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Innovating for cash.

James P Andrew1, Harold L Sirkin

  • 1Boston Consulting Group, Chicago, USA. jim.ops@bcg.com

Harvard Business Review
|September 11, 2003
PubMed
Summary
This summary is machine-generated.

Choosing the right commercialization strategy is key for product success. Companies can be integrators, orchestrators, or licensers, with the optimal approach significantly boosting profits.

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Area of Science:

  • Business Strategy
  • Innovation Management
  • Product Commercialization

Background:

  • Most new products fail to generate revenue despite significant investment in innovation.
  • The commercialization approach is as critical as the innovation itself for product success.
  • Companies often default to familiar commercialization strategies, neglecting optimal choices.

Purpose of the Study:

  • To highlight the importance of selecting the appropriate commercialization approach for new products.
  • To analyze three distinct innovation commercialization strategies: integrators, orchestrators, and licensers.
  • To demonstrate how matching the approach to the innovation opportunity maximizes profitability.

Main Methods:

  • Analysis of three commercialization approaches: integrator, orchestrator, and licenser.

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  • Examination of the investment, profitability, risk, and skill profiles of each approach.
  • Research findings on the impact of approach selection on profit generation.

    • Main Results:

    • Selecting the most suitable commercialization approach can yield two to three times greater profits compared to suboptimal choices.
    • Companies often rely on a single, familiar approach, leading to missed profit opportunities.
    • Factors such as industry, innovation characteristics, and market risks influence the optimal strategy.

    Conclusions:

    • Strategic alignment of commercialization approach with innovation opportunity is crucial for financial success.
    • Companies must consider multiple factors beyond familiarity when choosing between integrator, orchestrator, or licenser models.
    • Failure to optimize the commercialization strategy can lead to product and company failure, while optimization drives profitability.