Search

From a converted muffler-repair shop, Ray Kelner launched RLK Media in 1985, selling its radical audio speakers to affluent connoisseurs for $20,000 a pop. By the 1990s, RLK had grown into a billion-dollar business through its single-minded focus on pricey, highly branded, handcrafted consumer electronics. But things are no longer going so well.and chairman Keith Harrington lays it all at the feet of CEO Lars Inman."Your margins have evaporated," he barks."You're missing your numbers. The problem is not that you guys aren't working--whole damn place is like a bunch of college kids pulling all-nighters. The problem is, people aren't buying the old product--no matter how good it is-- and you don't have anything new." But RLK might just have something new. Ray and his team have done it again -- their astonishing iVid headset prototype is light-years ahead of the competition. All Ray needs is another 18 months (or so) and $6 million to hire ten elite software developers, and he could put RLK back on the map. Lars considers hedging his bets by outsourcing software development to Inova Laboratories, an impressively tight-run contract company in Gurgaon, India, that promises to move RLK from prototype to volume manufacturing in 12 months--at a fifth the cost. But Ray is adamant. His group is just too tightly knit. "Outsource this, and you can kiss the iVid goodbye," he insists. Should Lars outsource R&D nevertheless? Commenting on this fictional case study are Larry Huston, vice president for innovation and knowledge at Procter & Gamble; former Xerox chief scientist John Seely Brown and consultant John Hagel III; Claremont Graduate University professor Jean Lipman-Blumen; and Azim Premji, chairman of IT services company Wipro, based in Bangalore, India. [ABSTRACT FROM AUTHOR]