How Big Companies Make Innovation Acquiring Startups

1. Historical notes of Innovation of BG
To proceed to understand properly what is happening now in the innovation
processes by Big Companies, is of course necessary for first to look at his definition
properly. Innovation is a concept more wide and more complicated than expected
and it is worth trying to give it a comprehensive definition. Is also due  to consider
his evolution since the age of the II Industrialization, period taken as golden age of
the inventions and of science’s discovers, until to approach to the actual Innovation
paradigm and his prospective.
1.1 What is innovation?
1.1.1 The general definition
To have an precise definition  about innovation, of course the first thing that is due
to do is to read a good dictionary:
“The act, the work of innovating, that is to introduce new systems, new methods of
production and on political, social and economic perspectives. Any change,
transformation that radically changes or provoke an effective renewal in a political
or social order, in a production method, in a technique, etc.”
Treccani, Encyclopedia Online, http://www.treccani.it/
Here we have a general definition that expands the term of Innovation in a really
wide range of possibilities, to be honest like a typical way of saying, almost
everything and at the same time nothing. Innovation is every little step made by
humanity to improve his  world understanding  in every aspect, with like always the
same scope, to make easier our life, to be more wealthy with the goal to reach the
old classical concept of happiness. In that case often is not so easy to maintain clear
ideas and distinctions between different concepts. In particular there are  really
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close similitude between the concept of Innovation with those of Technology and
Science:
“Technology identifies, in general, the processes of creation, modification and
knowledge of tools, machines, systems, methods of organization, through which
scientific knowledge is finalized for specific useful purposes and objectives, such as
the solution of a certain problem, the improvement compared to existing solutions,
or performing a specific function.”
“Science is a set of disciplines essentially based on observation, experience,
calculation, or whose object is nature and living beings, and which use formalized
languages.”
Treccani, Encyclopedia Online, http://www.treccani.it/
The word technology indicates the techniques used to produce objects and improve
the conditions of human life: it is therefore not only a question of concrete
realizations, but also of abstract procedures. Technology has a very close link with
science, which is not a simple application aspect. The history of technology is
intertwined with the history of humanity and Science since his origins. With
technology, in fact, we intend more than a set of individual objects, we mean the
development of tools or machines with which a problem has been solved or an
aspect of our daily life has been improved. In this sense also from the invention of
the very first tools in prehistory  until the Big Data and the Digitalizaion, everyone
represents a technological progress. Regarding Science, the first definitions rise
from the ancient geek thought. In probably the Golden Age of human thought,
initially it doesn’t recognize two types of knowledge, one philosophical and the
other strictly scientific, but only the first one without separations. Only  Plato
started to speak about  the need for a distinction between the knowledge of detailed
science  (arithmetic, geometry, astronomy etc.) and the science perfect which was
the dialectic (proper to the philosopher), but the distinction remained generic and
uncertain. The emergence of an empirical instance will be found in Aristotle, who,
however, did not make a clear differentiation between them. only after the Middle
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Ages, with a new and  close relationship between math and Science, started the
beginning of the Modern science from the Illuminsm to the 20
th
 Century with the
industrialization process, one of the best periods of humanity regarding
technological, economical and social progress. 
In few words we spoken until now simply  about innovation, that someway is
identifiable with human history in a wide definition.
Still a today widespread idea is that science is interested in the general laws of
nature, studying it through disciplines such as biology, chemistry, physics etc, where
usually  science is saw like pure research without specific and immediate goal. Is
the technology to have the role to translate science discoveries in practical
applications. Of course things are more complex and doesn’t exist only a way.
History instead teaches that things are more complex even if yes, science and
technology are closely linked. In the past, much more than now, the scientist was
also a refined technologist, since he often had to build his own tools. In addition,
many inventions, such as the steam engine, also preceded the corresponding
physical theory for a long time, in this case the thermodynamics, which explained
its operation. Other fundamental inventions, today we would say technological
applications, were instead discovered 'by chance' in the course of scientific research
carried out for a completely different purpose, such as the light bulb, whose
operating principle was discovered during the first measurements on the
consequences of the passage of the current electric in various materials. In other
words, they never arrived at the light bulb (Edison, Thomas Alva), simply by
developing and perfecting the existing lighting technologies, such as the candle.
Another example, similar but much more recent, could be the web, developed in the
nineties of the last century by scientists who dealt with nuclear physics, simply to
exchange documents. In a few months the web spread around the world.
Technological progress does not always come from 'pure' science; indeed, the
opposite often happens. Technology, today as in the past, in fact creates new tools
that offer further possibilities, sometimes incredibly powerful, to basic research. A
consequence of that vision sometimes is that people can think that technology is
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useful, while for some reason often science is a waste of resources ( there aren’t
immediate rewards) , motive maybe  for which we are assisting in some Countries
to a drastic reducing of funds destinated to the Research in universities etc, in
particular for the generic one. An example is Italy where almost 1% of the GDP is
used for the Research where the World average is 1.7%. 
