11 ms·

Why Big Companies Can't Innovate

93 points by chirau 10y ago

Pica_soO 10y ago
Google can?
- ThomPete 10y ago
  I think innovate meant in the form of creating successful businesses. Most of googles revenue is still advertising.
  - dragonwriter 10y ago
    > Most of googles revenue is still advertising. That doesn't mean that Google's other businesses aren't successful. There are lots of independent, successful businesses with vastly less revenue than Google's advertising operations, so why wouldn't an internal Google business that is profitable but has vastly less revenue than its advertising business be evidence that Google can create successful businesses?
    - ThomPete 10y ago
      Sure but I think that's the spirit it's meant in. I.e. why is it hard for companies to mostly have one cash cow and not develop several. Or why is it hard for them the develop a new business as old ones die out.
      - ktRolster 10y ago
        why is it hard for companies to mostly have one cash cow and not develop several In other words, why can't more companies be like Apple? Or Oracle, or Microsoft, for that matter.
      - Pica_soO 10y ago
        Because the cash cow has a say in everything. Tablett? Put the cash cow on it. Mp3 Player? Cash Cow it. If there is one lesson to take from all this, once something had success - it should be held far away from anything new developing. If they want to give a prototype bovine-cash-madness - it should happen completely independent from the actual prototype and have no effect on the evaluation of said prototype.
  - mc32 10y ago
    Yup. It'll be interesting to see if Apple can continue Macs to iPods to iPhones to ipads to ??
    - giarc 10y ago
      I think the next step was supposed to be watches.
      - ktRolster 10y ago
        Apple watch sales have been amazing: http://www.wsj.com/articles/apple-watch-with-sizable-sales-cant-shake-its-critics-1461524901 http://www.wsj.com/articles/apple-watch-with-sizable-sales-c... Selling better than the iPhone did in its first year. If miniaturization improves to the point that we can fit reasonable processors battery life in the phone form-factor, then expect to sell even better.
pbreit 10y ago
It's still all just humans making decisions, nothing structural or insurmountable.
eva1984 10y ago
AMZN is pretty good at innovation, according to my recent memory....
ktRolster 10y ago
To be fair, most small companies can't innovate either. The ones that can are the ones that stand out.
quaunaut 10y ago
Well, folks are already off to the races reading the headline and not the core of the story. But, this is something I've thought of often over the last several years. If perhaps, a better angle would be to build a business around Unix-style philosophy, of "Do one thing, and do it well." Then, you simply start over with another brand new, small thing, and grow it from there, while lending it the HR resources of the core. The closest company to trying something like that, that I know of, is Google. But even there it seems they've hit some stumbling blocks.
- wolfgke 10y ago
  > while lending it the HR resources of the core. "HR resources" is redundant.
  - dragonwriter 10y ago
    > HR resources" is redundant. No, its not. It does expand out to have a repeated word, but the reference is different (the HR resources -- Human Resources resources -- are resources dedicated to the Human Resources function.)
  - magice 10y ago
    ? Why is it redundant? For the love of God, why is HR redundant? Let alone the other answer ("HR" == "other engineers"), which is brilliant, the HR department is the greatest weapon a large firm can deploy. Do you want insurance in case your kids get sick? Do you want days off to relax after a month of hard work? Do you want to ensure your boss ain't making inappropriate advances? Why on earth would a smart people want to be burdened with all of those works? Why on earth would a smart people hitch non-core work onto main work hour? Why on earth would a smart person refuse to delegate? "HR resources" is redundant. Such arrogance.
- edejong 10y ago
  It's quite unlikely you've heard of Eckart Wintzen [1]. He was leading one of the fastest growing software engineering companies in the 70's and 80's called BSO using a 'cell management', where sub-companies have a set maximum size of 50 and need to split afterwards. I worked for a company called Topicus [2] in the Netherlands which followed a similar philosophy for a while. [1] http://www.extent.nl/about-us/people/eckart/ http://www.extent.nl/about-us/people/eckart/ [2] http://www.topicus.nl http://www.topicus.nl
notahacker 10y ago
