What Makes Innovation Partnerships Succeed

 

Link: https://hbr.org/2022/07/what-makes-innovation-partnerships-succeed

Increasingly, companies today are aggressively pursuing breakthrough innovations. But to succeed in a significant, cost-efficient, and timely way they need to partner with other companies who have their own special interests and concerns, which turns out to be very hard. Partnerships are especially important in the tech sector, which moves fast with innovation as its fuel. In this article, the authors report on the efforts that Meta has made in establishing successful innovation partnerships with other companies, and they share guidance for leaders who wish to do the same

Breakthrough innovation creates new product families and economic opportunities by introducing novel paradigms and platforms. But it's never a one-man show. Even the largest corporations require partner. Partnerships for innovation provide numerous benefits. They reduce R&D costs, add expertise and flexibility, and aid in the creation of new markets. They can also shorten the timelines for innovation and commercialization, which is critical given that achieving and commercialising breakthroughs can otherwise take decades. As a result, 94% of executives in the technology industry believe that collaboration on innovation is a necessary strategy.

The problem is that the vast majority of these collaborations fail, particularly when it comes to making breakthroughs.

Why? There are numerous reasons for this. Companies select partners who are not a good fit for them. They set erroneous objectives. They either fail to communicate effectively or fail to meet product specifications. They are hesitant to share vital confidential information for fear of leaking intellectual property. They are resistant to change or are unable to deal with unexpected circumstances. The truth is that innovation is complex and risky, and collaboration can increase the risk.

That is certainly true for the companies developing the AR/VR/metaverse experience. To achieve their objectives, these companies must make critical breakthroughs in optics, hardware, and material technologies — breakthroughs that could take decades without collaborative innovation. The stakes are high, and for these companies to succeed, their collaborations must be flawless.

A better approach, which Meta has taken with its partners, is to allow all participants to take risks that are proportional to the potential benefits. External partners are more likely to take on technically risky development tasks if they are allowed to use the underlying technology to meet a variety of their own needs along the way. Meta used this approach to create a tiny new optoelectronics component called a high-voltage boost converter. Rather than focusing solely on the specific boost voltage requirement for our application, the vendor was encouraged to design this component as a platform that could be configured for any boost voltage within a range with minimal design changes, making the platform more versatile.

This platform approach has many advantages. It reduces risk for the vendor. It doesn’t limit product development to one customer’s use. It prevents time-limited market advantage in the customer’s original field-of-use. It amortizes the costs of the new-technology development over multiple applications and product generations, creating conditions in which partners can undertake assignments that might otherwise be considered too risky.

In the end, it all comes down to trust. If you want to efficiently develop and commercialize breakthrough innovations, you need to collaborate with partners who will come to the table with their own interests, expectations, and concerns. To establish trust and develop a productive collaboration in this situation, you’ll need to establish clear, win-win rules of engagement and figure out how to allocate risk fairly. If you can manage that, you’ll be able to navigate the conflicts and concerns that will inevitably arise, and you’ll be able not only to sustain but also accelerate your innovation.