Forget open innovation and the other buzzwords: in order to seriously innovate, Boards must plan and activate a reorganization. And use M&A operations as a means to acquire new technologies
“Innovation” is a mantra for contemporary managers. Everyone talks about it, everywhere: whether they work in traditional or new industries, companies with a consolidated position must agree to become innovative, since this is closely linked to the ability to cope with the tech disruption. In this context, the world of Venture Capital is frequently referred to as the bearer of innovation by definition.
However, we need to understand what innovation is and when it really can boost business. For a VC fund, innovation is certainly a pervasive concept, much more so than what is expressed in academic and traditional environments: in our experience, open innovation is a more nuanced category of innovation that leads to true disruption. Let me explain: as a VC we finance start-ups and scale-ups that are innovative from the very first moment, they have “lean” and relatively simple organizational structures, at least up to a certain point. Hence, within certain limits and by their very nature, these companies can experiment and redirect their business model, if necessary – which means they can proceed by trial and error. However, if the possibility of making mistakes is inherent in the concept of innovation, we should not believe that innovation is done by “improvising”.
On the contrary, there are some rules one should keep in mind by which innovation becomes a real part of the entire organizational structure and production process, and works as an accelerator for the company. Here they are:
A separate chapter is that of Fintech, an industry in which the traditional big players, such as Goldman Sachs and Credit Suisse, have started a series of acquisitions. This wise trend is going to last for long, as noted by WhiteCase: “Fintech has evolved from being a disruptive threat to a major opportunity for financial institutions. The possibilities for dealmaking and M&A are almost limitless.” Deals that, for those who play the part of the lion, often turn into a life-line for business.