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January 29, 2009

Comments

Edu

Tosh thanks for your thoughtful comments. Apple is a great example of a company that executes on innovation. I am not deeply knowledgeable about their process. I do know that during the early production process they work very hard to iterate on site at the production facilities. It's true that innovation can happen at large companies, but I believe that it has a better chance when it's a small - tight unit with modest goals to start with. I recently watched an interesting lecture - http://tinyurl.com/8n8awn - by Professor Don Sull of the London Business School. One of his points that really intrigued me is he challenged the idea of process with the concept of promise. To paraphrase - when people inside an organization work on the premise of personal promises it can be a very effective method for achieving goals. Another point he makes is that vision needs to be challenged by reconnaissance. The basic idea there is that you probe with breadth and once you find an opening to a new market or opportunity you flood.

Satoshi Tanimoto

I think there are many large companies that fit the profile above, but I think it's also a one-sided generalization - there are companies out there that are very focused and execute well.
I like Carl Icahn's idea of "survival of the unfittest" related to the senior management of many companies, and how the guy that's popular bubbles up to the CEO position - not necessarily the right person for the job.
http://abcnews.go.com/Business/Economy/Story?id=6610974&page=1

...but there are big companies that do it right too. Apple is one (yeah, everyone talks about Apple) if you listen to Jobs related to company growth, one of the things he is keen on is that it is very difficult to hire the right talent. They grow much slower than many companies of similar market stature. I think they take pains to figure out what skills they need, and hire people that is best suited with those skills. They also have a clear R&D pipeline - R&D has a direct outlet to production teams. Many times in companies that have grown too big, or companies that are too diversified, they still have R&D which they realize is important, but it turns into research without an outlet - disconnected from any product division. Any output from R&D becomes a sales pitch process.

Another one is Belkin - who knew there was good or interesting innovation left in something like a power strip? They did little travel surge power strips with USB ports built-in, power strips that have covers to hide the mess of cables. That happens because they have a need, they innovate on that need. They use their R&D resources well.

An industry that has a matured R&D process is the drug sector. Often the pure R&D is done by the small startups funded by venture money. (I think because internal R&D in their case becomes misdirected, or is difficult to incubate) as a startup, they are free to innovate in isolation, when they create a drug of market value, they get acquired by one of the large pharmaceutical companies.

Your point about small company / big company interaction - large companies reach out to startups usually when they have already realized they have no direction. By nature of their situation, they will never be clear on where they want to go, or goals, as a small company the way to approach it is to be quick and up front about if both companies are aligned in direction. It also helps to lock in early to get commitment on payment in phases - if they don't know what they want, at least they are wasting your time on THEIR dime not yours.

Small companies and large companies alike can poorly innovate. To do it well, it all comes down to the vision of the principles, and how clearly that is managed, and how clearly that's communicated as growth occurs.

Erik Wingren

Edu - in reference to your Jazz-metaphor, have you heard of John Kao and his book "Jamming - The Art and Discipline of Business Creativity"?

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