The new imperative for creating and profiting from technology pdf

Has PDF. Publication Type. More Filters. Open innovation has become a popular topic in management literature since Chesbrough published his book with the same title in Chesbrough, Consequently, no longer does it only exist in … Expand.

View 3 excerpts, cites background. This paper describes the evolution of open innovation and the emergence of a new paradigm Open Innovation 2. Open Innovation in Management Science. Innovation and knowledge accumulation — an intellectual property rights perspective.

In this era of an innovation-driven knowledge economy, innovation is a key factor in the creation of enterprise competitiveness. With the pace of globalization gaining speed and market competition … Expand.

Customers as the Engines of Innovation. The economy at large and the software industry in particular are benefiting more and more from the innovative contributions of their clients. In an age where software producers need to launch … Expand. New Perspectives in Technology Transfer.

Technology and its commercialization through improved or new products are key drivers of economic development and societal wealth Solow, While this finding dates back to the late s, there … Expand. View 1 excerpt, cites background. Open Innovation: Corporations Success Mantra. The research center was not mismanaged; rather, it was managed ac- cording to the best practices of the leading industrial research laborato- ries. Nor was the research center irrelevant to the rest of Xerox; the laser printers and advanced copiers sold by Xerox came directly out of PARC research breakthroughs.

Xerox managed PARC through a Closed Innovation paradigm: The corporation sought to discover new breakthroughs; develop them into products; build the products in its factories; and distribute, finance, and service those products—all within the four walls of the company. The greatest technological achievements that emerged from PARC, by contrast, could only take root—and create real economic value— when pursued in a far different context, a context of Open Innovation.

Most of these achievements were realized only when key PARC re- searchers left Xerox and went to other, smaller companies or went out on their own to start up new companies. These companies could not af- ford to pursue the model of deep vertical integration that Xerox fol- lowed.

Instead, they had to define a business model to commercialize their own technologies. Some of the technologies took root through the departure of key employees to Apple, where the Macintosh computer embodied many of the user-interface design concepts created at PARC. Other technologies were commercialized at Microsoft. For example, the Bravo word proces- sor was the precursor to Microsoft Word. As one would expect, many of these companies soon withered and died. Some companies, though, managed to prosper.

Ten went public, and a few such as 3Com, Adobe, and Documentum were still operating as independent companies in Instead, Xerox gave its explicit permission for most of these technologies to leave—via a nonexclusive technology license from Xerox—and Xerox maintained an equity stake in many of them in return for that license. Although the specific answer varies with every spin-off company, the general answer is that Xerox saw little further potential for each technology within Xerox.

Continuing to develop each technology was expensive and took money away from other new initiatives that might be more important to Xerox. In many cases, the researchers chose to work on new re- search projects with greater discovery potential or value to Xerox. Sometimes, though, the researchers wanted to continue with the proj- ect. Xerox chose to allow these researchers to gracefully exit the com- pany and take the project with them.

The success of some of these departing spin-offs was largely unforeseen—and unforeseeable. When they left, these spin-offs were far more like ugly ducklings than elegant swans.

The projects underwent significant development—and even transformation—on their journey to market after leaving Xerox. If they had stayed inside Xerox, this transformation would never have occurred and the value of these spin-offs likely never would have mate- rialized. Their success arose more from their response to subsequent external events than it did from the initial promise of the technology or the people. The path of this transformation is illustrated in the evolu- tion of SynOptics, a successful, though lesser known, Xerox PARC spin-off company.

In order to use SynOptics technol- ogy, the customers would have to install networks with entirely new wiring to connect the computers, printers, and other devices—making the cost of installing and using the technology very expensive. Andy Ludwick and Ronald Schmidt decided to take this technology outside to see if they could make it into a company. They could afford to be patient for optical cabling media to become established in the mar- ket, and they thought that they could distribute their products through value-added distributors who were selling and installing optical gear.

It might take a while and it might initially be expensive for customers to buy complete, optically wired networks, but once the market did get going, they would be well positioned to participate in the growth that would follow. A graceful exit from Xerox ensued, with Ludwick and Schmidt taking the technology outside, and Xerox retaining a 15 per- cent equity share of the company. Xerox PARC 9 Once out on their own, though, Ludwick and Schmidt soon realized that they had an even more valuable opportunity: The software and pro- tocols they were writing to drive Ethernet packets over optical cables could actually be applied to copper-wire networks.

Their efforts there- fore could make Ethernet run faster over copper-wire networks as well. Instead of continuing to pursue the technically chal- lenging aspects of making high-speed Ethernet work on a new trans- mission medium optical cables , the company chose to emphasize the more technically mundane approach of using its technology on copper- wire networks that were already installed and operating.

Instead of selling its products into future networks that had yet to be installed, SynOptics could upgrade the speed and performance of thousands of networks already up and running. Customers could spend a small fraction of the costs of buying new optically wired networks, and get transmission speeds five or ten times faster on the networks they had already paid for.

This was a compelling value proposition. SynOptics did very well in commercializing this approach. It went public in October , just three years after it was founded.

A small de- velopment project that started within PARC on a shoestring budget soon became a billion-dollar company. Later, Bay was acquired by Nortel. It is too glib and simplistic to attribute the eventual success of Syn- Optics to the early lab work at Xerox. It was the creative re- combination of that technology, using a different type of cabling and joined to a different type of network, that yielded such a boost in value.

Instead of helping Xerox systems products run faster in the distant fu- ture, SynOptics learned how to make IBM and other networks run faster today. Instead of focusing on entirely new networks, SynOptics added value to already installed networks.

This happened only after the company left the cozy confines of the PARC lab within Xerox, which prompted SynOptics to conceptualize an alternative way to apply its technology. For these projects, the search for an alternative approach to building value came to naught.

But those companies that did prosper managed to do quite well for themselves and their shareholders. Their technologies helped fuel the personal computer revolution and also contributed to the complementary industry of computer networking and communications.

Figure shows the market value of these com- panies once they went public. Though they too fell sharply in and as a result of the collapse in technology stock prices, the market value of these spin-off companies at the end of collectively exceeded that of their parent company, Xerox, by a factor of two.

By Ken Dill.