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How organisations can access unfamiliar markets and audiences by building “hybrid spaces” – and how they can avoid the pitfalls

How do you leverage new growth opportunities?

All kinds of organisations – universities, NGOs, private companies – look to access new audiences and enter new markets by reaching out to resource holders and diverse constituencies outside their standard remit. And there’s a certain amount of good business sense at play here: addressing new audiences helps increase risk diversification and safeguard longer term prosperity.

But this growth strategy comes with potential pitfalls. New audiences often have demands that can be very different to those of existing markets. Organisations entering new spaces run the risk of neglecting mainstream business. The capabilities needed to address a new market are often not those needed to maintain the flow and quality of products and services to existing customers and stakeholders.

How can organisations manage this kind of audience diversification so that everyone comes out of it better off? How can they balance who they already are – or are perceived to be – and what they already do, with the goals, objectives and modus operandi of their new audience?

Researchers need to be allowed to be academics

Three things you must do

One way to achieve this is to build specialised units within the organisation: units that, on the one hand operate independently, but on the other hand form an integral part of the mainstream organisation as it continues to service its traditional audience’s needs. We call these specialised units “hybrid spaces”.

In our recent research, we looked at the dynamics at play across eight European universities with hybrid spaces – each of them operating research units funded by private industry backers while continuing to function as public universities.

Analysing the data and the feedback from key players in each university, we found there are three essential actions organisations need to take to make hybridity work for them.

First, they need to prioritise the dominant rationale of the organisation while making it work for the new audience. In other words, they have to stick to what they do best. For a university with an industry-funded research unit, this means bringing the academic way of working – the dynamics of research – into the unit and leading with that, as opposed to being led by the commercial needs of the funding company to win patents or make money.

Done right, hybrid spaces can yield all the benefits to be found in diversification

Then they have to ensure the needs of both the mainstream and the incoming entities are met by mixing the way they work. This needs to be based on dialogue and a kind of iterative process that elucidates objectives and expectations as they hybridise activities and goals.

And finally, organisations working in hybrid spaces need to safeguard the interests of their own talent and resources. Researchers going into an industry-funded centre need to be permitted to pursue their own work ethics and methodologies – they need to be allowed to be academics.

Failing to take these three actions can lead to things unravelling fast.

No no no to Novartis

Take the case of the University of California at Berkeley. Back in 1999, the university signed a deal with pharmaceutical behemoth Novartis to fund research within the Department of Plant and Microbial Biology to the tune of $25 million. In exchange for the cash, Novartis was to have first dibs on licence negotiations for around a third of the department’s total scientific output. The company was also given two of five seats on the department’s research committee, the body that determines how money is spent.

New audiences often have demands that can be very different to those of existing markets

The resultant outcry by Berkeley faculty about the deal’s potential to undermine the independence of academic science met echoing volleys from students and alumni. They circulated a petition decrying the Novartis deal for standing “in direct conflict with our mission as a public university”.

It seems likely that where Berkeley was going wrong was in overdoing the hybridisation: leaning too far towards the needs of their industry partner, while not doing enough to leverage their organisational rationale as a university.

Done right, hybrid spaces can yield all the benefits to be found in diversification: the dynamic combination of different strengths, foci and modus operandi. And there are plenty of examples of hybridity at work across public and private sectors: from universities with an industry-funded unit, to energy companies looking to build a community of researchers and push the boundaries on renewables, or even a for-profit consultancy operating within the UK’s National Health Service.

The rewards are there, so long as organisations are mindful of the pitfalls. And how to avoid them.

This article draws on findings from “Protecting scientists from Gordon Gekko: How organizations use hybrid spaces to engage with multiple institutional logics”, published in Organization Science, and authored by Markus Perkmann (Imperial College Business School), Maureen McKelvey (Göteborg University) and Nelson Phillips (Imperial College Business 

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Prof Markus Perkmann

About Markus Perkmann

Professor of Innovation and Entrepreneurship
Markus Perkmann is Professor of Innovation and Entrepreneurship. He is the academic director of the Global Online MBA and academic director of the Imperial Enterprise Lab. He also curates the Entrepreneurial Journey, our school's experiential startup programme across all on-site MBA programmes.

His research focuses on the business of science, science and technology entrepreneurship and university technology transfer. He is editor of the journal Innovation: Organization & Management, and his research was published in journals including Academy of Management Journal, Organization Science, Research Policy and MIT Sloan Management Review.

Markus has startup experience stemming from working at Greychip, a London-based startup company founded to create an e-learning platform. He holds a PhD in Sociology from Lancaster University.
Nelson Phillips

About Nelson Phillips

Abu Dhabi Chamber Chair in Innovation and Strategy, Associate Dean of External Relations
Professor Nelson Phillips holds the Abu Dhabi Chamber Chair in Innovation and Strategy, having been Acting Dean the Business School. He has published more than 100 academic articles. He is Programme Director of the Executive Education course, Leadership in a Technology-Driven World.

Professor Phillips’ research interests lie in four main areas. First, he has become increasingly engaged in a program of research looking at a range of different but related issues in entrepreneurship. From a more practical perspective, he is interested in how to scale up new, high-growth ventures and in how scaling up social enterprises differs from scaling up more traditional companies. He is also interested in how new ventures “pivot” as this activity remains highly undertheorized. He is also involved in a project investigating how the idea of an incubator has been adapted to different cultural setting. When studying entrepreneurship, Professor Phillips often uses ideas from organization theory to help him theorize and he has found this approach to be particularly fruitful.