In a knowledge-based economy, the creation of wealth becomes synonymous with creating products and services with large software content. However, despite a few major players, the software industry as a whole is fragmented and consists mainly of small, niche market entrepreneurial ventures. The authors study the California software industry to characterize the major barriers to success for these ventures. Simultaneously, a fundamental shift of software technology to a component-based development paradigm will reinforce the industry’s fragmented nature by fuelling a third party, independent software component economy. Coupled with the globalization of the IT industry in general, the need for startups and small companies
to form strategic partnerships will become increasingly critical to their ability to create wealth. In recent years, innovative public–private partnerships have attempted to assist startups by addressing their lack of physical resources or capital. This is best illustrated by the dramatic growth of incubators and regional capital networks. In this paper, the authors propose a ‘‘ virtual incubator’’ model to facilitate startup success and business network formation, shifting the focus to the ‘‘ virtual
value chain’’ and to connecting startups with business expertise and strategic partners in the marketplace. The authors provide a theoretical basis for the model and its implementation, important to potential investors in virtual incubators.
Virtual Business Incubator Framework for Enriching Innovation Ecosystem 2013Vasily Ryzhonkov
The main purpose of this work is to find possible solutions for overcoming challenges of existing business incubation models. The end goal is to provide practitioners with the model of economic development tool which will help them to build new generation of business incubators, e.g. to guide management teams, policy makers, entrepreneurs and educators in establishing a successful business incubation program (BIP). Eventually the model intends to expand the limits of existing business incubation models.
Global Startup Platform_Market Research Report_2012Vasily Ryzhonkov
Global Startup Platform. Marketing Research Report. Version 4.0.
80+ pages of analysis and research, 4 online surveys analyzed, 9 reports from BCG, Startup Genome Project, Global Entrepreneurship Monitor, Opora Report, Yandex Report, TNS Report are analyzed.
New results are found.
Market Size Estimation for Russia is calculated.
Russian business incubator program _ prospect development and strategic plan ...Vasily Ryzhonkov
It is the purpose of this report to examine ‘best practices’ of setting up and operating
business incubators. Hence the strategic plan is a form of blueprint for the proposed pilot
project, identifying the parameters, goals, and processes of business incubator
development. The investigation of these components is referred to as PHASE ONE. The
purpose of PHASE ONE is to investigate the prospect development, thus setting the
direction for initiating PHASE TWO – the establishment of a Business Incubator Pilot
Project in Russia.
Finally, long-term and short-term objectives as well as potential stakeholders and funding sources are identified within the proposed three-phased 8-month strategic action plan
Fundraising as Main Problem for Entrepreneur 2012Vasily Ryzhonkov
1. What is the main bottleneck in startups funding?
2. How much venture and angel capital do we have available in the world? What is the demand for it?
3. Do all early-stage entrepreneurs have sufficient access to capital?
4. Could we change situation with financing not 1% of entrepreneurs, but more? If yes, how?
These questions and many others have been answered in current presentation. Careful analysis and research of VC industry have been done to guide audience through the early-stage entrepreneurs' main problem - ACCESS to CAPITAL.
Toward a grounded theory of effective business incubation 2008Vasily Ryzhonkov
Business incubators are found all over the world. Yet, to date, no viable integrative
theory of effective business incubation exists. This essay outlines a grounded theory
of incubation, driven by case studies, empirical results, and field work, based on
three main principles that generalize across countries and cultures. They are:
• The paradox of market emulation:Successful incubators both emulate market con-ditions and shield their ‘infants’ from them. Managing this paradox is fraught
with difficulty, not the least because it is often not explicitly recognized.
• Resolving the key make-or-break constraint:In every country, there are many con-straints that hinder ultimate business success of incubator projects, but there is
one key constraint that always ‘resonates’, i.e., that dominates the attention and
concern of project managers. In India, this constraint is funding. In Israel, where
the VC industry is mature and liquid, funding is not a major constraint (though
as always and everywhere, raising money is a major challenge), but experienced
managerial capacity is the resonating factor. Hence, a theory of incubation should
include principles that guide identification of the key ‘resonating’ constraint and
provide direction toward reducing or eliminating it.
• Alignment with local and national cultures:Culture is a shared, learned, symbolic
system of values, beliefs, and attitudes that shapes and influences perception
and behaviour. Culture is how values drive behaviour. In national studies of
incubation, it is strongly evident how powerfully national culture acts as a medi-ating variable between, for instance, incubator operations and processes and the
national and global business environment. Hence, a theory of incubation should
include answers to the following question:
How can incubator processes align well with elements of national and local culture, in order
to:
• reinforce those aspects of the culture that act positively to help incubator projects
attain success
• mitigate or eliminate those aspects of culture that act negatively, and lead to
failure?
BUSINESS INCUBATION AS ELEMENT OF BUSINESS SERVICE INSTITUTION AND SME DEVEL...Vasily Ryzhonkov
The core of the political and economic transformation of any country in transition (CIT) is
the creation of the private sector, the development of entrepreneurship and creation of small and
medium-sized enterprises (SMEs). They are consideredto be one of the principal driving forces in
economic development. SMEs stimulate private ownership and entrepreneurial skills, they are
flexible and can adapt quickly to changing market demand and supply situations, they generate
employment, help diversify economic activity and make a significant contribution to exports and
trade. SMEs also play an important role in innovation and the high-tech business, due to their
flexibility and creativity many of them became large businesses. In this process emphasis should be
laid on creation of a business friendly environment in which the transformation of the society
towards a market economy should be taken place
Global Startup Platform_Business Model Report_2012Vasily Ryzhonkov
This report contains information about Business Model of Global Startup Platform. There are several components covered:
1. Project Description
2. Marketing
3. Distribution
4. Costs
5. Sales
6. Partners
7. Revenue Models
8. Future Research
This report is the first version of the Report. We plann to update it as Market Research Report on the monthly basis.
Virtual Business Incubator Framework for Enriching Innovation Ecosystem 2013Vasily Ryzhonkov
The main purpose of this work is to find possible solutions for overcoming challenges of existing business incubation models. The end goal is to provide practitioners with the model of economic development tool which will help them to build new generation of business incubators, e.g. to guide management teams, policy makers, entrepreneurs and educators in establishing a successful business incubation program (BIP). Eventually the model intends to expand the limits of existing business incubation models.
Global Startup Platform_Market Research Report_2012Vasily Ryzhonkov
Global Startup Platform. Marketing Research Report. Version 4.0.
80+ pages of analysis and research, 4 online surveys analyzed, 9 reports from BCG, Startup Genome Project, Global Entrepreneurship Monitor, Opora Report, Yandex Report, TNS Report are analyzed.
New results are found.
Market Size Estimation for Russia is calculated.