They can innovate. Startups often make shit products the market doesn't want too, and often fail more slowly and expensively than the example of Gerber's adult food line; the article could instead have talked about how Gerber did successfully roll out a life insurance product. The followup articles mention Xerox and Apple: two companies which produced more game changing products as mature companies than 99.99% of Silicon Valley ever will. If I was to propose my own cod theory of why big companies don't innovate, it would probably involve them seeing innovation as driven by MBAs formulating "innovation strategies" based on articles full of interesting anecdotes and open-to-interpretation theories rather than management saying yes to a higher proportion of projects their underlings want budget for.
- nickpsecurity 10y ago
  One trip to Walmart or a large, grocery store shows you how much the big companies can innovate. Actually, they do it even more than that but often do focus groups in a form of fail-early and fail-fast. The bad ideas get weeded out before they can soil the brand or dilute the earnings. What we see is what at least seemed to work. It then usually makes plenty of money. Also, the big companies' innovation usually nets them tens to hundreds of millions in extra revenues or plenty of profit. They care about making money, not growth to sell out. Changes the nature of innovation considerably.
  - nol13 10y ago
    Can't speak for all giant companies, but they care about percent growth. A product that might be profitable, but millions profitable and not billions profitable, it isn't worth the effort and gets axed or sold. A 0.1% profit boost isn't gonna matter to share price. Not saying I agree with it, just an observation.
    - nickpsecurity 10y ago
      It depends on the company. Many of the big companies... can't say most without data... get their money through a collection of products and services. They do care about millions because a million here and there accumulates. The low-margin business care down to the pennies of individual items. So, that isn't a rule for big businesses especially in the Global 2000. Many care about that stuff. There's just competing interests that can axe one thing for another. The ones doing stupid, expensive stuff also make the news more since "incrementally improved operation to make more money" isn't as exciting over coffee. ;)
Animats 10y ago
Some can, some can't. IBM was once very good at innovation. What hurt IBM was not lack of innovation. They got that part right. It was incremental production economies, the thing the article says is a big-company problem. Others could make generic PCs cheaper than IBM. Others could make disks (which were invented at IBM) cheaper than IBM. IBM eventually exited the low end entirely. 3M, GE, and du Pont are big, old companies good at innovation. Westinghouse was too good - too many high-tech products before their time. Gerber, the baby food company, doing something stupid is not a good example.
- DamnYuppie 10y ago
  I would also add Hitachi in there as well. Not as well known in the states for the massive conglomerate that it is but they have a great corporate outlook and focus on long term goals over short term ones.
  - jschwartzi 10y ago
    Hitachi makes the best nailguns.
    - damienkatz 10y ago
      And massagers. For massaging.
- magice 10y ago
  I weep to see people sharing my viewpoints. Too often, quasi-professional observers of industries would make stupid anecdote examples into attention grabbing but misleading and ultimately stupid stories. To add to your examples (and to bring this closer to hearts of Hacker news audience): Google released Gmail, GMap, GWT, etc. after its initial success; Amazon unleashed AWS after domination of online marketplace; Microsoft jumped into Xbox after establishing itself as "the tech company." Most notably, Apple is only accepted as a mainstream "innovator" (with the slew of products like iPod, iPhone, iPad, etc) after its revival and domination; before that, they were merely a niche player and their products (the many colorful boxes) were never quite celebrated as later creation as market leader.
ogrev 10y ago
I think this is hard for most companies to understand. The natural growth pattern is to take what you're good at, tweak it and sell it to another market. The problem is that instead of creating a process or product that's tailor made for the market it's meant to serve instead you get something that's close yet just not right. What the article is implying that the only way to combat this is for there to be a substantial buffer between the established company its innovation group lest their be some amount of tainting. They only thing innovation group should be provided is money to try to come up with their own solutions without any interference or guidance beyond the main goal. Quite honestly I think this is impossible unless you hire people with nearly no knowledge of the established processes at the company unless you want intellectual incest. Maybe a single manager might suffice but beyond that I don't think it would work. I have to wonder how amazon is coming up with its new ideas. They seem to be batting at least .100 when the field is batting 0.
