Debunking Innovation Myths

Myth Five: The Best Strategy for Corporate Innovation is through Acquisitions

As the final installment of this week’s innovation myth series, this will be brief. Some companies have a simple innovation strategy. They let others take the risks and then acquire businesses that have been proven. In some respects, it is hard to argue against this strategy—it has many advantages and has worked for some companies. The key word, however, is “has”. In a world characterized by exponential growth and disruption, relying on acquisition as the core innovation strategy falls under the myth category.

Some of the challenges of this strategy are the same as have been all along. Simply put, many acquisitions fail to deliver the results anticipated by the acquiring company. In spite of rigorous due diligence, it is hard to know exactly what the company is getting until they have operating experience. And, it is often hard to integrate executives and cultures into a new organization.

But more importantly, acquiring an innovative company, whether it is operated as a standalone or integrated into the organization, will not make a traditional company an innovative company. If the skills, processes, structures, reward systems and norms are all still the same, the company will not suddenly become an agile, adaptive and innovative company.

Becoming an innovative company does not mean that everyone in the company has to become an innovator. It does mean, however, that as product life cycles become shorter and shorter, a company must develop the capability to continually innovate and disrupt.

Assuming this imperative can be achieved by a core acquisition strategy is myth.

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