Russian business incubator program _ prospect development and strategic plan ...Vasily Ryzhonkov
It is the purpose of this report to examine ‘best practices’ of setting up and operating
business incubators. Hence the strategic plan is a form of blueprint for the proposed pilot
project, identifying the parameters, goals, and processes of business incubator
development. The investigation of these components is referred to as PHASE ONE. The
purpose of PHASE ONE is to investigate the prospect development, thus setting the
direction for initiating PHASE TWO – the establishment of a Business Incubator Pilot
Project in Russia.
Finally, long-term and short-term objectives as well as potential stakeholders and funding sources are identified within the proposed three-phased 8-month strategic action plan
Fundraising as Main Problem for Entrepreneur 2012Vasily Ryzhonkov
1. What is the main bottleneck in startups funding?
2. How much venture and angel capital do we have available in the world? What is the demand for it?
3. Do all early-stage entrepreneurs have sufficient access to capital?
4. Could we change situation with financing not 1% of entrepreneurs, but more? If yes, how?
These questions and many others have been answered in current presentation. Careful analysis and research of VC industry have been done to guide audience through the early-stage entrepreneurs' main problem - ACCESS to CAPITAL.
Toward a grounded theory of effective business incubation 2008Vasily Ryzhonkov
Business incubators are found all over the world. Yet, to date, no viable integrative
theory of effective business incubation exists. This essay outlines a grounded theory
of incubation, driven by case studies, empirical results, and field work, based on
three main principles that generalize across countries and cultures. They are:
• The paradox of market emulation:Successful incubators both emulate market con-ditions and shield their ‘infants’ from them. Managing this paradox is fraught
with difficulty, not the least because it is often not explicitly recognized.
• Resolving the key make-or-break constraint:In every country, there are many con-straints that hinder ultimate business success of incubator projects, but there is
one key constraint that always ‘resonates’, i.e., that dominates the attention and
concern of project managers. In India, this constraint is funding. In Israel, where
the VC industry is mature and liquid, funding is not a major constraint (though
as always and everywhere, raising money is a major challenge), but experienced
managerial capacity is the resonating factor. Hence, a theory of incubation should
include principles that guide identification of the key ‘resonating’ constraint and
provide direction toward reducing or eliminating it.
• Alignment with local and national cultures:Culture is a shared, learned, symbolic
system of values, beliefs, and attitudes that shapes and influences perception
and behaviour. Culture is how values drive behaviour. In national studies of
incubation, it is strongly evident how powerfully national culture acts as a medi-ating variable between, for instance, incubator operations and processes and the
national and global business environment. Hence, a theory of incubation should
include answers to the following question:
How can incubator processes align well with elements of national and local culture, in order
to:
• reinforce those aspects of the culture that act positively to help incubator projects
attain success
• mitigate or eliminate those aspects of culture that act negatively, and lead to
failure?
BUSINESS INCUBATION AS ELEMENT OF BUSINESS SERVICE INSTITUTION AND SME DEVEL...Vasily Ryzhonkov
The core of the political and economic transformation of any country in transition (CIT) is
the creation of the private sector, the development of entrepreneurship and creation of small and
medium-sized enterprises (SMEs). They are consideredto be one of the principal driving forces in
economic development. SMEs stimulate private ownership and entrepreneurial skills, they are
flexible and can adapt quickly to changing market demand and supply situations, they generate
employment, help diversify economic activity and make a significant contribution to exports and
trade. SMEs also play an important role in innovation and the high-tech business, due to their
flexibility and creativity many of them became large businesses. In this process emphasis should be
laid on creation of a business friendly environment in which the transformation of the society
towards a market economy should be taken place
Global Startup Platform_Business Model Report_2012Vasily Ryzhonkov
This report contains information about Business Model of Global Startup Platform. There are several components covered:
1. Project Description
2. Marketing
3. Distribution
4. Costs
5. Sales
6. Partners
7. Revenue Models
8. Future Research
This report is the first version of the Report. We plann to update it as Market Research Report on the monthly basis.
Our HK Foundation's report -- based on a draft provided by the Victor and William Fung Foundation through the work of Fung Business Intelligence Centre
Accelerate Now! Current trends and strategies for the futureNUMA
You liked our White Paper "Accelerate Now" ? Read this news and share it !
NUMA goes for equity crowdfunding ! Paris-based innovation space provider NUMA is going international. To provide capital for this development phase, it has decided to call on the community at large, with an equity crowdfunding campaign.
--------------------------------------------------------------------------------------------------------
Accelerate Now !
Proudly supported by L'Atelier BNP
Early December last year, NUMA, a leading tech and innovation hub in central Paris and home to France’s first accelerator program, held its first ever European Accelerator Summit.
The Summit brought 200+ leaders from accelerators from across Europe and beyond to discuss and debate the current state and future of acceleration. Using collaborative workshops and interactive talks, the purpose of the 2-day conference was really to identify the top trends and challenges facing the accelerator sector and viable models and ideas to reinforce the future of acceleration.
Leveraging the ideas and content generated from the Summit, we’ve developed this whitepaper which focuses on what the group identified as the top trends in acceleration as well as the challenges, opportunities, and models for each.
Ukraine: National Export Strategy Consultation. Innovation - An International...Subhrendu Chatterji
Introductory presentation to Ukranian National Export Strategy consultation participants on concepts re developing an export-oriented national innovation system and policies.
VR is potentially the biggest transformation of our relationship with technology at least since a personal computer.
Different and more powerful mode of interaction
Proper superset of all existing means of communication
VR will finally allow us to interact with information in a way we are built in to interact with reality!
Drives the perceptual system as its built to be driven
In the limit, its as big as reality ... or bigger
VR is inevitable. But the path it will take depends on a several thousand key people in the computer industry.
VR is how we're increasingly going to interact
eventually will drive the full capability of our perceptual system
the last platform
possibly the best opportunity for R&D in our lifetime
will likely greatly change the relationship between human and technology
Our HK Foundation's report -- based on a draft provided by the Victor and William Fung Foundation through the work of Fung Business Intelligence Centre
Accelerate Now! Current trends and strategies for the futureNUMA
You liked our White Paper "Accelerate Now" ? Read this news and share it !
NUMA goes for equity crowdfunding ! Paris-based innovation space provider NUMA is going international. To provide capital for this development phase, it has decided to call on the community at large, with an equity crowdfunding campaign.
--------------------------------------------------------------------------------------------------------
Accelerate Now !
Proudly supported by L'Atelier BNP
Early December last year, NUMA, a leading tech and innovation hub in central Paris and home to France’s first accelerator program, held its first ever European Accelerator Summit.
The Summit brought 200+ leaders from accelerators from across Europe and beyond to discuss and debate the current state and future of acceleration. Using collaborative workshops and interactive talks, the purpose of the 2-day conference was really to identify the top trends and challenges facing the accelerator sector and viable models and ideas to reinforce the future of acceleration.
