In advising the entrepreneurs, directors and investors on growing better incubators the discussion often turns to measurement and indicators. Sometimes we come to this topic while trying to articulate and align what their mission means in practice, other times we are to quantifying or qualifying what is already being done and feels like in accordance.
This post is to share four fundamental considerations, four useful distinctions between groups of indicators, and one bonus 'impossible' indicator. For each there are some illustrative examples that may be useful in these conversations. The intention of this communication is to grow our intelligence as incubators and facilitators in service of our purposes.
These suggestions are gleaned from practice and dozens of incubators, programs and practitioners. So their usefulness remains an open question. Comments from your experience will improve them, and are welcome.
These principles can be a good guide for your approach to indicators.
In every sense - pursue honesty in your motivations for measuring, the accuracy of your data collectino and truthfulness of communication about your findings. Honesty is both a means and an end in itself and fundamental to being effective.
Intend to become clearer on what and who your incubator is for. Are you focused on results for founders, ventures, your incubator, investors, your community or globally? A previous post on 'What is a good incubator?' goes further into this. Without clarity your measures and indicators will only add to any confusion.
An example: if you are backed by a fund taking equity for 10x future returns and your focus is on financial metrics of ventures you may prioritise that data over the subjective evaluation of the programs by founders, social impact of their innovations.
Indicators and measures are for making decisions. Creating measures is also an oppounrtity to make explicit the assumptions, hypotheses and logic underpinning your operations. Your data and analysis can test hypotheses, beliefs and illuminate alternatives. Think 'lean': be rigorous and scientific in your experiments and use those findings to actually guide your decisions.
You can't and don't want to measure everything. Consider these questions to help prioritise. What are....
- things you can measure that no-one else can or will? Agencies, partners, entrepreneurs may all also be measuring things.
- the most valuable data and analysis for you, or others? Collect information that will create real value for key audiences.
- necessary to test assumptions, inform your strategy? Measure what you need to make key strategic and operational decisions.
- time-sensitive because it won't be accurate or findable later? Participant evaluations of a program can't be asked for a year later.
- inspirational or motivational? Stories, milestones and feel-good moments can be as useful as quantitative data.
- requirements for each type of metric? Do you have the skills, knowledge, resources to actually measure and analyse the data?
An example: if your target audience are aged between 15 and 25 to empower entrepreneurship as an alternative to tertiary education, it may be relevant to analyse: age of your social media followers, track if / when they still engage in tertiary education, how their rate of company formation and success compare to other age groups and programs. Some of this data may be collected by others, and you can use it and align methods so your data is comparable.
In advising governments and incubators on what to measure, creating four groupings of indicators has proven useful. They aren't precise slices, more like a way to group options from a smorgasbord into manageable selections. And much like the benefits attributed to eating a balanced diet, there's merit in selecting measures from each grouping.
A. Indicators for you
Whether for value-creation, vanity or viability, these are the essentials for you and your team to assess and adjust your own performance.
- your financial performance: revenue, expenses, profit, cost of sales,
- churn rate, revenue by source (sales, grants, sponsorship etc.),
- social media followers, reach and engagement,
- number of members, participants, ventures assisted,
- number of events, programs, media mentions,
- diversity, demographics, carbon emissions,
- number, contribution and value or mentors and volunteers,
- number of patents generated, value of IP protected,
- performance of your portfolio companies
Examples and methods of most of these abound as they are collected by all types of organisations and programs, not just incubators. You can search within each relevant domain (marketing, IP, event management) to refine exactly what measures are best and most appropriate.
There are also software platforms specifically for incubators that streamline collection, integration and analysis of many such metrics. If incubation is your core business, seriously consider some of these powerful platforms: Flitepath, Gust (for accelerators), Hockeystick.
B. Indicators for your audience
These indicators matter to those you are serving, partnering with or are supported by. They can indirectly affect your performance and viability. You can influence their perceptions directly, or through others e.g. testimonials or verification by a third-parties.
- Testimonials and stories - participants, partners, politicians may all say good things about you or share stories of what you've done. Collecting, analysing and communicating that qualitative information can influences others (positively) and addressing any critical feedback can be to the benefit or your learning and reputation.
- Outcomes for partners - funders, sponsors, delivery partners likely have their own objectives, different from your own. If you value the partnership then measuring how you contribute to their objectives may be valued. Examples are varied, but they may include things like number of media releases in national publications, number of jobs created, area of commercial floorspace rented, export earnings by ventures. These will all be specific to your partners and simply asking and seeking to align them is often a powerful and trust-generating conversation to have with them.
