Irrespective of greatness, no single technology alone can power successful innovations. No organization can fully depend on internal technology inventions either to unlock value from reinventions and evolution of innovations. However, refining acquired technologies is a must to leverage technologies sourced from the outside.
Organizations acquiring technologies from external sources must recognize the pivotal role internal R&D capacity plays in refining and fusing these technologies to create economic and competitive advantages. While sourcing technologies externally accelerates Innovation and reduces initial development costs, the real challenge lies in transforming these coarse technologies into scalable and marketable solutions. Companies like Apple, Sony, and Asahi Kasei have demonstrated that leveraging acquired technologies effectively requires robust internal capabilities for refinement, innovation, and adaptation.
The Role of Internal R&D in Refining Acquired Technologies
1. Refinement for Fit and Functionality
Technologies sourced externally often require substantial adjustments to fit within an organization’s product architecture. For instance, Apple acquired Graphical User Interface (GUI) technology from Xerox PARC and multi-touch technology from FingerWorks. However, these were not directly integrated into Apple’s products. Instead, Apple’s internal R&D team refined and customized these technologies to align with its envisioned product design and performance, leading to revolutionary innovations like the Macintosh and the iPhone. This process of refinement ensures that externally acquired technologies meet specific technical, aesthetic, and functional requirements.
2. Pushing Beyond Perceived Limits
Apple’s culture, driven by Steve Jobs, emphasized relentless refinement to surpass commonly perceived limits. For instance, Apple redefined the potential of multi-touch technology by integrating it seamlessly into the iPhone, setting new standards for smartphone interfaces. Similarly, the GUI in the Macintosh redefined personal computing by making it more accessible and intuitive. Without robust internal R&D, these acquired technologies would have remained underutilized or misaligned with market needs.
Fusion of Technologies for Innovation
1. Creating Synergies Among Technologies
Fusion is about combining multiple technologies to create new products or features that deliver unique customer value. Apple’s internal R&D team excelled at integrating technologies like multi-touch displays, miniaturized components, and software ecosystems to create groundbreaking products. For example, the iPhone’s success lay not just in refining individual technologies but in fusing them to create a seamless user experience.
2. Driving Competence Development
The refinement and fusion of technologies demand the development of new organizational competencies. For example, Sony’s licensing of the Transistor from Bell Labs and its acquisition of image sensor technologies required significant internal R&D efforts. Sony’s refinement of the transistor led to the creation of the transistor radio, a groundbreaking product that transformed the consumer electronics market. Similarly, its work on image sensors has positioned Sony as a global leader in imaging technology.
The High Competence Barrier in Refinement
Refinement of externally sourced technologies is not a straightforward process; it requires substantial technical expertise, investment, and organizational focus.
1. Asahi Kasei and Lithium-Ion Batteries
Asahi Kasei acquired the lithium-ion battery technology developed by British and American academics. However, the technology was in its nascent stage and not yet feasible for economic production. Asahi Kasei’s internal R&D team worked extensively to refine the technology, overcoming challenges related to efficiency, safety, and scalability. This effort not only commercialized lithium-ion batteries but also laid the groundwork for their application in diverse industries, from consumer electronics to electric vehicles.
2. Sony’s Nobel Prize-Winning Refinement
Sony’s licensing of the transistor technology is another testament to the critical role of internal R&D. The refinement process not only led to the creation of commercially viable products but also resulted in scientific breakthroughs that earned a Nobel Prize. This highlights how internal R&D can transform raw technologies into both economic assets and contributions to scientific knowledge. It appears that Sony represents Japan’s core strength in creating innovation success.
Economic Implications of Internal R&D
1. Maximizing Return on Investment (ROI)
Without robust internal R&D, organizations risk failing to extract full value from acquired technologies. For instance, countries with weak R&D infrastructure often fail to leverage imported technologies, leading to underutilization and economic inefficiency. In contrast, organizations like Apple, Sony, and Google have demonstrated that internal R&D is critical for scaling up and profiting from external acquisitions.
2. Enabling Proprietary Advantages
Internal R&D allows companies to create proprietary versions of acquired technologies, giving them a competitive edge. For example, while many companies license similar base technologies, those with superior internal R&D can refine and adapt them uniquely, creating differentiation in the market.
