Via Technology Review
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Infamous for failing to commercialize the technologies it invented,
Xerox's R&D subsidiary has a new strategy for innovation: make
money.
Cheap trick: In a prototype, logic circuits and computer memory are printed together on a sheet of plastic.
PARC
Last month, a small Norwegian company called Thinfilm Electronics and PARC, the storied Silicon Valley research lab, jointly showed off a technological first—a plastic film that combined both printed transistors and printed digital memory.
Such flexible electronics could be an important component of future
products, such as food packaging that senses and record temperatures,
shock-sensing helmets, as well as smart toys. But the story of how
PARC's technology—the printed transistors—wound up paired with memory
technology from an obscure Norwegian company also provides a window onto
a 10-year struggle by Xerox to transform the way it commercializes
R&D ideas.
For most of its 40-year history, PARC (for Palo Alto Research Center)
was as famous for squandering new technologies as it was for inventing
them. The mouse, the graphical user interface, and the drop-down menu
were all born at PARC—but it was Apple and Microsoft that commercialized
them and made them cornerstone inventions of the PC industry.
The list of innovations lost hardly stops there. While Xerox did, of
course, commercialize PARC's blockbuster technology of laser printing,
other PARC inventions ultimately commercialized elsewhere include
Ethernet networking, the PDF file format, and electronic paper—created
at the research lab in 1975, long before the Amazon Kindle and other
e-books appeared.
By 2001, Xerox had seen enough. Facing poor financial results, its
then-CEO, Anne M. Mulcahy, vowed to return the company to profitability.
As part of that effort, Xerox reincorporated its cash-burning R&D
center as an independent company, simply called PARC, with a mandate to
turn a profit whether by licensing patents, through contract research,
or by creating partnerships with other firms.
The buzzword attached to new era was "open innovation"; PARC's
researchers would now freely associate with the outside world to hone
ideas and work out how to commercialize them. "When PARC spun out in
2002, open, collaborative innovation became, in essence, the business
model for PARC," says Lawrence Lee, currently PARC's director of
strategy. "But we've only figured out what that means in practice over
the last couple of years."
PARC's advances in printing transistors came at around the same time
the lab was being reorganized, making the technology a key proving
ground for the new strategy. PARC at first hoped to develop organic
electronic displays, a potentially huge market, but the technology
proved difficult to manufacture, and it fell far short of silicon-based
displays in performance.
In the old days, the idea might have languished. Xerox headquarters
had often failed to embrace new inventions that didn't relate to the
company's core businesses of selling copiers. But following the "open
innovation" idea, PARC started shopping the technology to manufacturers,
telling them that printed transistors could also provide very cheap,
flexible sensors and computer logic for packaging, toys, and other uses.
Tamara St. Claire, PARC's vice president for global business
development, says manufacturers liked the idea but wanted to see what
she terms a "minimum viable product"—management-speak for something more
than a benchtop experiment. To develop one, in 2010 PARC formed a
"co-innovation engagement" with Thinfilm,
which was already making printed memory. The resulting prototype
circuit was the first to combine both printed transistors and memory,
according to PARC.
The Xerox company now has partnerships with several other firms and
government agencies to use printed electronics in pressure-measuring
helmets as well as in packaging that can sense pressure, sound, light,
acceleration, or temperature. By doing so, it hopes to tap a market for
printed electronics that an analyst firm, IDTechex, estimates could
reach $45 billion by 2021.
For PARC, the partnerships are signs that open innovation is working.
"There are plenty of great ideas at PARC, but you learn early on that
execution is often the hard part—execution and timing," says St. Claire.
"It's something you can say PARC is really starting to understand. You
almost have to be as innovative in the commercialization—especially when
you have game-changing technologies—as on the technology side."
PARC, which once served only Xerox, now has an expanding list of
technologies in development with outside partners that include Fujitsu,
Motorola, NEC Display Solutions, Microsoft, Samsung, SolFocus, and
Oracle. The change in strategy has helped turn it from a
multimillion-dollar financial sinkhole into a modest, but growing,
innovation business. In 2010, it was profitable on revenue of more than
$60 million, a spokesman says. PARC, which has 250 employees, is also
patenting at a fast clip, with about 150 patents filed per year since
2002.
The focus on doing business, not just having ideas, has also boosted
morale, says Teresa Amabile, an organizational psychologist at Harvard
Business School. "I've talked to a lot of scientists, technicians, and
engineers doing R&D inside companies ... and the people I talk to at
PARC [are] more strongly, intrinsically motivated than the average,"
she says. "They are driven by real passions and excitement for the
disruptive discoveries they are making, coupled with excitement for
seeing what they were doing actually being used in the world. That
combination is pretty unusual."