cowardlydragon 10y ago
Once you have ossified middle management machiavelli banally evil sociopaths that only care about maintaining their miniempire, all the big companies can do is leverage monopoly power, startup gap, and government largess to persist.
Avshalom 10y ago
As a note though: walk down the aisles at your nearest Target and you'll find just as many single serve pureed fruits+veggies in the food aisles as the baby aisles (many coming in the same pouches and a couple the same branding). I admit, marketed toward parent who want to spend too much money trying to get their middle schoolers to eat vegetables at lunch more than adults proper.
twic 10y ago
tl;dr: because innovation is what you have to do when you don't already have a business.
- bbcbasic 10y ago
  Call it an "executive summary" and you can charge for it
meeper16 10y ago
Xerox Parc innovated. It's usually based on the a high pain point the founder has with the product.
zeveb 10y ago
It's a good article, with a simple-enough premise: large companies do one thing, well, and have difficulty changing to do another thing, perhaps less well at first but better later. However, this leapt out at me: > In it’s infancy, You'd think Harvard could afford an editor …
- TheOtherHobbes 10y ago
  No, it's a terrible article. It's factually wrong, and then it tries to explain, with parables and no real evidence, something that isn't even a problem - at least, not in tech. I'm even not sure it's a problem in most industries. I suspect that companies that do the same thing over and over without any successful innovation are freakish exceptions, not the rule. It would be far more useful to (e.g.) think about how to match innovations to the market, and how to create balanced corporations that include a working mix of all the so-called corporate life stages.
unabst 10y ago
Businesses are built from the ground up to succeed in the business they are already in. Any entrepreneur who's built one, or anyone who oversees operations of a company knows that each component has a specific purpose, and the process of ensuring they all work and click is painstakingly tedious, fragile, and requires maintenance overhead (the guy overseeing operations is one of them). So to say "they have money and smart people, they can do anything, why not innovate" is completely ignoring how businesses grow, come to fruition, and ultimately profit. Google's profit mainly comes from Adwords. Their history involves entrepreneurship, an awesome search engine, a new philosophy for a top page, and a ton of innovation. They even kept their innovative (and academic) roots for as long as they could in the form of Google Labs, which one can only assume they had high hopes for considering the talent they had and the amount of freedom they gave them. But it was no Bell Labs or an IBM in their heyday. It shut down in 2011, because the business arm couldn't justify it. They didn't need hobby projects. Google needed bigger and faster innovation to meet the scale of their resources and potential returns to match, so they focused more on phones, cars, AI, and robots. And now they exercise true big corporate innovation. Innovation is bought. They buy it, work on it, then sell it if it doesn't work out (as they did with their headless robotic dogs). Big corporations cannot pay entrepreneurs to be entrepreneurs under their umbrella. No one can. They can pay researchers to do research, engineers to build things, and designers to come up with new products and services. But entrepreneurs are not for hire. The moment they're hired, they stop being true entrepreneurs. But their companies are often for sale -- the business they built from the ground up to succeed in the specific business they're in (or just for IP if they're a technology play). And innovation is easy to measure when it's already there for sale in front of you.
- nickpsecurity 10y ago
  Counterexample: Goldman Sachs and Buffet's stuff. They hire and pay entrepreneurs to be entrepreneurs, managers, and product developers. Many of their top people bringing in big dollars have attributes of all of these. Their job function just brings the money back to the parent company instead of a random investor. There's nothing about big companies that prevent entrepreneur-like activity within. Usually, just their management culture if anything.
kristianp 10y ago
Has HBR recently changed its page layout? There is a 20% top bar, that hides a few lines of text when I hit page down. I couldn't finish the article, too frustrated with that POC top bar.
olivermarks 10y ago