Leveraging the ideas and content generated from the Summit, we’ve developed this whitepaper which focuses on what the group identified as the top trends in acceleration as well as the challenges, opportunities, and models for each.
Ukraine: National Export Strategy Consultation. Innovation - An International...Subhrendu Chatterji
Introductory presentation to Ukranian National Export Strategy consultation participants on concepts re developing an export-oriented national innovation system and policies.
VR is potentially the biggest transformation of our relationship with technology at least since a personal computer.
Different and more powerful mode of interaction
Proper superset of all existing means of communication
VR will finally allow us to interact with information in a way we are built in to interact with reality!
Drives the perceptual system as its built to be driven
In the limit, its as big as reality ... or bigger
VR is inevitable. But the path it will take depends on a several thousand key people in the computer industry.
VR is how we're increasingly going to interact
eventually will drive the full capability of our perceptual system
the last platform
possibly the best opportunity for R&D in our lifetime
will likely greatly change the relationship between human and technology
Аналитический обзор рыночной ниши дополненной реальности. Отчет подготовлен Высшей школой маркетинга и развития бизнеса НИУ ВШЭ по заказу РВК. Исполнитель - Андрей Мамонтов
Аналитический отчет о рынке AR & VR в России 2015Vasily Ryzhonkov
Это краткая презентация по итогам аналитической работы, проведенной в апреле-мае 2015 года по рынку AR&VR в России.
Цель исследования:
Анализ рынка дополненной и виртуальной реальности в России:
структуры рынка, основных игроков, тенденций и ключевых фактов,
влияющих на его развитие.
Методология исследования:
анкетирование участников рынка - более 60 компаний
исследование за столом - поиск и анализ данных из открытых
источников: анонсы, интервью и пресс - релизы игроков рынка
исследования по теме AR & VR
Ограничения исследования:
По оценкам авторов исследования удалось охватить около 70% рынка. В этой связи не все компании из сферы AR&VR представлены в отчете.
Не все компании открывали данные по средней выручке и числу сделок, в этой связи полученные данные по объему рынка представляются авторам не достаточными для приведения количественных оценок. Следующий отчет предполагает иную методику исследования
The Future of Enterprise Software - How Software Companies can Achieve High P...Philipp Stauffer
The enterprise software industry, after sev- eral years of declining growth, stands at the verge of what promises to be a tumul- tuous time. Just as the Internet was responsible for the last explosion of growth in the industry in the past decade, it is now laying the groundwork for dramatic change that will sweep across the software sector in the coming years. Indeed, we already are seeing some of the first waves of change making their mark in the form of growing acceptance of open standards and the development of open source and soft- ware-as-a-service, which at the moment are competing for attention with the industry’s move towards consolidation.
To shed light on the nature and extent of these changes and how they will affect the industry, Accenture recently conducted comprehensive research involving software company executives, venture capitalists, CIOs and other technology leaders in major corporations, and Accenture’s own experts. We believe our findings and analyses — which are detailed in this paper — will provide software company executives with valuable insights that they can use as they shape their strategies for achieving high performance and market leadership in the dynamic and uncertain years to come.
Only few organizations wise up to new digital competitors, as they usually come from outside their own sector and are not taken seriously at first. Their allegedly inferior propositions confuse prominent players, who should in fact be the very first to be fully aware of potentially disruptive innovation.
To swing into action rapidly, existing organizations would be well advised to properly analyze anything resembling digital competition. Evidently, there are clear patterns behind the startup success marking a new techno-economic reality. Ecosystems, APIs, and platforms characterize this New Normal where customers have more freedom of choice and better service at lower costs.
These successful disruptors are called two-sided market players, also known as multi-sided platform players. Companies like Uber and Airbnb are getting all the media attention, however there are over 9000 players (and counting) active in almost every industry.
The new VINT report explores the new digital competition and presents:
A analysis of the success factors of disruption
10 design principles of the new digital competition like Unbundle your organization processes, APIs first. Access over ownership and Building trust with social systems
The need for every business to develop a API-strategy
An appeal to the CIO and the IT department to use a leading digital approach and map out an offensive technological route.
http://www.ericsson.com/thinkingahead/networked_society
Digitalization has unleashed a wave of transformation across a range of industries. The pace of change has been mind boggling and will only continue to accelerate. Everything from business models and product categories to financing and human resources will transform in order to take advantage of the possibilities of the Networked Society.
The Trouble With Enterprise SoftwareF A L L 2 0 0 7 .docxssusera34210
The Trouble With
Enterprise Software
F A L L 2 0 0 7 V O L . 4 9 N O . 1
R E P R I N T N U M B E R 4 9 1 0 1
Cynthia Rettig
Please note that gray areas reflect artwork that has been
intentionally removed. The substantive content of the ar-
ticle appears as originally published.
C O N T R A R I A
Te ch n o l o g y h a s a l -
w a y s b e e n a b o u t
hope. Since the begin-
ning of the industrial
revolution, businesses
have embraced new
technologies enthusi-
a s t i c a l l y, a n d t h e i r
optimism has been
re w a rd e d w i t h i m -
p r o v e d p r o c e s s e s ,
lower costs and re-
duced workforces. As the pace of technological
innovation has intensified over the past two de-
cades, businesses have come to expect that the next
new thing will inevitably bring them larger market
opportunities and bigger profits. Software, a tech-
nology so invisible and obscure to most of us that it
appears to work like magic, especially lends itself to
this kind of open-ended hope.
Software promises evolutions, revolutions and
even transformations in how companies do busi-
ness. The triumphant vision many buy into is that
enterprise software in large organizations is fully
integrated and intelligently controls infinitely com-
plex business processes while remaining flexible
enough to adapt to changing business needs. This
vision of software lies at the core of what Thomas
Friedman in “The World Is Flat” calls “the Wal-
Mart Symphony in multiple movements — with
no finale. It just plays over and over 24/7/365.”1
Whole systems march in lock step, providing syn-
chronized, fully coordinated supply chains,
production lines and services, just like a world-
class orchestra. From online web orders through
fulfillment, delivery, billing and customer service
— the entire enterprise, organized end to end —
that has been the promise. The age of smart
machines would seem to be upon us.
Or is it? While a few companies like Wal-Mart
Stores Inc. have achieved something close to that
ideal, the way most large organizations actually
process information belies that glorious vision and
reveals a looking-glass world, where everything is
in fact the opposite of what one might expect.
Back-office systems — including both software ap-
plications and the data they process — are a
variegated patchwork of systems, containing 50 or
more databases and hundreds of separate software
programs installed over decades and intercon-
nected by idiosyncratic, Byzantine and poorly
documented customized processes. To manage this
growing complexity, IT departments have grown
substantially: As a percentage of total investment,
IT rose from 2.6% to 3.5% between 1970 and 1980.2
By 1990 IT consumed 9%, and by 1999 a whopping
22% of total investment went to IT. Growth in IT
spending has fallen off, but it is nonetheless sur-
prising to hear that today’s IT departments spe ...
