Summary: Innovation That Fits

Review and Analysis of Lord, Debethizy and Wager's Book

BusinessNews Publishing

• Publisher: Must Read Summaries
• Year: 2016
• eBook ISBN: 9782806247339
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

The must-read summary of Michael Lord, Donald Debethizy and Jeffrey Wager's book: `Innovation that Fits: Moving Beyond the Fads to Choose the Right Innovation Strategy for Your Business`.

This complete summary of the ideas from Michael Lord, Donald Debethizy and Jeffrey Wager's book `Innovation that Fits` shows how innovation is not based on fad ideas and new trends. The basis for innovation can never be a `silver bullet`. In their book, the authors go through each of the innovation strategies implemented by companies and how to make them all work as effectively as possible, and to which businesses they are best suited. This summary will teach you how to ensure that your strategy will be successful by doing research and exercising caution, in order to set up a structure that is focused, integrated, monitored and controlled.

Added-value of this summary:
• Save time
• Understand key concepts
• Expand your capacity for innovation

To learn more, read `Innovation that Fits` and discover how you can choose the best strategy that suits your company and will provide results.

Summary of Innovation That Fits (Michael Lord, Donald Debethizy and Jeffrey Wager)

1. The five innovation options

1. Corporate venture capital investments

Corporate venturing is where an established firm attempts to emulate how a venture capitalist works. The company makes equity investments into outside start-ups or establishes a standalone internal “skunkworks” where new ideas can be pursued without interference from the corporate hierarchy.

Track Record

In the late-1990s, it was widely assumed that corporate venturing would be an imperative. Many companies set up internal business incubators and standalone venture capital funds. By one estimate, $17 billion was invested in 2,150 corporate venture capital deals in 2000 alone. When corporate venturing took off as a fad, almost every large corporation tried some form of corporate venturing. The largest and most prominent were Enron, Xerox and Lucent Technologies – who each lost billions of dollars in shareholder value in the early 2000s. Intel Capital has been one of the most prolific corporate venture capitalists, with some very noteworthy successes. As the losses have piled up with relatively few success stories, most corporations have now abandoned the corporate venturing approach to innovation.

Key Problems With Corporate Venturing

• Companies poured massive amounts of talent and resources into quasi-autonomous start-ups – which was fine but this did little to enhance innovation elsewhere in the organization.
• Internal business incubators are good at generating creative ideas but many of these ideas subsequently turn out to be irrelevant to the parent company’s core strategy or business direction.
• Even when venture capital seeded ideas turn out to have commercial potential, it is usually difficult to integrate the start-up back into the parent.
• Juggling the demands of a number of new ventures requires a large commitment of time, energy and attention by the parent organization’s management. This can be quite a distraction for most companies.
• Even when the new start-ups succeed in their own right, their financial results might end up amounting to little more than a rounding error for overall corporate financial performance. It may take a decade or more before a start-up can achieve a scale that will make its results material to those of the parent corporation. Those same resources if used in the business might produce a more immediate performance boost.

“Corporate venturing was, the theory went, the primary or sole hope for large and mature companies to stay strategically, competitively, and financially fit. Corporate venturing experience seems to offer a more mixed and cautionary message. Don’t go looking for company salvation – or even substantial rejuvenation – in corporate venturing. You’re likely to be disappointed. The odds were stacked against corporate venturing because of the very strategies, structures, and processes by which it was typically pursued.”

– Michael Lord, Donald DeBethizy and Jeffrey Wager

Lessons to Learn

• Corporate venturing has worked well in the pharmaceutical industry for many years. The difference there, however, is that existing companies only invest in start-ups which are of potential collaborative interest to the parent organization. By focusing on investments in the health care field, these companies have prospered. In other words, corporate venturing seems to work best when firms recognize their own limitations and narrow their focus rather than trying to cast as broad a net as possible for new and novel business concepts. If a firm does want to invest in domains away from its line of business, it should do so in partnership with an outside party, preferably an independent venture capital firm with experience in this field.
• Smart companies are now starting to link corporate venture capital activities directly to the core R&D and business development needs of the parent organization. This may take the form of investments in startups, targeted joint ventures, licensing arrangements or a host of other options, but the key is to link these entrepreneurial activities back to something the parent company actually needs.
• Another intelligent approach companies are using today is they are actively monitoring and communicating with venture-capital-led communities. By participating in these communities, companies can be on the lookout for new ideas, new technologies and products which may impact on the firm’s core business at some point in the future. Thus, even without investing a single dollar, smart companies can gain favorable access to opportunities to license, form alliances or make future equity investments in new dev...

Table of contents

• Title page
• Book Presentation
• Summary of Innovation That Fits (Michael Lord, Donald Debethizy and Jeffrey Wager)
• About the Summary Publisher
• Copyright