Lessons from Notable Companies in Refining Acquired Technologies
1. Apple
Apple’s ability to refine and fuse acquired technologies has set a benchmark in innovation. Its investment in internal R&D, combined with a culture of pushing boundaries, has enabled it to transform sourced technologies into iconic products. Apple’s success underscores the importance of coupling external acquisitions with robust internal R&D capabilities.
2. Sony
Sony’s refinement of the transistor and image sensor technologies highlights how internal R&D can transform externally sourced innovations into market-defining products. Its work in these areas has not only driven commercial success but also contributed to its reputation as a leader in consumer electronics.
3. Asahi Kasei
Asahi Kasei’s efforts in refining lithium-ion battery technology demonstrate the importance of internal R&D in overcoming the challenges associated with nascent technologies. Its success has had far-reaching implications, driving advancements in industries ranging from automotive to renewable energy.
4. Cisco
Cisco has effectively combined external acquisitions with strong internal R&D to maintain its leadership in networking technologies. By acquiring firms like AppDynamics and Duo Security, Cisco has expanded its portfolio while refining and integrating these technologies through its R&D efforts.
5. Canon
Canon’s strategy of acquiring imaging and optical technologies and refining them internally has enabled it to maintain its position as a global leader in imaging solutions. Its R&D investments have ensured that externally acquired technologies align with its long-term innovation goals.
Challenges and Recommendations
1. Overcoming Organizational Barriers
One of the major challenges in leveraging acquired technologies is organizational inertia. Companies must foster a culture that supports continuous innovation and empowers R&D teams to refine and adapt technologies.
2. Investing in Competence Development
Refinement and fusion demand high levels of competence. Organizations must invest in developing their workforce and infrastructure to support advanced R&D activities.
3. Balancing Acquisition and Development
While external acquisitions provide access to new technologies, internal R&D ensures their effective utilization. Companies must strike a balance between these approaches to maximize innovation potential.
Conclusion
The successful scaling up of externally acquired technologies hinges on the strength of internal R&D. From refinement and adaptation to fusion and integration, internal R&D plays a critical role in transforming raw technologies into marketable solutions. The examples of companies like Apple, Sony, Asahi Kasei, and Cisco illustrate that robust internal capabilities are essential for maximizing the value of acquired technologies. By investing in R&D and fostering a culture of innovation, organizations can not only overcome the challenges of refinement but also unlock new opportunities for growth and differentiation.
In an era of rapid technological advancement, the synergy between external acquisitions and internal R&D is more critical than ever. For companies seeking to innovate and lead in their industries, building and leveraging internal R&D capacity is not just an option—it is a necessity.
Five Key Takeaways of Refining Acquired Technologies
- Internal R&D Enhances the Value of Acquired Technologies
Externally acquired technologies often arrive in a raw form, requiring substantial refinement. Internal R&D plays a crucial role in adapting these technologies to meet organizational needs, ensuring compatibility with existing architectures, and enhancing functionality for market deployment. - Fusion of Technologies Drives Innovation Success
Combining multiple acquired technologies with internally developed competencies creates synergies that drive innovation. Successful examples include Apple’s integration of multi-touch and GUI technologies, which resulted in groundbreaking products like the iPhone and Macintosh. - Competence Development is Key for Refinement
High levels of technical expertise and continuous learning are essential for further refining acquired technologies. Examples such as Sony’s transistor and image sensor advancements highlight the importance of investing in internal capabilities to transform nascent technologies into commercial successes. - Economic Value Requires Strategic Refinement
Acquiring technology is only the first step. The real value lies in the ability to refine and advance these technologies. Companies without strong R&D capabilities risk underutilizing acquired innovations, leading to missed opportunities or competitive disadvantages. - A Culture of Innovation Enhances R&D Impact
Organizations that foster a culture prioritizing refinement, experimentation, and breaking barriers—like Apple under Steve Jobs—are better positioned to maximize the potential of acquired technologies. This culture enables teams to push boundaries and deliver products that redefine industries.
Five Research Questions
- How does the integration of acquired technologies with internal R&D processes impact a company’s innovation success and market competitiveness?
- What specific internal R&D competencies are most critical for refining and fusing externally sourced technologies into commercially viable products?
- How do companies like Apple and Sony overcome challenges in adapting raw or nascent technologies for large-scale production and economic value creation?
- What cultural and organizational factors support the effective refinement of acquired technologies within high-performing firms?
- How do variations in technology maturity (emerging, pacing, or key) influence the required internal R&D investment and refinement strategies for maximizing returns on acquisitions?
