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Curious about the nanotechnology innovations and digging into the US patent database, assistant professor , and professor Dr. Alain Verbeke, PhD, both at the were excited to see what trends would emerge to show how this nascent field of technology permeated to real-world applications.

They were surprised to learn that among the top nanotech patent holders was a company that did not build its brand on innovation but rather on beauty. L'Oréal, who focuses on skin care, makeup and hair colour, ranks number six among nanotech patent holders in the US. How did they do it?

As a concept, nanotechnology was proposed by famous physicist Dr. Richard Feynman, PhD, in a 1959 talk. It wasn’t until the 1980s that this concept really came to life with the first microscope that could see individual atoms. Ten years later, these discoveries started being patented in earnest and the first nanotechnology companies began operations; this is where the team drew their sample — looking at patents granted from 1990-2010. Relationships were mapped to see what trends emerged.

Dynamic capabilities of an organization: sensing, seizing and reconfiguring

Using the theory of as a lens, the team looked to see how firms sense and seize opportunities in their environment. In the case of L'Oréal, they were effectively using their board relationships as a sensing tool for innovation. Through these associations they had connections to over 34 unique areas of specialties including companies with patents in nanotechnology, business associations and research universities.

“If you only look in your field of sight, you will not be positioned to see opportunities for innovation,” says Petricevic. L'Oréal looked beyond its industry to find the latest innovations to integrate into their products; nanoparticles helped improve their offerings by helping to increase absorption.

Formal alliance relationships for L'Oréal were much different. There were only a few and they were mostly within the beauty-industry category.

“It is really about how companies learn,” says Petricevic. Companies create relationships to help them gather information.  Network relationships such as having individuals with unique expertise on the board do not bring the same types of benefits as having a formal alliance with another firm. Each provides a different kind of education to the firm.

Collaborating for innovation: leadership lessons

It is not a straight line correlation between your relationships and innovation, which was demonstrated by the larger trends in their , published in Cross Cultural and Strategic Management. There needs to be a careful balance between these strategies to ensure the relationships do not exhaust the skills of the firm to manage.

The research points to some important considerations:

Be aware of balance

When will the organization reach a plateau in its ability to integrate new innovations? Have a way to evaluate which relationships should be formalized. Ensure that relationships are not interfering with other processes within the organization.

Engage with purpose

Think of relationships strategically. How does the organization keep in touch with new ideas beyond its industry? What is the firm looking for from its network of key individuals? From its formal alliances with other firms?

Look beyond

For network relationships it is valuable for a firm to look beyond their own industry. Associations with research universities and professors can provide valuable information about technologies of the future. Develop board diversity by going beyond experts in the firm’s industry category to increase possibilities for innovation.

Build culture and processes

Once an organization is aware of an opportunity and builds a relationship to engage, there needs to be re-alignment of strategy, resources and processes internally to take in the intended innovation.

“More of each does not necessarily lead to better outcomes,” says Petricevic. “Innovativeness is best served when managers understand the limits of informal networking activities that lead to trade-offs in their formal collaborative alliance activities.”