I believe there would be a general agreement on the fact that
companies in today’s world need to innovate to survive. However, the conundrum
is how much of the company’s revenue (small/medium enterprises) or initial
funds (as for start-ups) be focused on the research activity?
Let us take examples of two types of business models (we
would only consider biotech/life science industry). First is the ‘service’
model where the companies provide technological services for fee. These might
range from providing protein purification services to next generation
sequencing. The companies rely on their expertise and promote their cause by
trying to give the best services. Since many of the companies utilize an
already known technology they focus on giving their clients the best
technological support and in due course would expect good ‘word of mouth’
publicity for the company to promote its services. The better companies which
survive for the longest duration however are also focused on improving the ‘in
–use’ technologies to sharpen their service portfolio. This is crucial as the
subtle improvements can bring in new clients and can also cater better to the
existing client base. One general question can be since these companies utilize
instruments or reagents from established players (Illumina, Agilent etc.) why
should the service provider invest money to innovate? Surely the instrument
manufacturers are doing their bit and the service providers can acquire the
technology from them! So why not completely focus on marketing and spend little
on ‘in-house’ research? Well, research does not always mean big ticket
breakthroughs! Even subtle changes for example, in the protocol of a particular
assay can bring in great benefits both in terms of economic advantage as well
as technological advancement. Second is that newer methods can provide a
valuable feedback to the instrument manufacturers and therefore the possibility
of partnership increases. This gives a huge fillip to the ‘brand value’ of the
service provider. Hence one cannot completely shut innovation even in service
based business models.
Image courtesy - The creative Scientist
Let us now look at the ‘product’ based business model (again
in the realms of life science industry). I guess there is no denying the fact
that for product based life science organizations ranging from companies
delivering ‘bioinformatics suite’ to companies selling enzymes, innovation has
to take the primary seat. Newer and better products are the keys to survival!
But having known these facts how many SMEs (Small medium
enterprises) really focus on innovation? Many companies think that money spent
on R&D is not worth it especially in the life science sector as there is a
long incubation period and higher failure rates. But then investing in research
is like buying insurance. Not only the companies need to invest but invest in
the right idea and people to continue surviving in this fast paced era!
