(B) Foreword: I re-read and copied in the following article sections of a paper that I wrote a long time ago that analyzed the concepts for innovations in a tech organization. Although most of the principles for an organization to seed innovation has not probably changed since the 70s and 80s – a lot of companies, markets and technologies mentioned in this article have significantly changed – and in the 80s Microsoft replaced IBM as the big elephant – so the industry focus shifted from challenging IBM to challenging Microsoft. Understanding Microsoft’s weaknesses was key to create a competing venture to Microsoft.
There is two kind of innovations: incremental and radical. Incremental innovations provide significant feature improvements to existing product lines. Radical innovations are very rare: the first spreadsheet, the first groupware software, the first neural network. Most innovations are incremental.
After the Apple II, Apple has never brought a radical technical innovation. A lot of the Macintosh features came from the Apple Lisa and the Xerox Star. After the Macintosh, most of the Apple computers brought some incremental benefits but never radical changes. After Ingres launched one of the first relational databases, most of its innovations were incremental: Ingres improved its database with distributed functionalities. Informix tailored its products for the UNIX market. And, Sybase pushed the client/server architecture.
Companies should challenge themselves both through radical and incremental innovations. Radical changes should not scare top management. They create new opportunities. Incremental innovations should be the focus either to meet new customers requirements or to extend initial markets to new users.
Does that mean that only small companies can innovate since large companies have always many product line legacy? No – Hewlett-Packard was able to do it. John Young was able to move HP from its original test and instrument markets to the mini-computer business by giving a large amount of freedom to his various organizations but keeping them, at the same time, focus on the same goal: building UNIX minicomputers with the HP’s RISC Precision Architecture. Hewlett-Packard found the trade-off between the entrepreneurial culture in the various parts of its organizations, and the interdependence required for them to work toward the same directions.
But how to formulate how innovation should be generated since innovation, by definition, requires to challenge established ideas to create new technologies?
Some basic research showed that the most innovative high-tech companies shared some “critical success factors” to push innovation. Here there are:
Small is beautiful and less is more (E. Schumacher)
The last thing that you must worry about technology is economy of scale. R&D cannot involve thousands of engineers. Gordon Bell who led the PDP 11 and VAX projects within DEC told once to Tom Peters: “I’ve never seen a job being done by a five-hundred-person engineering team that couldn’t be done better by fifty people.”
Why do you think that John Ackers in June 1991 was ready to do anything to make a deal with Apple after John Sculley showed Pink and explained to IBMers that Apple wanted to be a software company? Because he knew that the 33,000 IBM programmers wearing dark suits cannot do the job of 100 Apple programmers wearing tee-shirts.
Within small groups, it is easier to motivate, coach and empower people than it is in a group of one thousand people. Within small groups, the technical focus cannot be lost. Within small groups, commitment and passion can be shared.
Passion is everything
Few high-tech companies succeed without passion. As Tom Peters said: ” many passionate entrepreneurs fail. But that’s not the point. Almost none without passion succeed. The odds are stacked so high against the entrepreneur that only irrational commitment i.e. passion, emotion stands even a chance of carrying the day.”
• Is Microsoft Windows for DOS the best PC operating system? No, Apple has designed the best PC operating system.
• Is Microsoft Word the best PC word-processor? No, Software Publishing Corporation has designed the best word processor.
• Is Microsoft Excel the best PC spreadsheet? No, Lotus has designed the best spreadsheet.
• Is Microsoft Lan Manager the best PC network operating system? No, Novell has designed the best network operating system.
• Is Microsoft Multimedia product the best multimedia environment? No, Apple has designed the best multimedia product.
• Is Microsoft Windows for pen-based computer the best operating system for pen-based computer? No, GO Corporation has designed the best pen-based operating system.
• Is Microsoft Access the best PC database? No, Borland has designed the best PC database.
• Is Microsoft Workgroup for Windows the best Groupware software? No, Lotus has designed the best Groupware software.
Steve Jobs twice in his life led the most advanced product in its market. The Macintosh was far more advanced than the IBM PC. The NEXT workstation was more advanced than the SUN workstation. Even with the most aggressive hiring program of engineers, Microsoft has not been able in any of its market to design the best product. Bill Gates has only one goal: the monopoly of the software industry. Microsoft engineers are not managed to love and challenge the technology. Microsoft culture is not toward designing quality products, it is toward being present in the market whatever the market is.
Try, try and try
At Intel, risk-taking is promoted by management. In high-tech, success is achieved through risk-taking. Risk-taking means trying unusual things and accepting to fail. In this process, a lot of mistakes are made. But companies as individuals must learn that failing is the necessary step toward succeeding. If IBM was successful with its RS 6000 workstation, it was because IBM failed with its PC RT workstations. If Apple was successful with the Macintosh, it was because Apple failed with the Lisa. Failures hurt in the short term but make companies stronger if they continue their passions.
CEOs formulate the end not the means
Ex-DEC CEO Ken Olsen, CEO Scott McNealy at SUN, ex-HP CEO John Young, all of them defined their jobs of CEOs as setting up strategic goals, providing some kind of vision and challenges, and creating the right environment for innovation. Management cannot try to define how each component of a product shall be. Management should not formulate what innovation should be but what the environment for innovation should be. It is up to the engineers and marketers either to come up with the ideas that make the vision come true or to suggest some elements to the management to built a vision.
Move People, encourage communication, reward innovation
I met a few weeks ago an Engineer from the Santa-Theresa IBM Lab in San-Jose. Both of us met after having been interviewed by the same company. He showed me his resume. I was completely surprised. After graduated with an MSCS, he spent five years in the design of drivers for optical storage, basically doing the same thing each year. He was bored of what he was doing and wanted to leave IBM to work on new object-oriented environment technologies.
At Microsoft, most engineers after graduation work in the same field for several years as do IBM engineers.
Gene Amdahl ex-IBM superstar mainframe designer and founder of Amdhal considered that when a small group works together, each member of the group tends to specialize. Each engineer tends to handle the same part of the project each time and to build some kind of expertise. Amdhal believes that expertise is dangerous to innovation. Once they get some expertise, engineers continue to do things the same way.
The best structure is to get a mix of engineers with some high-level of expertise in the field of the project with experienced engineers without the expertise in the project field added with a couple of young graduates. In every case anyway, the imperative is to move people on a regular basis either to new technologies or new products.
The second trick in managing people is to facilitate communication. The “management by walking around” or the “coffee break” of HP, and the “beer bust” of Tandem every Friday are some means to create an open environment. A high-tech culture must encourage people to express their most crazy ideas and to turn them into profitable innovations. Managers should have an open door policy.
The last trick is to reward innovation and success. Performance evaluation and salary should be based on the contribution of each engineer to have brought some personal added-value to the team project.
In conclusion, management style should emphasize openness and communication. Risk-taking should be promoted. New engineering ideas should be tried. Everyone must have the opportunity to be heard and to have the opportunity to make vital contributions through innovations. Success should be measured by this contribution.
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Categories: Business Strategy, Innovation