Historically, science and business have lived in separate worlds. Science was the province of universities and not-for-profit research institutes, while business was conducted by profit-seeking companies operating in the realm of markets. This is no longer the case. For the past four decades, the worlds of science and business have been converging and leading to a new type of entity – the science-based business.
Unlike traditional “tech” companies, science-based businesses become directly involved in the creation, development and commercialization of basic science. And according to innovation and strategy expert Gary Pisano, this creates enormous challenges. What’s needed, he says, is institutional innovation.
Too often, science-based businesses borrow models proven to work in software, computers and other high-tech industries. However, this Silicon Valley “anatomy” is fundamentally flawed when it comes to creating new science, explains Pisano, who has spent nearly 30 years extensively researching the strategies, structure, performance and evolution of the biotechnology and pharmaceutical industry. “Unless the anatomy changes dramatically, science-based businesses won’t attract the investments and talent required” to thrive.
Interestingly, the bottleneck is not the science, it’s the business, he says. Science-based businesses have three radically different, inherent challenges that require new ways of organizing:
- Profound uncertainty and risk – R&D in science-based industries like biotech or pharma often requires decades of highly uncertain investment. This requires investment and funding models designed for exceptionally long-term commitments with highly skewed returns.
- Integration of diverse disciplines – Breakthroughs in science typically involve cross-fertilization across disciplines. This requires organizational mechanisms to drive deep integration across diverse knowledge bases.
- A Rapidly Evolving “Frontier” – What is known pales in comparison to what remains to be discovered; rapid learning and adaptation are essential.
“Put the world of science and the world of business together, and fantastic things will happen,” believes Pisano, Harvard Business School (HBS) Professor and author of “Science Business” (Harvard Business Review Press).
A unique HBS field course, “Commercializing Science,” which Pisano teaches alongside former Biogen Idec and Verex Pharmaceutical executive Vicki Sato, is a testament to the potential. Mimicking the microcosm of science-based business, students are selected across the university’s schools of business, medicine, applied science and engineering, law, public health and government. The students work in cross-disciplinary teams to develop a business model for commercializing real IP that has emerged from one of Harvard’s labs or that they have brought to the class with them.
“I’ve never encountered anything like this in teaching,” commented Pisano. “It’s fascinating to have students with highly diverse backgrounds debating these issues. It will prepare them well when they become involved in their own science-based businesses. They also learn that they need to be inventive in creating business models.”
Pisano truly believes that science can be a business, but only if we transform the way these businesses operate – an undertaking that will have major impact not only on R&D and healthcare, but also on university- and government-funded scientific research, emerging industries and the U.S. economy.