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Management of Technology (OM476)

Management of Technology (OM476). Collaborative Strategies April 5, 2006 S. Fisher. Agenda. Why collaboration? Various forms of collaboration to enhance innovation Current examples . Criteria for Determining Best Collaboration Strategy. Speed Cost Control Potential for

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Management of Technology (OM476)

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  1. Management of Technology (OM476) Collaborative Strategies April 5, 2006 S. Fisher

  2. Agenda • Why collaboration? • Various forms of collaboration to enhance innovation • Current examples

  3. Criteria for Determining Best Collaboration Strategy • Speed • Cost • Control • Potential for • Leveraging existing competencies • Developing new competencies • Accessing other firms’ competencies • See Figure 8.5 on page 155

  4. Strategic Alliances • Allows a firm to gain access to valuable resources of another firm • Share risk • Enhance flexibility • Knowledge transfer • Capability complementation vs. transfer

  5. Joint Ventures • Formal arrangement • Equity investment from both sides • E2-home • Joint venture between Electrolux and Ericsson to develop smart appliances • Electrolux wanted Ericsson’s expertise in electronics and mobile communications

  6. 8th Continent • Joint venture between General Mills and DuPont • Produces soy milk • Motivation for each company? Source: Tischler, L. (May 2002). Deep pockets, open mind. Fast Company. P. 32.

  7. Research Consortia • Trade associations, university-based centers, private research firms • Center for Automotive Research (www.cargroup.org) • Center for Research on Polymers (http://www.pse.umass.edu/cumirp/) • American Gas Association (www.aga.org) • Share expenses on research projects that will benefit multiple companies

  8. Entering into Alliances for Funding • Venture Capital • Firms that invest in projects with rapid growth potential • Often comes with equity stake in the new firm • Angel investors • Wealthy individuals • Usually smaller funding than VCs • Government grants and loans

  9. Licensing • Reaping benefits from ownership of the technology • More transaction, less relationship-oriented • Passive vs. aggressive multiple licensing • Passive – Performance Indicator • Aggressive - JVC

  10. Outsourcing Innovation • Hottest new cell phone designers • HTC • Flextronics • Cellon • Outsourcing of manufacturing has led to outsourcing of design • Efforts to cut costs, design time • Similar to what we saw in the RLK Media case Key question – what is core technology and what has become a commodity?

  11. palmOne Collaboration • Outsources mechanical and electrical design to HTC in Taiwan • Still has in-house designers for look and feel, display, core chips, specification of performance requirements • Outcomes • Reduced development times by months • Reduced defects by 50% • Increased gross margins approximately 20% Source: Engardio and Einhorn (March 21, 2005). Outsourcing innovation. Business Week, 82-94.

  12. Risks of outsourcing innovation • Fostering new competitors • Losing in-house R&D capability • Becoming “hollow” • Negative reactions from customers and investors Source: Engardio and Einhorn (March 21, 2005). Outsourcing innovation. Business Week, 82-94.

  13. Procter and Gamble’s Connect and Develop Strategy • Acquiring innovations from outside the firm • 35% of new products • 45% of projects in the NPD portfolio • Goal is 50% • Examples • Printing process for Pringles® Prints • Mr. Clean Magic Eraser Source: Huston and Sakkab (March 2006). Connect and develop: Inside Procter and Gamble’s new model for innovation. Harvard Business Review, 58-66.

  14. Connecting Tools • NineSigma • Company identifies problem to solve • Submits problem to network of innovators • Anyone can submit a proposal back to the company • InnoCentive • Founded by Eli Lilly • 75,000 contract scientists who can solve very specific problems • YourEncore • Network of retired scientists and engineers • Short term contract assignments

  15. Caveats to Connect and Develop • Need cultural commitment, buy-in for the approach • Consistent with need to speed up NPD • Was initially inconsistent with P&G’s resistance to ideas not invented internally • “Ready to go” ideas usually aren’t; they still need some further development • Easy to underestimate the R&D resources needed for connect and develop Source: Huston and Sakkab (March 2006). Connect and develop: Inside Procter and Gamble’s new model for innovation. Harvard Business Review, 58-66.

  16. For next class • Monday, April 10: Technology transfer • Compilation of many of the concepts we have been discussing • In-class exercise • Wed., April 12: Our last formal case presentation

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