Why Large Companies Can’t Innovate

One of the things that has made Dell World very different is that at the end, one or more controversial speakers take the stage and provide an incredible amount of insight for the folks who haven’t left early.

All three of the last three speakers were fascinating, but it wasn’t until I wove all three speeches together that it became clear to me why innovation seems to evaporate the larger a company becomes. I was drawn in particular to why Netscape failed and Google, outside of ad revenue, largely has been unsuccessful once you factor in economics.

I’ll walk you through this and then close with my product of the week: a new set of headphones from Plantronics, which have become my favorite travel headphones.

The 4 Elements of Innovation

The first speaker used, of all things, the creation of chemotherapy as his quintessential example of innovation. He told the story of how leukemia was a death sentence for children coming into the 1960s, with not only a 100 percent fatality rate but also a horrid end for each child. It was so bad that some doctors refused to see the children, he said, and nurses visiting their wards were covered with sprayed blood. It must have been incredibly difficult to see small children suffering in incredible pain, and the images no doubt deeply disturbed the hospital staff.

Apparently, there were four drugs that had some success, but they were all poisons. Each had a different function, each had terrible side effects, and each was potentially deadly. All of them individually only prolonged what was a horrid experience, so many doctors refused to use any of them.

One doctor, and you can read more details here, felt that all four might work where no one had worked before. Keep in mind the patients were children; each of the drugs individually was a deadly poison, and that doctor wanted to use all four. Oh, and since there was no animal counterpart to leukemia in children, the testing would have to be on live patients.

He got very little help and was constantly threatened with termination, but he was 98 percent successful, and his work became the foundation for modern-day chemotherapy.

The speaker used this example to illustrate his contention that four elements are necessary for innovation to take hold: creativity, the ability to see an alternative; conscientiousness, the ability and drive to work to completion; contentiousness, the ability to fight against a common practice; and a sense of urgency, so the task will be completed in a timely way. (I agree with three of these.)

Interestingly, he also used Steve Jobs as an example, but those of us who knew Steve knew he was neither creative (the ideas always came from someone else) nor really conscientious (he got others to do most of the work). Just ask Steve Wozniak.

Jobs was a visionary, however, and he could see the value in someone else’s idea that others often could not. Also, he sure as hell was disagreeable and contentious. The Steve Jobs example suggests that all of the elements necessary for innovation don’t have to reside in the same person. It should be possible to create innovative teams that would have all of those traits and end up with something amazing.

But…

Not in a Large Company

The issue is that folks who are contentious and disagreeable, who are free thinkers, don’t survive in large firms. They become the nail that the rest of the firm pounds on until they either conform, die or quit. It is actually kind of hard to find visionaries who aren’t CEOs for the same reason.

Largely, they are forced to fit inside the visions of someone else, and I think that is why most large firms have to acquire much of their innovative technology after a while. It is why Xerox PARC could create the graphical user interface and mouse, but it took Steve Jobs and Apple to bring them to market.

I recall that the first iPhone-like phone I saw was created at Palm, and that group quickly was disbanded after being shot down by Palm’s then-CEO for having a stupid idea. It didn’t conform. Even at Apple, the iPhone required Steve to see the threat of a music-playing phone to convince him to pioneer and then husband the product to market.

Microsoft also had a group that created an iPhone before Apple and even created a better tablet than the iPad, called the “Courier,” and both were killed before ever making it to market. It wasn’t that those firms didn’t have people who could innovate — they just treated them like problems, and instead of blessing and driving the related innovations, they forced them out of the company.

Google’s Approach

As the Dell World speakers continued, one of the other things that became clear was that the reason Google largely has been a copycat is that it lost track of its identity. The second speaker, talking about coming innovations, showcased a list of cutting-edge firms — all of which were created by directing people toward something the firm didn’t own and monetizing it.

Facebook didn’t own the content, Uber didn’t own the cars, and Airbnb didn’t own the properties. However, Google was the king of monetizing what it didn’t own, and that was its entire model for achieving success.

The implication was that had Google realized what it was best at — monetizing access — then it would have created its own Facebook, Uber, and Airbnb. Instead, it tried to copy Apple, Microsoft, and eventually Facebook, but none of those endeavors has been particularly successful financially, and some have cut into their revenue and added to costs. For example, both Apple and Microsoft could have been partners instead of rivals.

I recall one of IBM cofounder Thomas Watson Jr.’s saying: “Be willing to change everything but who you are.” I think Google’s — now Alphabet’s — problem is that it no longer knows what it is.

Wrapping Up

Overall, the Dell World talks left me with two lessons.

One is that if you want innovation, you have to identify those who are likely to innovate and then back and protect them. Truly consider the concept of Skunk Works, (which has resulted in some of the most innovative products ever created) and the new policies at Ford, which expressly protect free thinkers.

Two, if you don’t know what your core skill is, then you are likely to fail a lot. I could go down a list of companies, starting with Netscape and ending with Yahoo, that just forgot who they were and either failed or are in the process of failing as a result.

This suggests two other things: If you are a creative free thinker, then you don’t want to work for a big company that won’t protect you; and one of the first things you should ask when considering a new job is whether the firm knows what its core skill is — in other words knows more about what it is than its name suggests.

Something to noodle on this week.

I was a huge fan of the original BackBeat headphones because they were comfortable, had decent active noise cancellation, and really good battery life. The problem was they were really big, and I lost two pairs of them taking them out of my backpack to get something else and forgetting to put them back in.

At something like US$250 each, that got old really, really fast.

Well, Plantronics just released the second generation, and they not only are smaller, allowing me to work around them and not take them out of my backpack, but also cheaper, coming in at a bit more reasonable price of $199.99.

Plantronics BackBeat Pro2

I’ve been carrying them on my last two trips — they have worked flawlessly, and I haven’t come close to losing them.

Even though they are smaller, they cut out the noise on a plane just as well, and I’ve been burning through a ton of old and new TV shows and several hit movies as a result.

Because I’m a long-time fan of BackBeat and I’m less likely to lose these, and they are less likely to break me if I do, the new Plantronics BackBeat Pro 2 headphones are my product of the week. (Now, if I could just get them in black, not brown… .)