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Why companies lose their best innovators (2019)

190 points by hhs 6y ago

mmhsieh 6y ago
Fixing this will be the exception rather than the rule. The author identifies it: the incentives are all wrong once you become a mature company. How likely is it, for instance, that Zoom will internally develop the VR chat app that will be to Zoom what Zoom is to Cisco?
- loopz 6y ago
  Could be likely and still not the right idea or execution. Most comments on Zoom is hindsight and survivor bias.
  - AznHisoka 6y ago
    And narrative curve fitting. I doubt the story was as simple as some laid it out.
deleted 6y ago
[deleted]
kumarvvr 6y ago
There is a reason companies don't encourage internal innovation. It has nothing to do with managers, HR, or what not. Say you have 100 innovators in your company. Everyone comes to you with an idea, as an SVP or a Director, can you agree to all of them? You obviously pick and choose. And how can anyone say a new product / service by a company is not the result of an internal innovator? Alternatively, in the safe environment of a company, as in the innovator is getting capital and resources from the company finances, I think it is more likely that people are more free to give out ideas, even crappy ones. It's easy for a good idea to get lost in the noise. Ultimately, what is the solution to this? I guess you have to fundamentally change the structure of companies itself. In the given example, if Cisco were to transfer the innovator to another division, give him some money, on the same terms and conditions as a VC, perhaps it would have borne fruit. Essentially, it's easy to see companies, once a certain size, are effectively hard wired to move at a slow, glacial pace and focus on sustainability, rather than fast and fail innovation.
- coderintherye 6y ago
  >Say you have 100 innovators in your company. Everyone comes to you with an idea, as an SVP or a Director, can you agree to all of them? Yes, actually you can, as long as you control the parameters around how the idea is tested. We used to do a full 2-week sprint once out of every 16 weeks just to prototype people's ideas. In order to pitch the idea the only constraint was that it needed agreement from someone knowledgeable in that area that a prototype could be accomplished in <= 2 weeks.
- MattGaiser 6y ago
  > Everyone comes to you with an idea Is this actually happening? Are ideas being pitched at a high rate? As at every company I know of that has held an internal innovation competition, interest is quite low.
  - sk5t 6y ago
    > internal innovation competition As in, an opportunity to give away good ideas for no cash and no equity?
    - MattGaiser 6y ago
      They usually have cash prizes, or at least electronics.
      - robjan 6y ago
        Doesn't seem like a good deal
        MattGaiser 6y ago
        It depends. I am someone with a lot of ideas and I will never follow up on 95% of them on my own accord. Having it on the resume + the $200 bucks is more than enough for an idea that would otherwise just rot in my notebook.
      - 6y ago
dnautics 6y ago
Midway the article talks about risks and incentive, and that not all innovators will want to leave the nest. I'd say though, if you're already in a place where you're internally innovating, by virtue of the fact that you've already deigned to challenge internal culture, practices, or product roadmap, you're the type to take high-payoff risks. There should be a strong positive bias for leaving among internal innovators. Probably the only reasonable way for a company to be able to take profit from these innovators is to make it easy to spin out with a favorable equity position.
TwoBit 6y ago
Companies - especially market leaders - are averse to creating products that compete against themselves.
- eskaytwo 6y ago
  Do you mean The Innovator’s Dilemma?
  - mymusings 6y ago
    Yes, quite so.
- mymusings 6y ago
  That is precisely what Steve Jobs explains quite well in his biography. He says, if Apple does not invent the next big product, someone else will. So, why not cannibalize our existing product with new ones than let someone else do it? But, not all companies are Apple and not all products are the same. So, it really depends if companies what to take the risk.
  - fendy3002 6y ago
    Still, there are some expectations from customer that limit the product's innovation. Let's take Iphone, from the first version to latest one customers expect a slim phone with touch screen. Customers want "this product but better", that the innovation will be limited around that product's initial characteristics. Of course another line of product can be independently developed, but it's riskier as customers may or may not want that kind of product.
    - mymusings 6y ago
      Certainly agree. Except for the watch, Apple has made existing products way better than how they were initially introduced. In fact, pictures taken using the iPhone are almost as good as a high end digital camera, if not with a DSLR. Having that said, I think the new product innovation has ground to a halt after Steve Jobs, mainly because of the overall mindset of the company changing from a services centric one from a product centric one. Their focus has gone onto News, Music, Storage, Cloud and other service areas. Macs and Phones continue to get refreshed but are too pricey for the quality they offer, which is why they have not been able to make a dent outside EU, US and China (or in other words, emerging markets).
roenxi 6y ago
Corporations aren't really meant to be all that innovative. In practice corporations are designed to be extremely disposable. They can be unwound up on failure and spun up relatively easily. There isn't a rule saying that these companies can't innovate, but why should Cisco even be trying to write a teleconference client? There is no fault to be found that they didn't capitalise on what became Zoom. Best of breed corporations are often characterised by a focus on key ideas and their variations - look at Apple, pretty much all their products are variants of an iPad at different sizes and different target audiences. Picking some other global Fortune 500s: Walmart and Amazon, profound dedication to logistics. DuPont knows chemistry, Boeing mastered turbulence and propulsion. A couple of big extractors that know how to claim resources from the natural world. These companies are all very innovative, but also profoundly focused. They will really struggle to cope with innovations that aren't in the area of their strategic edge. It isn't a loss to anyone if the next trillion-dollar idea spins out as a new company instead of growing within an existing major. If someone has great ideas, we should invest in the person not in their employer. And they should stand to profit from their own success.
- kqr 6y ago
  Well, Apple didn't start out making iPads in a garage. Amazon didn't start out renting web services along with books. I think you're selling some of these companies short -- the thing they might seem focused on now was not the thing they initially got popular for doing. In other words, they innovated outside their expertise to stay relevant.
  - roenxi 6y ago
    I don't think it is a failure of Cisco that they let Zoom slip out and become a new company. Even if I were a Cisco shareholder I don't know that I'd be that unhappy with management. I can just buy Zoom stock if I think they are on a winner - more than 75% of their market cap came into existence after the IPO. I don't see who the loser is in this story. It isn't Cisco shareholders; they can be Zoom shareholders too if they want to be.
    - 6y ago
lnsru 6y ago
Big companies have their own roadmaps, managers have their own agendas. There is no resources for innovative weirdos. Especially in the world ruled by bookkeepers. In my experience not much technical guys make it into middle management. And you can explain 100 times simple technical improvement in the simplest words to a bookkeeper. He will not get it!!! Instead engineers will play another session of design thinking to check innovation box on somebody’s checklist.
MattGaiser 6y ago
I am the kind of person to submit 30 ideas to internal innovation challenges. I was an innovation intern for a bank. I have won many innovation awards from competitions they hosted to find ideas. How many of those ideas got out of the page/prototype stage? 0. Because it seems like the important thing for many is to seem innovative. After that part has been done, interest disappears. Everyone would rather you excite them with a new idea. So much of this "innovation" stuff is about media and being trendy.
- hinkley 6y ago
  Dopamine is a hell of a drug.
  - MattGaiser 6y ago
    Never thought of myself as a drug dealer...
    - maffydub 6y ago
      It's possible you were the addict rather than the dealer. :( What's the easiest way of keeping you at the company rather than going to innovate somewhere else? Make it as easy as possible for you to get your next "hit" of innovation dopamine. (I'm being cynical - this isn't necessarily what your employer was doing, but it could have been.)
      - MattGaiser 6y ago
        I must admit, that is plausible given how my current organization works.
      - hinkley 6y ago
        I worked with a customer who was a little too dim to appreciate how manipulative he was being. Remember, it’s the boss who puts you into that position. Only they have to understand what you’re doing, and not even that well. Realizing that about him made it feel worse somehow.
m0zg 6y ago
If you innovate, you have to have the freedom to fail, often repeatedly. Most companies (large or small) do not tolerate failure, especially the repeated kind.
- Waterfall 6y ago
  I heard the opposite, where people like those who tried and failed, which is why trump's failures were seen as good. Its better to try and fail than never try.
  - m0zg 6y ago