White paper by Bessemer Venture Partners outlining the growing opportunity to build large industry software businesses. The white paper discusses the trends driving growth in industry software, playbooks for building successful industry software businesses, markets ripe for innovation, and historic M&A outcomes.
Serving the long tail white-paper (how to rationalize IT yet produce more apps)Newton Day Uploads
Businesses benefit from having fewer technology tools in their 'enterprise stack'. Yet CIOs still need to encourage innovation and employ software tools as an enabler for growth and cost reduction. This white paper focuses on the role of Situational Applications platforms to reduce the number of technology platforms whilst increasing opportunities to serve the long-tail of applications demands from individuals and communities of users whose needs are unfulfilled by core enterprise platforms.
Why We Are Open Sourcing ContraxSuite and Some Thoughts About Legal Tech and ...Daniel Katz
Why We Are Open Sourcing ContraxSuite and Some Thoughts About Legal Tech and the Modern Information Economy - By Michael Bommarito + Daniel Martin Katz from LexPredict
This paper illustrates the dramatic innovations in software development that have taken place over the past decade. It is a rebuttal to Robert Gordon's argument in the Rise and Fall of the American Economy that the digital revolution has been anemic since about 2005.
An analysis of software innovations and how they are affecting GDP, productivity, and jobs. A critique of economists' arguments that Internet related innovation is dead and that innovation in ITC industries is cumbersome and difficult.
How is Marc Andreesen's dictum that "software is eating the world" having real impacts? This report explores the many categories of software innovation and includes estimates of economic impacts.
Governance of Power Platform – As enabler, not as gatekeeperSwatantra Kumar
In today’s digital age, organizations are under immense pressure to define, ideate, build and deliver services at consistently shortening time to market. With a demanding market, an unpredictable and slowing economy, and a global shortage of skilled labor, low-code platforms are increasingly seen as a boon for enterprises aiming to fuel digital transformation by building new apps, modernizing application landscapes, or automating processes quicker and more efficiently. Low-code/no-code (LCNC) tools have seen steady growth due to their effectiveness in addressing some of the challenges in technology – primarily for digitizing workflows, enhancing user experiences, promoting internal efficiency, and their ability to quickly fill the workforce gap. Low-code application platforms are emerging as a key accelerator for app development and delivery. However, there are still challenges ahead due to a vacuum of battle-tested IT governance for low-code platforms. This article covers our view on the governance of one of the leading LCNC tools, Power Platform, and why it is important while planning, securing, deploying, and supporting applications built on the platform.
Similar to Nowak & Grantham _ The virtual incubator managing human capital in the software industry (20)
The rise of VR & AR era. Why this time is different?Vasily Ryzhonkov
When Facebook bought virtual reality company Oculus in early 2014, virtual reality blew up. While game and movie studios began reimagining the future, others looked back at the "old days" of VR — a loosely remembered period in the 1990s when gloves and goggles were super cool and everyone was going to get high on 3D graphics.
Computer enthusiasts and science fiction writers have dreamed about VR for decades. But earlier attempts to develop it, especially in the 1990s, were disappointing. It turns out the technology wasn’t ready yet. What’s happening now — because of Moore’s Law, and also the rapid improvement of processors, screens, and accelerometers, driven by the smartphone boom — is that VR is finally ready to go mainstream. Now, we’re in the midst of a virtual reality revolution.
So the question I want to pose here – is this time different?
Are we going to this future or it’s only media hype?
James Glattfelder studies complexity: how an interconnected system — say, a swarm of birds — is more than the sum of its parts. And complexity theory, it turns out, can reveal a lot about how the economy works. Glattfelder shares a groundbreaking study of how control flows through the global economy, and how concentration of power in the hands of a shockingly small number leaves us all vulnerable.
What may happen in the next hundred years by John Watkins 1900Vasily Ryzhonkov
In 1900, Smithsonian Institution curator John Elfreth Watkins wrote an article for The Ladies’ Home Journal, entitled “What May Happen in the Next Hundred Years,” filled with predictions that many of his readers probably scoffed at as ridiculously improbable. Indeed, Watkins was pretty far off about some things. He predicted, for example, that the letters ‘C,’ ‘X’ and ‘Q’ would vanish from the alphabet, streets would be relocated underground, and farms would grow strawberries as large as apples. But what’s more impressive is the extent to which Watkins’ vision of the future actually has come to pass — wireless phone networks on which a person in New York could talk to another in China, live TV images being transmitted around the globe, MRI machines, aerial warfare, and high-speed trains traveling between cities at 150 miles per hour. Watkins even predicted the food trucks that have become a fad worldwide.
The roots of futures thinking – the imaging in human minds of the future – can be traced back to the beginnings of human societies. The formalized study of futures came much later, but it can be said that the most advanced civilizations tended to project their thinking and utilize basic methods of planning and foresight. Greek philosopher Plato developed the concept of an ideal society with perfect justice in "The Republic," and his vision inspired millions of thinkers to imagine the future.
Mary Meeker's Famous Internet Trend Report – 2014 Edition
A must-read that’s chock full of critical knowledge. Kleiner Perkins partner Mary Meeker’s data dumps have become a highly anticipated event in the tech industry, as her research helps everyone else level up.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
Discover the innovative and creative projects that highlight my journey throu...dylandmeas
Discover the innovative and creative projects that highlight my journey through Full Sail University. Below, you’ll find a collection of my work showcasing my skills and expertise in digital marketing, event planning, and media production.
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
https://viralsocialtrends.com/vat-registration-outlined-in-uae/
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Kseniya Leshchenko: Shared development support service model as the way to ma...Lviv Startup Club
Kseniya Leshchenko: Shared development support service model as the way to make small projects with small budgets profitable for the company (UA)
Kyiv PMDay 2024 Summer
Website – www.pmday.org
Youtube – https://www.youtube.com/startuplviv
FB – https://www.facebook.com/pmdayconference
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
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Nowak & Grantham _ The virtual incubator managing human capital in the software industry
1. Ž .Research Policy 29 2000 125–134
www.elsevier.nlrlocatereconbase
The virtual incubator: managing human capital in the software
industry
Michael J. Nowak a,)
, Charles E. Grantham b
a
Xerox Venture Lab., Xerox Technology Enterprises, Xerox, Palo Alto Research Center, Palo Alto, CA, USA
b
Institute for the Study of Distributed Work and the Fisher Center for Management and Information Technology, Haas School of Business,
UniÕersity of California Berkeley, Berkeley, CA, USA
Abstract
In a knowledge-based economy, the creation of wealth becomes synonymous with creating products and services with
large software content. However, despite a few major players, the software industry as a whole is fragmented and consists
mainly of small, niche market entrepreneurial ventures. The authors study the California software industry to characterize the
major barriers to success for these ventures. Simultaneously, a fundamental shift of software technology to a component-based
development paradigm will reinforce the industry’s fragmented nature by fuelling a third party, independent software
component economy. Coupled with the globalization of the IT industry in general, the need for startups and small companies
to form strategic partnerships will become increasingly critical to their ability to create wealth. In recent years, innovative
public–private partnerships have attempted to assist startups by addressing their lack of physical resources or capital. This is
best illustrated by the dramatic growth of incubators and regional capital networks. In this paper, the authors propose a
‘‘virtual incubator’’ model to facilitate startup success and business network formation, shifting the focus to the ‘‘virtual
value chain’’ and to connecting startups with business expertise and strategic partners in the marketplace. The authors
provide a theoretical basis for the model and its implementation, important to potential investors in virtual incubators.
q 2000 Elsevier Science B.V. All rights reserved.
