How to Achieve High Innovation Performance in Biotechnology: a Collaborative-Pyramid Approach
The very first biotechnology product commercially available was Insulin, approved by the US FDA in 1982. Since then, Biotechnology has been known as a rapidly changing industry with intense merger and acquisition activity. The factors that led to the development of the industry are innovative products, novel platform discoveries and maturation of the pharmaceutical business model.1
The key points that led to the success of Biotechnology products were the firm’s ability to innovate new products, the firm’s ability to make decisions along the development process, and the firm’s intuition and experience with clinical trials, manufacturing, registration, patenting and commercialization. Biotechnology firms can follow the Collaborative-Pyramid Approach to achieve high innovation performance.
The Base of the Biotechnology Innovation Pyramid is a collaboration between a firm, who operates in a commercial fashion, and a Research Organization, who operates in a non-commercial fashion. Collaboration with a research-oriented organization, without commercial incentives, allows the firm to gain access to external resources, competencies, and knowledge not currently available inside the firm. As the firm expands its knowledge base, the firm also expands its innovation capabilities. Over time, the firm can develop a wide set of competencies and a scientific approach to problem solving. The firm can use the resulting balance in the Exploitation-Exploration Learning Framework proposed by James G. March, to translate scientific discoveries into successful Biotechnology products.23
Just How Important Is the Discovery of New Knowledge in Biotechnology?
The discovery of new knowledge is crucial to understanding the rapidly changing environment in Biotechnology. The Biotechnology industry has enjoyed a whirlwind of newly commercialized products in the last thirty years. You would be surprised to know that many of the products recently commercialized stemmed from discoveries made in the early 1900s. If new Biotechnology products were discovered so long ago, why haven’t they been commercially available until now? There were critical developments in the field of science and technology around the 1970s that led to the development of commercial biotechnology products; some key developments are listed as follows:
- Gene technology was introduced as a standardized method of accessing proteins
- Monoclonal antibodies production technology
- New trends in metabolomics, transcriptomics, proteomics
- Organic Solvent enzyme catalysts
- Advances in the fields of Data Management, Microfluidics and Microelectronics.4
The developments listed above changed the way research was conducted and more importantly how we understand the science behind Biotechnology products.
How Does an Exploration and an Exploitation Orientation Differ?
Entities with a focus on Exploration, attempt to discover fresh knowledge through experiments and variation. On the other hand, entities with a focus on exploitation attempt to refine experiments through selection and the use of existing knowledge and competencies. The most common Exploration-Oriented entities are research organizations like Universities and Public Research Organizations. The incentive scheme of research organizations is to create and distribute new knowledge. Alternatively, the most applicable Exploitation-Oriented entities are commercial Biotechnology firms. The incentive scheme for Biotechnology firms is to create commercial products and technologies using applied research and translating the firm’s current knowledge. The innovation approach of an entity is determined by the rules, established practices, routines, habits and laws. The key is collaboration between the Research Organization and the Biotechnology firm. Combining the innovation approaches of a Biotechnology firm and a research organization can create a balance that can lead to current and ongoing value for the firm.3
Why Is It So Important for Balance Between Exploration and Exploitation?
An exploration-exploitation balance can be described as a proper delegation of activities which fosters scientific discoveries and conversion of those discoveries into successful commercial products. A proper balance can create innovative value along the entire development process. To be in balance, the research organization should be experienced in scientific discovery, and intuitive to develop promising opportunities while avoiding futile research activities. Moreover, the Biotechnology firm should be experienced in manufacturing, regulatory pathways, market access and how to match new scientific discoveries to meet customer needs.3
Commercial Biotechnology Firm Collaborative-Innovation Pyramid:
- Evens, R. P., & Kaitin, K. I. (2014). The biotechnology innovation machine: A source of intelligent biopharmaceuticals for the pharma Industry—Mapping biotechnology’s success. Clinical Pharmacology & Therapeutics, 95(5), 528-532. doi:10.1038/clpt.2014.14
- March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71-87. doi:10.1287/orsc.2.1.71
- Messeni Petruzzelli, A., & Rotolo, D. (2015). Institutional diversity, internal search behaviour, and joint-innovations. Management Decision, 53(9), 2088-2106. doi:10.1108/MD-05-2014-0256
- Mattiasson, B., Kemiska institutionen, Gemensamma institutioner för naturvetenskapliga och tekniska fakulteterna, Bioteknik (LTH), Common departments, the faculties of Science and Engineering, Department of Chemistry. . Lund University. (2013;2012;). Then and now–a 30-year perspective on biotechnology. Trends in Biotechnology, 31(3), 118. doi:10.1016/j.tibtech.2012.11.003