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Shared Creation

Some companies thought it would be best to simply share the costs and risks of innovation. The appeal of innovation collaboration led to a proliferation of R&D and commercialization alliances. The logic of innovation alliances was intuitively attractive: Two heads are better than one, and even more heads are better yet. Share the risks and investments while bringing together different sets of complementary knowledge, resources, and capabilities. In turn, reduce overall development expenses, speed time to market, and help more favorably influence and dominate the industry environment. Create a win-win for all the partners involved.

The advantages of innovation alliances often are illusory, however. Their record is weak in many areas. Remember Iridium? Iridium was the global, Motorola-led alliance designed to revolutionize global mobile telecommunications. The technology and investment consortium included high-profile partners and investors from every sphere of high-tech and from countries all around the world. But Iridium filed for bankruptcy in a spectacular, multibillion-dollar flameout in 1999, just a few months after launching service. Meanwhile, more nimble and focused competitors leapfrogged Iridium with simpler and cheaper solutions. The combined innovative power of many, even formidable organizations, is sometimes less than the power of one.

Even successful innovation alliances might not necessarily translate into profits. Most people would agree that Linux, for example, has been a successful software consortium. The catch is that Linux's great success as an innovation alliance is precisely a function of its relatively free and open nature. This, of course, is exactly the conundrum for those hoping to richly profit from it. Open alliances can be great for generating and commercializing innovation, but are not necessarily very profitable for many of the players involved.

Without a doubt, innovation alliances are often essential. But they carry with them many inherent tensions and challenges. Instead of speeding development, they are often slow and cumbersome. Instead of reducing the costs and risks of innovation, alliances can often increase costs, risks, and complexities. Innovation alliances sound ideal in concept. In reality, they inevitably introduce new issues that beg to be shrewdly planned for and smartly executed for the partnership to flourish rather than fail.

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