Where Innovation Goes to Die

Steve Blank quoting a friend of his:

“Most of the time our attempts at innovation result in “innovation theater” – lots of motion (memos from our CEO, posters in the cafeteria, corporate incubators) but no real change. We were once a scrappy, agile and feared organization with a “can-do” attitude. Now most people here don’t want to rock the boat and simply want do their job 9 to 5. Mid-level bureaucrats kill everything by studying it to death or saying it’s too risky. Everything innovative I’ve accomplished has taken years of political battles, calling in favors, and building alliances.”

Startups are high status these days. It’s a remarkable characteristic of our times. No surprise outsiders want to capture some of this status by adopting the startup lingo. In the end, companies optimized for execution (not innovation) carry on as usual. They have no business innovating, really, it would kill their very valuable incumbency. For a culture of moon shot gambling? Makes no sense. Try this from Horace Dediu on Steve Ballmer:

Microsoft ascended because it disrupted an incumbent (or two) and is descending because it’s being disrupted by an entrant (or two). The Innovator’s Dilemma is very clear on the causes of failure: To succeed with a new business model, Microsoft would have had to destroy (by competition) its core business. Doing that would, of course, have gotten Ballmer fired even faster.

Steve Ballmer’s only failing was delivering sustaining growth (from $20 to over $70 billion in sales.) He did exactly what all managers are incentivized to do and avoided all the wasteful cannibalization for which they are punished.

If anything, Steve Ballmer avoided The Innovator’s Curse. Being successful with new market innovations would probably have led to an even shorter tenure. Destroying prematurely the pipeline of Windows in favor for a profit-free mobile future would have been a fireable offense. Where established large companies are concerned, markets punish disruptors and reward sustainers.

Steve Ballmer will not be remembered as favorably as the man who created Microsoft. But at least he won’t be remembered as the fool who killed it. That epitaph is reserved for his successor.

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2 Responses to Where Innovation Goes to Die

  1. nick.lamps says:

    Excellent article and on point.

    I am creating a personal lines product that will bundle flood and earthquake coverage into the policy form. Whenever I pitch this idea, nearly always, the first questions asked is “why didn’t anyone else come up with this?”.

    The reason is what you described above. It’s too risky to disrupt the cash cow. No one wants to stick their neck out, which means the idea is really only suited as a disruptive startup.

  2. nick.lamps says:

    Reblogged this on Nicholas Lamparelli and commented:
    Innovator’s curse and why large companies can’t be disruptive, for the most part.

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