    It's different if it's your own company though. You can fail as much as you want, until you run out of money. :-)
emerged 6y ago
as an innovator, I stayed at a company which was extremely resistant to innovation because nobody had any idea how few hours I was working for a decade. So while they resisted all my innovations for that decade, I was spending most of my time doing everything I wanted to outside of work.
- NegativeLatency 6y ago
  Can you elaborate?
  - emerged 6y ago
    I worked remotely, very few hours per day, and nobody knew how few hours I worked because I was still the person they gave all the hard problems to and ripped through all my tasks quickly. But any innovations put forward were rejected through political games played by non remote employees. On some meta level I was fine with that because while they saw those as petty wins I was living a life of freedom working less than half the day. Since then I realized the same level of freedom could be had with people who care to leverage innovation instead of striving to fight it. Life was very good, now it's great.
    - isoprophlex 6y ago
      Inspiring story; how'd you manage to identify the people that cared about leveraging your innovations?
    - hackerfromthefu 6y ago
      Hi thanks for your post. It jumped right out at me and I had to login and reply right away - because my experience is the same as yours, verbatim, for the first part! I'm presently as you mentioned: fully remote, fixing the hard problems so they keep me well rewarded, doing it part time and enjoying the freedom, the org is political and non remote with culture issues stifling true innovation .. its striking in its similarity I feel like we could be work twins! I would love to talk to you about the next level, what it is for you and also how you got there. If I can, how can I get in touch with you?
idclip 6y ago
Not saying i had the best work life balance, and ive learned my lesson of not wasting air time on deaf ears... I was so enthusiastic after graduating .. i adopted the product, made it upgradable (8 year old repo, 1 programmer before me who was a sysadmin) - made it into a modern 12 factor app, before i even knew what that was. One thing i learned is that innovators dont belong in certain environments .. those innovators didnt belong where they were .. and that was their wake up call, at least, it was mine. Now i found a work place that appreciates me energy, and took me in as a fullstack dev and im so thankful, and careful. Im sure some devs there cant hear what i have to say. I learned, to speak less. Do more. Hobby? Ill make my own. A work place needs me to make it better - not to have me judge it .. its not easy thing to balance or properly execute if you Want to keep your soul. For my next job, I was careful, it took me 4 months of interviews that tried to pitch a junior/mid and secretly wanted a senior .. but eventually, i found a home. But sometimes its really necessary to wake up, and see that your efforts are being wasted, and move on. Left them better than i found them, and but i neglected myself and it was a valuable lesson in self care and the significance of my own time. Another important lesson is growing beyond having milk teeth .. we should look around, and see where we are, and what kind of people are there ... are we making enemies, or injecting spirit? Its no easy, those devs didnt belong in those companies to begin with. It was a life lesson to all involved.
- emerged 6y ago
  It feels very different once you escape a toxic environment. It's as true for us as engineers as it is for victims of domestic violence or any other sort of toxic relationship.
  - idclip 6y ago
    a powerful experience .. it does feel like a new lease on life.
hathym 6y ago
>If someone drives a billion dollars of incremental value then why not pay them $25 million LOL, You are lucky if your managers did not take credits of everything you achieved.
vemv 6y ago
I have the feeling that the introductory story about Zoom and Webex wasn't quite like that. I think I remember some HN comments detailing it. For one thing you can't "just" create a replacement; you need employees, capital etc. So it was much more likely a game of politics rather than one of innovation. A more useful example would be one involving engineers, not a senior tech exec.
tjpnz 6y ago
If you have an idea of sufficient merit what would incentivise you to give it up to your employer versus quitting and trying to do it yourself? I realise that startups aren't for everyone but the alternative seems far less appealing and doesn't guarantee you any control over how it's executed (and very likely none of the reward).
- bob1029 6y ago
  This is a dilemma I struggle with currently. I have several product ideas that I can either run 100% on my own, or I can try to convince my current CEO that we should start building these out and selling them to our existing client base. The advantage of starting your own path is that you get 100% autonomy over every decision and every client that you take on. This can give you an incredible uplift because nothing is ever in your way from an organization/people/politics angle. The disadvantage is that you have to rebuild all that corporate boilerplate in order to establish name/brand/reputation/process/etc. You also don't have many constraints acting upon you when starting from zero, and you can wind up making piles of decisions that roll-up into disaster. I think the best course of action would be to present your ideas to executive leadership. If you can secure some equity share in the organization or products you propose, this is easily the fastest and least stressful way to get them to market. Being able to reuse your same HR, marketing & sales teams can save you potentially years of headache. If your current organization is gigantic or otherwise inflexible, you are probably best suited building out your project on your own time, incorporating LLC over the weekend, etc. One day you just put in your notice and move on with your dream.
- hedora 6y ago
  Common reasons I’ve encountered include: - “Golden handcuffs” - $BIGCO / $RECENT_IPO accidentally pays way above market because the stock appreciated since the person was hired. - “Benching” - $BIGCO hires an army of senior people at significantly above market rate to do work that should go to a recent grad. They can’t attract competent recent grads, and can’t retain senior engineers at market rate. - “Resting and vesting” You did a bunch of quality innovative work, but corporate culture changed and the opportunities to pursue new projects dried up before your stock vested. Since quality engineers get bored quickly, and most good ideas have a short shelf life, why not pitch them to management while you’re twiddling your thumbs?
westurner 6y ago
https://news.ycombinator.com/item?id=23886158 https://news.ycombinator.com/item?id=23886158 > Three reasons companies lose their best innovators. > 1. They fail to recognize and support the innovators > 2. Innovation becomes a herculean task > 3. Corporations don’t match rewards with outcomes While the paragraphs under point 2 do discuss risk and the paragraphs under point 3 do discuss rewards, I'm not sure this article belongs here. Risk and Reward. Large corporations are able to pay people by doing things at scale; with sufficient margin at sufficient volume to justify continued investment. Risk is minimized by focusing on ROI. Startups assume lots of risk and lots of debt and most don't make it. Liquidation preference applies as the startup team adjourns (and maybe open-sources what remains). In a large corporation, that burnt capital is reported to the board (which represents the shareholders) who aren't "gambling" per se. "You win some and you lose some" is across the street; and they don't have foosball and snacks. How can large organizations (nonprofit, for-profit, governmental) foster intrapreneurial mindsets without just continuing to say "innovation" more times and expecting things to happen? Drink. "Innovators welcome!". Drink water. "Intrapreneurial." What does that even mean? The employee, within their specialized department, spends resources (time, money, equipment) on something that their superior managers have not allocated funding for because they want: (a) recognition; (b) job security; (c) to save resources such as time and money; (d) to work on something else instead of this wasteful process; (e) more money. Very few organizations have anything like "20% time". Why was 20% time thrown off the island to a new island where they had room to run? Do they have foosball? Or is the work so fun that they don't even need foosball? Or is it worth long days and nights because the potential return is enough money to retire tomorrow and then work on what? Step 1. Steal innovators to work on our one thing Step 2. Step 3. Profit. 20% Project: https://en.wikipedia.org/wiki/20%25_Project https://en.wikipedia.org/wiki/20%25_Project Intrapreneurship: https://en.wikipedia.org/wiki/Intrapreneurship https://en.wikipedia.org/wiki/Intrapreneurship Internal entrepreneur: https://en.wikipedia.org/wiki/Internal_entrepreneur https://en.wikipedia.org/wiki/Internal_entrepreneur CINO: Chief Innovation Officer / CTIO: Chief Technology Innovation Officer https://en.wikipedia.org/wiki/Chief_innovation_officer https://en.wikipedia.org/wiki/Chief_innovation_officer ... Is acquiring innovation and bringing it to scale a top-down process? How do we capture creative solutions and then allocate willing and available resources to making that happen? awesome-ideation-tools: https://github.com/zazaalaza/awesome-ideation-tools https://github.com/zazaalaza/awesome-ideation-tools
say_it_as_it_is 6y ago