Keywords: Virtual incubator; Managing human capital; Software industry
1. Introduction
In a knowledge-based economy, the creation of
wealth becomes synonymous with creating products
Žand services with large software content Hagel and
.Armstrong, 1997 . Software is that ubiquitous tech-
nology that powers everything in the Information
Age, embedded in everything from automobiles to
electric can openers. The knowledge encapsulated in
)
Corresponding author. Tel.: q1-650-813-7122; e-mail:
nowak@pahv.xerox.com
software will increasingly define the economic value
of the intellectual capital it represents. Speaking of
the importance of this new kind of capital, Stewart
Ž . w x1997 declares: ‘‘ . . . for a new Information Age
economy, whose fundamental sources of wealth are
knowledge and communication rather than natural
resources and physical labor.’’
At the heart of this new economy lies the software
industry, providing the enabling tools and infrastruc-
ture to IT professionals in virtually all other indus-
tries. A key characteristic of the software industry is
that, despite a few major players, as a whole it is
0048-7333r00r$ - see front matter q 2000 Elsevier Science B.V. All rights reserved.
Ž .PII: S0048-7333 99 00054-2
2. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134126
fragmented and consists mainly of small, niche mar-
ket entrepreneurial ventures. The predominance of
entrepreneurs and small companies in the industry
will only be accelerated by the move towards a new
Ž .component-based software development technol-
ogy. Together with the globalization of business and
the marketplace, both trends will fuel the need for
more strategic alliances and wide-ranging partner-
ships. This seems to be especially true in California
where software development often sets international
standards, for example JAVA and HTML language
variants.
These competitive drivers will have a profound
effect on the US economy and in particular the
management and commercialization of intellectual
capital. It will present a host of human resources
management challenges to both large and small com-
panies, with the roles and responsibilities of employ-
ees undergoing profound redefinition. Indeed, the
entire role of strategic partners in the value-added
chain of an industry continues to undergo dramatic
evolution. In this paper, we review some of the
current publicrprivate efforts to assist startups and
small companies, the critical creative element in the
software industry. The authors propose a virtual
incubator model to enable small company success
and to allow US industry to take advantage of the
evolution towards distributed human resources and a
business landscape dominated by international strate-
gic partnerships.
2. Software industry evolution
2.1. Technology
The software industry is poised to undergo a
dramatic evolution in the next decade, evolving from
an object-oriented programming paradigm, where the
software expert is still critical to the development of
business applications, to the component-based soft-
Ž . 1,2
ware development CBSD paradigm. In a com-
ponent-based software economy, software experts
1
Component-based Software White paper, NIST. Can be found
at www.atp.nist.gov.
2
Russell Dewey, ‘‘Streamlining Software Development’’.
will only develop relatively generic components
which business or domain experts can purchase and
modify to create domain-specific applications. This
separation or specialization of work will allow soft-
ware and business experts to focus exclusively on
their own areas of expertise, much as assembly lines
permitted specialization in manufacturing.
In this transition, analogous to what the machine
tool industry experienced during the 19th century
Industrial Revolution, this new approach to software
development will lead to a replacement of hand-
crafted, artisan-tailored lines of code with software
‘‘parts’’ or components and automated processes for
their assembly. This will lead to dramatic increases
in the quality, maintainability and flexibility of soft-
ware while reducing its cost, development time and
complexity. It will also create a new industry of third
party software component foundries that can special-
ize around particular competitive advantages in soft-
ware functionality or business domain knowledge
and create independent, interoperable, top-quality
components for sale.
2.2. Globalization
Globalization of the information technology busi-
ness will have a critical impact on the ability to
create wealth among software companies. A host of
technology and market drivers coupled with govern-
ment deregulation are creating a new global market-
place, particularly for software.
The explosive growth of the Internet and the
Ž .Internet Service Providers ISPs as a low-cost, eas-
ily accessible marketing, sales and distribution chan-
nel for new software products will allow easy access
to mass markets for all producers. On the other hand,
large dominant firms will have the ability to create
global scales of economy and global name brands
and hence take greater advantage of their size and
depth.
We believe that there is an interesting parallel
here to other waves of technical innovation. The key
characteristic that these technologies have is that
they tend, over time, to increase the density of the
social networks of innovators. According to theory
Ž .Wellman, 1999 , this increase should increase the
pace of innovation; and we feel, spread it out over
3. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134 127
wider spatial areas, i.e., lead to global innovation
Ž .Katz et al., 1963; Robertson, 1971 . The current rise
of LINUX
3
is an excellent case study of this type of
innovation being fuelled internationally through use
of the Internet as a communication medium.
Taken together, these trends only exacerbate the
need to immediately translate state-of-the-art techno-
logical innovation into sustainable competitive ad-
vantage in the marketplace. This will increase the
pressure on software manufacturers to shorten prod-
uct development cycles and lower development costs,
Žsince product lifetimes and hence revenue generat-
.ing ability are likely to decrease with greater com-
petition. As a consequence, the continued globaliza-
tion of the world economy will drive the need to
form strategic partnerships at all stages of a business
endeavour: technology, product and market develop-
Ž .ment Shapiro and Varian, 1998 .
2.3. A fragmented industry
The last basic characteristic of the software indus-
try to consider is that despite a few major players it
is as a whole highly fragmented, consisting mainly
of small, niche market entrepreneurial ventures. Our
study of the number of firms vs. annual revenue for
software companies in California shows the average
Žannual revenue to be US$2.8 million a gross mea-
.sure of size with a standard deviation of US$17.3
million, indicating a very wide distribution of firm
size heavily weighted towards the low end. Further-
more, all trends suggest that it will remain a frag-
mented industry with its members increasingly re-
liant on strategic alliances to remain competitive.
2.4. The new software industry landscape
These three evolutionary factors: technology the
globalization of markets and the fragmented and
entrepreneurial structure of the industry will lead to a
new competitive landscape for the software industry.