- Benchmarking - there are institutions and communities that use indcators as the basis for comparison between incubators. Examples include:
C. Indicators for your ecosystem and community
Some incubators are focused on their overall contribution to a community above all else. From another perspective, community or funders may care much more about the impact or benefit generated by your incubator than what's in the direct scope of its activities. If you have a specific focus for your space or programs like regenerative agriculture, creative industries, First Nations entrepreneurs or social enterprises addressing homelessness, these indicators may actually be core to you and your partners.
For each context there will likely be a method or expert to guide the accurate attribution of systemic change to your incubators contribution:
- Economic contribution e.g. export dollars earned by ventures, jobs created, incoming investment attracted, new industry clusters or collaborations facilitated,
- Social contribution e.g. participation by disadvantaged or under-represented audiences, attraction or retention of population,
- Ecological contribution e.g. carbon emissions avoided, ha of land regenerated, endangered species protected,
- Cultural contribution e.g. effect on culture of a community, vibrancy of the urban area, cultural traditions created or preserved,
- Startup ecosystem contribution e.g. effect on Startup Genome or other global startup ecosystem rankings.
D. Indicators for the field
You, and others, may be interested in this whole 'incubator' and 'accelerator' thing (the idea, field) and how it's working. There are networks, institutions and academics who collect data and consider assumptions underlying the theory and practice from economic, cultural or social perspectives. You may want to collect and contribute data and / or participate in networks and conversations that progress this level of questioning and improvement.
Examples how to do this include:
- Sharing accurate data to government e.g. in progress reports or acquittals of project funding, in submissions or contributions to strategy adn policy development,
- Participating in ongoing global programs e.g. Global Accelerator Learning Initiative
- Growing networks and having critical conversations with peers in networks, institutions or confrerences e.g. Meshpoints, Convenors, Aspen Network, and Frontier Incubators
Bonus: an 'impossible' indicator?
Perhaps the most important indicator is also the hardest to pin down. Let's call it "Possibilities Created" 💡
What this refers to is the moment, insight, realisation, connection or interaction when something newly valued is first created. This is when something that was previously impossible or not imagined suddenly comes into being for an individual, venture, community or industry. A whole world of opportunities may be created that transcends, cuts across or doesn't fit neatly into any 'measures'.
Some semi-fictional examples of what might have happened and how it is communicated:
- "It was in our program that a young artist really "got" and created for herself the possiblity that she could make a living from her art through being entrepreneurial",
- "We proved you can operate incubation programs for community benefit through a sustainable social enterprise model in regional Australia",
- "We facilitated a workshop where the term Blue Economy first got mentioned, so that whole field sort of got created",
- "Our approach to impact investment demonstrated its viability and benefit to government institutional investors. Since then more than $X million has been invested...."
- "It was at our event that Melanie got talking to Bill who then got introduced to….[etc] and now they are worth a billion dollars and employ a thousand people"...
Some of these might be outrageous for an incubator to claim credit for, but in some way and measure it could be attributable. While hard to value quantifiably, possibilities created are excellent indicators of the qualities or quality that your activities, programs or spaces may seek to create. They give some sense of the potential you are creating space for. So, if it's true that making the previously impossible possible is your intention then look out for when it happens and make time to document it.
So, that's a run down 💁🏼♂️
- Four fundamental Considerations,
- Four groupings of Indicators, and
- One impossible indicator of entirely new possibilites created.
Two final thoughts
One is that the if you are honest, clear, decisive and prioritise, then what you look at and for (indications) will direct and 'be' what you are doing and the intelligence you are developing. Your intentions, attention and questions will change what you do, become who you are and be the effect you are having. It's not about the indicators and it's all about the indicators.
Two is about what this means in practice. Let's take as an example an incubator with a mix of sales (coworking, programs, sponsorships) and grants revenue. You may devote ten person-hours per month to some form of measurement. Your focus within those limits could be:
- Meeting reporting and evaluation requirements of sponsors;
- Automated aggregation and analysis of financial data, social media and newsletters;
- Annual surveys of participants each program or community annually;
- A couple of hours each month to capture and celebrate milestones or progress directly relevant to your mission and 5-year vision;
- Contributing to one or two national or global surveys or reports; and
- Sharing full and factual data with government and researchers when they ask for it, and, of course,
- Always keeping an eye out for new possibilities being created for people, ventures, communities and the field. You never know where, when or how it might happen....but it can be your constant intention that it does.
A complementary codified guide to how to implement some of the four groupings of indicators is also available from InBIA.