Zoom didn't succeed at Cisco's failure. It wasn't Cisco's lunch that was eaten. Zoom succeeded because the founder left and organized a venture. A new organization, a new culture, new leadership, and so so much luck contribute to the outcome. Only thing Cisco could have done better was establish a venture capital division to fund work beyond its internal controls. Yet, they would probably only fund ideas by top performers and this in itself wouldn't ensure greater success because metrics, politics and culture driving employees performance do not imply excellence or deficits.
dwd 6y ago
It really comes down to personality. Highly creative people generally rank low on conscientiousness. Organisations as they grow need ALL their employees to be conscientious: organised, punctual, goal-oriented, accountable - to not just to control outcomes but maintain cohesiveness. Organisation culture stifles those type of people. For an organisation to keep their innovators they need to be siloed away in an autonomous 'Skunk Works' where they can be free from the bureaucracy required to run a company.
- stiray 6y ago
  True. The one thing that corporations are extremely good at is destroying all the initiative and add so much bureaucracy to the development that you loose interest to improve / inovate as you are paifully aware that this will bring in more documents, jira tickets, endless "bicycle shed" discussions, endless covincing of managers that only care about their schedule (which you will corupt by "unknowns"), endless politics as there is always some architect/team lead that "must be the smartest" (and typically those comming to those positions are excelent in navigating buereaucracy and politics and are rarly inovators as those endanger manager schedules, adding risks, ...) and so on. Too many cooks spoil the broth. At the end you just figure out it is not worth it , do what you are paid for and you inovate at home. If those inovations become a startup you just leave.
  - dwd 6y ago
    I used to infuriate one development manager by going on a streak of productivity where I'd generate a mass of code over a matter of days, and then go quiet while I was thinking, trialing and tinkering with the next project - this was in a role where I had some latitude to do that. I'm not sure if other's thought I was slacking off at those times and complained, or it just messed with him because his burn-down charts would always look like a cliff face.
    - qes 6y ago
      I struggle with the same pattern and worries myself, though mostly internally. My position affords a lot of latitude for it (I replaced the previous lead dev 10 years ago when the company was 5 people). It seems to be (and is said to be) okay with others as long as I communicate even as little as, "I'm deep in the weeds on this and probably will be for the next 2-3 weeks." I worry about the optics of it, but at least have confidence that other developers can see the end result is solid for the total amount of time invested. Smooth workflow for everyone is the other major concern, but again we're lucky to be working on our own system and not beholden to external deadlines.. and I guess lucky to have enough want-to-dos in the backlog that no one is ever without something useful to work on. We do create a bit of expectation of every developer having at least some tasks each week that are picked up and some that are completed, and it's tempting to just game that a bit to put up some numbers on the weeks where I'm figuring out how to do what I'm about to do.
Jare 6y ago
Companies also lose their worst innovators the same way - we get to find out who was which afterwards. (*) we find out through success or failure, which is at best a proxy.
ChrisMarshallNY 6y ago
An important consideration is corporate focus. Any organization (not just a corporation) has to have a lodestar; a “shared vision.” In some cases, this is a “boat anchor,” preventing the organization from moving forward, but in many cases, it is the thing that holds it together, and allows it to continue its existence; albeit, at a humble scale. Sometimes, a “boat anchor” is necessary. Not all organizations are about continuous growth, or even innovation. They may be a “do one thing, and do it well” type of shop, where growth and innovation can actually be harmful. I know, because I worked in a company like that. They found a product line that was crazy profitable, and it changed the company culture quite drastically. For many years, the company grew like a wildfire. The focus became “blurred.” Lots of money poured in, but I feel like the company may have “lost its soul,” so to speak. The original “lodestar” was never sufficiently replaced with a new focus. Then, the bottom fell out of the market, and the company suffered an implosion. They contracted back to their “roots,” where a conservative mindset took over. Will they survive? I’m not sure, but over a century, they did weather numerous disasters and roadblocks (like having a lot of their assets turned to kindling in war). I sincerely wish them well. Despite my frustrations there, I have nothing but respect for them. I learned many important values that I never would have learned at other organizations. But they are like a cactus; ideal for the harsh conditions of a desert. They are not well-suited for temperate rainforest, where so many other plants thrive. Innovation and risk-taking was difficult (not impossible) at that company, and many of my efforts to introduce change never bore fruit. It was my decision to remain with them, despite that. Basically, some organizations are just not places where innovative staff can thrive. They are stony, dry soil; ideal for cactus, but not for redwood trees. That is not always a bad thing. In those cases, the innovators either have to accept that they will have to live within great constraints, or they will need to move on.
softwaredoug 6y ago
Mature companies can become vehicles for protecting management/investor wealth. This forces them to act far too conservative. Management starts to see it like we might see our mortgage or savings. As such, they want to build a “fortress” to protect the current business model. Innovation- even internal innovation - can upset the apple cart. Making things worse, executives running a mature company are often very operations oriented. They’re not the same mentality of a founder (who are conversely often terrible at streamling operations!).
graphicsRat 6y ago
This is exactly what happened to Lightwave (a revolutionary 3D animation software). Management refused to allow the engineers to address pressing concerns so the chief engineer left to create another company whose products modo has now eclipsed Lightwave https://youtu.be/DiOX-D2B8LE https://youtu.be/DiOX-D2B8LE
- friendlybus 6y ago
  Same thing is happening to modo.
  - graphicsRat 6y ago
    Really? So soon? Can you be more explicit?
benjohnson1707 6y ago
Most companies seem to screw it up once they leave the startup stage and enter the growth stage. Incentives schemes aren't designed to 'reward' failure, but zero risk-taking. It seems to be that simple: If you WANT innovation, you'll get innovation. What most people (at least those willing to climb the corporate ladder) want however is a career. And within a corporate incentive structure, career and failure don't go well together. Creating value out of nothing is way harder than simply not screwing up existing value. So it's obvious what you're gonna get. Eventually, there is no such thing as 'corporate innovation'. There could be a thing called 'corporate sponsored innovation garage', or something similar. At least for new business development from the ground up. The promising way to pull that off it seems is a blend of YC startup school tutoring, venture capital, [Google] X, the innovation culture of Tesla/SpaceX and access to cutting edge technology/people - baked into the right incentive structure. IF innovation was repeatable, I'd bet on such a vehicle and allocate resources there.
- michaelcampbell 6y ago
  I could retire if I had a Euro or 2 every time I have heard management say that mistakes are just lessons, experiments SHOULD fail now and again, and other such platitudes. Then reward the exact opposite type of workflow.
  - jorblumesea 6y ago
    "we want innovators, outside the box thinkers and people willing to take risks" proceeds to promote people who only make safe bets, suck up to management and tow the party line
    - Gruuuuulyes 6y ago
      Sounds politically, but 'To generate a room in an existing room, to use its reaction as an impetus...' um that maybe also another topic... phys... ^^
  - deleted 6y ago
    [deleted]
bladegash 6y ago
This article reminded me of a book by Ed Catmull (one of the founders of Pixar) called Creativity, Inc. The book is essentially about how Pixar has worked to foster creativity in a company where their business model pretty much relies on it. There are also some interesting Steve Jobs tidbits as well. I didn't really like the second half of the book, but the first half was fantastic! From my personal experience, I think the major thing that always stymied creativity for me was office politics. Having to constantly watch your back for someone with a knife can really drain your energy from just, you know, doing a job you otherwise enjoy.
atlgator 6y ago
When corporations are actively pushing a “skills don’t matter” narrative innovation isn’t even in the ballpark anymore.
known 6y ago
Innovation is 2 types 1. Incremental 2. Disruptive And Context is 2 types 1. Internal 2. External Totally we can see 8 options here; Pick the best one that fits in your company;
lhpz 6y ago