Advances in technology will lead to the growth of a
large, third party, independent software component
industry enabled by the CBSD paradigm. Growth of
3
See www.redhat.com for example.
the Internet as a low-cost, easily accessible market-
ing, sales and distribution channel for new software
products 4
will lead to increased opportunities and
competition. An industry dominated by entrepreneurs
and small companies will have an even greater need
to form global strategic alliances.
These changes will drive competition in the soft-
ware industry for the coming decades and cause it to
mature in an unlikely direction: back towards its
roots of entrepreneurialism and an industry model
based on alliance formation and distributed human
resources. Consequently, a better understanding of
the basic success factors for a software entrepreneur
Ž .Bell, 1991 is critical to the understanding of how to
stimulate strong economic growth. Key questions
are:
Ø What are the strategic variables for a software
entrepreneur to succeed in the evolving electronic
commerce marketplace?
Ž .Ø How does one create, maintain and value sus-
Žtainable competitive advantage Hamel and Pra-
.halad, 1994 in new ventures with information-
based products and services?
Ø Where will the management and executive talent
for this explosively expanding industry come
from?
Ø How do we integrate socially diverse teams of
software developers quickly and establish com-
puter mediated communication channels?
3. The California software industry
The California Trade and Commerce Agency,
Office of Strategic Technology sponsored in 1997 a
study to develop a comprehensive strategy to ensure
the long-term viability and economic solvency of the
software industry. The study took the form of inten-
sive interviews with software industry executives,
professional organizations, and regional industry
councils that took place over the period of 1 year.
4
As a consequence, Bill Gates and Microsoft have recently
shifted their business development strategy to software develop-
ment, as opposed to providing content, for the Internet. See
Business Week, 9r8r1997, p. 126.
4. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134128
Table 1 illustrates the geographic and market
breakdown for business resource requirements for
startups in the software industry in California.
A major finding of the study is that software
startups require external support not usually provided
by financial resources. Indeed, these needs are usu-
ally pre-cursors to obtaining the capital that the firms
need to grow. Three critical needs of software star-
tups in California are:
Ø access to low cost infrastructure resources
Ø access to adequate management skills and knowl-
edge
Ø access to business networking resources for mar-
keting
There is an apparent lack of these resources in
California and elsewhere around the country. Most
existing public resources operate only in an ‘‘aware-
ness mode,’’ telling new companies what they should
do but failing to provide necessary resources for
survival or access to those resources. As a conse-
quence, four out of five startups in California fail,
taking with them the potential for new market cre-
ation and economic growth. The prime reason for
this failure is under-capitalization, often rooted in the
lack of experienced management and of an adequate
understanding of seed investing by local investors.
From this study, it is clear that small businesses
and startups need a way to quickly gain the knowl-
edge and hire the experience to complete effective
business planning. The following key disciplines
represent the knowledge required by a software
Table 1
Order of magnitude estimates for software industry in 1997.
Number of annual startups
Segment Northern CA Los Angeles San Diego Total
Office automation 30 15 5 50
Networking 120 60 20 200
Internet apps 180 90 30 300
Operating systems 12 6 2 20
Manufacturing 6 3 1 10
Telecom 120 60 20 200
Databases 150 75 25 250
Scientific 12 6 2 20
Games 30 15 5 50
Total 660 330 110 1100
startup and appeared to be lacking at various levels
by all those interviewed:
Ø Business Planning
Ø CompetitiÕe Assessment — substitute product as-
sessment and barriers to market entry.
Ø Marketing — product development, market de-
velopment, market penetration, acquisitions and
promotion
Ø Sales
Ø Financial Planning and Analysis — sensitivity
analysis for various plan scenarios
Ø Human Resources — attracting and retaining the
right talent
A better understanding of early-stage or seed invest-
ing has also been recognized as a growing need in
the investment community. 5
The lack of a coherent,
stable and widely accepted format for structuring
early-stage deals with well-known startup risks has
led to a widespread under-capitalization of new ven-
tures around the country. The SBA reports a very
Ž .low percentage approx. 5% of new investment
flowing into startups and small ventures. 6
In summary, the critical resources for a successful
startup to a large extent are not being provided by
either the private or public sector. In the private
sector, until recently a business model that would
provide these services and resources in a profitable
fashion had not been apparent. On the other hand,
the public sector has always struggled with the ques-
tion: should it help supply these critical resources to
industry? In the end, both efforts have tended to be
geographically focused, unnecessarily restricting the
scope of the business opportunity and the potential
for economic growth.
5
The Ewing Marion Kauffman Foundation can be found at
www.emkf.org.
6
‘‘Trends in Venture Capital Funding in the 1990s’’, Nicole R.
Onorato, US Small Business Administration, Office of Advocacy,
August, 1997.
5. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134 129
4. Managing intellectual or human capital?
Clearly, there are radical changes coming to the
software industry as a new development paradigm
fuels fundamental structural changes and electronic
commerce follows the hyper-growth of the Internet.
As their ability to compete on a global level in-
creases, however, software entrepreneurs face a more
critical knowledge gap in an even more competitive
climate. Although often spoken of as intellectual
capital management issue, the real hurdle for an
entrepreneur is to acquire and manage the technical
and business knowledge and expertise to compete in
the global market, which increasingly is also ones’
Ž .local market Kanter, 1995 . We concentrate in this
paper on the root cause of that knowledge gap.
Indeed, the California study illustrates clearly that
the critical issue for the software industry of the
early 21st century will be human capital. The critical
human resources dynamic for the industry has been
and will continue to be one of constant shortage.
Here, we believe, is where the need for tripartite
cooperation between universities, the public sector
and private commercial interests is the greatest. Un-
derstanding and exploiting the nature of the triple
helix may be the key for the US software industry to
stay competitive for the foreseeable future.
The authors first present a brief review of current
public and private sector approaches to assisting
entrepreneurs and small companies in their struggle
to survive and prosper. At the end, they present a
new, hybrid model to facilitate startup success and
economic growth.
4.1. Public sector programs
The traditional approach for the Federal Govern-
ment has been to create grants programs to fund
technology development for mission-oriented agen-
cies such as the Departments of Defense or Energy.
The Small Business Innovative Research grant pro-
gram administers over US$800 M 7
a year to small
companies in staged grants, but typically addresses
only technical issues which often are not transferable
7
An interesting commercial web site about SBIRs is
www.win-sbir.com.
to the commercial marketplace. 8
At the US Depart-
ment of Commerce, the Advanced Technology Pro-
gram, 9
NIST is pioneering an innovative approach
to funding R&D in industry in that the technology
development funded must be targeted towards prod-
ucts or services for commercial markets. Analysis of
the economic impact of these funds is currently
underway.
State governments 10
have created grants and other
financial assistance programs, often to leverage off
of Federal funding, but typically do not focus on the
knowledge gap, even when working with small,
innovative companies. In California, there are many
nascent government-sponsored efforts throughout the
state, but they are unfocused and independent of
each other and there is no coordination mechanism
between regions nor a consensus that it is needed. In
due course, there is great skepticism among en-
trepreneurs and within the software industry about
what value the public sector can add.
