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How Corporations Can Manage New Ventures and University Projects as Extensions of their Advanced Product Development

Professor Ikhlaq Sidhu and I recently started talking about how the interest of corporations in the innovations created by startups is leading to changes in corporate R&D models, an area he has been studying for some time. As we continued our conversations we felt that it will be important to start publishing some of our thoughts. This is the first of what we hope to be a series on posts on how startup innovation is impacting corporate R&D models.  Please also see.

The World of Innovation Has Changed

A great deal has changed in corporate innovation since the days of Bell Labs and Xerox PARC.   While these models of advanced work led to so many innovations and created tremendous broad economic value, though not always to the lab’s corporate owner, it is clear that large scale, insulated corporate research is no longer the most common model for entering new markets or developing technologies of the future. Even Alphabet is re-evaluating the mission of Google X.

What has changed? For most companies, open innovation and new venture acquisitions have become extensions of the firm’s advanced R&D portfolio. At the same time entrepreneurs and their investors have become much more effective and skilled at efficiently creating new startups and bringing technology and business model innovations to market. And finally, a significant fraction of University lab work has now evolved from the traditional “publish or perish” model to one that is today closer to demonstration, design-oriented, and more applied than ever before.

All of these changes are now converge towards a new model for creating and managing portfolios of innovation.

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The Innovation-Driven Disruption of the Automotive Value Chain (Part 3)

In a previous post I wrote about the disruptive innovations that have been introduced by Tesla Motors (Tesla) and Uber and presented the steps the automotive industry should be taking in order to address the startup-driven disruption.  In this post I want to make three points:

  1. It is hard for startups to break into and succeed in the automotive industry.  The industry requires high investment and ability to scale while maintaining low risk.  The Car Use value chain has lower barriers to entry but they result in many competitors that have difficulty differentiating their solutions.
  2. Startups must realize that they cannot disrupt the entire automotive industry.  Instead they must focus in the right areas, and collaborate with innovation-minded incumbents in order to become part of the appropriate supply and value chains as quickly as possible.
  3. The incumbents must structure their organizations, operations and culture in a way that enable startup-driven innovation to meaningfully impact their business.

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