If you look at what a company really is from a different perspective, then it makes complete sense that an internal innovator cannot exist inside any established organization. Let’s examine how any company came to be: it first started with a few individuals with a shared project, who maybe managed to obtain resources beyond their own resources, for example by raising external capital. With these resources, they create a product or service, and more importantly look for customers. They may not find customers immediately, but through a long and painful trial and error process, they will try many different recipes before they actually discover the recipe to find customers. Companies who can’t find enough customers will die. Initial capital is just delaying this fatal outcome. During this first phase till initial success, the organization is very fluid. The company strategy can be completed changed, the product can be completely changed, the production process can be completely changed … basically anything can be completely changed. A newly established organization is fluid and can reconfigure itself quickly, because it is still small, and more importantly it has nothing to lose doing so. After a recipe to some initial commercial success has been painfully discovered, then the only strategy that make sense is to replicate it to grow the company. The initial recipe will be scientifically and meticulously improved, optimized, refined and scaled in all its components. Possibly by deploying additional capital, because the investment is now much less risky. This is what professional managers do. They perfect the execution of a recipe and balance risks doing so. Because now, as an established company with many shareholders, thousands of employees, suppliers, customers … the company has so much to lose by doing anything risky. Any established company must be risk averse or it will quickly disappear. Fast forward a decade or more of commercial success optimizing the same recipe with a risk-averse mindset, which still has room for some internal innovation but only of the incremental type, then any company is no longer fluid but solid. If it’s a public company obsessed with short terms returns, then it’s a very dense solid. It is also a large organization by now, with many gatekeepers to company resources. An internal innovator would have to convince all of these gatekeepers for any significant new endeavor. This is clearly impossible unless the internal innovator is the CEO of the company. That's why companies lose their best innovators. That’s why significant innovation cannot be produced inside large companies, but it can nevertheless be brought in via acquisitions ... sometimes from ex-employees who left to start their own company! What you see as an established company today, you can also see as a “fossil of its past successes”. That’s why an established company cannot be an innovation machine in my opinion. This was not always the case in the past. It’s probably a consequence of contemporary professional management, with too much emphasis on short-term, low risk and immediate returns.
sergioisidoro 6y ago
> Creating a billion dollars of incremental value at a startup yields untold riches for the entrepreneurs behind the venture. Creating a billion dollars of incremental value within a large corporation may be recognized, but the rewards are nowhere near the same level as a startup. Isn't this the most obvious reason? If you have an idea and the capabilities to develop it for your own gain, why would you do it so the shareholders of your old company can buy a new yacht, while you struggle to buy an apartment?
- koheripbal 6y ago
  Because the risks are different. Most startups fail and founders often lose money. At a big company, the risk of failure still comes with a fulltime salary.
- deleted 6y ago
  [deleted]
gkanai 6y ago
Another great example of an innovator who was not rewarded is Shuji Nakamura, who invented the blue LED, which led to a lot of other successful products including the white LED and the bluray disc platform. Nakamura was not rewarded by his company, went on to win a Nobel prize with collaborators from his company. Nakamura left the firm, sued the firm and basically walked away with nothing. He's now an academic at an American university.
dfilppi 6y ago
Not sure there is a solution for this. To create a money machine like Cisco is extremely difficult and valuable. It is natural that the culture becomes more conservative, plus large orgs are conservative by necessity and bureaucratic. Also, most innovators won't put in max effort when they dont have full control and are under tremendous pressure. In a big rich org like Cisco, the comfy status quo is always whispering to you.
PaulHoule 6y ago
Zoom is a particularly good example because it shows the same cycle the "chat" space has been stuck in since 1993 or so. For a while IRC was cool, then it was CUSeeMe, then there was Paltalk, and ICQ, and AIM, and Microsoft Messenger and Skype and Lync and Skype for Business and Google Talk and Facebook Messenger, and... If you look at them closely you can find some improvement (e.g. Zoom has a server that makes the "Hollywood Squares" view of all the participants) but if you look at them broadly they don't seem to have gotten better over time, they've just locked people in, stagnated, then something new comes along. It's hard to see how Facebook Messenger is different from AIM except for what it is locked in to. If the EU really wanted to show some leadership it would put an outright ban on proprietary chat programs and force them all to use open protocols. Think of it as a part of a "computer user's bill of rights". Every time somebody wants me to download some new chat app I want to throw a hammer through a screen like that Apple 1984 ad.
deleted 6y ago
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roland35 6y ago
This is a tough problem for companies. At my last job there was an "advanced concepts" group which had a lot of freedom and latitude, but they had a poor reputation for not really producing anything useful. The few things they did produce had to basically be redone since the quality of engineering wasn't ready for production. I'm not sure how to fix that, since lack of freedom wasn't the problem! It probably is just making sure that the right people are leading. I also don't know how to reduce other engineering groups more focused on practical projects resenting the innovation group working on more fun, low stress projects. That is a hard political problem.
- sauntheninja 6y ago
  Valve had the same problem people there are free to join or start any project they like but it just resulted in projects being started but being scrapped half way through
- mensetmanusman 6y ago
  This is a ying and yang issue. For every advanced concepts team, you need a non-techy business and marketing team to pull ideas out to the world.
dennis_jeeves 6y ago
Related article of mine. Why good organizations decline: https://realminority.wordpress.com/ https://realminority.wordpress.com/
starky 6y ago
The company I work for drives me nuts with this. We do tons of research and innovation on the software side of things. But because hardware takes longer we almost never do any research or try out anything risky because we are always the critical path on the schedule. The funny thing is, whenever we have hackathons, hardware teams always end up winning because someone has been sitting on a cool idea that they would never have the time to investigate during their normal job duties. We have definitely lost a couple of our good people because of this attitude.
bananaface 6y ago
I don't think this has anything to do with the particular reward structure at one company or whether this or that company encourages it. It's a structural problem. Unless innovators are rewared with equity in the innovation (not the broader company - the reward needs to be tightly coupled with the power of the innovation), there's no incentive to produce extremely successful innovations. You won't be rewarded for outliers. That's all there is to it.
- lumost 6y ago
  In most companies you will be penalized for outliers, high risk projects often come with their share of detractors.
  - hkt 6y ago
    It is worth noting that a project that would raise internal criticism would often have a reasonable chance of success as a startup in its own right. Investors are generally more rational than colleagues.
gumby 6y ago
This article is confused in its examples. The Nespresso story was posted yesterday. Cisco is pretty explicit about the model: its not uncommon that someone quits to develop a promising technology (and even someone else quits to develop an alternative approach). If one or both fail, or come in second, you VP an get your job back. While if one succeeds Cisco can buy the company. This allows them to provide bonuses for developing something new without screwing up their comp system and allows smart people to develop new stuff even if there are institutional biases. For many years they were an acquisition machine for this reason. Really the opposite of today’s “Acquihire” model. So not a failure at all.
xornox 6y ago
I have not ever been working in a company, which would reward innovation meaningful way. Why I would give any ideas free for anyone? If I have a good idea, I will benefit for it or nobody.
allo37 6y ago
Is there a bit of survivorship bias in this? You hear these stories about how some big company poo-pooed some employee's idea, only for that employee to run off and turn it into the next big thing, but you never hear about all the ideas that never quite worked out. I not saying big corporate environments don't stifle innovation but maybe there's some sanity in not investing in every "innovative" idea?
kls 6y ago
I really don't see this as a problem, the current org already has a focus on a product it innovated and the innovator leaving for their own venture allows themselves and fellow risk takers to capture more value for their idea, thus distributing wealth across a broader spectrum. This is how it should be. Had said innovator brought their product to fruition under the current corporate umbrella they would get a bonus and promotion at best. Meanwhile the product would not be the corporations core focus or competency and would most likely be diluted to help push their core product.