But is interesting that  yet today we also know that there is correlation between
funds destinated  to the research and grade of Technological state in a Country
(South Korea 4% , Japan 3,5% , Germany north Europe Countries more or less
3%) , thing which suggests that of course the research is important. In this context
we can also think about Startups, we can consider them in a lot of cases like a way
to make research an innovation too, where there already is a goal with a practical
application, with a future idea of business. Even in environments like Silicon Valley,
where  startups are the center an the economy extremely innovation oriented,
Institutions give an high importance to the Research. Every year Investors and the
big Hi-Tech Companies, give huge donations to universities like MIT
( Massachusetts Institute of Technology) and University of California Berkeley, to
finance the pure research. The only privilege they ask in exchange, is to be the firsts
to be informed about every new discovery. In fact with  the USA Hi-Tech
ecosystem, we have the most brilliant and successfully case of Technology
Transfer processes, namely transforming the results of Research in marketable
products or services. A process that takes place so through a number of means: the
collaboration between industries and research organizations, the licensing of
intellectual property rights and the creation of startups businesses or university spin
out companies. That process is fundamental , for example Italy historically is a
awesome source of inventions , but  it has always been difficulties to translate there
results in business and practical solutions. In conclusion technology and science are
two intersecting roads, where innovation travels in both directions and sometimes in
other ways. Anyway will speak in future focusing on innovation made by Big
Companies and Start-ups.
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1.1.1 The economic definition
Focusing now still in Innovation definitions, it has most of the time business
applications, applications that are the final stage of company processes modulated
to reach the market avoiding failures, in even more complex markets under risks
and uncertainty. So after the general and objective definitions,   is time to explore
also an economical definition and concepts of innovation.
“innovation must be distinguished from the invention. We can define invention
(from invent, "discover" in Latin) the discovery or elaboration of new ideas and
technologies independently of their possible industrial application. Innovation, on
the other hand, is the translation of an idea or a technology into a product
marketed to consumers, who perceive it as new.”
(Di Maria, 2016).
For first , the economical vision makes an important distinction between invention
and innovation, that highlights the connection between the innovation process and
the company business , aimed at the definition of a proper offer, in line with the
market market expectations, anticipating them. We can see a dualism very similar to
that of Science-Technology mentioned before. In the definitions we spoke , science
is a general source of innovation, where the practical application is when the
scientific discovery brings to a new technology. But here that concept is shifted
forward, were  a technology isn’t still a practical application until it isn’t translated
in a product the company can sell, obtaining higher profits or other forms of
competitive advantages. The economical discipline treats Innovation like a tool , but
the company is a tool too of the innovation process, in fact the customer is the point
of contact between the discovery and its introduction diffusion in everyday life.
Shumpeter (1912) has been the first to develop the concept of innovation under a
economical vision. Through Innovation, companies can realize conditions of
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temporary monopoly exploiting new products, results of the innovation process. The
competitive advantages drop during time, with the progressive diffusion and the
imitation of the innovation. Shumpeter defines Innovation like a creative -
destruction. Every innovation moves the competition to an higher level where
companies can die but also born, new and more efficient. At the beginning the hero-
inventor entrepreneur was the center of this vision, but it is substituted in his
following studies by the big company. For Shumpeter the Big Company,  the typical
archetype of Fordist  and Tayloristic model ,  is the only one with sufficient
resources to sustain all the cost of the innovation process, where the R&S function
is really important; finally all the process is internal. That is really important
because with the advent of internet, the first step forward the Globalization and the
Digitalization, we assisted to an increasing environment complexity where the old
Big Company paradigm fell in crisis. With a countless amount of different actors all
connected in a global level, Is not more possible fort he company to make
innovation without to consider and exploit the  external resources. This is the
principle that has brought to the new Open Innovation paradigm, also adopted today
by the big companies, were the startups market is becoming fundamental. 
Is also important to still remind that innovation is not only material but also
immaterial, as we can see from the Hamel Pyramid (2006):
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         Management 
          Innovaiton
   Strategic Innovation
Product/service Innovation
   Operative Innovation
Figure 1:  Hamel  2006.
For Hamel the immaterial innovation is the more valuable. At the top we have the
Management Innovation, applied to wide an complex problems creating new
management methods regarding the organizational and administrative structure.
Instead the Strategic Innovation is focused on the definition of new business models
that don’t allow the competitors to consolidate, putting them in a defensive stance.
These innovations precisely because they are immaterial, make more hard for
competitors to copy them, creating a long term competitive advantage. A competitor
can copy a new management method, but is not assured that will work in a different
context and also that it will be able to understand all the factors that made the
strategy successfully in order to replicate them. He Product/service and Operative
Innovations are essentials, but they don’t give a long term advantages. Anyway even
more today, also the product/service innovation acquired a consistent immaterial
value. The Innovation is not only functional, the design reached an important role,
like the services combined with the product, the brand, the communication and in
general the attribution of complex meanings. In that aspect the Marketing
Management has a primary importance. Today the marketing has risen a central role
in the companies activity, so much so that today we speak about marketing like a
science and a real management philosophy for the company, in all his aspects.. A
marketing oriented definition of innovation could be: 
“the process of translating an idea or invention into a good or service that creates
value or for which customers will pay. To be called an innovation, an idea must be
replied at an economical cost and must satisfy a specific need”
Business Dictionary, http://www.businessdictionary.com
In a Marketing orientation the customer is the center of the concept of innovation
which has a sense only in function of the valor earned for the customer,  managed in
the products portfolio. In fact central is the product innovation. A first sight is a
trivial exercise, but which can lead to multiple results, in relation to the basic
criterion to which the degree of novelty is assessed (concerned to the technology
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