Issue link: http://www.e-digitaleditions.com/i/136276
APAC Forum owned Fortune 500 firms over 11 years. We found that firms which combined high levels of R&D with the development of internal legal expertise through the hiring of internal intellectual property (IP) lawyers produced significantly more patents than R&D intensive firms that did not possess this internal expertise. Qualitative interviews with executives from these firms revealed that one of the biggest difficulties that firms encountered was not producing new ideas but identifying those ideas that had the highest potential. By regularly meeting with inventors to discuss their research projects, internal IP lawyers were able to identify early on those projects that had the greatest potential for producing valuable intellectual property, something that the inventors themselves often could not ascertain. Thus, the development of this complementary resource enhanced the organisation's ability to harvest the fruits of their R&D efforts. A second striking finding was that firms whose top management teams contained individuals with expertise in patent law were more effective at generating patents through the bundling of R&D and legal expertise than organisations whose top executives did not possess this skill set. Qualitative interviews suggested that top executives with patent expertise were able to bring more organisational focus on converting R&D into intellectual property. That helped develop processes that enhanced communication between the R&D and legal areas. So What? So what does this mean for firms seeking to be more innovative? We believe our results offer three important implications for organisations. First, successful innovators adopt a resource bundling strategy when making talent management decisions. In addition to recruiting individuals with technological expertise, successful innovators also select and develop talent in other complementary areas, such as legal expertise, marketing, and operations. The extent to which an organisation can develop complementary expertise plays a key role in whether organisations effectively exploit their technical expertise. Second, successful innovators create situations that allow for the combination of complementary expertise. This can take the form of using multi-functional teams in all phases of the innovation process. Organisations such as Microsoft, Xerox, Timberland, and IBM have adopted the practice of integrating researchers into multi-functional product teams in an effort to better harvest research ideas for commercialisation. However, the best innovators also appreciate that valuable combination opportunities don't always occur within the firm. Often the complementary expertise needed to harness innovation might exist outside the organisation. Thus, many firms develop explicit strategies for their Firms whose top management teams contained individuals with expertise in patent law were more effective at generating patents through the bundling of R&D and legal expertise than organisations that did not possess this skill set. employees to work with external parties. For example, recently the American semiconductor firm Intel partnered with Baidu, China's largest search engine, to create a new innovation lab. This lab will allow Baidu software engineers to interact with Intel hardware engineers in order to create new mobile software for the Chinese market. Finally, successful innovators appreciate the important role that their executives play in creating fertile conditions for the development of complementary expertise and its successful combination. This is because executives' leadership behaviours can facilitate or constrain the likelihood that employees will engage in innovation supportive behaviours. For example, research on the Taiwanese electronics and telecommunications industry found that firms whose executives engaged in "transformational" leadership behaviours, such as creating conditions for intellectual stimulation and using inspirational motivational tactics, generated more patents over a three-year period, compared to firms whose executives did not exhibit such leadership behaviours. Today's external environment represents a mixed blessing for firms in many industries. The upheaval of the global financial crisis has created a marketplace that is very dynamic and uncertain, however, as a result many new business opportunities have emerged. Many organisational leaders have embraced innovation as a way to exploit these opportunities. However, in order to be successful, firms must appreciate that an innovation strategy must not only entail investing in research, there must also be careful consideration given to the creation of complementary talent management practices needed to harness new ideas. Professor Ian O. Williamson is the Helen McPherson Smith chair of leadership for social impact and professor of human resource management at Melbourne Business School. SPRING 2013 | www.hroglobal.com [15]