Too many overconfident anecdotal HBR 'instructive stories' remind me of the old adage 'an economist is someone who can tell you a thousand ways to make love but has never actually met a member of their opposite sex'...the authors often appear to be hackademics, VC bag handlers and other theorists with little practical experience...
thomasjudge 10y ago
Gamestop is not really a good example to end the article with as a company that has given up on innovation. They've pursued the other strategy: buy it. Since 2010 they have made several acquisitions including Spawn Labs, Simply Mac, BuyMyTronics, Spring Mobile, and a bunch of Radio Shack stores.
- dragonwriter 10y ago
  That's buying something, but is it innovation?
  - nickpsecurity 10y ago
    " that has given up on innovation. They've pursued the other strategy: buy it." Writer claimed they were doing the opposite. Or am I misreading what you're asking? Did you mean to ask if buying something was itself an act of innovation as in other comments?
    - dragonwriter 10y ago
      I was asking if the things that they are buying are fairly described as buying innovations.
      - nickpsecurity 10y ago
        I'd say so. You can build it or acquire it. Steve Jobs, echoing Picasso, used to say that "good artists create but great artists steal." Allegedly, anyway. ;) I'd also say, as some others did, that it takes a certain amount of insight to see through the noise of the market to spot the claims (eg innovations) that will become part of your vision and integrate with your offerings. A track record of doing that right most of the time is certainly a form of innovation even if not as brilliant as a startup. Each time, the company's portfolio is stronger and providing more value to customers and shareholders that competition might not have.
otterley 10y ago
This article was written in 2012. Mods, can you please update the link?
combatentropy 10y ago
From the article: > corporations exist to make money. I'm so tired of hearing this. Contrast this with Steve Jobs's quote: "My passion has been to build an enduring company where people were motivated to make great products . . . the products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything."
- spc476 10y ago
  Public companies legally have to "increase shareholder value." If they don't, the shareholders can revolt. Private companies aren't beholden to this mandate. Nor are Google and Facebook, which structured their public stock offerings to keep the founders in charge. Apple was an odd outlier in that the stock holders had complete trust in Steve Jobs to ultimately increase the stock value long term, so let him spend the money on R&D as he saw fit. How many public companies not structured like Google or Facebook are like that?
Alex3917 10y ago
This example doesn't make much sense, since adult baby food is one of the hottest food trends right now. It's usually packed in squeezable pouches rather than plastic containers, but other than that it looks like they were just ahead of their time.
kangar00 10y ago
From part 2 of this series: https://hbr.org/2012/10/how-big-companies-should-innovate https://hbr.org/2012/10/how-big-companies-should-innovate "If the antibodies already exist within your organization to destroy new endeavors, you need to go outside of the organization to overcome them." Another option is to just fire or move employees that are resistant to change and innovation to other parts of the company where their resistance to change might be more helpful. I don't understand why this option is not considered or discussed.
- michaelt 10y ago
  Well, there's more than one way to block new endeavors. Many organisations sometimes have costly problems, and try to learn from them by adding new procedures to stop the problems recurring. After a few years, an accumulation of such procedures can raise the costs of a new project significantly - even though every rule is a reasonable one put in place with the best of intentions. For example, where a startup can test a concept with a PHP website on a single server using MySQL, a large company might have standards calling for a high availability configuration, a 24/7 support rota, monitoring logging testing automatic scalability change management backups and security to these standards/levels and independently audited, a bug bounty program... Before you know it a project a startup could have prototyped with one guy and a week needs several guys and several months - but the reasons for it are all individually reasonable and firing the people behind them makes no sense at all.
incepted 10y ago
The whole article is about Gerber, it should have been called "Why Gerber can't innovate". As plenty others have already pointed out, the tech industry is currently being led by very big companies that are frighteningly effective at innovating. Disappointing content from the Harvard Business Review.

