The End of the Knowledge Monopolies

1. Indicators of Knowledge Diffusion

1) Patents (USPTO)

• Huge companies ↓
• Small firms, individuals ↑
• US companies → other countries

2) Change of Industrial R&D by Size of Enterprise

• 25,000+ : 70.7% (1981)
• 25,000− : 58.7% (1999)

3) Increasing Number of College and Post-College Graduates

These movements make it easier to find value outside organizations.

---

2. Characteristics of the Age of Abundant Knowledge

1. Labor mobility ↑ (lifetime employment ↓)
2. Pension moves with the worker (not with the job)
3. Venture capital expansion
4. Abundant external knowledge

You can choose new ideas from a diverse menu (universities, research institutes, startups, etc.).

Change in the Meaning of NIH (Not Invented Here)

• Old meaning

  • Exclusion of outside technology

• New meaning

  • Reliance on external sources

---

3. How to Access External Knowledge

1. Employing professors or graduate students

2. Funding external research at nearby universities

• Scanning new ideas
• Evaluating proposals from researchers before spending money

3. Scouting the activities of young startup companies

• Business development discussions
• Strategic alliances
• Giving money to venture capitalists
• Direct investment in promising startup companies

---

Example

1) Intel

1. Relied almost entirely on external research
2. Assessed what was available from outside → then charted its own course internally
3. Well-structured program funding university research

• about $100M per year

2) IBM, Merck

Successful firms in the former paradigm → moving into the wealth of external knowledge