Winning Ideas and R&D are now Outsourced

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Cisco has started a competition asking for your best new ideas on what capabilities you would like to see Networking products and services provide. Pretty serious prize of $10,000 for the winner, but all the ideas once submitted become the intellectual property of Cisco, so not really a good trade for your best idea for […]

Cisco has started a competition asking for your best new ideas on what capabilities you would like to see Networking products and services provide. Pretty serious prize of $10,000 for the winner, but all the ideas once submitted become the intellectual property of Cisco, so not really a good trade for your best idea for a start-up that’s going to make you rich! Or is it? Arguably it’s a low risk approach for an individual who is not entrepreneurial and will provide the satisfaction to see your idea developed, and may be even a hire to work on its development.
I also heard about today about the sale of a start-up that had been gaining ground steadily for the last few years to one of our global leading technology vendors. When a colleague told me about the sale I replied it was not a big surprise as the technology advisory board had had a key senior person from the acquiring company as a member for a while now. That’s happening more and more; big vendor is interested in this developing capability, or maybe market, or business model, and works with start-up to help them prove a market exists and then buys.

What both moves demonstrate is that innovation is not just alive and well, but happening faster and in more diverse ways then conventional R&D activity based on projecting forward from an Enterprises current position can cope with. Its no surprise that any big break through in the last couple of years has come from a new young generation working on what they want from technology rather than established players R&D labs. The buy or build argument has been around for a while now in terms of R&D, but its getting a little more interesting when it is crossed with the so called ‘Long Tail’ effect.
Put simply ‘Long Tail’ describes that an increasing variation in offerings both increases the overall size of a market overall, but at the same time there is a declining number of buyers for each further level of variation. Given the challenge of this effect is increasingly applying to most markets leading to demands for an increasingly number of new products, and the availability of corporate funding for R&D being largely unchanged, something has to change in the approach to developing new ideas and products.
Getting extra funding into the market through venture capital, and using the new online business models to determine winners and losers, seems a pretty good idea, but the real challenge for making this model work lies in acquisition skills. It would seem that all the major technology vendors have worked at making this a core competence, take a look at this fascinating timeline showing the numbers of acquisitions. I think it makes the point pretty clearly that this is no longer a trend, but an accepted and standardised best business practice for a successful technology company today.

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