In the June 2015 issue of Harvard Business Review, Dr. Gary P. Pisano, Professor of Business Administration at Harvard Business School, made a convincing case for why companies need innovation strategies and why the absence of innovative initiatives can lead to failure. Furthermore, if a company is to remain competitive, its innovation strategy must continue to evolve.

Here are the four types of innovation proposed by Dr. Pisano:

1 Conventional innovation - based on the company's existing business model and technological capabilities

2Disruptive innovation – building on the company’s existing technological capabilities and adopting new business models

3. Radical innovation: Building on the company’s existing business model and requiring new technological capabilities

4. Architectural innovation: both new business models and new technological capabilities

It should be emphasized that the innovation referred to here is only applicable to the enterprise, not the integrated industry, unless the enterprise is the first enterprise to cause a specific innovation in the industry.

Four types of innovation: conventional, disruptive, radical, and architectural, applicable to different biological contexts.

Background 1: If a biopharmaceutical company has developed and commercialized an oncology product line, it now decides to develop and commercialize another potential anti-cancer drug. (This change requires conventional innovation)

Background 2: If a biopharmaceutical company focuses on developing therapies and, according to its business model, licenses its products to other pharmaceutical companies, it now decides to be directly responsible for the marketing of the products. (This change requires disruptive innovation)

Background 3: A biotech company that provides polyclonal antibodies to the market decided to replace its polyclonal antibodies with monoclonal antibodies obtained from immune animal cell lines. (This change requires radical innovation.)

Context 4: A growing biopharmaceutical company decides to transform into a personalized diagnostics company focused on development and commercialization. (This change requires architectural innovation).

Taking real-life companies as an example, the success of Celgene, Genzyme, Monsanto, etc., these well-known biotechnology companies are all based on strategic changes in architectural innovation. However, Celgene and Genzyme launched their new strategies relatively early, while Monsanto launched it relatively late.

Celgene

Celgene was originally part of Celanese, but was spun off from the parent company in 1986. The company was founded in 1987 and initially focused on bioremediation and biocatalysis research and development, with revenues of $2.3 million in 1992. However, that same year, Celgene began its transformation into a biopharmaceutical company. Inspired by the innovative thinking of scientific executive Dr. Sol J. Barer, Celgene acquired the rights to thalidomide, which was once sold as a treatment for morning sickness but was later banned for causing birth defects.

Based on the research results of others, Dr. Barer was very interested in the commercialization of thalidomide for different therapeutic uses. In 1998, the FDA approved thalidomide for the treatment of leprosy. In the same year, Celgene reported that the sales of thalidomide reached $3.3 million. Two years later, the sales increased to $62 million. In 2014, as the fourth largest biopharmaceutical company in the United States, with cancer and inflammation drugs as its main product lines, Celgene announced total revenue of $7.7 billion and net profit of $2 billion.

Genzyme

Genzyme was founded in 1981 with the initial plan to produce enzyme products, a plan that would eventually lead to a $100 million diagnostic enzyme business. However, when Henri Termeer joined Genzyme in 1983, he began to re-examine Genzyme's mission. Ultimately, the company's most important product line was a modified version of glucocerebrosidase that was signed with the NIH in 1983 and 1984.

In 1985, Termeer consulted his scientific advisors, who believed that Genzyme should not pursue enzyme therapy. However, Termeer's idea was exactly the opposite. He believed that enzyme therapy should be insisted on. In the same year, Termee became the CEO of Genzyme and took the company public in 1986. Genzyme's sales in 1985 were $9 million, and in 1991 the FDA approved its modified glucocerebrosidase. Genzyme then developed and commercialized therapeutic products for other genetic diseases and metabolic diseases, all of which involved recombinant enzymes.

In 2010, the year before Genzyme was acquired by Sanofi-Aventis, it had total revenues of more than $4 billion and net income of more than $400 million. Genzyme's innovation strategy continued to develop, and now has five major business units, the largest of which is the Personalized Genomic Health Unit, responsible for enzyme therapies, which account for more than 40% of total revenues. At that time, Genzyme was the fourth largest biopharmaceutical company in the United States.

Monsanto

Since its founding in 1901, Monsanto has produced a wide variety of products, including industrial chemicals, synthetic fibers, building materials, pesticides, food additives, and pharmaceuticals. By the late 1980s, Monsanto's sales had reached $8.7 billion.

After Richard Mahoney became CEO in 1983, the company became increasingly involved in the research and development of agricultural biotechnology. Robert Shapiro became CEO in 1995, and the development of agricultural biotechnology was faster. The acquisition of agricultural biology played an important role in the overall strategy, and the company subsequently sold off product lines not related to agriculture.

In 1997, the company's chemical business was spun off into Solutia, a newly formed public company. In 1999, Monsanto sold NutraSweet, which was part of GD Searle and acquired by Monsanto in 1985. It was the manufacturer of the artificial sweetener aspartame. Monsanto then merged with another pharmaceutical company. In 2000, Monsanto was separated as an independent company.

Today, Monsanto is a very different company. In 1996, the agricultural product line had sales of just $2.9 billion, with total sales of $9.3 billion. Monsanto reported revenues of $15.9 billion in 2014, all of which went into research and development of agricultural products, divided into two divisions: Seeds and Genomics and Agricultural Productivity. As Professor Pisano points out, innovation is a necessity. In fact, necessity is the mother of innovation. In the biotechnology field, this statement is borne out by the success of Celgene, Genzyme, and Monsanto.