Why 4 Innovation Frameworks Are Better Than 1: Organizations today operate across four distinct innovation quadrants, each suited for different challenges

Written by Feby Abraham, PhD, executive vice president and chief strategy and innovations officer, Memorial Hermann Health System

When OpenAI’s ChatGPT reached 100 million users in just two months—faster than any product in history—it wasn’t built in isolation. The breakthrough emerged from Microsoft’s $10 billion partnership, thousands of open-source contributors and internal teams racing against competing efforts. This is the future of innovation strategy. Industries face a critical choice: build comprehensive internal capabilities like cathedrals, or embrace open, decentralized approaches like bazaars. But this binary thinking misses the strategic opportunity.

Forward-thinking organizations are discovering that the most effective innovation strategy isn’t choosing one model—it’s orchestrating multiple approaches simultaneously. A framework based on Eric Raymond’s seminal “Cathedral and the Bazaar” essay reveals how organizations can strategically deploy different innovation models based on project characteristics and strategic goals.

The Innovation Portfolio Approach

Organizations today operate across four distinct innovation quadrants; each suited for different challenges:

• Cathedrals represent centralized, internal innovation—the high-stakes, proprietary projects that define competitive advantage. Some notable examples include large biotechs developing breakthrough innovations such as GLP-1 drugs, cancer vaccines and cell & gene therapies, Apple’s iPhone development and Tesla’s battery technology. These initiatives typically require several months to years and substantial capital investment but deliver differentiated capabilities such as proprietary algorithms, breakthrough user experiences and defensible intellectual property.
• Strategic partnerships combine centralized direction with external collaboration. These could be one-off examples like Truveta, where health systems pool de-identified data, or systematic building efforts like Longitude Health, focused on next-generation health system enablement, demonstrating how partnerships accelerate innovation while sharing risks and resources.
• Forums enable grassroots innovation within organizations or serve as marketplaces to connect innovative companies with key pain points. Companies within several industry sectors have created innovation accelerators and hubs showing how this can help identify operational bottlenecks and prototype solutions rapidly while driving meaningful operational improvements by tapping into frontline expertise and encouraging experimentation.
• Bazaars represent fully open, decentralized initiatives where Raymond’s original concept emerged from software development. Linux and Apache demonstrate how global collaboration can outperform proprietary alternatives. In healthcare, OpenMRS, a global effort on healthcare electronic medical records, serves low-resource settings, showcasing how bazaar models leverage distributed expertise while allowing shared costs and accelerating innovation cycles.

Strategic Decision Framework 

The key lies in matching innovation opportunities using four strategic filters:

• Strategic importance: Core mission initiatives warrant cathedral investment; non-differentiating capabilities suit partnerships. 
• Risk and reward profile: High-uncertainty moonshots need centralized oversight; incremental improvements can be decentralized.
• Data sensitivity: Proprietary insights require internal development; shareable knowledge benefits from open collaboration.
• Collaboration potential: Some innovations gain from external input; others need protected development.

Implementation Realities 

Successfully managing this portfolio requires distinct approaches: Cathedral projects need C-suite oversight and significant capital investment, partnerships require board-level governance and business development capabilities, forums operate with departmental approval and bazaars need minimal investment but require community engagement skills. 

The most innovative organizations maintain balanced portfolios: typically 80-90 percent partnerships and cathedrals, 10-20 percent forums and bazaars. 

The Competitive Implications 

This portfolio approach addresses mounting pressures across industries. Margin compression, workforce shortages, trade barriers and technological disruption demand both breakthrough innovations and operational improvements. Organizations limited to single approaches—whether purely internal or exclusively partnership-driven—lack the strategic flexibility to deploy capital (both financial and human) and deliver with speed and nimbleness to address this full spectrum of challenges. 

The results speak for themselves: firms adopting grassroots innovation outperform those that don’t, and companies with highly engaged employees are 21 percent more profitable than disengaged teams. 

The implications are immediate and actionable. Executives should audit their current innovation investments using this four-quadrant framework to identify gaps and misallocated resources. The goal isn’t achieving perfect balance but ensuring strategic alignment between innovation approach and project characteristics. 

Organizations that master this portfolio approach won’t just navigate transformation within their industries—they’ll lead it.

The future belongs to organizations that can orchestrate innovation across this full spectrum, fusing strategic vision with operational velocity. 

Feby Abraham, PhD, is executive vice president and chief strategy and innovations officer for Memorial Hermann.