Monday, May 25, 2009

Innovation: Does size matter?

Why do journalists always ask the wrong question - over and over again? Oh well. I guess the task of a journalist is to write about a zillion different subjects and consequently, know little or nothing about anything. It would be good if they returned to just reporting the facts. But we live in an age where everybody -- journalists included -- consider it their responsibility to entertain you long enough so that you might be persuaded to buy the products that appear in your peripheral vision.

Anyway, here's an NYT journalist, as is customary among their tribe, setting up a strawman. Who says innovation belongs to the small? snorts the headline. Yeah, who says so? Apparently everybody that Steve Lohr met:
FOR more than a decade, the prevailing view of innovation has been that little guys had the edge. Innovation bubbled up from the bottom, from upstarts and insurgents. Big companies didn’t innovate, and government got in the way. In the dominant innovation narrative, venture-backed start-up companies were cast as the nimble winners and large corporations as the sluggish losers.
There was a rich vein of business-school research supporting the notion that innovation comes most naturally from small-scale outsiders. That was the headline point that a generation of business people, venture investors and policy makers took away from Clayton M. Christensen’s 1997 classic, “The Innovator’s Dilemma,” which examined the process of disruptive change.
Let's dissect this some, shall we? All the good research has suggested that small, intense, groups -- not little guys -- tend to be generate more innovative breakthroughs. Recognizing this,many large corporations (such as 3M, for instance), organize their groups tasked with innovation as a number of small groups of highly talented individuals with diverse skills and strengths. Xerox's Palo Alto Research Center, known for such highly paradigm changing contributions as Ethernet networking, the Graphical User Interface that showed up on the Apple Macintosh and Microsoft Windows, and the laser printer was made up of a number of small, talented groups. The same was the case with IBM's research labs that have made numerous contributions to the advancement of information technologies.

So it's not that anybody believed that only little guys innovate; it's just that large organizations have a tendency to crush the small groups that innovate, and small organizations have not yet gained the mass to crush their innovative processes. Further, the point being made by the article -- that large corporations have the resources to fling at innovations that demand huge investements -- has also been known for decades. The breakthroughs in hard drives, fiber optics, reduced instruction set computing, relational databases and numerous other areas required a lot of investment.

So nothing to see here, but a good reminder anyway, at least for those with rapidly fading memories.

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