« Patent lunacy continues - Hollywood style | Main | Bubble or normal failure scenario? »

January 05, 2007

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341bf9da53ef00d83444292553ef

Listed below are links to weblogs that reference Why startups innovate while big companies incrementally improve:

» What does the IBM PC, Apple Mac, and Microsoft Xbox have in common? from Don Dodge on The Next Big Thing
The original IBM PC, the Apple Mac, and Microsoft's Xbox were all innovative products that were disruptive... [Read More]

» Why is it so hard for large companies to innovate?? from
Innovation happens at companies large and small, but truly disruptive innovation usually happens at startups. How can a little startup that spends 1,000 times less money on R&D be more innovative? Because they have nothing to lose and everything to gain. [Read More]

» Web 2.5: The Social Enterprise - Part II from The Software Abstractions Blog
The Software technology industry is curiously different from most other large industries, in the sense that large Enterprises in this space often lag behind small startups and even individuals in adopting cutting-edge technologies. It is hard to see th... [Read More]

Comments

Lloyd Budd

set aside a portion...: of employee time? Google's "20 percent time" seems like a great idea, but most pepole that I speak to suggests that like all jobs there is more work than 100% of their time let alone 80% and the time is seldom used for exploration.

Don Dodge

Lloyd, Every startup I ever worked with consumed 100% of my waking hours. There was no way to carve out 20% of my time to focus on anything not directly related to getting the next release done. Big companies have so many people that no one can keep track of what they are really doing. Perhaps Google has graduated from start-up to big company.

I was suggesting something different. Take 20% of your R&D people and focus 100% of their time on new innovative, disruptive projects. Take 20% of your sales and marketing people and focus them on building new markets.

It is an interesting idea that has had a few amazing successes. IBM set up a separate small skunk works, in a small facility in Boca Raton to develop the original PC. Apple did something like this with to develop the Mac while the rest of the company focused on the Apple III. Microsoft set up a self directed group to build the Xbox, and did it again to develop the Zune.

All of these products were innovative and by most measures very successful. Maybe it should be done more often.

Lloyd Budd

Don, I got what you were suggesting. I was looking forward to your thoughts on 20% (distracted) time and appreciate the insights in your response. Thank you.

Thomas Meloche

I've been reading Darwin's "On the Origin of Species" the past few weeks and I think his ideas are applicable to your article. Think of innovation in business as variation in a species. Some innovations improve the chance for survival and some don't.

Startups have several advantages over large companies in testing variation:

1. There are more of them, so many more different variations can be tested.

2. Small innovations actually help a small business survive.

#2 is essential, and it is why I believe many small businesses seem to innovate more than large businesses (I am not convinced that they do, but I am convinced that their innovations survive better). Innovation in a small business has a better chance of succeeding than innovation in a large business because small business actually notice when an innovation is helping them survive. The small innovation may be the difference between making payroll and not making payroll because it led to a key sale this month!

The small business thrives on the one new additional customer hooked by a new innovation. The large business doesn't even notice it has a new customer. In the small business the successful innovation can continue to be fostered and enhanced while in the large business it may be discarded and not recognized as having survival value.

I've worked in small and large businesses and I've seen a lot of innovation in the large businesses. However, I also noticed that most of the large business innovation never saw the light of day.

The comments to this entry are closed.

My Photo

Enter your email address:

Delivered by FeedBurner

Twitter Updates

    follow me on Twitter