Stifled by Size? How Tech Transfer Boosts Innovation in Large Companies
Dvorah Graeser
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Why Large Companies Struggle With Innovation
As companies grow in size, they become more complex. While company growth is a linear process, company complexity is exponential – meaning that companies become a lot more complex before they get big. So companies develop internal business processes that enable them to handle all of that complexity while further reducing costs. Optimized business processes provide reliable, reproducible executional excellence at the lowest possible cost.?
The problem? These optimized business processes are also relatively inflexible. They are optimized for the current business climate and product or service mix. To achieve such optimization, they should be stable and unchanging. But when the business needs to change, these same optimized processes can get in the way. The entire business becomes so finely tuned for a particular set of conditions that adapting to new conditions becomes very difficult.?
Furthermore, innovation is by its very nature non-optimal. Innovation requires change to achieve future benefits. It involves risks. Multiple options and ideas must be explored, and either further developed or discarded. The process of innovation is cyclical and involves a lot of discarded work - which can look wasteful when viewed through the lens of current profitability.
The Kodak Example
Kodak is often cited as an example of a company that failed to innovate. It is accused of failing to develop new digital cameras. However it is more accurate to say that Kodak failed to adopt digital technology in its product line. A Kodak engineer, Steve Sasson, actually invented the first digital camera - way back in 1975, long before the first digital camera was commercially available (1990 in the US). But Kodak executives were worried that this new technology would destroy its existing film business. Because Kodak’s entire business was optimized around film technology, any change would have been hugely disruptive.?
In the short term, this decision may have been more profitable - and certainly avoided any friction around innovation.?
In the long term - well, we all know what happened. Kodak filed for bankruptcy in 2012 and is now a shadow of its former self.?
How Tech Transfer Can Help
Tech transfer is often touted as a solution for the problems large companies face in innovation. But as noted above, innovation by itself isn’t the biggest problem - commercialization of innovations is. Because commercialization of innovations can reduce profitability, disrupt existing optimized business processes and increase risk, many large companies avoid it.
However, tech transfer can help big companies successfully adopt new innovations in two ways. First, receiving an innovation through tech transfer already decreases risk. The initial ideation and development are done by the university or other research organization. These early stages are the riskiest stages of innovation. The corporation both de-risks, and saves time and money, through tech transfer.
Second, tech transfer can reduce disruptions to existing business processes. Changes to existing business processes can focus on the licensed innovation and so are more efficient. In some cases, tech transfer involves hiring the students or other researchers who worked on the original innovation, as employees, consultants or both. These new hires bring both innovation and work experience, which can smooth integration.?
The more the university and the large company collaborate, the greater the commercialization benefits to the large company. One example is Honeywell and Carnegie Mellon University. In a dramatic move in 2018, the CEO of Honeywell spun out two divisions using aging tech, and instead started a new collaboration with Carnegie Mellon University. The result is a completely new product line, including warehouse automation solutions with both software and robotic components, and logistics solutions. This new product line has opened up new business and growth opportunities for Honeywell.
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While innovation may seem like the biggest draw for a large company, in fact tech transfer is most beneficial because it delivers so many benefits around the core innovation - not just reduced risk, but also increased know-how and human capital. These additional benefits can make the difference between successfully commercialized innovation - and a large company going down the same sad path as Kodak.
Can tech transfer save large company innovation??Comment below, or?click this link to talk with me ?directly about your own tech transfer challenges.
References:?
Effects of exponential growth on companies:
Interesting article on various types of business process optimization and how they can block innovation: https://www.forbes.com/sites/tendayiviki/2018/11/04/why-large-companies-continue-to-struggle-with-innovation/?sh=23abaa2767b4
Story behind Kodak’s failure to capitalize on its invention of the digital camera: https://www.weforum.org/agenda/2016/06/leading-innovation-through-the-chicanes/ ?
History of digital cameras: https://www.cnet.com/tech/computing/history-of-digital-cameras-from-70s-prototypes-to-iphone-and-galaxys-everyday-wonders/ ?
Honeywell automation products: https://sps.honeywell.com/us/en/products/automation ?
Insightful post on failure of large companies to innovate; although I don’t agree with all of it, the post and the many comments are thought provoking: https://www.dhirubhai.net/posts/tomfgoodwin_almost-everyone-is-wrong-about-why-blockbusters-activity-7064262310889975808-RPaE?utm_source=share&utm_medium=member_desktop ?