93 points by chirau 10y ago

Pica_soO 10y ago

Google can?

ThomPete 10y ago
I think innovate meant in the form of creating successful businesses. Most of googles revenue is still advertising.
- dragonwriter 10y ago
  > Most of googles revenue is still advertising. That doesn't mean that Google's other businesses aren't successful. There are lots of independent, successful businesses with vastly less revenue than Google's advertising operations, so why wouldn't an internal Google business that is profitable but has vastly less revenue than its advertising business be evidence that Google can create successful businesses?
  - ThomPete 10y ago
    Sure but I think that's the spirit it's meant in. I.e. why is it hard for companies to mostly have one cash cow and not develop several. Or why is it hard for them the develop a new business as old ones die out.
    - ktRolster 10y ago
      why is it hard for companies to mostly have one cash cow and not develop several In other words, why can't more companies be like Apple? Or Oracle, or Microsoft, for that matter.
    - Pica_soO 10y ago
      Because the cash cow has a say in everything. Tablett? Put the cash cow on it. Mp3 Player? Cash Cow it. If there is one lesson to take from all this, once something had success - it should be held far away from anything new developing. If they want to give a prototype bovine-cash-madness - it should happen completely independent from the actual prototype and have no effect on the evaluation of said prototype.
- mc32 10y ago
  Yup. It'll be interesting to see if Apple can continue Macs to iPods to iPhones to ipads to ??
  - giarc 10y ago
    I think the next step was supposed to be watches.
    - ktRolster 10y ago
      Apple watch sales have been amazing: http://www.wsj.com/articles/apple-watch-with-sizable-sales-cant-shake-its-critics-1461524901 http://www.wsj.com/articles/apple-watch-with-sizable-sales-c... Selling better than the iPhone did in its first year. If miniaturization improves to the point that we can fit reasonable processors battery life in the phone form-factor, then expect to sell even better.

pbreit 10y ago

It's still all just humans making decisions, nothing structural or insurmountable.

eva1984 10y ago

AMZN is pretty good at innovation, according to my recent memory....

ktRolster 10y ago

To be fair, most small companies can't innovate either. The ones that can are the ones that stand out.

quaunaut 10y ago

Well, folks are already off to the races reading the headline and not the core of the story. But, this is something I've thought of often over the last several years. If perhaps, a better angle would be to build a business around Unix-style philosophy, of "Do one thing, and do it well." Then, you simply start over with another brand new, small thing, and grow it from there, while lending it the HR resources of the core. The closest company to trying something like that, that I know of, is Google. But even there it seems they've hit some stumbling blocks.

wolfgke 10y ago
> while lending it the HR resources of the core. "HR resources" is redundant.
- dragonwriter 10y ago
  > HR resources" is redundant. No, its not. It does expand out to have a repeated word, but the reference is different (the HR resources -- Human Resources resources -- are resources dedicated to the Human Resources function.)
- magice 10y ago
  ? Why is it redundant? For the love of God, why is HR redundant? Let alone the other answer ("HR" == "other engineers"), which is brilliant, the HR department is the greatest weapon a large firm can deploy. Do you want insurance in case your kids get sick? Do you want days off to relax after a month of hard work? Do you want to ensure your boss ain't making inappropriate advances? Why on earth would a smart people want to be burdened with all of those works? Why on earth would a smart people hitch non-core work onto main work hour? Why on earth would a smart person refuse to delegate? "HR resources" is redundant. Such arrogance.
edejong 10y ago
It's quite unlikely you've heard of Eckart Wintzen [1]. He was leading one of the fastest growing software engineering companies in the 70's and 80's called BSO using a 'cell management', where sub-companies have a set maximum size of 50 and need to split afterwards. I worked for a company called Topicus [2] in the Netherlands which followed a similar philosophy for a while. [1] http://www.extent.nl/about-us/people/eckart/ http://www.extent.nl/about-us/people/eckart/ [2] http://www.topicus.nl http://www.topicus.nl

