3M versus Xerox Technology Ventures' Performance - Case Study Example

Business – Xerox Technology Ventures Vs. 3M Case Study Introduction Innovation and change are two very important aspects to a business enterprise for it to remain competitive as a result of complexities that globalization have brought with it. The Xerox Technology Ventures (XTV) and 3M case study provides insight into management of innovation and change that are essential in the modern business world. Case Study According to Drucker 2002, p98, “Knowledge-based innovations can be temperamental, capricious, and hard to direct”, which show that managing innovations is not an easy task. This is the basis of comparison of XTV and 3M in that it analysis the manner in which these two business organizations managed innovations and the changes in business administration that came with it. The function of innovation is a specific component of entrepreneurship. It is this functional component of entrepreneurship that is responsible for the development of new wealth-producing resources or otherwise creates within the existing resources the abilities for being more productive in terms of wealth generation (Drucker, 2002). Innovation is not just the creation of new products, but that which results in a product acceptable to the customers that make up the product and the means to wealth generation (Sawhney & Wolcott, 2004). Sawhney, Walcott & Arroniz 2006, p. 76, point out that “Business Innovation is About New Value, Not New Things. Innovation is relevant only if it creates value for customers — and therefore for the firm”. Innovation may lead to products that are not capable of wealth resource generation and products that are capable of wealth resource generation. Innovations are thus not always business opportunities and in essence it is the capacity to discern this that is essential to making innovation a successful component of entrepreneurship. XTV and 3M are both high-technology business enterprises, wherein innovation is a necessity to remain competitive in the market. Innovation thus is encouraged in both the business enterprises, as a part of the corporate venturing that both companies indulge in, but managed in different ways leading to difference in the success enjoyed in leveraging the benefits of innovation. The initial success that 3M gained from innovation within the activities of the organization led to 3M looking at innovation as a critical component of its strategy, to be managed from within the organization. Innovation of 3m may thus be considered an intrapreneurial activity. This is emphasized by the strategy requirement of twenty-five percent of its business be generated from products that are not part of its product range in existence earlier than five years. Such a strategy has brought with it the benefit of a culture in the organization that supports innovation and does not stifle individuals and idea generation. However, through 3M we see many of the deficiencies that such a strategy of developing, manufacturing, marketing and servicing innovation in a closed innovation model (Chesbrough, 2003). Sufficient financial resources have to be available to see an innovative idea through to a successful product in the market. This has led to conflict within 3M for the needed financial resources that each of its divisions needs to see through innovation to being fruitful. Paucity in funds can slow down the progress of an innovative idea to a product. In addition there is the need to be objective in evaluation of innovative products and their progress. In a culture that is benevolent to innovation, 3M has found it difficult to terminate unsuccessful innovative product development to enable these funds to be made available to the progress of other new products. Even in choice of team members in the development of an idea of marketable product, 3M prefers to use human resources within the organization. This may be helpful for employee motivation and loyalty, but is proving a dampener in developing a strong objective team for product development. 3M is a competent technology company with knowledge assets in different fields available in different divisions. Making use of these strengths does enable 3M to reduce costs and speed of availability of knowledge assets to teams responsible for the development of new products. This is fine as far as knowledge assets, but extending such a strategy to the market development is not proving successful. Marketing and sales teams are very conscious of spending effort for returns in terms of their objectives. They are less likely to be enthusiastic about products that may take time in yielding results to the detriment of the product. In contrast to 3M, XTV is a part of its parent company Xerox that handles new product ventures, by converting product ideas coming from within Xerox, but manages it externally of its parent organization. Xerox has created an innovative environment, but as a learning organization has learnt from its past mistakes and has created XTV as the new product development part of the organization external to its current activities. Such a strategy enables XTV to set clear objectives for itself and select the innovative products for development that will fit into these objectives. Through its independence XTV can also source financial partners to strengthen financial to support its innovation program. Fruits from successful innovative products are shared by XTV among itself and its partners, which include the team involved in the development, but paid only after success has been attained. This policy makes the teams more aware of their need for meeting objectives. XTV has the option of using the parent companies strengths in various activities. Unlike in 3M, XTV has chosen to use only the strong supply chain of Xerox and avoided using the marketing strengths of Xerox. This has resulted in XTV having a strong and dedicated marketing and sales team a critical component to market development for new products. Success in innovation at XTV has stemmed from it adopting an open innovation model (Chesbrough, 2003). Conclusion The case study of 3M and XTV demonstrates that the older closed model of innovation as adopted by 3M may not be a competent way to manage innovation in an organization, particularly in business activities required in the modern world. XTV demonstrates that the newer open innovation model is a more competent strategy in the modern business world. Literary References Chesbrough, H.W. 2003, ‘The Era of Open Innovation’. MIT Sloan Management Review, Spring. Drucker, P. 2002, ‘The Discipline of Innovation’, The Innovative Enterprise. Sawhney M. & Wolcott, R. V. 2004, ‘The seven myths of innovation, The Financial Times Ltd. Sawhney, M., Walcott, F. & Arroniz, I. 2006,’The 12 Different ways for Companies to Innovate’, MIT Sloan Management Review, vol.47, no.3, pp.75-81 Read More