All of this brings us to the five stages of denial EMC's investment group has developed and has to defend.
Stage 1: Denial
When executives first hear of the investment the reaction is denial that it is a wise investment. The argument is that if the technology was viable then it would have been adopted by the company and the fact the company didn't go in that direction is proof the concept isn't going anyplace. (What is interesting is this is an attempt to ruse company policy to kill an external effort).
Stage 2: Anger
The technology is successful and begins to bleed sales from the company and the line executive express anger that their firm's funds were used to create a competitive entity that is stealing customers. (What is interesting is that this is an attempt to use turf to kill an external effort, showcasing in this and the prior stage why the technology in question couldn't be born inside the company).
Stage 3: Curiosity
The technology continues successfully moving in the market and is solving problems for customers that no one else seems to be able to solve. The company's executives ask the Venture group to set up meetings so they can understand the technology better and understand why customers think it is better. (It is interesting to note that this is where a Skunk Works project typically makes itself known in order to make sure it isn't prematurely killed by hostile executive action).
Stage 4: Collaboration
The executives, after meeting with the firm, now understand why the approach is better and want to set up a deeper technology exchange and/or joint sales effort. They want to be able to use and resell this technology that they now believe is both real and compelling. (A Skunk Works project typically skips this step and the following one moving to integration, if successful, because it is already part of the firm).
Stage 5: Acquisition
Finally, after successfully partnering and co-selling the company moves to acquire the firm that has proven to be so successful. The acquisition goes particularly well because, by this time, there are deep connections into the company from engineering, sales, and finance limiting the disruption and speeding dramatically the benefits, which have largely already been realized back in stage 4.
Policies that try to make companies immortal
Ever since working at IBM, I've been fascinated with policies that are focused on making a company immortal. Both EMC's and Intel's VC programs are designed for that ultimate goal. Intel is focused on assuring there are new companies coming up that will use Intel's technology in new and creative ways, and EMC's group is focused on firms that could make all or parts of EMC obsolete to ensure that outcome never happens. In the latter case it also provides a list of companies that EMC can easily and successfully acquire because the firms are very well known and are already tied to EMC in a number of critical ways when the acquisition strategy is reached.
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