That's a great point (and one we should have captured). I'd even argue that M&A for some companies is the primary method by which they bring innovation into the mothership (instead of doing it organically via an independent innovation center). However, one of the risks of relying solely on M&A is that you risk losing the capability of innovating from within (which can be a major problem if there is no viable M&A target on the market that meets your needs)
Thanks for the quick reply. Have you checked into the Straumann Group (dental), or Danaher (multiple--Fluke was a portfolio company that grew under this approach for a long time)? While you do call out a risk...I'd argue that risk is smaller than the risk of exporting to an innovation center is greater than nothing being available to acquire.
I haven't looked into the Straumann Group or Danaher (but I will). Thank you for the recommendation!
I think you're right about the M&A risk being relatively low (especially in a market like right now where valuations are suppressed and the number of companies open to being acquired is higher than normal).
And Innovation Centers definitely carry risks of their own (ex: does the cost model make sense when it's brought back into the parent company, are employees incentivized the same way a startup team is?). Venture Studios (ex: High Alpha Innovation) are offering some interesting workarounds to this problem.
The main thing I've counseled executives about is the risk of outsourcing their internal capability to innovation. If they rely wholly on acquisitions to supplement that, it can become a problem (especially in the M&A doesn't go well). That being said, M&A is an excellent option (especially for larger companies) needing to bring fresh ideas in-house. I think you were spot on in calling that out as a miss in the article.
This issue also happens with other business tools when implemented to be in the trend without considering second-order effects. Agile is the first that comes to mind
Agile is a great example. Any implementation of a new business system (Agile, Waterfall, Lean Six Sigma, Process Engineering, JIT, etc.) needs to give careful consideration to the full impact that these systems will send throughout the entire company. I think these tools can be incredibly valuable, but leaders need to be careful that they're used in the right context and amounts to avoid accidentally harming other aspects of the business (ex: morale, innovation, creating bottlenecks, etc.)
This made me think about using the "Pomodoro" technique when studying over long periods of time or laser-focusing on work/projects. I think it works great for getting things done efficiently, but I also feel that it can stifle creativity and serendipity. I believe this is similar to what is mentioned above. Thank you so much for writing this awesome article!
M&A is another potential avenue for innovation. Early-stage investments with exclusive buy rights if you want to ensure beating competition.
That's a great point (and one we should have captured). I'd even argue that M&A for some companies is the primary method by which they bring innovation into the mothership (instead of doing it organically via an independent innovation center). However, one of the risks of relying solely on M&A is that you risk losing the capability of innovating from within (which can be a major problem if there is no viable M&A target on the market that meets your needs)
Thanks for the quick reply. Have you checked into the Straumann Group (dental), or Danaher (multiple--Fluke was a portfolio company that grew under this approach for a long time)? While you do call out a risk...I'd argue that risk is smaller than the risk of exporting to an innovation center is greater than nothing being available to acquire.
I haven't looked into the Straumann Group or Danaher (but I will). Thank you for the recommendation!
I think you're right about the M&A risk being relatively low (especially in a market like right now where valuations are suppressed and the number of companies open to being acquired is higher than normal).
And Innovation Centers definitely carry risks of their own (ex: does the cost model make sense when it's brought back into the parent company, are employees incentivized the same way a startup team is?). Venture Studios (ex: High Alpha Innovation) are offering some interesting workarounds to this problem.
The main thing I've counseled executives about is the risk of outsourcing their internal capability to innovation. If they rely wholly on acquisitions to supplement that, it can become a problem (especially in the M&A doesn't go well). That being said, M&A is an excellent option (especially for larger companies) needing to bring fresh ideas in-house. I think you were spot on in calling that out as a miss in the article.
This issue also happens with other business tools when implemented to be in the trend without considering second-order effects. Agile is the first that comes to mind
Agile is a great example. Any implementation of a new business system (Agile, Waterfall, Lean Six Sigma, Process Engineering, JIT, etc.) needs to give careful consideration to the full impact that these systems will send throughout the entire company. I think these tools can be incredibly valuable, but leaders need to be careful that they're used in the right context and amounts to avoid accidentally harming other aspects of the business (ex: morale, innovation, creating bottlenecks, etc.)
Glad you enjoyed it! I haven't heard of the "Pomodoro" technique before. Thanks for putting that on my radar
This made me think about using the "Pomodoro" technique when studying over long periods of time or laser-focusing on work/projects. I think it works great for getting things done efficiently, but I also feel that it can stifle creativity and serendipity. I believe this is similar to what is mentioned above. Thank you so much for writing this awesome article!