4.2. Public–priÕate partnerships
The US Small Business Administration 11
has
been a strong advocate of small business around the
country, making incredible progress in recent years
in making low-cost loans available to small busi-
nesses, in stimulating the creation of Small Business
Investment Funds, and other financially oriented as-
sistance. One form of public–private partnership has
been the creation of ACE-NET, 12
which tries to
take advantage of the Internet to link potential in-
vestors with entrepreneurs and in the process create a
new, nationwide equity market for US small busi-
ness.
8
Personal observation. Most SBIR grants lead to the develop-
ment of technologies for government consumption with require-
ments that make commercial exploitation at best difficult.
9
More information can be found at www.atp.nist.gov.
10
States such as California, Michigan and New York have been
quite active in economic development and small business assis-
tance.
11
More information can be found at www.sba.gov.
12
Information about ACE-NET can be found through the SBA
web site or directly at https:rrace-net.sr.unh.edu.
6. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134130
State-sponsored venture funds, 13
and other pub-
lic–private partnerships like The Capital Network 14
Ž .TCN have been a recent innovation with the
promise of addressing the knowledge and human
resources gap as well as the funding needs of en-
trepreneurs. The state-sponsored seed and venture
funds typically take a minor equity stake in the
entrepreneurial venture while focusing on its critical
needs, albeit typically from a local, state perspective.
Capital networks like TCN are often non-profit eco-
nomic development organizations which train en-
trepreneurs in basic business skills as well as provide
access to investors, but usually from a state or
regional perspective.
4.3. Incubators 15
Often working in conjunction with state and re-
gional funds and networks are places especially de-
signed to foster the growth of small companies.
Studies have documented that legitimate incubators
increase their tenant companies’ likelihood of suc-
Ž .cess to 80–90% compared with 20% in general by
providing startups with a supportive network, infras-
tructure and physical facilities. Critical to a success-
ful incubator environment is that it should offer
experienced business and management advice and
mentoring as well as access to professional expertise,
usually coupled with an explicit requirement that
entrepreneurs complete a thorough business plan.
To date, there is no single formula for a success-
ful business incubator. According to the National
16 Ž .Business Incubator Association NBIA , most
Ž .49% incubators are non-profit, operated by groups
ranging from community development organizations
to municipal governments seeking to create new jobs
and increase local tax bases. Academic related incu-
Ž .bators 13% serve as a link between innovations
developed by universities or colleges and the busi-
13
The National Association of State Sponsored Seed and Ven-
ture Funds is headquartered in Oklahoma City, OK.
14
The Capital Network of Austin, TX, can be found at
www.thecapitalnetwork.com.
15
US Small Business Administration, ‘‘Business Incubators
Hatch Young Companies’’, more information at www.sba.gov.
16
More information can be found at www.nbia.org.
nesses that market them to the general public. The
‘‘mixed’’ or ‘‘hybrid’’ incubator, which links private
companies and public institutions in an effort to
create new business, comprise 18% of the total.
Ž .Finally, a growing number 12% are for-profit incu-
bators, which make money by acquiring equity in
their tenant companies or charge for rent or other
services. According to the founder and first execu-
tive director of the NBIA, Carlos Morales, for-profit
operations are expected to grow to at least half the
total of all incubators in the next few years: ‘‘The
future is private, for-profit incubators.’’
4.4. The electronic community
A different approach to facilitating small business
and startup success in the private sector is now
occurring through the growth of a non-profit consor-
Ž 17 .tium CommerceNet in Silicon Valley. Com-
merceNet was founded in 1994, received initial fund-
ing from the Federal Government, and is now a joint
venture participant in an ATP award 18
to develop an
Internet-based infrastructure for electronic com-
merce. It has grown to a consortium of nearly 300
corporate and organizational members who together
are struggling to form a global business community
around the idea of electronic commerce.
4.5. A new model proposed
Our analysis of software industry trends suggests
a time of increasing competition and opportunity for
entrepreneurs and small companies. Our case study
of the software industry in California shows that its
entrepreneurs face the same general issues all en-
trepreneurs face: the critical shortage of financial and
human capital. Current approaches to public–private
partnership have some merit, especially when fo-
cused on training and access to business and man-
agement experience. However, it is clear to us that
there is a great need for a new approach or model to
facilitate startup success and business network for-
mation. An open question at this conference is the
optimal location for R&D centers of excellence? We
17
More information can be found at www.commerce.net.
18
See 4
.
7. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134 131
propose that it is not their location but their connec-
tion, with each other and with business centers of
excellence, that is the key question and focus on how
to structure a virtual ‘‘network of innovation’’?
Based on the findings of the case study and our
own observations we conclude that the new model
needs to provide the small business community with
a structure and mechanism to easily access:
Ø information on ‘‘best practices’’ for business de-
velopment
Ø industry and management experience
Ø resources for international marketing, sales and
distribution
Although space does not permit an extensive dis-
cussion of our methodology, the clear focus has to be
on wealth creation. Essential to our approach are the
Ž .ideas of Rayport and Sviokla 1995 on the virtual
value chain. In short, every business today competes
in two worlds: a physical world of resources that
managers can see and touch and a virtual world
made of information. The physical world may be
addressed via incubators, but there is also the essen-
tial virtual part of the equation. From that perspec-
tive, key steps in our methodology are shown in
Table 2.
These steps above all revolve around the develop-
ment of sustainable competitive advantage for a firm
and its strategic partners. At first cut, they are blind
to geographic and resource constraints and focus
solely on pooling resources to optimize the strategic
teams’ chances for success. Pooling technical and
business talent across all frontiers, providing a clear
focus on wealth creation and a strategy to meet the
business opportunity at hand would be the main goal
Ž .of the ‘‘virtual incubator’’ see Table 3 .
It is clear to us that an entrepreneurial firm has
many needs that must be addressed in order to
become a successful venture, but that not all re-
Table 2
Methodology
Ø identify strategic opportunities
Ø identify key core competencies and human resource
requirements
Ø actively manage intellectual capital
Ø create strategic alliances
Table 3
The virtual incubator
Ø Human resources focusqcapitalsa source of integrated
resources
Ø Focus on strategic alliance formation: bringing all essential
ingredients for success together as early as possible
Ø Intellectual capital valuation and management expertise
on-board and active from the start
Ø Internet-based, distributed resources
Ø For-profit
Ø Private sector plays lead role, university and public sector
supporting roles
Ž .Ø Formalized management control systems accounting, etc.
for stability
Ø National and international business and market focus and
reach
Ø Work in conjunction with physical incubators when needed
sources must be co-located. Indeed, with the global-
ization of today’s technical and business resources,
that is an unreasonable constraint.