notahacker 10y ago

They can innovate. Startups often make shit products the market doesn't want too, and often fail more slowly and expensively than the example of Gerber's adult food line; the article could instead have talked about how Gerber did successfully roll out a life insurance product. The followup articles mention Xerox and Apple: two companies which produced more game changing products as mature companies than 99.99% of Silicon Valley ever will. If I was to propose my own cod theory of why big companies don't innovate, it would probably involve them seeing innovation as driven by MBAs formulating "innovation strategies" based on articles full of interesting anecdotes and open-to-interpretation theories rather than management saying yes to a higher proportion of projects their underlings want budget for.

nickpsecurity 10y ago
One trip to Walmart or a large, grocery store shows you how much the big companies can innovate. Actually, they do it even more than that but often do focus groups in a form of fail-early and fail-fast. The bad ideas get weeded out before they can soil the brand or dilute the earnings. What we see is what at least seemed to work. It then usually makes plenty of money. Also, the big companies' innovation usually nets them tens to hundreds of millions in extra revenues or plenty of profit. They care about making money, not growth to sell out. Changes the nature of innovation considerably.
- nol13 10y ago
  Can't speak for all giant companies, but they care about percent growth. A product that might be profitable, but millions profitable and not billions profitable, it isn't worth the effort and gets axed or sold. A 0.1% profit boost isn't gonna matter to share price. Not saying I agree with it, just an observation.
  - nickpsecurity 10y ago
    It depends on the company. Many of the big companies... can't say most without data... get their money through a collection of products and services. They do care about millions because a million here and there accumulates. The low-margin business care down to the pennies of individual items. So, that isn't a rule for big businesses especially in the Global 2000. Many care about that stuff. There's just competing interests that can axe one thing for another. The ones doing stupid, expensive stuff also make the news more since "incrementally improved operation to make more money" isn't as exciting over coffee. ;)

Animats 10y ago

Some can, some can't. IBM was once very good at innovation. What hurt IBM was not lack of innovation. They got that part right. It was incremental production economies, the thing the article says is a big-company problem. Others could make generic PCs cheaper than IBM. Others could make disks (which were invented at IBM) cheaper than IBM. IBM eventually exited the low end entirely. 3M, GE, and du Pont are big, old companies good at innovation. Westinghouse was too good - too many high-tech products before their time. Gerber, the baby food company, doing something stupid is not a good example.

DamnYuppie 10y ago
I would also add Hitachi in there as well. Not as well known in the states for the massive conglomerate that it is but they have a great corporate outlook and focus on long term goals over short term ones.
- jschwartzi 10y ago
  Hitachi makes the best nailguns.
  - damienkatz 10y ago
    And massagers. For massaging.
magice 10y ago
I weep to see people sharing my viewpoints. Too often, quasi-professional observers of industries would make stupid anecdote examples into attention grabbing but misleading and ultimately stupid stories. To add to your examples (and to bring this closer to hearts of Hacker news audience): Google released Gmail, GMap, GWT, etc. after its initial success; Amazon unleashed AWS after domination of online marketplace; Microsoft jumped into Xbox after establishing itself as "the tech company." Most notably, Apple is only accepted as a mainstream "innovator" (with the slew of products like iPod, iPhone, iPad, etc) after its revival and domination; before that, they were merely a niche player and their products (the many colorful boxes) were never quite celebrated as later creation as market leader.

ogrev 10y ago

I think this is hard for most companies to understand. The natural growth pattern is to take what you're good at, tweak it and sell it to another market. The problem is that instead of creating a process or product that's tailor made for the market it's meant to serve instead you get something that's close yet just not right. What the article is implying that the only way to combat this is for there to be a substantial buffer between the established company its innovation group lest their be some amount of tainting. They only thing innovation group should be provided is money to try to come up with their own solutions without any interference or guidance beyond the main goal. Quite honestly I think this is impossible unless you hire people with nearly no knowledge of the established processes at the company unless you want intellectual incest. Maybe a single manager might suffice but beyond that I don't think it would work. I have to wonder how amazon is coming up with its new ideas. They seem to be batting at least .100 when the field is batting 0.

cowardlydragon 10y ago

Once you have ossified middle management machiavelli banally evil sociopaths that only care about maintaining their miniempire, all the big companies can do is leverage monopoly power, startup gap, and government largess to persist.

