Xerox Technology Venture

Xerox’s interest in XTV came with the realization that the Xerox PARC’s technology was leaking out of the company. Industry rumor suggests that the Macintosh, Ethernet, laser printers, and mouse pointers were all invented by Xerox PARC and leaked out to various start-ups. The company executives thought that by providing entrepreneurial opportunities to its employee, it will be able to keep Xerox-born ideas in the family. Xerox created XTV and nominated Adam, a well seasoned Xerox executive to head the new division.

Xerox Technology Venture mission was to manage ventures more aggressively with entrepreneurial approach. XTV’s job was to identify top ideas, secure outside venture funding, and provide guidance as these startup companies grew. Xerox held all of the stock, twenty percent of it was set aside to be used as stock options for employee. 20% of stock options motivated employees to come forward with their ideas to XTV, if their ideas were not pursued by mainstream Xerox business.

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Xerox gave them shares in the new company in exchange for waiving the legal right to demand a job from Xerox if the new company failed. The startup ventures were allowed to use Xerox’s resources to develop ideas and slowly acquire funding from outside to further develop these ideas. During the life-cycle of XTV, Adams and his associates selected nine ideas that became companies. Two of the companies have gone public; the most successful is Documentum, Inc. , a company that makes enterprise-wide document management software.

Documentum was founded in 1990, went public in early 1996, and has attracted considerable attention along the way. In spite of mixed success, XTV in mid-1990s was replaced with another unit, Xerox NewEnterprise, which was supposed to manage ventures more aggressively and entrepreneurially. Yet XNE was ended in the late 1990s. From above analysis, it seems the company tried structure after structure, yet couldn’t become the innovation powerhouse it so wanted to be.

Having seen the track record of entrepreneurial model, I believe Xerox would have been more successful by following the producer model entrepreneurial approach that is currently being practiced successfully by companies like IBM and Cisco. Xerox should have integrated Xerox PARC and its venture wing in a bigger organization called innovation. The integration of these organizations would have helped Xerox R&D to streamline its innovation process to better cater the need of its current business.

The entrepreneurial wing of innovation could have come up with appropriate business case to motivate Xerox’s internal businesses to pursue these ideas or even help refine these ideas to meet Xerox’s existing business need. This way Xerox would have created relevant technologies and retained these technologies inside for its organic growth to impact its top line. The XTV approach only facilitated engineers to pursue their failed ideas outside companies; however it did not motivate Xerox engineers and management to integrate new ideas inside company to organically grow Xerox’s business outside its core competence..

Reference(s):
1) HBS note, “Xerox technology venture: March 1995”
2) HBS note “XTV: Xerox’s Attempted Recovery from “Fumbling the Future”, http://hbswk.hbs.edu/item/3413.html, 3) Other internet based research
4) “Grow from Within”, Robert C. Wolcott etc al

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