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How Can You Create Innovation Using Strategic Partnerships?

Partnerships can be the key driver of innovation and we shouldn't underestimate them

2Nov

The time when companies used to innovate and deal with challenges alone is gone. Today's market is unpredictable and startups capturing big chunks of market share don't make it easier to survive. Thus, more businesses started to think about joining forces. By combining experience, efforts, and resources, there are better chances to avoid disruption. So, in the last couple of years, we have witnessed an increasing number of strategic partnerships across multiple industries.

A collaboration between innovators can exist in various forms, depending on their agenda and intended results. Some companies seek to create a partnership to move towards a more sustainable future, others see it as an opportunity to create a next generation product or service, which may not seem possible to achieve with their resources alone.

Among the recent examples of such collaborations is the partnership between Tesla, Panasonic, and Schneider Electric. Each is aiming to achieve different goals, but with sustainability being a mutual agenda. For Panasonic, it's an opportunity to be involved in a low-carbon agenda, and by partnering with Schneider Electric, the two giants aim to build new PV solar cells and smart building technology. And the non-binding partnership between Panasonic and Tesla is intended for the latter to manufacture and produce PV cells in the US.

In particular, the Schneider-Panasonic partnership will provide new heating technology, ventilation, and air conditioning control and energy efficiency (HVAC). Partners came up with a wireless system to enable communication between Panasonic's variable refrigerant flow (VRF) and Schneider's building management system, and room controllers.

As for Tesla, Elon Musk seems to have more than one plan. Following the acquisition of SolarCity, which caused concerns among Tesla's shareholders, the collaboration with Panasonic may become that reassuring point. Tesla's plan is to use PV cells and modules manufactured by Panasonic and integrate them in Tesla's energy storage products - Powerwall and Powerpack. So we can see that with clear vision and the right resources, strategic collaborations can significantly ease processes of innovation deployment.

Strategic partnerships can also act as a form of open innovation but in a more secure way. The protection provided by mutual legal agreements can decrease potential financial risks and ensures that any IPs involved in the deal are safe. If one party comes up with a new product idea but its R&D is struggling with solution and product development, a strategic partnership can also be there to help.

HSBC and the Hong Kong Applied Science and Technology Research Institute (ASTRI), for example, have teamed up to form a joint R&D innovation lab to succeed in fintech. The new facility aims to accelerate developments in AI, particularly, facial recognition technology, biometric authentication, big data analytics, and internet finance. The new initiatives will essentially address HSBC's vision of the future of fintech and make it easier for them to implement using applied research.

Whether it's a partnership between a company and a research institution, a start-up, or another company - partnerships allow creation of a full innovation picture, where all elements are intact - from financial strategy to ideas, to implementation.

Partnerships come in different forms and shapes, including supply relationships, joint R&Ds, equity participation, M&A, joint distribution and others, so the key is to choose the right one. The basis of that choice should create a clearly defined agenda, strategy, and forecastable results.

By collaborating, whilst sharing a mutual interest, companies can forget about any rivalry that could potentially exist, and focus on the essence of what the current market truly wants and how, by joining forces and resources they can successfully innovate in disruptive times. 

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