kick in.
What do we incubate?
Most investors will tell you that they invest in the team, particularly the leader, as much as they invest in an idea. Our goal of transforming the financial system only serves to increase this focus on people.
The scale and depth of transformation needed in our financial system means that there’s no blueprint for change (for more on this, see our Strategy for Systems Change). Likewise, it’s very unlikely that our Fellows’ business ideas will turn out exactly as they planned. Pivoting – business jargon for ‘a big shift in strategy’ – is to be expected as part of their long and complex journey.
For this reason, we focus as much on building our Fellows’ capacity to lead systemic change as much as their ability to lead their specific projects. That means a huge emphasis on resilience, because the power relations in finance don’t shift easily, and collaboration, because no one can change even a small part of the financial system on their own. We also build the strength of the Fellows’ community, teaching them to coach each other and building deep bonds of trust and mutual belief.
What’s the end goal?
Six months is a short period in the lifetime of any business, but for one which is trying to change the way finance works – a project which is likely to span generations – it’s barely any time at all. So rather than seeing investment as the end goal of the programme, it’s one of a set of tools we teach. Instead, we focus on building the skills our Fellows will need for the long-game – self-awareness, mission focus, collaborative leadership, action learning – and a strong community of peers who will continue to support each other long after the Fellowship has finished.
Uniquely, we also work to change the context in which our Fellows work. Throughout the programme, we track the systemic barriers to success for our Fellows – such as inappropriate regulation or the behaviour of incumbents – and we get the right people in the room to change the rules of the game. This doesn’t just benefit our Fellows; it creates a more enabling environment for all innovators.
So: does our incubator work?
Based on the above, what would success look like? I’d say: stronger leaders, with better business skills, a resilient community of Fellows, and positive movement on the wider issues that affect our Fellows’ work.
This year’s Fellowship was a pilot programme and, as with all pilots, we’ve learnt by getting things both right and wrong. We’re already building improvements into our plans for next year, including longer sessions and a thematic focus to help us tailor the content (our 2017 theme is financial health). We’re in the middle of our formal evaluation and our data isn’t complete*, but the initial results show:
- A dramatic increase in our Fellows confidence in dealing with the financial system (from 38% to 100%) and dealing with senior people in finance (from 40% to 100%)
- Increases in our Fellows (self-reported) skills in all areas of the programme, including brand, marketing, team-building, pitching and strategy
- Increases in Fellows confidence to lead their team, their project, and their own self-development.
More instructive to me, though, are some of the comments we received:
Being part of a community has really been invaluable for me over the past 6 months. It has been a safe environment to share challenges and create common solutions where other fellows may have faced similar hurdles. It has allowed a new side of me to grow around entrepreneurship.
The biggest value for me is a feeling of companionship, of being able to connect with others in a similar position to myself (small business start-up) for advice and company.
Being a Fellow has given me opportunity to share and learn with an amazing group of people, and provide a perfect platform from which to develop both myself and the project.
The Fellowship has helped me grow as an individual, it has helped me think through challenging situations and apply a framework of self-awareness to overcome obstacles. It really has given me a sense of place in the financial community, and has provided a safe forum to share ideas, collaborate and learn.
It has made me more aware of the context in which I am operating. I feel that I am less alone in wanting to do things differently, and inspired to do more, better.
For me I feel like I am walking away with a great network that will be beneficial far beyond the short time in the Fellowship.
That, for me, is success.
* These statistics are based on 12 of 16 responses. We’ll update the figures here when the evaluation is finalised.