190 points by hhs 6y ago

Fixing this will be the exception rather than the rule. The author identifies it: the incentives are all wrong once you become a mature company. How likely is it, for instance, that Zoom will internally develop the VR chat app that will be to Zoom what Zoom is to Cisco?

loopz 6y ago
Could be likely and still not the right idea or execution. Most comments on Zoom is hindsight and survivor bias.
- AznHisoka 6y ago
  And narrative curve fitting. I doubt the story was as simple as some laid it out.

deleted 6y ago

[deleted]

kumarvvr 6y ago

There is a reason companies don't encourage internal innovation. It has nothing to do with managers, HR, or what not. Say you have 100 innovators in your company. Everyone comes to you with an idea, as an SVP or a Director, can you agree to all of them? You obviously pick and choose. And how can anyone say a new product / service by a company is not the result of an internal innovator? Alternatively, in the safe environment of a company, as in the innovator is getting capital and resources from the company finances, I think it is more likely that people are more free to give out ideas, even crappy ones. It's easy for a good idea to get lost in the noise. Ultimately, what is the solution to this? I guess you have to fundamentally change the structure of companies itself. In the given example, if Cisco were to transfer the innovator to another division, give him some money, on the same terms and conditions as a VC, perhaps it would have borne fruit. Essentially, it's easy to see companies, once a certain size, are effectively hard wired to move at a slow, glacial pace and focus on sustainability, rather than fast and fail innovation.

coderintherye 6y ago
>Say you have 100 innovators in your company. Everyone comes to you with an idea, as an SVP or a Director, can you agree to all of them? Yes, actually you can, as long as you control the parameters around how the idea is tested. We used to do a full 2-week sprint once out of every 16 weeks just to prototype people's ideas. In order to pitch the idea the only constraint was that it needed agreement from someone knowledgeable in that area that a prototype could be accomplished in <= 2 weeks.
MattGaiser 6y ago
> Everyone comes to you with an idea Is this actually happening? Are ideas being pitched at a high rate? As at every company I know of that has held an internal innovation competition, interest is quite low.
- sk5t 6y ago
  > internal innovation competition As in, an opportunity to give away good ideas for no cash and no equity?
  - MattGaiser 6y ago
    They usually have cash prizes, or at least electronics.
    - robjan 6y ago
      Doesn't seem like a good deal
      - MattGaiser 6y ago
        It depends. I am someone with a lot of ideas and I will never follow up on 95% of them on my own accord. Having it on the resume + the $200 bucks is more than enough for an idea that would otherwise just rot in my notebook.
    - 6y ago

dnautics 6y ago

Midway the article talks about risks and incentive, and that not all innovators will want to leave the nest. I'd say though, if you're already in a place where you're internally innovating, by virtue of the fact that you've already deigned to challenge internal culture, practices, or product roadmap, you're the type to take high-payoff risks. There should be a strong positive bias for leaving among internal innovators. Probably the only reasonable way for a company to be able to take profit from these innovators is to make it easy to spin out with a favorable equity position.

TwoBit 6y ago

Companies - especially market leaders - are averse to creating products that compete against themselves.

eskaytwo 6y ago
Do you mean The Innovator’s Dilemma?
- mymusings 6y ago
  Yes, quite so.
mymusings 6y ago
That is precisely what Steve Jobs explains quite well in his biography. He says, if Apple does not invent the next big product, someone else will. So, why not cannibalize our existing product with new ones than let someone else do it? But, not all companies are Apple and not all products are the same. So, it really depends if companies what to take the risk.
- fendy3002 6y ago
  Still, there are some expectations from customer that limit the product's innovation. Let's take Iphone, from the first version to latest one customers expect a slim phone with touch screen. Customers want "this product but better", that the innovation will be limited around that product's initial characteristics. Of course another line of product can be independently developed, but it's riskier as customers may or may not want that kind of product.
  - mymusings 6y ago
    Certainly agree. Except for the watch, Apple has made existing products way better than how they were initially introduced. In fact, pictures taken using the iPhone are almost as good as a high end digital camera, if not with a DSLR. Having that said, I think the new product innovation has ground to a halt after Steve Jobs, mainly because of the overall mindset of the company changing from a services centric one from a product centric one. Their focus has gone onto News, Music, Storage, Cloud and other service areas. Macs and Phones continue to get refreshed but are too pricey for the quality they offer, which is why they have not been able to make a dent outside EU, US and China (or in other words, emerging markets).

roenxi 6y ago

Corporations aren't really meant to be all that innovative. In practice corporations are designed to be extremely disposable. They can be unwound up on failure and spun up relatively easily. There isn't a rule saying that these companies can't innovate, but why should Cisco even be trying to write a teleconference client? There is no fault to be found that they didn't capitalise on what became Zoom. Best of breed corporations are often characterised by a focus on key ideas and their variations - look at Apple, pretty much all their products are variants of an iPad at different sizes and different target audiences. Picking some other global Fortune 500s: Walmart and Amazon, profound dedication to logistics. DuPont knows chemistry, Boeing mastered turbulence and propulsion. A couple of big extractors that know how to claim resources from the natural world. These companies are all very innovative, but also profoundly focused. They will really struggle to cope with innovations that aren't in the area of their strategic edge. It isn't a loss to anyone if the next trillion-dollar idea spins out as a new company instead of growing within an existing major. If someone has great ideas, we should invest in the person not in their employer. And they should stand to profit from their own success.

kqr 6y ago
Well, Apple didn't start out making iPads in a garage. Amazon didn't start out renting web services along with books. I think you're selling some of these companies short -- the thing they might seem focused on now was not the thing they initially got popular for doing. In other words, they innovated outside their expertise to stay relevant.
- roenxi 6y ago
  I don't think it is a failure of Cisco that they let Zoom slip out and become a new company. Even if I were a Cisco shareholder I don't know that I'd be that unhappy with management. I can just buy Zoom stock if I think they are on a winner - more than 75% of their market cap came into existence after the IPO. I don't see who the loser is in this story. It isn't Cisco shareholders; they can be Zoom shareholders too if they want to be.
  - 6y ago

lnsru 6y ago

Big companies have their own roadmaps, managers have their own agendas. There is no resources for innovative weirdos. Especially in the world ruled by bookkeepers. In my experience not much technical guys make it into middle management. And you can explain 100 times simple technical improvement in the simplest words to a bookkeeper. He will not get it!!! Instead engineers will play another session of design thinking to check innovation box on somebody’s checklist.

MattGaiser 6y ago

I am the kind of person to submit 30 ideas to internal innovation challenges. I was an innovation intern for a bank. I have won many innovation awards from competitions they hosted to find ideas. How many of those ideas got out of the page/prototype stage? 0. Because it seems like the important thing for many is to seem innovative. After that part has been done, interest disappears. Everyone would rather you excite them with a new idea. So much of this "innovation" stuff is about media and being trendy.

hinkley 6y ago
Dopamine is a hell of a drug.
- MattGaiser 6y ago
  Never thought of myself as a drug dealer...
  - maffydub 6y ago
    It's possible you were the addict rather than the dealer. :( What's the easiest way of keeping you at the company rather than going to innovate somewhere else? Make it as easy as possible for you to get your next "hit" of innovation dopamine. (I'm being cynical - this isn't necessarily what your employer was doing, but it could have been.)
    - MattGaiser 6y ago
      I must admit, that is plausible given how my current organization works.
    - hinkley 6y ago
      I worked with a customer who was a little too dim to appreciate how manipulative he was being. Remember, it’s the boss who puts you into that position. Only they have to understand what you’re doing, and not even that well. Realizing that about him made it feel worse somehow.

m0zg 6y ago

If you innovate, you have to have the freedom to fail, often repeatedly. Most companies (large or small) do not tolerate failure, especially the repeated kind.

