8 Instruments to Monetize Innovation
I was talking with two executives last week – one a CEO of a pharmaceutical firm and the other the Chief Innovation Officer and Head of Regulatory Affairs for a Fortune 100 company.
Different industries, different days, similar urgent needs, same question. And the question? How do they catalyze emerging businesses to accelerate revenue and EBITDA growth? One of them put it well, ‘our traditional growth model, itself, needs innovation. We are looking for new ‘growth engines’.’ They are both exploring a mixture of business incubators and accelerators, venture funds and IP licensing arrangements – all instruments designed to support growth. But they were both stopped by a simple question: which instruments do you use when and for what purpose?
The purpose of this post is to suggest a pragmatic way to answer this question, recognizing that the objective may be the same – e.g., get me some new institutional arrangements – instruments – to monetize our innovation – but the choreography in figuring which ones to use when, for which purposes, for how long, with what set of capabilities is easy, *if* you know the steps to take.
Figure 1 suggests 8 instruments for monetizing innovation.
Each has different:
- Business objectives
- Capabilities to get to work
- Time horizon and
- Risk / return profiles
And here it starts to get entertaining. Each can be useful, and even productive. The challenge comes in using the right instrument for the right reason. And, doing so requires insight into these differences and what to do about them.
Figure 2 depicts a set of considerations mapped to each of the instruments. It summarizes the key differences, how they ‘work,’ challenges in getting them to work, and their time horizons to impact.
Subsequent posts will provide examples and details into the mechanics of what these are and what they mean for different business objectives. For now, we’ll leave you with what we call the ‘choreography of using the right instruments right.’ It suggests a simple roadmap of considerations of what to focus on, on the key considerations for each step along the roadmap and arguably, most importantly, the key challenges that create roadblocks along the journey.
Stay tuned for our future thoughts around monetizing innovation!