Technology Venturing

Corporate Innovation and Growth


 What is your next move?

Companies need innovation to compete and grow. They may do really well, growing year on year for some time, and then at some point they reach a glass ceiling to growth and nothing seem to make any real change. Peter Drucker the father of management science once said:
"A Business Enterprise has two main functions: innovation and marketing. Everything else is just expense!"

(Read more about companies Innovation Challenges)

History shows that companies will only continue to grow and prosper in the long run if they are capable of morphing into new technology and business areas.

They need to constantly look for ways to drive their growth and competitive advantage in the future. And they have been trying it, one way or the other, all along.

However confronting an increasingly competitive global economy and the emergence of innovation centers all around the world makes it harder and harder for companies to go about innovation with a casual and ad-hoc approach.

About 62% of businesses report they struggle to keep pace with innovation necessary to help them grow.

The most successful companies are those that have developed an aggressive innovation plan and have made it a critical component of their growth strategy. They also realize that in a world of widely distributed knowledge, companies cannot afford to rely entirely on their own research.
They use Corporate Open Innovation and use it systematically and effectively.

To be an open innovator, a company employs external collaborators to originate or develop innovations. This is different from traditional 'closed' innovation, where in-house research and development (R&D), production engineering and marketing departments collaborate to produce new products and services.

What are the options?

Corporations use a variety of approaches to innovate and grow, including internal R&D, incubation of
new businesses, alliances, strategic investments (Corporate Venture Capital) or acquisitions.

Let's review each option:

- Internal R&D

For obvious reasons internal R&D is always pursued as the first option.
This works well for extensions to existing products, but rarely for game changing ones. Major innovations require flexible timelines and unboxed creativity.

In established companies internal teams are frequently constrained by technical and cultural factors, limiting the possibilities. Furthermore it is challenging to manage long-running, parallel projects within the organization without interfering with day-to-day business.

- Merger and Acquisition

Usually acquisition is considered as the next option.
It can be very fast and it can provide side benefits such as customer base. However there is not much room for mistake. The cultural conflicts, integration problems add to the challenges.

- Corporate Venture Capital

Making many small external investments (e.g. startups) is a less pursued option due to high overhead, long time horizons and uncertainty. Nevertheless being done right this can be an inexpensive and attractive option.



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