Waterfall 6y ago
I heard the opposite, where people like those who tried and failed, which is why trump's failures were seen as good. Its better to try and fail than never try.
- m0zg 6y ago
  It's different if it's your own company though. You can fail as much as you want, until you run out of money. :-)

emerged 6y ago

as an innovator, I stayed at a company which was extremely resistant to innovation because nobody had any idea how few hours I was working for a decade. So while they resisted all my innovations for that decade, I was spending most of my time doing everything I wanted to outside of work.

NegativeLatency 6y ago
Can you elaborate?
- emerged 6y ago
  I worked remotely, very few hours per day, and nobody knew how few hours I worked because I was still the person they gave all the hard problems to and ripped through all my tasks quickly. But any innovations put forward were rejected through political games played by non remote employees. On some meta level I was fine with that because while they saw those as petty wins I was living a life of freedom working less than half the day. Since then I realized the same level of freedom could be had with people who care to leverage innovation instead of striving to fight it. Life was very good, now it's great.
  - isoprophlex 6y ago
    Inspiring story; how'd you manage to identify the people that cared about leveraging your innovations?
  - hackerfromthefu 6y ago
    Hi thanks for your post. It jumped right out at me and I had to login and reply right away - because my experience is the same as yours, verbatim, for the first part! I'm presently as you mentioned: fully remote, fixing the hard problems so they keep me well rewarded, doing it part time and enjoying the freedom, the org is political and non remote with culture issues stifling true innovation .. its striking in its similarity I feel like we could be work twins! I would love to talk to you about the next level, what it is for you and also how you got there. If I can, how can I get in touch with you?

idclip 6y ago

Not saying i had the best work life balance, and ive learned my lesson of not wasting air time on deaf ears... I was so enthusiastic after graduating .. i adopted the product, made it upgradable (8 year old repo, 1 programmer before me who was a sysadmin) - made it into a modern 12 factor app, before i even knew what that was. One thing i learned is that innovators dont belong in certain environments .. those innovators didnt belong where they were .. and that was their wake up call, at least, it was mine. Now i found a work place that appreciates me energy, and took me in as a fullstack dev and im so thankful, and careful. Im sure some devs there cant hear what i have to say. I learned, to speak less. Do more. Hobby? Ill make my own. A work place needs me to make it better - not to have me judge it .. its not easy thing to balance or properly execute if you Want to keep your soul. For my next job, I was careful, it took me 4 months of interviews that tried to pitch a junior/mid and secretly wanted a senior .. but eventually, i found a home. But sometimes its really necessary to wake up, and see that your efforts are being wasted, and move on. Left them better than i found them, and but i neglected myself and it was a valuable lesson in self care and the significance of my own time. Another important lesson is growing beyond having milk teeth .. we should look around, and see where we are, and what kind of people are there ... are we making enemies, or injecting spirit? Its no easy, those devs didnt belong in those companies to begin with. It was a life lesson to all involved.

emerged 6y ago
It feels very different once you escape a toxic environment. It's as true for us as engineers as it is for victims of domestic violence or any other sort of toxic relationship.
- idclip 6y ago
  a powerful experience .. it does feel like a new lease on life.

hathym 6y ago

>If someone drives a billion dollars of incremental value then why not pay them $25 million LOL, You are lucky if your managers did not take credits of everything you achieved.

vemv 6y ago

I have the feeling that the introductory story about Zoom and Webex wasn't quite like that. I think I remember some HN comments detailing it. For one thing you can't "just" create a replacement; you need employees, capital etc. So it was much more likely a game of politics rather than one of innovation. A more useful example would be one involving engineers, not a senior tech exec.

tjpnz 6y ago

If you have an idea of sufficient merit what would incentivise you to give it up to your employer versus quitting and trying to do it yourself? I realise that startups aren't for everyone but the alternative seems far less appealing and doesn't guarantee you any control over how it's executed (and very likely none of the reward).

bob1029 6y ago
This is a dilemma I struggle with currently. I have several product ideas that I can either run 100% on my own, or I can try to convince my current CEO that we should start building these out and selling them to our existing client base. The advantage of starting your own path is that you get 100% autonomy over every decision and every client that you take on. This can give you an incredible uplift because nothing is ever in your way from an organization/people/politics angle. The disadvantage is that you have to rebuild all that corporate boilerplate in order to establish name/brand/reputation/process/etc. You also don't have many constraints acting upon you when starting from zero, and you can wind up making piles of decisions that roll-up into disaster. I think the best course of action would be to present your ideas to executive leadership. If you can secure some equity share in the organization or products you propose, this is easily the fastest and least stressful way to get them to market. Being able to reuse your same HR, marketing & sales teams can save you potentially years of headache. If your current organization is gigantic or otherwise inflexible, you are probably best suited building out your project on your own time, incorporating LLC over the weekend, etc. One day you just put in your notice and move on with your dream.
hedora 6y ago
Common reasons I’ve encountered include: - “Golden handcuffs” - $BIGCO / $RECENT_IPO accidentally pays way above market because the stock appreciated since the person was hired. - “Benching” - $BIGCO hires an army of senior people at significantly above market rate to do work that should go to a recent grad. They can’t attract competent recent grads, and can’t retain senior engineers at market rate. - “Resting and vesting” You did a bunch of quality innovative work, but corporate culture changed and the opportunities to pursue new projects dried up before your stock vested. Since quality engineers get bored quickly, and most good ideas have a short shelf life, why not pitch them to management while you’re twiddling your thumbs?

westurner 6y ago

https://news.ycombinator.com/item?id=23886158 https://news.ycombinator.com/item?id=23886158 > Three reasons companies lose their best innovators. > 1. They fail to recognize and support the innovators > 2. Innovation becomes a herculean task > 3. Corporations don’t match rewards with outcomes While the paragraphs under point 2 do discuss risk and the paragraphs under point 3 do discuss rewards, I'm not sure this article belongs here. Risk and Reward. Large corporations are able to pay people by doing things at scale; with sufficient margin at sufficient volume to justify continued investment. Risk is minimized by focusing on ROI. Startups assume lots of risk and lots of debt and most don't make it. Liquidation preference applies as the startup team adjourns (and maybe open-sources what remains). In a large corporation, that burnt capital is reported to the board (which represents the shareholders) who aren't "gambling" per se. "You win some and you lose some" is across the street; and they don't have foosball and snacks. How can large organizations (nonprofit, for-profit, governmental) foster intrapreneurial mindsets without just continuing to say "innovation" more times and expecting things to happen? Drink. "Innovators welcome!". Drink water. "Intrapreneurial." What does that even mean? The employee, within their specialized department, spends resources (time, money, equipment) on something that their superior managers have not allocated funding for because they want: (a) recognition; (b) job security; (c) to save resources such as time and money; (d) to work on something else instead of this wasteful process; (e) more money. Very few organizations have anything like "20% time". Why was 20% time thrown off the island to a new island where they had room to run? Do they have foosball? Or is the work so fun that they don't even need foosball? Or is it worth long days and nights because the potential return is enough money to retire tomorrow and then work on what? Step 1. Steal innovators to work on our one thing Step 2. Step 3. Profit. 20% Project: https://en.wikipedia.org/wiki/20%25_Project https://en.wikipedia.org/wiki/20%25_Project Intrapreneurship: https://en.wikipedia.org/wiki/Intrapreneurship https://en.wikipedia.org/wiki/Intrapreneurship Internal entrepreneur: https://en.wikipedia.org/wiki/Internal_entrepreneur https://en.wikipedia.org/wiki/Internal_entrepreneur CINO: Chief Innovation Officer / CTIO: Chief Technology Innovation Officer https://en.wikipedia.org/wiki/Chief_innovation_officer https://en.wikipedia.org/wiki/Chief_innovation_officer ... Is acquiring innovation and bringing it to scale a top-down process? How do we capture creative solutions and then allocate willing and available resources to making that happen? awesome-ideation-tools: https://github.com/zazaalaza/awesome-ideation-tools https://github.com/zazaalaza/awesome-ideation-tools

say_it_as_it_is 6y ago

Zoom didn't succeed at Cisco's failure. It wasn't Cisco's lunch that was eaten. Zoom succeeded because the founder left and organized a venture. A new organization, a new culture, new leadership, and so so much luck contribute to the outcome. Only thing Cisco could have done better was establish a venture capital division to fund work beyond its internal controls. Yet, they would probably only fund ideas by top performers and this in itself wouldn't ensure greater success because metrics, politics and culture driving employees performance do not imply excellence or deficits.

