Erik Keller is a bright chap, masses of experience, ex-Gartner analyst and so on. He posted the other day about big enterprise software companies not being able to innovate because they are, well, big. Dennis has called me out to comment, and I will rise, trout-like to the lure. Sometimes Dennis ties a good Mrs Simpson. And I will take an enterprisey nibble, be hooked and thrash around for a while.
To be frank, this isn’t one of Erik’s better posts. I’m sceptical of sentences that begin “by definition” but then don’t offer any definition.
By definition, innovation comes from small, early-adopter efforts for a given company or industry
My take. (obviously biased as I work in one of those “innovation-free” big enterprise software companies !-) )
1. Where is the proof? Please show me the statistics that show innovation is “by definition” a small company thing. 3M, GE, Philips, Intel, Siemens, Nokia, DARPA,IKEA, Sun, BASF, IBM, Stanford and MIT are all biggish organisations that do a great job at innovation. Irving Wladawsky-Berger from IBM has been at the forefront of innovation at IBM for ages. His blog is a gem, and his take on IBM’s history is fascinating read.
2. How are you defining and measuring innovation? I’m confused.
3. I buy the point about crowdsourcing and I’m a big fan of Von Hippel’s customer led innovation. But start ups without customers can’t really do customer led innovation. (I know, I started one)
4. Big companies do have bureaucracy and sales inertia, fair point, but often they have the space and the cash to hire and nurture innovative people. Not every innovator is an entrepreneur, and big companies, when run well provide a great environment for people to innovate. Small teams are not the sole preserve of small companies. Smart big companies recognise the serendipity effect of putting lots of clever folks together, and work hard to manage the challenge of disruption. Believer though I am of the cluetrain and customer-led innovation, often really earth-shattering mindblowing stuff is happening in a government funded or large enterprise lab, and we have absolutely no idea what it will lead to. (see a previous rant)
5. Erik goes on to comment.
Today’s most innovative large companies, including DuPont and Proctor & Gamble, are not attempting to do everything themselves, but rather reach out to customers and independents.
Procter & Gamble, (to spell it correctly) have clearly innovated through acquisition, they are kings of consolidation. Their ability to acquire brands and nurture them is to be marveled. The Gillette merger makes Oracle PSFT merger seem like very small beer.
In the SAP context, a basic premise of Netweaver is all about enabling ISVs and customers to drive their own innovation, and it is by working closely with the P&G’s and Du Pont’s of this world that we develop the applications that they want. I’d suggest SAP’s SDN is a pretty good example of “social networking, crowdsourcing and supplier collaboration”
Also, to argue that
The concept of one-stop shopping for the technology industry is akin to the model espoused by Henry Ford in the early 1900s, which culminated with the creation of the River Rouge plant, where Ford did everything from the smelting of iron ore to final fabrication of automobile
Would be valid if Oracle acquired Intel, Sun,and Accenture, but I don’t see even Larry doing that.
6. M&A is the most dominant trend at some software companies, and it is the one that journos and analysts love to write about, but even Oracle’s M&A spend is dwarfed by that in of players in Pharma, Insurance, FMCG, Retail, Banking….
7. Lumping all big software companies in the same box is as absurd as dissing Toyota because of what Ford do. Not all big companies are the same. Some big companies innovate, others don’t. Small companies that innovate consistently quickly become big companies. Big companies that stop innovating shrink. Some Austrian chap wrote about this some time ago, but instead of quoting him I’ll rely on IBM’s Irving to provide more sound guidance on how to sustain innovation in times of challenge.
There is no truer test of the ability of a business to innovate than to see it successfully reinvent itself and keep going year after year after year.
It isn’t really a question of big or small at all.