In a well-marked line from the movie The Social Network, Facebook founder Mark Zuckerberg turns to the Winklevoss twins, who are suing him for stealing their invention, and says: "If you guys were the inventors of Facebook, you'd have invented Facebook." The words speak volumes about the origins of one of the most successful companies on the planet, but are also a commentary on the origins of any invention.
"Anytime you invent something, you have really invented two things—the thing itself, and an idea," says Harvard Business School visiting professor Gautam Ahuja, a professor of strategy at the Ross School of Business at the University of Michigan. In the case of Zuckerberg vs. the Winklevosses, the twins may have had created a simple interface for college kids to connect with one another, but it took Zuckerberg to take the idea and turn it into that of a worldwide social network that would allow everyone to share their lives with one another across geographies.
"Compared to the value of the global network idea, the value of the actual product of a platform for college kids was much less," says Ahuja. "Often the concept value of the invention is more important than the physical aspect."
In a paper published last year in the Academy of Management Review called "The Second Face of Appropriability: Generative Appropriability and Its Determinants," Ahuja makes distinctions between two types of value: "primary appropriability," or a company's' ability to exploit the opportunity of an invention by turning it into a product, and "generative appropriability," a firm's ability to capture the later value inherent in the idea.
"Often companies don't fully exploit the latest ideas that their product has created," says Ahuja, who wrote the paper with Curba Lampert of Florida International University and Elena Novelli of City University London. "They go on and create new products and inventions without realizing the potential for building new products out of their existing inventions."
Take Xerox, for example. Its research center, Xerox PARC, famously had invented the graphical user interface, mouse, laser printing, and other technologies that would later become commonplace in modern computing, but did not commercialize the innovations. It was Steve Jobs and his Apple team that saw the possibilities during visits in 1979 and made them the cornerstone of the Macintosh. In other words, while Xerox may have invented many wonderful things, it did not necessarily profit from them in terms of either primary or generative appropriability.
By contrast, years later, Apple broke new ground in the creation of the iPod, a simple portable device that allowed users to play music through a digital library. But it didn't stop there. Realizing the potential of the invention, Apple employed many of the ideas used in the iPod as a foundation for an entirely new product, the iPhone. And then it increased the size and added functions to create the iPad, a portable tablet computer.
"It was already halfway to becoming a computer, and they completed the job," says Ahuja. "Apple is a company with good generative appropriability that is constantly building on its ideas to create new products."
When Ideas Conflict
Setting the Right Conditions
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[This article was provided with permission from Harvard Business School Working Knowledge.]
Another great article to read Mr.Michael.It is true that human mind is a universe in its own kind.One closes his eyes and there you are ,a cosmos in front...Same is the case in the process of physical creation.You create a product based on facts and there you are opening the boundaries of human mind to ponder deep inside, in search of further new concepts,ideas,corollaries ...Companies are today fighting so much for space that days have gone deep into the territory of the cosmos of human mind. As Gautam Ahuja has rightly conceived the effect in "generative appropriability" ,the people who are getting the substance of this idea are becoming Jack Ma,Mark Zuckerberg....no doubt many are still in the pipeline.We all need to base our thoughts on a platform that is always pinging....Be it discussion with "old guards" as HP CEO Lew Platt rightly said or redrawing or recreating the process of delivery of the product in hand to link with any idea however redundant it may seem.The generation of ideas from people can be from any source even a supposedly insignificant person can make the neurons of the mind "twitch".Finally ,to suggest that only patents will help a company is I think a naive concept in the world of internet connectivity.Where minds are clicking simultaneously with press of a "TAB".All that is needed is intelligent awareness and a resolve to do something for the betterment of existence.... for regions of haves and have not's.on Dec 6, 2014