If one innovation approach is helpful, you might think using more than one approach to innovation would be even better. Not necessarily, write Frank T. Rothaermel and Andrew M. Hess in an article on innovation strategy in the new issue of Business Insight, MIT Sloan Management Review’s collaboration with The Wall Street Journal.
In a five-year study of strategies among pharmaceutical companies pursuing innovation in biotechnology, Rothaermel and Hess found that not all innovation strategies are equally complementary — and that companies can risk wasting resources if they pursue certain combinations of strategies at the same time. For example, the authors note, companies that invest simultaneously in cultivating internal human capital and in external alliances may not get the best return on the combined investment — since the two strategies offer similar benefits.
The best single innovation strategy over all, according to this research? Investing in people. “The most effective way to achieve continuous innovation over the long term is to hire and cultivate talented people,” Rothaermel and Hess write.