Case Study

Kontor: When VR faces reality. An internal innovator's dilemma

10 pages
October 2025
Reference: IMD-2674

The case looks at the fundamental challenges, tensions and opportunities associated with an internally run venture as opposed to an externally funded startup or spin-off company. It discusses the genesis and context of Kontor, an internal venture funded by Resmed Inc. Resmed is an S&P 500 MedTech company. At the time of the case, May 2024, Kontor is trying to find its way through turbulent times. Kontor applies Resmed’s class-leading comfort and fit technology to the AR/VR space, thus making these devices more comfortable for the user. Kontor has been running for several years and Erika, the case protagonist, is the newly appointed general manager. The current turbulent situation is causing executives to question investment in the internal venture. Erika must deal with many challenges, but the fundamental question is whether Kontor will create the most value for Resmed as an internal venture or whether it should be spun out and in what manner. The case compares five strategic possibilities: 1) spin out the business and run Kontor independently of Resmed with external investors, 2) keep Kontor wholly owned by Resmed but run it off-balance sheet, 3) sell Kontor to a strategic buyer, 4) keep running Kontor internally with operational assistance from Resmed Inc, or 5) wait and see how the venture goes without making a decision in the near term thus preserving all options.

Learning Objective
  • Comprehend everything involved in making strategic choices.
  • Gain a better understanding of the resource allocation tensions in a successful organization.
Keywords
Innovation, Strategy, Spin-off, Virtual Reality, Augmented Reality
Settings
Northern America
Kontor, ResMed, Manufacturing, Technology
2024
Type
Field Research
Copyright
© 2025
Available Languages
English
Related material
Teaching note
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