We propose to create a ‘‘network of innovation’’
which brings together, if only in a virtual sense,
centers of technical and business or management
excellence. This connectivity between practitioners
of ‘‘best practices’’ would facilitate powerful al-
liances of startups, universities, and large companies
which would have excellence as a common underly-
ing theme and wealth creation as an ultimate com-
mon goal. In much the same way as the CBSD
paradigm allows application builders to combine
‘‘best of’’ components to build competitive software
products, the ‘‘virtual incubator’’ will allow the best
marketeers, technologists and managers to self-as-
semble into strategic alliances to address business
opportunities. 19
To summarize our concept of the virtual incuba-
tor, we include the table of essential elements below.
Clearly our strategy has been to borrow elements of
success from all the previous models of public–
private partnership described above, albeit with a
new focus on the virtual value chain and strategic
alliances. It is also evident that the concept may need
fine-tuning for a particular industry, location or mar-
19
A recent New York Times article, ‘‘Warmth, but No Walls,
in This Incubator’’ by William R. Long describes how this works
for a software company in a virtual incubator in Colorado. See the
New York Times of January 17th, 1999.
8. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134132
ket, we have primarily focused on the software
industry because of its trend setting nature and grow-
ing role as a key source of value-added for all
industries. However, about 30 of the newest business
incubator programs in the country are ‘‘virtual’’
incubators, suggesting the power of the concept and
underlying ideas. 20
5. A new approach to organizing work in incuba-
tors
As we have noted, the advent of the Internet age
has ushered in a period of significant development of
new models of doing business and managing organi-
zations. Various authors have talked about ‘‘the
networked organization,’’ ‘‘virtual corporations,’’
Ž‘‘cellular firms,’’ and ‘‘distributed firms’’ Di Mar-
tino and Wirth, 1990; Drucker, 1994; Grantham,
.1996a; Miles et al., 1997 . Futurist Alvin Toffler
describes a ‘‘third wave’’ economy characterized by
continual and continuous change, demassified manu-
facturing, mass customization, and intensive depen-
dence on information and knowledge as sources of
Ž .competitive advantage Toffler, 1980 .
Developments in Information Technology are ac-
tually enabling, if not driving, enterprises to adopt
new work practices, new organizational structures,
and even new management styles in order to extend
their businesses both domestically and abroad. As
the pace of business activity increases and markets
emerge and disappear almost overnight, different
approaches are required to respond to these rapid
changes. The traditional industrial model of hierar-
chical, formal, layered organizations may soon be
antiquated and replaced by more flexible, dynamic
structures. Mature organizations or industries with
cultural barriers to such change risk falling behind
and being unable to compete effectively and hence,
we believe our case study illustrates a need for a new
model of business in the software industry.
We believe that successful models for work
organization in this ‘‘New Economy’’, which is
epitomized by the virtual incubator will include
small-scale networks of interlocked specialists com-
20
See 19
.
ing together on a temporary basis to approach a
focused market or software project. This combina-
tion of relatively autonomous entities or ‘‘business
atoms’’ will stay together just long enough to meet
its members’ specific goals and then disband, with
individuals and teams moving on to other projects
and other ventures. Formal workgroups with member
relationships that span long periods of time and
numerous work efforts will be replaced with these
focused, temporary, virtual organizations of organi-
Žcally formed business ‘‘molecules’’ Grantham,
.1996b; Hagel and Armstrong, 1997 .
These ‘‘disposable organizations’’ 21
litter Silicon
Valley and add a critical, dynamic human element to
the rush of new technology and ready capital. The
authors believe it is this dynamic element which
constitutes the Valley’s greatest asset. In other words,
it is not just the acceptance of an incredibly fluid
work environment, but the eagerness and ability of
the population to constantly reconfigure to capitalize
on technological and business opportunities and to
thrive in such an organizationally uncertain climate.
Yet our formal knowledge of how these new
forms of organization and management actually op-
erate is relatively limited. And while we sense that
these new management approaches may be more
appropriate for the new economy, little research has
been done to show that they actually produce higher
quality products and services for customers, a higher
quality of life for employees, or higher levels of
profitability for shareholders and other investors. The
regional success of Silicon Valley in the new econ-
omy, we believe, is the best indicator to date.
Another compelling present-day example of this
new organizational model can be found in Holly-
wood. For large film ventures today, it is typical for
literally hundreds of small firms and individual enti-
ties to coalesce around a project — usually a script
Ž .Morley and Silver, 1977 . These projects are led by
producers and directors who recruit talent for all key
Žroles including both on-screen and off-screen con-
.tributors . Often the members of a film project par-
ticipate in a shared equity model, and the final
21
Jim March, Stanford University, Professor Emeritus in Busi-
ness, Sociology, Political Science, and Education, private commu-
nication, 1998.
9. ( )M.J. Nowak, C.E. GranthamrResearch Policy 29 2000 125–134 133
product is delivered through existing distribution
Ž .channels Laumbacher et al., 1997 . Combinations of
talent from a particular film may work together on
future endeavours; but in general, once a particular
project is completed, the virtual organization that
created it comes to an end.
The film industry offers a unique and rich exam-
ple of how business and organizational structures
have shifted over time from the large, vertically
integrated production enterprises of the early studio
era to the more loosely connected functional net-
works of independent actors, production companies,
Žand distributors of today Bordwell et al., 1985;
.Lewis, 1985 .
Similar organizational transformations have oc-
curred in other traditional industries during the past
half-century as information technology has become
increasingly pervasive in business and in our per-
sonal lives. Each stage in the evolution of computing
has brought with it changes in how individuals within
organizations interact with each other, with cus-
tomers, and with information itself. No longer is
information technology merely an automation func-
tion. It has become the key business infrastructure of
the Internet Age, enabling businesses to be con-
nected and related to partners, suppliers and cus-
Žtomers around the world Daft and Lengel, 1986;
Finholt and Sproull, 1990; Prahalad and Hamel,
.1993 .
6. Conclusion
The authors propose a virtual incubator model to
facilitate small company and startup success and to
enable US industry to take advantage of the evolu-
tion towards distributed human resources and a busi-
ness landscape dominated by strategic partnerships.
The development of sustainable competitive advan-
tage for a firm and its strategic partners would be its
operational focus, with ‘‘best practices’’ and excel-
lence the underlying theme and wealth creation as
the ultimate common goal. We also need to examine
new and innovative ways of organizing to do this
‘‘knowledge work’’. One of these new models has
emerged from this case study that looks at a more
temporary project focus of software teams, than a
more traditional ‘‘permanent’’ organizational struc-
ture. By supporting a virtual ‘‘network of innova-
tion’’ to connect centers of technical and business
excellence, universities, the public and private sector
could play a critical role in addressing the knowl-
edge gap which will increasingly limit growth in a
knowledge-based economy.
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