Innovation by Acquisition
Getting your innovation mix correct includes having innovation from M&A’s as part of the innovation strategy. As with anything, there are pros and cons so go into innovation M&A with your eyes open. There are two types of innovations from M&A:
- Acquiring a company
- Purchasing IP (intellectual property such as patents, trade secrets, etc)
In some cases, M&A can allow an organization to become lazy when it comes to innovation. M&A can lower the risk since the other organization has proven the opportunity, it also has a lower return. Innovation from mergers and acquisitions needs to be part of the mix rather then the primary way an organizations fills its innovation pipeline.
When M&A is part of the innovation strategy, it can be a great tool to secure a key position in the existing industry (e.g. acquire a competitor with unique IP) or grow into an adjacency (e.g. acquire new skills and expertise needed).