What is the strength of innovation in your organization?  In this week’s Killer Innovations, we explore avenues to building innovation strength.  Innovation from Mergers and Acquisitions can be a fast track to innovation.  What are the pros and cons to this innovation path? We also look at the five biggest risks to innovation.  Your company’s innovation depends on avoiding the pitfalls. Is building innovation strength through acquiring innovation right for your company?  Avoiding the risks to innovation stretches across a broader spectrum.  Any company should be aware of the five biggest risks to innovation.

Mergers and Acquisitions: Acquiring Innovation

A growing means of building innovation strength is through acquiring innovation.  Innovation from Mergers and Acquisitions has its benefits and its drawbacks.  

To start, there are two types:

1. Acquiring a company outright
2. Purchasing the Intellectual Properties – This could be a product line, patents, a team, or a group of individuals with core expertise.

Let’s discuss the first type, acquiring the company.  Innovation from Mergers and Acquisitions has its pros and its cons.

Pros

• You can get into a market fast – you don’t have to wait for R&D.
• There are reduced risks.

Cons

• Reduced risks = lower returns.
• This approach can make an organization lazy.
• This approach can be expensive.

The most common reason for Innovation from Mergers and Acquisitions are:

1. Your company missed a trend and now you have to acquire company to get into the space.
2. You saw the trend, but didn’t realize its impact.
3. You saw the trend, but wanted to avoid the risk of investing in it.

Innovation from Mergers and Acquisitions can work if it is:

• Proactive
• Part of an innovation strategy

The second type of Innovation from Mergers and Acquisitions is purchasing Intellectual Properties (IP).  Why has it become so important? In a word: litigation. Patent lawsuits offer lucrative opportunity. Exclusivity to a com