I recently saw this interesting piece.
The piece references this important book on how innovation happens, or doesn’t happen in large companies.
The post makes a point about the three myths that large corporations tell themselves and how that gets them in trouble. I’m going to quote each one in turn and then add my commentary.
Innovation Myth #1: Innovation is Carefully Cultured and Watched Over
Traditional product development strategies for mature business lines can be modeled and projected. You can easily track its ROI. You can estimate how many of your existing customers will buy the new product and your sales force will have very few problem understanding new products that are similar to old ones.
The problem with this line of thinking is even mature product lines can have somebody in their garage playing around with it in entirely different ways. And carefully watching over and controlling all your processes stifles creativity and spontaneity. Which is why, the guy in the garage may be working for you.
Innovation Myth #2: You Must Listen to Press and Analysts to Track Innovation Trends
Press and analysts report on what has already happened. Occasionally they try to extrapolate forward and predict the future as well, but if they were any good at that, why wouldn’t they be putting their money where their mouth was? Like meeting a psychic or anybody claiming to predict the future, your first question should always be what tomorrow’s lottery numbers will be.
By the time the mainstream press picks up on something, it’s more than likely too late. You have to have interested parties engaged in the process and in the middle of what’s going in those garages. To that you need to have clear channels of communication for you employees to bring innovations in and develop ideas.
Innovation Myth #3: A Few Targeted Bets in Innovation Are Prudent
A surefire way to fail at innovation is to make a few targeted bets and hold on to them despite their lack of triple digit percent year-over-year growth… waiting patiently for them to turn around.
Innovation and acceptance are chaotic. There’s no way to predict just what will be the winner. Or what may change. Smart money is getting your employees engaged and looking for as many new ideas as possible. Which, the author doesn’t mention it explicitly is Myth #4.
Innovation Myth #4: If All Else Fails We Can Just Buy Innovation
This probably the biggest myth that corporation management tells themselves. It’s easily the most costly. Yet, over and over companies pay a premium to buy a startup or small company for it’s innovative ideas only for the whole thing to go bust a few years later. If the definition of insanity is repeating the same thing over and over and expecting a different result then corporate America is collectively insane.
Yet, throughout businessland you keep seeing the same stories over and over. A startup starts off with a new product, gets a lot for press for while gets bought up by bigco and two years or so later you can’t find either the product or the remnants of the startup.
Take the case of what happened to Makerbot and Stratasys as opposed to IBM and Apple in the 1970’s. Instead of buying Apple, IBM got a small team together and more or less independently of IBM’s mainframe business, developed a PC of their own. Which had profound effect on both IBM and the future PC market. Contrast with what happened then to what has happened with Makerbot and Stratasys with the ongoing failure of Makerbot and Stratsys leaving the small 3D printer market.
I understand why this happens. companies get too stuck in a rut and then panic. As the post starts off with:
Big companies aren’t just distracted with their attention, they are also politically entrenched, usually with thousands or even tens of thousands of employees who are trying to protect their jobs. Nobody ever got fired for NOT failing. Nobody wants to be held accountable for the very real possibility of total failure of a new business opportunity, so generally they won’t even try.
For example, there’s the great story of the invention of scotch tape at 3M by Richard Gurley Drew. Richard desperately wanted to be an inventor, but when his boss noticed he wasn’t towing the party line of selling more sand paper, he was reprimanded and told to stop it.
Richard didn’t stop, though. He kept working on his own time until he stumbled upon painter’s tape and eventually scotch tape which completely re-invented 3M’s business.
The thing is that when the company runs everything institutionally, innovation means the possibility of getting your job restructured. The problem is that true innovation is a crapshoot. If people in your organization aren’t willing to take a gamble and they have no support your not going to get innovative new products from your R&D dept. you are going to get expensive maintenance engineering.
This all comes from institutional risk avoidance and only wanting to bet on the sure thing. The problem with that is that the company becomes completely noninnovative. Instead of being an innovation powerhouse the company becomes the place where innovation goes to die and the place that where talent self destructs itself on the dreary mundane pace of the day to day. Nobody pursues the chances that come up because there’s no institutional path for success and no reward for trying, but certain penalties for failure. The biggest failure though is the company itself, which if things keep going, will get a visit from one of Larry’s friends at some point.
There’s an old saying that goes “innovate or die.” And unfortunately far too many companies are just saying their prayers.
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