Innovator’s Dilemmas: to invent or not to invent?
“One of the oldest barriers to innovation is “Not Invented Here,” a persistent bias of even the most creative people toward their own creations and against those of people who work for other companies. And the problem of N.I.H. isn’t limited to business; it can also infect the military and government research agencies.”
“How much of a company’s technology does it create on its own? How much does it buy from others? These questions (…) are central to “dealing squarely with the dilemma of innovation” and the pursuit of great ideas. How to resolve the tension between make and buy varies from one organization to the next.”
“Cisco has 50 executives scouring the globe for technology acquisitions.”
Read Pascal Zachary’s article on The New York Times.
I’m at the airport and just finished reading Pascal’s article on my mobile phone. He provides the following examples:
- Sun Microsystem’s recent purchase of MySQL.
- Microsoft’s proposed takeover of Yahoo.
- Google’s purchase of YouTube.
- eBay’s purchase of Skype.
- Cisco’s serial acquisition strategy.
When discussing this topic, Cisco, Google and Microsoft happen to be well known reference cases. These three companies have grown their product portfolios by leveraging both in-house research and technologies from third parties.
Acquisition strategies often involve more than buying technology and intellectual property. For instance, capturing know-how and global talent in no time can actually help the buyer further innovate and leapfrog direct competitors. In some cases, M&A speeds up time to market, consolidates fragmented industries, and can deliver a customer base which a new in-house product would find difficult to match in fast paced markets.
The fact is that various kinds of partnership models can also deliver interesting opportunities for companies to collaborate even with direct competitors. Enabling and supporting ecosystems of third party partners and indirect sales channels happen to be a necessity in many high-tech markets.
Nonetheless, integration strategies, whether vertical (e.g. purchasing other companies in the value chain) or horizontal (e.g. take overs of similar businesses) seek significant market advantages and opportunities to displace competitors. But, as you might have already guessed, there are plenty of cases illustrating that things can go sour.
In my view, the learning is that there is no single rule of thumb that dictates how to go over a “make / buy / ally / outsource” type of analysis. This kind of decisions require analytical and integration skills as well as the understanding that working assumptions can significantly change as time goes by.
Related posts:
- Innovator’s Dilemmas: to innovate or not to innovate?
- Not invented here and Vulcan Mindmelt Innovation
- The globalization of innovation
Picture credits: mobile version of The New York Times. Screenshot of my phone’s browser.
| J. de Francisco |  |
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| O’Hare, 30 March 08 |  |
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