11:57 AM

Big Differences In How Large Companies Innovate

By David Needle

There are no shortage of tried and true ways to succeed in business, but if your goal is to be the next Apple be prepared to toss the rule book out the window.

That's the inescapable conclusion I came to after hearing a number of tech and business execs discuss how they promote innovation and inspire leadership at their companies.

"We've moved from over 25 to very small teams of four or five people and we iterate with our customers to get closer to the customer's pain. We have failures, but we have more at-bats," said Kaaren Hanson, vice president of Design Innovation at Intuit. Hanson spoke recently as part of a recent Churchill Club-sponsored panel on innovation at Microsoft Research in Silicon Valley.

Another panelist, Inder Sidhu, senior vice president for strategy and planning at Cisco, said it can be tough for a big company to innovate if its perceived as a challenge to the mainstream business. "It's like an infection, new antibodies will come and try and crush it," he said.

Sidhu drew a distinction between sustainable and disruptive innovation.

He related the story of how Cisco developed its Telepresence video conferencing system by incubating it's development under a separate team that had its own executive and resources. "We gave them a sheltered environment and violated all the rules" for how products are normally developed at Cisco, he explained, including a $50k incentive bonus paid to each team member for finishing the project six months early.

"The parking lot was full every Saturday night," he recalled. "If you get the incentives right, you can get to disruptive innovation."

Based on Cisco's recent woes, it sounds like the company's bread-and-butter "sustainable innovation" isn't holding up well. But Cisco CEO John Chambers told the Mercury News this week that the networking giant plans to "double down" on its long-stated commitment to further development of video technology.

That fits with the strategy Mark Johnson, co-founder and Chairman of innovation consulting and investment firm Innosight, said is required to keep companies focused on long term challenges.

"A leader needs to say a set of things won't happen for three, four, five or seven years out, but that 'its' our future'," said Johnson, who also spoke on the panel.
And then there's Apple

I've covered a number of panels where tech execs offer advise on how to be successful with product launches and strategic initiatives. It always sounds reasonable (e.g. "Listen to your customer," etc.) until you step back and realize that's not how the hottest tech company going, Apple, got where it is today.

Apple does far less market research than other companies when it comes to developing new products. And whatever the labs come up with, the ultimate test is whether CEO Steve Jobs likes it.

Microsoft's Dan'l Lewin argued the software giant has a more balanced sustainable and disruptive innovation cycle than Apple. "Apple's good at making you buy a new machine every three years because the old stuff won't run anymore," cracked Lewin, vice president of strategic and emerging business development at Microsoft Research.

But Innosight's Johnson said Jobs has proven to be uniquely capable at guiding Apple's innovation.

"Steve Jobs is relentless on user experience and integrating that philosophy into the whole organization to make sure it happens," said Johnson. "So it's not just about understanding the customer, but seizing opportunities."