Collaborations Protect Your Competitive Advantage and Minimize Risk

In my last post I talked about how collaborations can be less risky than mergers and acquisitions (M&A) when it comes to tapping into an external technology to accelerate or enhance product development. If your company is like most, you don’t believe me. But read on.

Maybe you think spin-in doesn’t apply in the corporate setting because you think collaborating compromises your competitive advantage. I’m saying, it doesn’t have to.

Think about it: if you don’t have the in-house capabilities to solve a technical challenge, that’s because it’s not your core competency. If it were, you’d already have it.

I’m talking about situations where the technical need is something new and different for your company. For example, years ago Fuentek worked with a pharmaceutical start-up that was working on an innovative technology to better treat respiratory and pulmonary diseases, such as asthma. The company’s concept was a new dry powder inhaler that would vibrate the powdered medication, making it an aerosol that would then flow into the user’s lungs.

The company understood the pharma industry and market, and they knew all of the technical aspects of this new product… except one. They didn’t have the mechanical expertise needed to aerosolize the powder so that it could be distributed according to their unique formulation in a consistent and cost-effective manner.

Hiring staff to build up in-house expertise didn’t make sense, because this was only one small aspect of their product. (What would that person work on once the problem was solved?!) And M&A wasn’t an option because they were a start-up with limited cash. Instead, the company hired us to find the partner they needed to address this technical need. The company solved the problem, patented the solution, and has since been acquired by a major pharma company. (Talk about a successful start-up!)

Even if a technical solution is (or could be) part of your core competency, why not take a try-before-you-buy approach? Collaboration is a much safer alternative to immediately acquiring a technology you’ve never worked with. Consider this…

A large company acquired a smaller company whose technology seemed to be the silver bullet for a new product line. While staff tried to integrate the technology into their process, the company hired us to find other applications for it. As we dug into the technology and talked to those who were now working with it, we quickly realized that this technology was not a match for the company and they never should have bought it.

So which is riskier: (a) spending more than $40 million to acquire a technology you can’t use or (b) putting the appropriate non-disclosure and intellectual property ownership agreements in place so that you can collaborate and be sure the technology really meets your needs?

So let me be crystal clear: I’m not saying you never do M&A. I’m not saying you never hire in the expertise you need to tackle a technical challenge. I’m saying: Don’t forget that there’s another option: collaboration. You can always acquire the company later or include an option to buy in the original partnership agreement.

That’s what Symbiotic Innovation is all about. If you want to read more about this, check out my paper “Investigate Before Investing: Using Technology Transfer Principles to Guide R&D.”

–By Laura A. Schoppe

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One Response to Collaborations Protect Your Competitive Advantage and Minimize Risk

  1. Phil Simon says:

    Great example of successful collaboration, Laura. If I had know about this, it would have found it into the book!