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Outsourcing innovation: comparison of external technology providers to Siemens uncovers five drivers of innovation success

Author: Cui, Zhijian ; Loch, Christoph H. ; Grossmann, Bernd ; He, RuINSEAD Area: Technology and Operations ManagementIn: Research Technology Management, vol. 52, no. 6, November/December 2009 Description: p. 54-63.Type of document: INSEAD ArticleNote: Please ask us for this itemAbstract: Innovation outsourcing has become a widespread practice in RandD management. Managers on the ground wonder what project management practices are required for technology development with external providers: operationally, what should the RandD project manager do? The authors, from INSEAD and Siemens, examine 24 outsourced development projects at Siemens in order to identify success drivers. They find five common drivers across all innovation providers; for example, project-specific partner competence as well as maintaining in-house competence separate successes from failures. In addition, each innovation source has specific success drivers. These include managing expectations (customers tend to get carried away thinking they can sell the technology next month) and protecting your intellectual property in collaborations with competitors and start-ups. When a mature technology—rather than a novel technology—is outsourced, the success drivers shift from project issues to producibility and system compatibility
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Innovation outsourcing has become a widespread practice in RandD management. Managers on the ground wonder what project management practices are required for technology development with external providers: operationally, what should the RandD project manager do? The authors, from INSEAD and Siemens, examine 24 outsourced development projects at Siemens in order to identify success drivers. They find five common drivers across all innovation providers; for example, project-specific partner competence as well as maintaining in-house competence separate successes from failures. In addition, each innovation source has specific success drivers. These include managing expectations (customers tend to get carried away thinking they can sell the technology next month) and protecting your intellectual property in collaborations with competitors and start-ups. When a mature technology—rather than a novel technology—is outsourced, the success drivers shift from project issues to producibility and system compatibility

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