What happened
Mixed outcomes. PARC’s inventions had substantial influence, while Xerox and the spin-offs captured value unevenly. In a comparison of selected spin-offs, successful ventures changed their business models more than unsuccessful ventures. The later outcome does not reveal which opportunities were clearly promising when the decisions were made.
- PARC engineers developed the Alto through intensive prototyping and use within their technical community. Xerox PARC’s Engineers on How They Invented the Future
- Among the Xerox technology spin-offs compared in the study, successful ventures changed their business models, while failed ventures showed less search and learning. The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies
What might explain it
Supported in case
A successful existing business model can narrow which new uses an organization can recognize and support. The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies
Alternative explanation: Markets, complementary technology and timing may make apparently promising uses unviable regardless of management interpretation.
Plausible
Spin-offs can create room for a different customer and revenue model. The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies
Alternative explanation: Spin-offs also lose resources and coordination benefits; selected survivors exaggerate their apparent advantage.
Understanding the outcome
Business models as an organizational learning mechanism
A prototype can be technically impressive while lacking a customer, distribution channel, service arrangement, or source of revenue. Testing those connections is part of learning what the invention can become. The Role of the Business Model in Capturing Value from Innovation: Evidence from Xerox Corporation’s Technology Spinoff Companies
A retrospective account benefits from knowing what later succeeded. It cannot show that every rejected experiment would have been sensible to fund at the time.
Questions to take into practice
- Who owns the work of turning a prototype into a usable service?
- Can a new idea test a different business model without satisfying all assumptions of the old one?
What remains uncertain
- How many apparently promising spin-offs failed, and which inventions were commercialized successfully inside Xerox? Without both sides of that comparison, it is easy to mistake the most memorable successes elsewhere for a complete account of Xerox’s choices.