dwd 6y ago

It really comes down to personality. Highly creative people generally rank low on conscientiousness. Organisations as they grow need ALL their employees to be conscientious: organised, punctual, goal-oriented, accountable - to not just to control outcomes but maintain cohesiveness. Organisation culture stifles those type of people. For an organisation to keep their innovators they need to be siloed away in an autonomous 'Skunk Works' where they can be free from the bureaucracy required to run a company.

stiray 6y ago
True. The one thing that corporations are extremely good at is destroying all the initiative and add so much bureaucracy to the development that you loose interest to improve / inovate as you are paifully aware that this will bring in more documents, jira tickets, endless "bicycle shed" discussions, endless covincing of managers that only care about their schedule (which you will corupt by "unknowns"), endless politics as there is always some architect/team lead that "must be the smartest" (and typically those comming to those positions are excelent in navigating buereaucracy and politics and are rarly inovators as those endanger manager schedules, adding risks, ...) and so on. Too many cooks spoil the broth. At the end you just figure out it is not worth it , do what you are paid for and you inovate at home. If those inovations become a startup you just leave.
- dwd 6y ago
  I used to infuriate one development manager by going on a streak of productivity where I'd generate a mass of code over a matter of days, and then go quiet while I was thinking, trialing and tinkering with the next project - this was in a role where I had some latitude to do that. I'm not sure if other's thought I was slacking off at those times and complained, or it just messed with him because his burn-down charts would always look like a cliff face.
  - qes 6y ago
    I struggle with the same pattern and worries myself, though mostly internally. My position affords a lot of latitude for it (I replaced the previous lead dev 10 years ago when the company was 5 people). It seems to be (and is said to be) okay with others as long as I communicate even as little as, "I'm deep in the weeds on this and probably will be for the next 2-3 weeks." I worry about the optics of it, but at least have confidence that other developers can see the end result is solid for the total amount of time invested. Smooth workflow for everyone is the other major concern, but again we're lucky to be working on our own system and not beholden to external deadlines.. and I guess lucky to have enough want-to-dos in the backlog that no one is ever without something useful to work on. We do create a bit of expectation of every developer having at least some tasks each week that are picked up and some that are completed, and it's tempting to just game that a bit to put up some numbers on the weeks where I'm figuring out how to do what I'm about to do.

Jare 6y ago

Companies also lose their worst innovators the same way - we get to find out who was which afterwards. (*) we find out through success or failure, which is at best a proxy.

ChrisMarshallNY 6y ago

An important consideration is corporate focus. Any organization (not just a corporation) has to have a lodestar; a “shared vision.” In some cases, this is a “boat anchor,” preventing the organization from moving forward, but in many cases, it is the thing that holds it together, and allows it to continue its existence; albeit, at a humble scale. Sometimes, a “boat anchor” is necessary. Not all organizations are about continuous growth, or even innovation. They may be a “do one thing, and do it well” type of shop, where growth and innovation can actually be harmful. I know, because I worked in a company like that. They found a product line that was crazy profitable, and it changed the company culture quite drastically. For many years, the company grew like a wildfire. The focus became “blurred.” Lots of money poured in, but I feel like the company may have “lost its soul,” so to speak. The original “lodestar” was never sufficiently replaced with a new focus. Then, the bottom fell out of the market, and the company suffered an implosion. They contracted back to their “roots,” where a conservative mindset took over. Will they survive? I’m not sure, but over a century, they did weather numerous disasters and roadblocks (like having a lot of their assets turned to kindling in war). I sincerely wish them well. Despite my frustrations there, I have nothing but respect for them. I learned many important values that I never would have learned at other organizations. But they are like a cactus; ideal for the harsh conditions of a desert. They are not well-suited for temperate rainforest, where so many other plants thrive. Innovation and risk-taking was difficult (not impossible) at that company, and many of my efforts to introduce change never bore fruit. It was my decision to remain with them, despite that. Basically, some organizations are just not places where innovative staff can thrive. They are stony, dry soil; ideal for cactus, but not for redwood trees. That is not always a bad thing. In those cases, the innovators either have to accept that they will have to live within great constraints, or they will need to move on.

softwaredoug 6y ago

Mature companies can become vehicles for protecting management/investor wealth. This forces them to act far too conservative. Management starts to see it like we might see our mortgage or savings. As such, they want to build a “fortress” to protect the current business model. Innovation- even internal innovation - can upset the apple cart. Making things worse, executives running a mature company are often very operations oriented. They’re not the same mentality of a founder (who are conversely often terrible at streamling operations!).

graphicsRat 6y ago

This is exactly what happened to Lightwave (a revolutionary 3D animation software). Management refused to allow the engineers to address pressing concerns so the chief engineer left to create another company whose products modo has now eclipsed Lightwave https://youtu.be/DiOX-D2B8LE https://youtu.be/DiOX-D2B8LE

friendlybus 6y ago
Same thing is happening to modo.
- graphicsRat 6y ago
  Really? So soon? Can you be more explicit?

benjohnson1707 6y ago

Most companies seem to screw it up once they leave the startup stage and enter the growth stage. Incentives schemes aren't designed to 'reward' failure, but zero risk-taking. It seems to be that simple: If you WANT innovation, you'll get innovation. What most people (at least those willing to climb the corporate ladder) want however is a career. And within a corporate incentive structure, career and failure don't go well together. Creating value out of nothing is way harder than simply not screwing up existing value. So it's obvious what you're gonna get. Eventually, there is no such thing as 'corporate innovation'. There could be a thing called 'corporate sponsored innovation garage', or something similar. At least for new business development from the ground up. The promising way to pull that off it seems is a blend of YC startup school tutoring, venture capital, [Google] X, the innovation culture of Tesla/SpaceX and access to cutting edge technology/people - baked into the right incentive structure. IF innovation was repeatable, I'd bet on such a vehicle and allocate resources there.

michaelcampbell 6y ago
I could retire if I had a Euro or 2 every time I have heard management say that mistakes are just lessons, experiments SHOULD fail now and again, and other such platitudes. Then reward the exact opposite type of workflow.
- jorblumesea 6y ago
  "we want innovators, outside the box thinkers and people willing to take risks" proceeds to promote people who only make safe bets, suck up to management and tow the party line
  - Gruuuuulyes 6y ago
    Sounds politically, but 'To generate a room in an existing room, to use its reaction as an impetus...' um that maybe also another topic... phys... ^^
- deleted 6y ago
  [deleted]

bladegash 6y ago

This article reminded me of a book by Ed Catmull (one of the founders of Pixar) called Creativity, Inc. The book is essentially about how Pixar has worked to foster creativity in a company where their business model pretty much relies on it. There are also some interesting Steve Jobs tidbits as well. I didn't really like the second half of the book, but the first half was fantastic! From my personal experience, I think the major thing that always stymied creativity for me was office politics. Having to constantly watch your back for someone with a knife can really drain your energy from just, you know, doing a job you otherwise enjoy.

atlgator 6y ago

When corporations are actively pushing a “skills don’t matter” narrative innovation isn’t even in the ballpark anymore.

