Industrial Entrepreneurship

I've had more than one conversation in the last couple of weeks in which the following topic has come up:

Why aren't Pittsburgh's remaining big industrial companies -- U.S. Steel and PPG, for example -- behaving more entrepreneurially when it comes to funding and partnering with local R&D in universities and start-ups?

Maybe the question relies on mistaken assumptions; maybe the big local firms have business development officers or internal venture funds that are out there beating the Western PA bushes for the best ideas that money can buy. Is that right?

From what I've heard, though, that isn't right. Our big companies aren't doing much to help get smaller firms and new firms get off the ground here.

Before anyone else can say, "Innovator's Dilemma," I'll say it myself, and I'll even throw in an irrelevant but entertaining tidbit: Before he was famous, Clayton Christensen was, among other things, the Cubmaster of my son's Cub Scout Pack.

Opinions welcome.


7 Responses to "Industrial Entrepreneurship"

Harold D. Miller said... 3/01/2006 7:32 AM

There is clearly a transition occurring. Many of the big companies are trying to look outside to R&D and startup firms for innovations, rather than just to internal R&D units. But for the biggest companies, it's a new approach, and they don't yet have the kinds of relationships with universities, technology development organizations (e.g., the Greenhouses), etc. to facilitate this. And in terms of university R&D, it's difficult for a lot of companies to find the right balance between cost and IP protection on new product development. It's important to distinguish between R&D for process improvements vs. new product development -- the former is easier for companies to demonstrate ROI.

Hooman said... 3/01/2006 10:27 AM

Just curious, Mike - are you implying that if these folks are not partnering wiht local R&D and start-ups it is endemic of the "Innovator's Dilemma"? I have studied the area of innovation and was hoping you could offer more specifics. Cheers!

Mike Madison said... 3/01/2006 2:06 PM

Yes, that's the implication. The "innovator's dilemma," for those who haven't read the book, hypothesizes that established companies are rationally motivated *not* to make dramatic innovations, because dramatic innovation is perceived as undercutting the company's core (revenue) strengths. In fact, the story of U.S. Steel was an important part of that book.) Harold M. points out that there are some subtleties to the problem that have to be considered, and that's a fair point. But he agrees with me generally, I think: This is an area that local companies haven't worked on much.

rustbelter said... 3/02/2006 10:19 AM

US Steel developed steel home construction framing products. Local home builders rejected it for lumber.
Alcoa has had more success with getting builders to use modern materials.

I worked on a US Steel house and there are still some in the area. There was a steel frame model at Point Park years back. In Pittsburgh the "we always have done it this way" approach rules. That's why you have so many cracked block foundations around here. The builders are blockheads.

here's a clue said... 3/02/2006 11:55 AM

Avoid termites yinz guys.

Da Rustbelt said... 3/02/2006 12:05 PM

Da translation is:
Dere is clearly a transition occurring.
In Picksburg da "we always have done it this way" approach rules. ats hauscome yinz have so many cracked block foundations arahnd here. da builders are blockheads. Dere are some subtleties to da problem that have considered, n'at's a fair point.

No Way St. said... 3/02/2006 12:32 PM

Pittsburgh innovation! The no way street. I think this was a U2 song. Where the streets have no ways.

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Pittsblog 2.0 is written by Mike Madison, a law professor at the University of Pittsburgh. Send email to michael.j.madison[at] Mike also blogs at, on law and technology. Chris Briem of Null Space drops by from time to time.

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