Modeling the City Incubator
Posted by Tara Sturm on December 12, 2012
Photo via Dennis Yang
There have been a number of publications detailing the concept of the city as a startup. This is a useful framework for managing cities more efficiently and creatively. As we look at the private market, though, we find that only a small fraction of startup companies will ever come to be successful and sustainable. Merely approaching running cities like a startup, then, is certainly not enough.
Incubators are an invaluable asset to the startup community—but what would a city incubator look like? What would it do? We will look at a few roles that business incubators take on, and try to understand how the same model can be applied to supporting cities.
Covering the Basics
Business incubators realize that while someone may have a great idea, not every passionate entrepreneur necessarily has the means to pull it off—or may not know how to make it sustainable in the long run. The very first question any advisor or mentor would ask after hearing your pitch is: how does it generate revenue? While a city financing structure is clearly unique, it is important to understand that maximizing return on investment is critical. In many cases, the role of the incubator is to ask the difficult questions. Who is your target audience? What is your value proposition? How are you differentiating yourself from your competition? The city—whether the actor working to improve it is a governmental agency, nonprofit, or other organization—must be able to admit when it doesn’t have a good answer. Many entrepreneurs fall in love with their products and ideas, making them blind to the reality that the numbers just don’t work out. An incubator would help the startup city recognize this, but also help them to understand what changes could be made to make the idea viable. In turn, the city learns to be flexible.
Incubators provide startups with the physical infrastructure needed to test-run and evolve their business and strengthen legitimacy. They also provide marketing resources. Cities already have space, but they exist as the culmination of a variety of different decisions, spatially scattered and independent of one-another—despite the fact that these individual decisions could intertwine quite closely when it comes to impact. A city incubator could provide space for different actors within a community to come together in driving growth. The importance of carrying a strong brand is just as important for cities as it is for startups. Having a clear community identity will strengthen vision, and the commitment to that vision. At the same time, marketing is only as good as the product one sells. Ensuring your city has value to the customer is just as important (if not more so) than communicating that value to current and potential residents.
Networking is a vital component to any incubator, as building connections leads to the intersection of ideas and resources—leading to a much greater likelihood of success. A city incubator could draw on this idea to create linkages between different actors within the city. It could create linkages with experts who have found success in their own ventures, so that the startup can draw on that experience. It could, then, connect cities with new ideas to springboard their own growth—understanding, though, that replication does nothing for the market. You have to either take an existing idea and implement it far better, or find a way to differentiate it or innovatively apply it for a different use to ensure demand.
There are many more functions and services that incubators provide to startup companies. What others do you think can be applied to helping cities grow?
Growth requires asking necessary questions and the ability to admit you don't have a good answer.