Page 257 - Grow from Within Mastering Corporate Entrepreneurship and Innovation

242 Appendix B

developing opportunities that did not fit, or even conflicted,
with existing divisions or were too long-term for organizations
with short-term P&L responsibilities. Lockheed’s “Skunk
Works” was a pioneer, founded just before World War II. It
turned out a series of high-profile successes, including the U2
and SR-71 spy planes and the F-117A stealth fighter. In 1966,
Hewlett-Packard consolidated its long-term science and
emerging technologies research in HP Labs, which drove the
company’s move into computer and information technologies.
Many of the technologies developed in HP Labs were trans-
lated into products that came to account for most of the com-
pany’s revenues and growth for years. A few years later, in
1970, Xerox Corporation founded the Palo Alto Research Cen-
ter (PARC) for much the same purpose.
Sometimes a company would set up a separate team to pur-
sue specific new concepts. In 1980, IBM sent a dozen engineers
to Boca Raton, Florida, to design and build what it dubbed the
“personal computer,” or PC. Freed from IBM corporate poli-
cies and cultural assumptions, the group devised an innova-
tive architecture and business model for the PC. By 1985,
according to John DeMott’s report in Time, there were ten thou-
sand employees working in what became the IBM Entry Sys-
tems Division. Similarly, GM launched the Saturn Corporation
in 1987 as a completely separate company. Automobile manu-
facturers would routinely set up subsidiaries to pursue new
concepts, but these subsidiaries might share corporate design,
engineering, manufacturing, or back-end capabilities. Saturn
was completely independent and introduced several changes
in design, production, and marketing that would have been
nearly impossible to do within GM.
The nature of the connection between the separate group
and the parent corporation depended on the perceived sources
of conflict with existing business units that motivated the sep-