By David G. Hull

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For Sony, vertical integration is a means to capture more value in a highly competitive industry, and also a way to differentiate its products from the competition, as in the case of its proprietary memory formats. As the Sony episode in Christensen’s chapter shows, a vertically integrated business model can influence the firm’s care and objectivity in assessing the quality and reliability of external technologies. In the context of core competences, Sony may have overemphasized its component technology competence, when it evaluated the digital amplifier technology from a Danish university, at the risk of its systems or architectural competence.

In Christensen, knowledge exists in many places, and is difficult to transfer from a university setting (via an entrepreneurial spin-out) to a larger company. While TI’s discovery of the technology was almost accidental, to its credit, it rapidly developed a working relationship with the inventor and the technology, worked hard over many months to absorb it, and subsequently acquired ownership of the technology. By contrast, Sony lacked the appreciation for the nascent technology’s capability, and perhaps overestimated its own internal capabilities to replicate it.

One paradox posed in Open Innovation was the surprising ability of Cisco to keep up with Lucent and its Bell Labs. As the book noted, ‘Though they were direct competitors in a very technologically complex industry, Lucent and Cisco were not innovating in the same manner. Lucent devoted enormous resources to exploring the world of new materials and state of the art components and systems, to come up with fundamental discoveries that could fuel future generations of products and services. Cisco, meanwhile, did practically no internal research of this type.

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optimal control theory for applications by David G. Hull

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