Incubation in the DMZ

I’m often wrong but rarely pleased about it. It happened again last week when I went to Ryerson University’s DMZ (Digital Media Zone, 'the Zone') for their 2nd birthday/expansion celebration.

I’ve been a skeptic because DMZ seemed to be more interested in creating a learning environment than in launching businesses. I left reminded that these aren’t unrelated objectives.

For a variety of reasons, business incubators typically demonstrate rigour by setting strict terms about admission and graduation. They set time limits for the companies they bring in, and they charge occupants for space and services. But not in the Zone.

DMZ charges nothing. Rather than set fixed terms, it lets companies remain and grow until they are ready and feel like moving out. A high proportion of applicants actually get into DMZ (with some grooming), whereas other incubators demonstrate quality by citing low acceptance rates.

Yet DMZ has produced a respectable number of start-ups (8 graduates) in its first year, and after touring the facility again last week, I’d say they’ve got more in the pipeline. Congratulations to Valerie Fox and her team, and to the University that provides the space, time, funding and people to make this work.

It works in part because of the gentle treatment it gives its tenants. Generally speaking, these are very young people who aren’t about to bring anything to market soon without a lot of help. In Fox’s words, DMZ is trying to maintain a learning environment rather than hustling entrepreneurs through the familiar start-up gauntlet. She says 'community' is the key to DMZ. Tenant companies must be active participants in the DMZ, whether it’s the demonstration of a prototype to visiting dignitaries of the Canadian or foreign governments (these tours happen at the rate of about 5-6/week!) or sharing ideas with fellow DMZers or offering expertise after you’ve left.

Although this may sound very different than the conventional language of business incubators, maybe it’s not. Mentoring and coaching, which are staples of the incubator experience, seem to be more about guidance than learning, but they are forms of learning nonetheless. Perhaps DMZ’s entrepreneurs need help at a more fundamental level than more experienced entrepreneurs, but it all adds up to the same thing in the end – competently fostered companies entering the marketplace with a valued offering and a viable plan.

I left thinking that the softer language and the depressurized environment of DMZ is a very pragmatic response to feedback from its inhabitants. DMZ has learned, and continues to learn, what its users need. Perhaps this is why, after its second full year in operation, it can boast about its success and announce yet another expansion of its facilities along with the addition of pre-incubator courses and an accelerator. It has learned how to serve its student and alumni entrepreneurs, some of whom probably wouldn’t be accepted into a more conventional incubator or wouldn’t survive to graduation.

Ryerson’s DMZ is an exception to the rule in other ways too. Our research shows that most incubators are created by multiple institutions in partnership. This is usually a financial necessity, and in the best cases, a virtue is made of this necessity by bringing the standards and practices of the partners together in the design and operation of the incubator. We have argued that the resulting balance between corporate, academic, and civic perspectives produces better outcomes than what results from incubators designed with a single perspective or motive.

DMZ wasn’t dependent on such a partnership for its creation, nor is it reliant on outside institutions for its expansion. Ryerson’s President, Sheldon Levy, has insured that DMZ has the money, the space, and the personnel to pursue its objectives without the complexity, compromise, and delay entailed by partnerships with government or industry.

All of this leaves me scratching my head. Perhaps DMZ isn’t actually breaking the rules. It applies soft rigour and a purposefully broad interpretation of 'digital media' in a canny effort to maintain an environment in which young entrepreneurs feel emboldened and unconstrained. It isn’t obliged to satisfy the objectives of outside institutions in its design or the operation and doesn’t dictate terms to its users. Instead it is self-consciously responsive to user feedback in the way it creates space and offers support.

Actually, I think it conforms to our research findings in most other ways, starting with executive leadership, a bricks and mortar location, an immersive experience, access to significant mentor and funding opportunities, and solid (albeit undeclared) performance metrics for the incubator and its hatchlings.

DMZ achieves its ends by unconventional means, and Ryerson is unusual in its commitment to establish and grow an incubator in prime, downtown real estate. Whether it’s the exception that proves the rule, or it’s just plain peculiar, DMZ seems to be delivering on the promise of business incubation. Perhaps this is one of the reasons Toronto was recently named the 4th best city in the world to start a business.

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