Avshalom 10y ago

As a note though: walk down the aisles at your nearest Target and you'll find just as many single serve pureed fruits+veggies in the food aisles as the baby aisles (many coming in the same pouches and a couple the same branding). I admit, marketed toward parent who want to spend too much money trying to get their middle schoolers to eat vegetables at lunch more than adults proper.

twic 10y ago

tl;dr: because innovation is what you have to do when you don't already have a business.

bbcbasic 10y ago
Call it an "executive summary" and you can charge for it

meeper16 10y ago

Xerox Parc innovated. It's usually based on the a high pain point the founder has with the product.

zeveb 10y ago

It's a good article, with a simple-enough premise: large companies do one thing, well, and have difficulty changing to do another thing, perhaps less well at first but better later. However, this leapt out at me: > In it’s infancy, You'd think Harvard could afford an editor …

TheOtherHobbes 10y ago
No, it's a terrible article. It's factually wrong, and then it tries to explain, with parables and no real evidence, something that isn't even a problem - at least, not in tech. I'm even not sure it's a problem in most industries. I suspect that companies that do the same thing over and over without any successful innovation are freakish exceptions, not the rule. It would be far more useful to (e.g.) think about how to match innovations to the market, and how to create balanced corporations that include a working mix of all the so-called corporate life stages.

unabst 10y ago

Businesses are built from the ground up to succeed in the business they are already in. Any entrepreneur who's built one, or anyone who oversees operations of a company knows that each component has a specific purpose, and the process of ensuring they all work and click is painstakingly tedious, fragile, and requires maintenance overhead (the guy overseeing operations is one of them). So to say "they have money and smart people, they can do anything, why not innovate" is completely ignoring how businesses grow, come to fruition, and ultimately profit. Google's profit mainly comes from Adwords. Their history involves entrepreneurship, an awesome search engine, a new philosophy for a top page, and a ton of innovation. They even kept their innovative (and academic) roots for as long as they could in the form of Google Labs, which one can only assume they had high hopes for considering the talent they had and the amount of freedom they gave them. But it was no Bell Labs or an IBM in their heyday. It shut down in 2011, because the business arm couldn't justify it. They didn't need hobby projects. Google needed bigger and faster innovation to meet the scale of their resources and potential returns to match, so they focused more on phones, cars, AI, and robots. And now they exercise true big corporate innovation. Innovation is bought. They buy it, work on it, then sell it if it doesn't work out (as they did with their headless robotic dogs). Big corporations cannot pay entrepreneurs to be entrepreneurs under their umbrella. No one can. They can pay researchers to do research, engineers to build things, and designers to come up with new products and services. But entrepreneurs are not for hire. The moment they're hired, they stop being true entrepreneurs. But their companies are often for sale -- the business they built from the ground up to succeed in the specific business they're in (or just for IP if they're a technology play). And innovation is easy to measure when it's already there for sale in front of you.

nickpsecurity 10y ago
Counterexample: Goldman Sachs and Buffet's stuff. They hire and pay entrepreneurs to be entrepreneurs, managers, and product developers. Many of their top people bringing in big dollars have attributes of all of these. Their job function just brings the money back to the parent company instead of a random investor. There's nothing about big companies that prevent entrepreneur-like activity within. Usually, just their management culture if anything.

kristianp 10y ago

Has HBR recently changed its page layout? There is a 20% top bar, that hides a few lines of text when I hit page down. I couldn't finish the article, too frustrated with that POC top bar.

