Science-based sectors for example biotechnology offer the possibility of high growth, nevertheless they are filled with risk. The payoffs can take many years to materialize or may never come. Although the traditional venture capital/entrepreneurial model has been shown to spark innovation in a wide array of technology settings (software, computers, Internet, electronics, etc.), it wasn't designed to deal with the costs, dangers, and slow payout of science-based industries. There has been a major shift away from funding enterprises at the earliest periods, although venture capital continues to flow into industries like biotechnology. In this article, authors Andrew W. Lo and Gary P. Pisano draw on comparisons to jobs in the moviemaking industry and propose the project-centered organization (PFO) as an alternative construction for undertaking long-term, high-risk, highly capital-intensive R&D plans in science-based industries such as biotech. PFOs are things created to conduct a certain R&D endeavor. The writers discuss how they could work in practice, using the example of biopharmaceutical R&D.
Lessons From Hollywood A New Approach To Funding R&D Case Study Solution
Researchers innovating in a science-established context must overcome two challenges that are unique. They must raise adequate capital to fund a long term, highly risky, and very expensive endeavor. Second, they need to have a governance mechanism for allocating capital (human and fiscal) and running jobs. The authors propose that governing centered on the job rather than the company might be a more efficient way to arrange innovation in science-based sectors. As with film jobs, investors could pick jobs they would like to invest in, together with the understanding that they'll receive yields only if those projects succeed. Even though the authors write that organizing initiation through PFOs has benefits for investors and companies, they say that many models need to be researched and that one size doesn't fit all when it comes to organizing innovation.
PUBLICATION DATE: January 01, 2016 PRODUCT #: SMR543-PDF-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
Related Case Solutions & Analyses:
NASCAR: Leading a Marketing Transformation in a Time of Crisis – Spanish Translation, Spanish Version
Ricky Martin: The Role of Reputation in a Celebrity’s Career
Medalogix
Porsche Canada: Selling Winter Driving
The Growth of the Electric Vehicle Industry: Facilitating and Impeding Forces
Wii Encore?
Apollo Hospitals Enterprise Ltd. Clinical Score-Card
Hanson Production: Pricing for Opening Day
Infineon Raceway (Sears Point Raceway): Marketing in the Motorsports World
Sondologics: Product Diversion and MAP Violations in Internet Channels