known 6y ago

Innovation is 2 types 1. Incremental 2. Disruptive And Context is 2 types 1. Internal 2. External Totally we can see 8 options here; Pick the best one that fits in your company;

lhpz 6y ago

If you look at what a company really is from a different perspective, then it makes complete sense that an internal innovator cannot exist inside any established organization. Let’s examine how any company came to be: it first started with a few individuals with a shared project, who maybe managed to obtain resources beyond their own resources, for example by raising external capital. With these resources, they create a product or service, and more importantly look for customers. They may not find customers immediately, but through a long and painful trial and error process, they will try many different recipes before they actually discover the recipe to find customers. Companies who can’t find enough customers will die. Initial capital is just delaying this fatal outcome. During this first phase till initial success, the organization is very fluid. The company strategy can be completed changed, the product can be completely changed, the production process can be completely changed … basically anything can be completely changed. A newly established organization is fluid and can reconfigure itself quickly, because it is still small, and more importantly it has nothing to lose doing so. After a recipe to some initial commercial success has been painfully discovered, then the only strategy that make sense is to replicate it to grow the company. The initial recipe will be scientifically and meticulously improved, optimized, refined and scaled in all its components. Possibly by deploying additional capital, because the investment is now much less risky. This is what professional managers do. They perfect the execution of a recipe and balance risks doing so. Because now, as an established company with many shareholders, thousands of employees, suppliers, customers … the company has so much to lose by doing anything risky. Any established company must be risk averse or it will quickly disappear. Fast forward a decade or more of commercial success optimizing the same recipe with a risk-averse mindset, which still has room for some internal innovation but only of the incremental type, then any company is no longer fluid but solid. If it’s a public company obsessed with short terms returns, then it’s a very dense solid. It is also a large organization by now, with many gatekeepers to company resources. An internal innovator would have to convince all of these gatekeepers for any significant new endeavor. This is clearly impossible unless the internal innovator is the CEO of the company. That's why companies lose their best innovators. That’s why significant innovation cannot be produced inside large companies, but it can nevertheless be brought in via acquisitions ... sometimes from ex-employees who left to start their own company! What you see as an established company today, you can also see as a “fossil of its past successes”. That’s why an established company cannot be an innovation machine in my opinion. This was not always the case in the past. It’s probably a consequence of contemporary professional management, with too much emphasis on short-term, low risk and immediate returns.

sergioisidoro 6y ago

> Creating a billion dollars of incremental value at a startup yields untold riches for the entrepreneurs behind the venture. Creating a billion dollars of incremental value within a large corporation may be recognized, but the rewards are nowhere near the same level as a startup. Isn't this the most obvious reason? If you have an idea and the capabilities to develop it for your own gain, why would you do it so the shareholders of your old company can buy a new yacht, while you struggle to buy an apartment?

koheripbal 6y ago
Because the risks are different. Most startups fail and founders often lose money. At a big company, the risk of failure still comes with a fulltime salary.
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gkanai 6y ago

Another great example of an innovator who was not rewarded is Shuji Nakamura, who invented the blue LED, which led to a lot of other successful products including the white LED and the bluray disc platform. Nakamura was not rewarded by his company, went on to win a Nobel prize with collaborators from his company. Nakamura left the firm, sued the firm and basically walked away with nothing. He's now an academic at an American university.

dfilppi 6y ago

Not sure there is a solution for this. To create a money machine like Cisco is extremely difficult and valuable. It is natural that the culture becomes more conservative, plus large orgs are conservative by necessity and bureaucratic. Also, most innovators won't put in max effort when they dont have full control and are under tremendous pressure. In a big rich org like Cisco, the comfy status quo is always whispering to you.

PaulHoule 6y ago

Zoom is a particularly good example because it shows the same cycle the "chat" space has been stuck in since 1993 or so. For a while IRC was cool, then it was CUSeeMe, then there was Paltalk, and ICQ, and AIM, and Microsoft Messenger and Skype and Lync and Skype for Business and Google Talk and Facebook Messenger, and... If you look at them closely you can find some improvement (e.g. Zoom has a server that makes the "Hollywood Squares" view of all the participants) but if you look at them broadly they don't seem to have gotten better over time, they've just locked people in, stagnated, then something new comes along. It's hard to see how Facebook Messenger is different from AIM except for what it is locked in to. If the EU really wanted to show some leadership it would put an outright ban on proprietary chat programs and force them all to use open protocols. Think of it as a part of a "computer user's bill of rights". Every time somebody wants me to download some new chat app I want to throw a hammer through a screen like that Apple 1984 ad.

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roland35 6y ago

This is a tough problem for companies. At my last job there was an "advanced concepts" group which had a lot of freedom and latitude, but they had a poor reputation for not really producing anything useful. The few things they did produce had to basically be redone since the quality of engineering wasn't ready for production. I'm not sure how to fix that, since lack of freedom wasn't the problem! It probably is just making sure that the right people are leading. I also don't know how to reduce other engineering groups more focused on practical projects resenting the innovation group working on more fun, low stress projects. That is a hard political problem.

sauntheninja 6y ago
Valve had the same problem people there are free to join or start any project they like but it just resulted in projects being started but being scrapped half way through
mensetmanusman 6y ago
This is a ying and yang issue. For every advanced concepts team, you need a non-techy business and marketing team to pull ideas out to the world.

dennis_jeeves 6y ago

Related article of mine. Why good organizations decline: https://realminority.wordpress.com/ https://realminority.wordpress.com/

starky 6y ago

The company I work for drives me nuts with this. We do tons of research and innovation on the software side of things. But because hardware takes longer we almost never do any research or try out anything risky because we are always the critical path on the schedule. The funny thing is, whenever we have hackathons, hardware teams always end up winning because someone has been sitting on a cool idea that they would never have the time to investigate during their normal job duties. We have definitely lost a couple of our good people because of this attitude.

bananaface 6y ago

I don't think this has anything to do with the particular reward structure at one company or whether this or that company encourages it. It's a structural problem. Unless innovators are rewared with equity in the innovation (not the broader company - the reward needs to be tightly coupled with the power of the innovation), there's no incentive to produce extremely successful innovations. You won't be rewarded for outliers. That's all there is to it.

lumost 6y ago
In most companies you will be penalized for outliers, high risk projects often come with their share of detractors.
- hkt 6y ago
  It is worth noting that a project that would raise internal criticism would often have a reasonable chance of success as a startup in its own right. Investors are generally more rational than colleagues.

gumby 6y ago

This article is confused in its examples. The Nespresso story was posted yesterday. Cisco is pretty explicit about the model: its not uncommon that someone quits to develop a promising technology (and even someone else quits to develop an alternative approach). If one or both fail, or come in second, you VP an get your job back. While if one succeeds Cisco can buy the company. This allows them to provide bonuses for developing something new without screwing up their comp system and allows smart people to develop new stuff even if there are institutional biases. For many years they were an acquisition machine for this reason. Really the opposite of today’s “Acquihire” model. So not a failure at all.

xornox 6y ago

I have not ever been working in a company, which would reward innovation meaningful way. Why I would give any ideas free for anyone? If I have a good idea, I will benefit for it or nobody.

allo37 6y ago

Is there a bit of survivorship bias in this? You hear these stories about how some big company poo-pooed some employee's idea, only for that employee to run off and turn it into the next big thing, but you never hear about all the ideas that never quite worked out. I not saying big corporate environments don't stifle innovation but maybe there's some sanity in not investing in every "innovative" idea?

kls 6y ago

I really don't see this as a problem, the current org already has a focus on a product it innovated and the innovator leaving for their own venture allows themselves and fellow risk takers to capture more value for their idea, thus distributing wealth across a broader spectrum. This is how it should be. Had said innovator brought their product to fruition under the current corporate umbrella they would get a bonus and promotion at best. Meanwhile the product would not be the corporations core focus or competency and would most likely be diluted to help push their core product.