Innovating When You Don’t Know What You Don’t Know: The View from PARC

Opinion

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how do you acquisitively or organically grow when you don’t know what you don’t know?

Lessons learned

PARC has been in the business of breakthroughs for 40 years (yes!; as of this year). We’re also approaching 10 years as an independent subsidiary company of Xerox, which has meant a number of years experimenting with different business models and evolving our role in a new innovation landscape. Taken together, our experiences incubating startups and co-developing and transferring new business opportunities to clients while investing in our own internal R&D have given us a unique perspective.

They’ve also provided us with a “pattern recognition” that informs our decisions about what potential ideas we invest in, and an understanding of what’s required to make these ideas valuable to those who commercialize them.

So with that vantage point, here is some advice we’d share for Xconomy SF readers:

1. Think about the presence of a platform and the necessary strategic portfolio coverage—not just number of patents you’re trying to acquire. It’s also important to transfer know-how into your organization along with IP (which is difficult to do from universities and patent-only entities) if you want to be a creative, leading player in the space.

2. Draw on outside expertise to see breakthrough possibilities where others may not. Internal experts, while immensely valuable, can be so immersed in the inertia of the company’s core directions that it’s difficult for them to see things differently. Meanwhile, acquired startup expertise may seem agile, but may be too focused on the close-in exit strategy.

3. Don’t rely only on VCs to vet options for you. For example, a VC might decline to invest in a capital-intensive industry, where you may already have much of the capital infrastructure in place and can consider that opportunity.

4. Don’t dismiss considering the open source ecosystem, which can be a powerful enabler for creating market opportunity when your value is differentiated upstream.

5. Build opportunity discovery into the front end of innovation. Social science methodologies such as ethnography can help identify new opportunities beyond incremental feature improvements—especially when you can’t know what you don’t know. Otherwise, you’ll be reduced to asking and delivering what people think or say they want, which, as Henry Ford noted, would have led to a faster horse… not the automobile.

When seeking to acquire and grow technologies/expertise that create new business opportunities, consider all the sources—sometimes in partnerships with multiple players—that can make your vision a reality.

The innovation landscape has many players, and the allure of Silicon Valley is the ever-evolving confluence of government funding, startups, VC funding, universities, global enterprises, leading talent, research centers, and R&D businesses that has made this the place it is.

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Mark Bernstein is the CEO of Palo Alto Research Center (PARC), an independent subsidiary of Xerox. Follow @

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