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How to not sell out

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?

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.

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.

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 School).

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Markus Perkmann
About Prof Markus Perkmann

Markus is Professor of Innovation and Entrepreneurship, and head of the Department of Innovation & Entrepreneurship at Imperial College Business School.

He is also the academic director of the Imperial Enterprise Lab and directs the MBA Entrepreneurial Journey. He is co-editor in chief of the journal Innovation: Organisation & Management.

Markus has collaborated with organisations including GlaxoSmithKline, Syngenta, Shell, Rolls Royce and Imperial Innovations, and published widely in journals including Academy of Management Journal, Research PolicyOrganisation Science, and MIT Sloan Management Review.

In his research, he is currently exploring the use of entrepreneurial methods aimed at driving innovation within large corporations. He also studies science-based organisations and science-based entrepreneurship, and has a particular interest in special hybrid structures that can bridge the gap between academic science and industrial application. Finally, he is interested in social valuation, i.e. how individuals, firms and products are evaluated by others and how this process is affected by biases and pre-conceptions.

About Prof Nelson Phillips

Professor Nelson Phillips holds the Abu Dhabi Chamber Chair in Innovation and Strategy, having been Acting Dean of Imperial College Business School between 2016 and 2017.

Prior to joining Imperial, Nelson was the Beckwith Professor of Management Studies at the Judge Business School, University of Cambridge. He completed his PhD in Organisational Analysis from the University of Alberta, Canada in 1995.

He has published more than 100 academic articles and book chapters including articles in the Academy of Management Journal and MIT Sloan Management Review.

Nelson teaches courses in strategy, organisation behaviour, innovation, and leadership at the undergraduate and graduate level. In addition, he is active in Executive Education at the Business School, where he has been involved in programme design and delivery for a wide range of clients.

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Written by Prof Markus Perkmann, Prof Nelson Phillips Published 4 July 2018 Categories Management, Strategy & Leadership Topics Corporate Strategy, Identification, Partnerships Share Download as PDF