Wednesday, July 27, 2011

Kodak, Motorola: Can't restructure? Sell off your Patents

Both Motorola and Kodak, icons of American innovation in the 70s and 80s, have been struggling in the last decade to reinvent themselves. Selling assets, spining off subsidiaries, streamlining operations, outsourcing non core business. Yet with the succession of CEOs and unending announcements of retructuring plans, neither company has figured out what to do with its rich patent portfolio.

"Obviously they've spend billions of dollars in the last 3 decades researching, developping and registering these patents, now probably all written-off in their balance sheets" remarks Rachid Sefrioui, Managing Director at Finaventures, a California-based venture capitalist. 

While Silicon Valley is innovating and backing entrepreneurs who cleverly discover new uses for mankind, neither Motorola nor Kodak have decided to open up their portfolios to VCs and entrepreneurs. Surely there could be enough in there to come up with a dozen blockbuster applications that could pay off for either company.

Instead both companies are discretly shopping around their pristine patent portfolios to the highest bidders. Once cash proceeds are washed down by executive bonuses and restructuring costs, both companies will probably go the route of Polaroid and Borders...chapter 7.

And that's the glamour and tragedy of innovation.

Friday, July 8, 2011

China's Baidu restructures: better late than never

Baidu, the largest Chinese search giant, announced a restructuring plan of its business units including sales, operations, user products , commercial products, and new technologies such as cloud computing and mobile.

The Company said it will implement an executive rotational program in an attempt to spur innovation and efficiency. This is the biggest ever organizational restructure since its founding in 2000.

"I always said that technology re-invests itself every 18 to 24 months", asserts Rachid Sefrioui, founder of Finatech, a regional technology leader with 700 employees, "and therefore a company needs to re-adjust its organizational chart every 24 to 36 months to re-invigorate executives and boost productivity."

According to Baidu, after the reorganization the search company will reach new levels of productivity in operations, increase sales, and better coordinate synergies between its divisions.  Reorgs often spur fresh gusts of innovation in processes but also in customer acquisition, new products and new markets.