Innovation that fits

Venturing within corporation

Corporate venturing, a strategy where established firms invest in or collaborate with startups, has seen varying degrees of success across industries. Initially, it was seen as a critical innovation pathway, with companies like enron, xerox, and lucent technologies investing heavily but ultimately facing significant losses. Intel capital, however, stands out for its successful investments. The approach has faced criticism for not enhancing innovation across the entire organization, generating ideas that don't align with the parent company's core strategy, and difficulties in integrating successful startups back into the parent company. The distraction and resource allocation to these ventures can also detract from the parent company's performance.

Despite these challenges, corporate venturing has thrived in the pharmaceutical industry, where investments are closely aligned with the parent company's interests. Modern strategies include linking venture activities directly to the core r&d needs of the parent company, engaging with venture-capital-led communities for insights and potential collaborations, and focusing on investments that offer direct benefits to the parent company's strategic goals.

The mixed experiences with corporate venturing suggest it is not a universal solution for innovation challenges. Successful ventures often result from a focused approach that leverages the parent company's assets and aligns closely with its core strategies. Companies like google, ge, and microsoft have demonstrated the potential benefits of corporate venturing, including access to new markets and technologies, when executed with a strategic focus. The key is for companies to recognize the limitations and potential of corporate venturing, aligning efforts closely with their core innovation strategies to avoid the pitfalls experienced by some in the past.

Licensing intellectual property

Intellectual property (ip) licensing has gained prominence in the digital age, with companies like ibm generating significant revenue from patents, though these figures are often dwarfed by their research and development (r&d) expenditures. The commercial value of ip largely stems from its application rather than mere knowledge, which is why corporations often outvalue universities in this realm. Universities have found limited success in ip licensing since the true innovation value emerges during commercialization, not at the conceptual stage.

Ip's intangible nature complicates its management, with licensing agreements open to interpretation and disputes potentially costing billions. Moreover, companies that depend on licensing external technology may see their own r&d capabilities diminish over time. Managing an ip portfolio incurs substantial costs, and the ever-changing political landscape around ip rights, coupled with rapid technological advancements, can affect the enforceability and value of ip.

Despite these challenges, ip remains crucial in the new economy, with effective management strategies being key to leveraging innovation value. However, the asset-lite model of ip licensing, which minimizes tangible investments, has limitations. Most industry revenues and profits derive from the execution of ideas, not just their conception. Without deep involvement in product development, companies focusing solely on ip may struggle to innovate and remain competitive. Thus, for most firms, ip licensing is part of a broader innovation strategy rather than a standalone solution.