All you need is innovation

Caught this post on O'Reilly Radar this morning on someone who fed 20 years worth of documents relating to Microsoft through Tagline Generator. This gave him a tag cloud of key phrases that appeared in Microsoft lexicon over the years.

What was interesting, as I slid the tag cloud slider bar all the way back to April 1975 (founding of the company) and worked forward, I noticed the term "innovation" turned up only a few times until about 1990. Then the term started picking up steam over the 90's and really took off after 2000. Innovation showed up roughly 20 times in the last 16 years of the companies life. Yes, this is far from scientific but it is still noteworthy.

Innovation is certainly a big buzz word these days. I know when I was working in the small company world, I never heard the term innovation used around the office. It was just assumed that was what we were doing. But I hear it all the time working for a large company. I also read about it a fair amount in the press, just last week catching an article from Fortune reporting on Google's org structure for fostering innovation.

What is it about big companies that lose the edge in innovating? My theory is two fold. First, most successful companies that turn into mega corps are lightening strikes. They're complete accidents--success due to being at the right place, at the right time. Don't get me wrong. There are many very smart talented people that have built these companies. But there are lots of smart talented people in the world. What makes one more successful than another? Has to be luck.

The second part of my theory is over focus on cash cows that makes mega corps huge in the first place. Search made Google huge. Overnight delivery made FedEx huge. Fancy coffee made Starbucks huge. So, what do you do with a cash cow and become more huge? You try to milk it for all it's worth. That means keeping close tabs on metrics and looking for small efficiency gains which, if you're big, could mean big dollars to the bottom of the line. The problem with focusing on looking for tiny efficiency gains, you aren't spending energy looking for new things. So, eventually the cash cow stops moving the stock forward, so panic ensues and it's time to start innovating.

Surely, it can't be difficult for mega corp to come out with new big businesses? A quick wave of the wand and resources will scurry forth and innovate. Well, for the most part, that very seldom happens. Why? Because, as said earlier, mega corps are accidental empires and usually lightening doesn't strike twice in the same place. Or in the case of recourse reallocation, operations pros think different than innovators. That's why you often see innovators leave big companies to go work in startups and fancy pedegree types go work for mega corps. They are two different mindsets for most employees and managers.

There are certainly examples of multiple successes for mega corps. Microsoft come up with a second lightening strike with Office. Apple did it with the iPod. I'm sure there are other examples. For the most part, I think most companies slowly decline away with their single big success (think railroads versus airplanes for travel) which is maybe just the natural order of things.

I'm keeping a close eye on the Google experiment. Their 20% free innovation time for all engineers is interesting. But there are still no second lightening strikes for Google with all the innovation time spent in the company. I have my doubts whether it's possible to legistlate innovation top down in an organization.