olivermarks 10y ago

Too many overconfident anecdotal HBR 'instructive stories' remind me of the old adage 'an economist is someone who can tell you a thousand ways to make love but has never actually met a member of their opposite sex'...the authors often appear to be hackademics, VC bag handlers and other theorists with little practical experience...

thomasjudge 10y ago

Gamestop is not really a good example to end the article with as a company that has given up on innovation. They've pursued the other strategy: buy it. Since 2010 they have made several acquisitions including Spawn Labs, Simply Mac, BuyMyTronics, Spring Mobile, and a bunch of Radio Shack stores.

dragonwriter 10y ago
That's buying something, but is it innovation?
- nickpsecurity 10y ago
  " that has given up on innovation. They've pursued the other strategy: buy it." Writer claimed they were doing the opposite. Or am I misreading what you're asking? Did you mean to ask if buying something was itself an act of innovation as in other comments?
  - dragonwriter 10y ago
    I was asking if the things that they are buying are fairly described as buying innovations.
    - nickpsecurity 10y ago
      I'd say so. You can build it or acquire it. Steve Jobs, echoing Picasso, used to say that "good artists create but great artists steal." Allegedly, anyway. ;) I'd also say, as some others did, that it takes a certain amount of insight to see through the noise of the market to spot the claims (eg innovations) that will become part of your vision and integrate with your offerings. A track record of doing that right most of the time is certainly a form of innovation even if not as brilliant as a startup. Each time, the company's portfolio is stronger and providing more value to customers and shareholders that competition might not have.

otterley 10y ago

This article was written in 2012. Mods, can you please update the link?

combatentropy 10y ago

From the article: > corporations exist to make money. I'm so tired of hearing this. Contrast this with Steve Jobs's quote: "My passion has been to build an enduring company where people were motivated to make great products . . . the products, not the profits, were the motivation. Sculley flipped these priorities to where the goal was to make money. It's a subtle difference, but it ends up meaning everything."

spc476 10y ago
Public companies legally have to "increase shareholder value." If they don't, the shareholders can revolt. Private companies aren't beholden to this mandate. Nor are Google and Facebook, which structured their public stock offerings to keep the founders in charge. Apple was an odd outlier in that the stock holders had complete trust in Steve Jobs to ultimately increase the stock value long term, so let him spend the money on R&D as he saw fit. How many public companies not structured like Google or Facebook are like that?

Alex3917 10y ago

This example doesn't make much sense, since adult baby food is one of the hottest food trends right now. It's usually packed in squeezable pouches rather than plastic containers, but other than that it looks like they were just ahead of their time.

kangar00 10y ago

From part 2 of this series: https://hbr.org/2012/10/how-big-companies-should-innovate https://hbr.org/2012/10/how-big-companies-should-innovate "If the antibodies already exist within your organization to destroy new endeavors, you need to go outside of the organization to overcome them." Another option is to just fire or move employees that are resistant to change and innovation to other parts of the company where their resistance to change might be more helpful. I don't understand why this option is not considered or discussed.

michaelt 10y ago
Well, there's more than one way to block new endeavors. Many organisations sometimes have costly problems, and try to learn from them by adding new procedures to stop the problems recurring. After a few years, an accumulation of such procedures can raise the costs of a new project significantly - even though every rule is a reasonable one put in place with the best of intentions. For example, where a startup can test a concept with a PHP website on a single server using MySQL, a large company might have standards calling for a high availability configuration, a 24/7 support rota, monitoring logging testing automatic scalability change management backups and security to these standards/levels and independently audited, a bug bounty program... Before you know it a project a startup could have prototyped with one guy and a week needs several guys and several months - but the reasons for it are all individually reasonable and firing the people behind them makes no sense at all.

incepted 10y ago

The whole article is about Gerber, it should have been called "Why Gerber can't innovate". As plenty others have already pointed out, the tech industry is currently being led by very big companies that are frighteningly effective at innovating. Disappointing content from the Harvard Business Review.