80
3.4 Closed Innovation
During most of the twentieth century, inwardly focused research and development
(R&D) in industry enabled substantial achievements and many commercial
successes.
In many countries, academic scientists were at the time more interested in the
process of scientific discovery to gain insights about the physical world than in putting such knowledge into practical use. At that time, it was common among academic camps to dismiss researchers inclined toward applied applications of science,
on the ground that they were sold to corporate interests and therefore considered greedy.
Therefore, and with the benefit of hindsight, during most of the twentieth century, pursuing R&D within a firm was one of the few options available to those
interested in practical applications of science, and it became the de facto dominant
design among large, multinational companies. Internal R&D divisions were considered a strategic asset that needed to be carefully nurtured and shielded from the
external world and competitors. The world knew little about corporate innovations
until scientific developments became launched and commercialized in the form of
products (Chesbrough 2003).
After the Second World War, the US government made increasingly large
amounts of funding available, not only to government labs but also to the large
number of independent universities being created. The availability of more research
grants and scholarships enabled a dramatic increase of the pool of talent educated at
the graduate level in many fields of science. In addition, during the 1990s, private
funding for R&D activities in developed countries caught up to public R&D budgets. The combination of additional funding, both public and private, and a larger
pool of talent led to the golden era of corporate labs in firms such as DuPont, Bell
Laboratories, General Electric, IBM, RCA, Xerox in the United States, BASF,
Bayer, Roche, Nestlé, Unilever, Siemens, and Shell, among many others in Europe,
and “keiretsu” conglomerates such as Mitsui, Mitsubishi, Sumitomo, and Sanwa,
among others, in Japan.
The mindset was one of “closed innovation”, and was based on the principle that
companies were, by and large, on their own in terms of developing the technologies
needed to sustain and increase their market footholds. It is during this period that the
unfortunate “not invented here” motto was coined, reflecting an inward stance
where firms could simply not afford to rely on scientific developments created outside the corporation, be these of public or private nature. From a strategic standpoint, internal R&D capabilities were seen as an entry barrier to discourage potential
competitors (Chesbrough 2003).
Closed innovation created a subtle, and sometimes not so subtle, tension between
research and development activities. For instance, while scientists in centralized,
corporate research labs were driven to move into the next wave of innovative projects, instead of delving deeper into commercially relevant work, researchers in
development felt the pressure to find out more about how to translate such research
M. L. Müller and H. Campos
3.4 Closed Innovation
During most of the twentieth century, inwardly focused research and development
(R&D) in industry enabled substantial achievements and many commercial
successes.
In many countries, academic scientists were at the time more interested in the
process of scientific discovery to gain insights about the physical world than in putting such knowledge into practical use. At that time, it was common among academic camps to dismiss researchers inclined toward applied applications of science,
on the ground that they were sold to corporate interests and therefore considered greedy.
Therefore, and with the benefit of hindsight, during most of the twentieth century, pursuing R&D within a firm was one of the few options available to those
interested in practical applications of science, and it became the de facto dominant
design among large, multinational companies. Internal R&D divisions were considered a strategic asset that needed to be carefully nurtured and shielded from the
external world and competitors. The world knew little about corporate innovations
until scientific developments became launched and commercialized in the form of
products (Chesbrough 2003).
After the Second World War, the US government made increasingly large
amounts of funding available, not only to government labs but also to the large
number of independent universities being created. The availability of more research
grants and scholarships enabled a dramatic increase of the pool of talent educated at
the graduate level in many fields of science. In addition, during the 1990s, private
funding for R&D activities in developed countries caught up to public R&D budgets. The combination of additional funding, both public and private, and a larger
pool of talent led to the golden era of corporate labs in firms such as DuPont, Bell
Laboratories, General Electric, IBM, RCA, Xerox in the United States, BASF,
Bayer, Roche, Nestlé, Unilever, Siemens, and Shell, among many others in Europe,
and “keiretsu” conglomerates such as Mitsui, Mitsubishi, Sumitomo, and Sanwa,
among others, in Japan.
The mindset was one of “closed innovation”, and was based on the principle that
companies were, by and large, on their own in terms of developing the technologies
needed to sustain and increase their market footholds. It is during this period that the
unfortunate “not invented here” motto was coined, reflecting an inward stance
where firms could simply not afford to rely on scientific developments created outside the corporation, be these of public or private nature. From a strategic standpoint, internal R&D capabilities were seen as an entry barrier to discourage potential
competitors (Chesbrough 2003).
Closed innovation created a subtle, and sometimes not so subtle, tension between
research and development activities. For instance, while scientists in centralized,
corporate research labs were driven to move into the next wave of innovative projects, instead of delving deeper into commercially relevant work, researchers in
development felt the pressure to find out more about how to translate such research
M. L. Müller and H. Campos