Why partnerships and acquisitions are playing a growing role in innovation

In 2021, over 75% of companies listed innovation as one of their top priorities (BCG). The need to innovate has become increasingly evident to match the rapid pace of change in the world. Along with this increased urgency, the need for corporates to change how they innovate has become more apparent.

Historical approaches to innovation were often internally focused, closely guarded, and centered on protecting intellectual property. Corporations are now moving to open innovation models that are oriented around partnerships, acquisitions, or investments. Research from EY indicates that “68% of corporates say that partnering is the only way to succeed in today’s market.” (EY)

Distributed knowledge has contributed to the growing importance of open innovation. When a company is interested in building out new capabilities, it can be much more effective for them to partner with others who have developed these capabilities already. In contrast to closed innovation, which often required companies to build or hire for these capabilities internally, a partnership approach allows for much faster execution in the market.

Another driver of this growth is customer expectations. Consumers increasingly expect connected experiences between different parts of their lives, driving a further need for corporates to participate in broader ecosystems. In order to meet these expectations quickly, corporations are partnering and acquiring to meet consumers where they expect them to be.

Partnerships and acquisitions can also reduce innovation risk for corporates. Usually, the target company for the partnership or acquisition has proven out aspects of their technology in the marketplace already. By using these methods, companies can share the risk of experimenting with new business models or revenue streams.

Related Articles

Top 5G companies ranked on the…

Huawei emerged as the top-scoring company on the back of equally innovative and strong customer relationships ...

Exploring Smart Cities through the lens…

With the influx of people in cities and towns growing rapidly, it is more important now, than ever, to unlock ...

Soitec – analyzing a player in…

With technological innovations happening at a breakneck pace, it is easy to lose sight of the building blocks ...