Saturday, March 13, 2010

The Exploitation of Innovation

We need more focus on the exploitation of innovation than upon innovation and creativity. That is why I am glad U.T. Dallas has an Institute for Innovation & Entrepreneurship. It is entrepreneurship that turns innovation into products, jobs, and profits. And you cannot have entrepreneurship without the financial resources to turn inventions into products. Again we find that U.T. Dallas has a pertinent resource, it's Center for Finance Strategy Innovation. I look forward to the day when U.T. Dallas is a Tier One university. This university is a great resource for our community and for the state of Texas.

The story of PARC, the Palo Alto Research Center of Xerox, is a perfect example of how innovation is not always exploited correctly. The PARC developed windowing, but gave Steve Jobs a tour without getting him to sign contracts to protect the intellectual property of PARC. So Apple Computer exploited the technology Steve Jobs saw on his tour of the PARC. Besides windowing, he got to see bitmap graphics, a computer mouse, a laser printer, the graphical user interface (GUI), and WYSIWYG text editing: everything that made the Macintosh computer a successful product. The PARC also invented Ethernet, but it was 3Com that got rich from it. Microsoft later copied the idea of windowing from Apple, and Apple could not sue because Apple copied the idea from the PARC. Copying good ideas is an important business principle and we should put more emphasis on exploitation than on innovation.

It is better to be an exploiter than an innovator. You know who Bill Gates is, but who is Tim Paterson? Tim Paterson wrote QDOS (Quick and Dirty Operating System) for Seattle Computer Products. Bill Gates at Microsoft knew I.B.M. needed a disk operating system for their new PC, so he bought QDOS from Seattle Computer Products for $50,000 and licensed it to I.B.M. as MS-DOS. Whose fortune would you rather have, Tim Paterson's or Bill Gates? This is a perfect example of why it is better to be an exploiter than an innovator.

Our children's future prosperity will depend more on their exploitation of innovations than upon their own innovations. It is perhaps better to not get distracted with innovation, but to focus on the exploitation of other people's innovations. The public schools place too much emphasis on creativity and give out children a distorted perspective on the place of creativity within our business culture.

Having worked at high tech companies I can say that most high tech companies have more innovations than they know what to do with. Their problem is not a lack of innovation. A tech company has trouble sorting the winners from the losers, and figuring out how to turn a winning innovation into a home run. Seattle Computer Products could not turn QDOS into a home run, but Microsoft could. The challenge is exploitation, not innovation.

Innovation does not have to be complicated. This is an important lesson our children need to know. When I was working on super computer technology at Convex Computer I read the obituary of Baron Marcel Bich, the inventor of the Bic pen, Bic lighter, and the Bic disposable razor. Three simple products and he became a billionaire, was made a French baron, and was set for life. It is much harder to develop a super computer than a disposable razor. Convex Computer no longer exists, but you can still buy Bic products.

Steve Jobs figured out that technology based products are ephemeral. He gave up computers and turned to Pixar, developing products with long lasting sales: movies for kids. Our children need to know there are hard ways to make money, and easier ways to make money.

Our children need the best education they can get from PISD. They need to hear lessons that will help them prosper.

Robert Canright

To read more about PARC, try Fumbling the Future: How Xerox Invented, then Ignored, the First Personal Computer, by Douglas K. Smith