The PARC Forum

Thursday, June 15, 2000

LESSONS FROM XEROX's HISTORY WITH TECHNOLOGY SPINOFF ORGANIZATIONS

Hank Chesbrough

There have been a series of technology-based spinoff organizations that have emerged out of one or more of Xerox's research centers over the past 20 years. Some of the early spinoffs became vibrant, important companies in the nascent personal computer industry. Observers of this success saddled Xerox with a reputation as an inept manager of technology that "fumbled the future". Since the early spinoffs, Xerox has instituted a number of corporate initiatives to capture more value from their technology through spinoff organizations. These initiatives have evolved over time from an initial laissez faire approach, to a casual investment regime, to a formal internal venture capital regime, to a triage process that channels spinoffs into different structures, depending on their fit with the corporate technology and business strategy. This talk details the experience of each of the 36 firms that spun out of Xerox's research centers from 1979 to 1998. While the success of a few of these spinoffs is well-known, the fate of the majority of these spinoffs has never been reported. This talk reports new data on what happened to each of these firms once they separated from Xerox. The sources for this research were numerous and varied: utilizing a web site questionnaire, 80 direct interviews, numerous primary source documents, and relevant secondary sources.

Henry Chesbrough is an assistant professor of business administration, and the Class of 1961 Fellow at the Harvard Business School. He holds a joint appointment in the Technology and Operations Management (TOM) and Entrepreneurial Management (EM) areas. He received his Ph.D. in Business Administration from the University of California-Berkeley in May of 1997, in the area of Business and Public Policy. He was a recipient of the Robert Noyce memorial fellowship from the Intel Foundation. He also holds an MBA from Stanford University, where he was a Arjay Miller Scholar. He holds a BA from Yale University in Economics (with an Engineering minor), where he graduated summa cum laude, and was elected to Phi Beta Kappa. Prior to embarking on an academic career, he spent ten years in various product planning and strategic marketing positions in Silicon Valley companies. He worked for seven of those years at Quantum Corporation, a leading hard disk drive manufacturer and a Fortune 500 company. He was Vice President of Marketing and Business Development for an entrepreneurial subsidiary of Quantum, Plus Development Corporation.