Attitudes about innovation

At some recent workshops, I put six groups of ideas in front of people as shown here

The answers surprised me (a bit).  Innovation ranked FOURTH from a group of 120 senior managers at a large multi-national company.

At another company, Innovation ranked SECOND, from 89 managers

At yet a third, it was FIFTH, from about 70 managers

WHERE SHOULD IT BE?

Internal Chasms, canyons and voids

Many of you studied (or at least skimmed) Geoffrey Moore's CROSSING THE CHASM a few years ago.  His thesis was (and is) a great one--enthusiasts (read NERDS) and early adopters provide initial sales for any new product or service.  But then there is a big GULF before the quiet majority sign up. The majority has several categories--the WAIT and SEE crowd, the SKEPTICs, and the OVER MY DEAD BODY types.  But the problem is that all of them are slow to adopt new methods, and that hampers the enthusiasm of any start-up, or new offering.

This is an EXTERNAL CHASM--meaning it is to a significant degree OUT OF YOUR CONTROL

We've identified three INTERNAL CHASMS as well, reasons that larger companies so often fail at innovation by comparison with small companies.

The FIRST in a FUNDING CHASM.  Paradoxically, larger companies, with lots more money, have less to spend on speculative things than do smaller companies.  HUH?  Well, oddly, this is true.  The shareholders want it back, in terms of dividends, or share price, or both.  To drive share price, the earnings spiral must be ever upward, which means that speculative 'new money' is not spent.  Refinement becomes not just the norm, but the rule.  So new research money doesn't get spent.

The SECOND is a RESEARCH CHASM.  As the money doesn't get spent, the best researchers tend to leave for greener pastures.  This leads to outsourcing your new product development.  Ohmygawd

The THIRD, by far the most prevalent way to shoot yourself in the heart, is the CANNIBALISM CHASM.  This is the one where the sales teams (and often manufacturing and marketing and support) refuse the new product / service / concept because of the disruption it causes for smooth operations.  Case in pony:  Kodak pioneered digital photography just fine, holding more than 17,000 patents in this area.  So the funding chasm and the research chasms were handled.  But the operational side didn't like the new stuff, and loved the old wet chemical stuff.  And they rode it into the grave.

Moore covers some of this in DEALING WITH DARWIN, but we think it could be explicated more completely.  Hopefully, we'll get that into a readable version this year.

The nature of research -- courtesy Jim Pelkey

Jim Pelkey's 'new book'   The History of Computer Communications" is outstanding, both because it is done from a serious engineer's and investor's standpoint vs. a historian's approach, and because it is a time capsule from twenty-five years ago.

I referenced this earlier, but if you missed that, See http://www.historyofcomputercommunications.info/Book/7/7.10-ReturnVentureCapital.html 

What I want to call you attention to, though, is the significant interview that Pelkey had with Phil Kaufman, then CEO of Silcion Compilers after a terrific areer at Intel:

JLP:  I hold a view that the research process in the United States is in great disarray.  With ARPA becoming DARPA, and Bell Labs post-divestiture, NSF funding individual professors at universities, but the needs of today of systems projects where you cross disciplines and there are many people and they are big projects, and if we don't start investing in research in a different way, in terms of these information technologies, we're living today off stuff that was done in the '60s and early '70s, for the most part.

PK:  Oh, I agree completely.

JLP: And where are we making the investments today that we're going to see, in 20 years time, that's what's become (unintelligible)?

PK:  I think there's a vast hole to do the kinds of systems, if you will, research that the Bell Labs -- Bell Labs, Xerox PARC, Sarnoff Research, those don't exist in the same form today, even if they exist.  The companies that are still doing it are doing much less of it, and much more short term product-oriented.  At the same time, as you say, the government funding is going into one-off kind of things, and mostly researching the past.  A lot of the universities are turning from real research to product development.  I consider that, for example, that Berkeley's done a lot of wonderful stuff in CAD, but they haven't done research.  They've done product development.  They've been a low-cost employee product development team.  That's very nice, but it isn't research, and it isn't really advancing the state of the art, but it's where they can get funding.  Companies will fund them because it's short term.

JLP: I think it's a real issue for us as a society.  I'm going to address it in this book.

PK:  I'll tell you a related issue that you may want to think about, which is one I've been giving a lot of thought to, and that is 'how do companies do research and product development?'  In the US, venture capital drives the disassociation of companies, and new start-up companies and small companies, and the nature of a start-up company is you have to do everything, but you have to build your product from scratch too.  Fifty or 75% of what you put into R&D is building stuff that isn't innovative and isn't part of the essence of the technology you deliver, and has no secondary use because you're a small company and you don't have any other place to put it.  Big companies, where they have some cross-fertilization potential, at least in the US, are notoriously bad at doing it, and I can't say that I know how to do it.  I spent a lot of time at Intel trying to drive synergy, and I'm convinced that's the wrong thing to do, that big companies should be holding companies and at most they should drive communications, but the ones that are doing it best are the vertically integrated Japanese  companies, not the American companies, of reusing things, and the relatively larger companies.  If Mentor develops a schematic editor, they can use it across a very broad products line.  If we develop a schematic editor, we use it across 500 customers.  One of the things that I've been trying to come up with is a way for multiple small companies to share technology, not just technology but real products that are developed, that aren't in their mainstream.

JLP: Right.  I agree.

PK:  And nobody's come up with a way to do that, but I've been trying to work on some things like that, and other efforts --

JLP: Actually, you should get together with Gordon, because Gordon just gave a speech last week that he was telling me about, where he was saying that he wants companies to break up their engineering efforts.  He thinks you only need one fifth the number of engineers doing engineering.  In fact, a lot of engineers are doing enabling things, such as testers and so on.  Those should be shared across companies.

PK:  Absolutely.

JLP: So it's the same vein.  He's going to try to write an article for Spectrum on this issue.

PK:  Well, I've got a paper that I've written and circulated to a number of companies that I call a Technology (unintelligible), on how to try to do things like that.  It was dastardly hard to do, because you've got NIH and management issues.

JLP: One of the issues I address because I'm addressing technology industries is that we, in this country, going to your point, have been very good at building small companies.  We haven't been all that good at building big companies.  If the trend of today continues, we need more big companies in order to be able to compete on this global basis with the pan-European and the Japanese companies, and we're not doing that.  Is that important or not important?

WAS THIS PRESCIENT OR WHAT?  1988 words

So WHICH COMPANIES, PEOPLE made the rapid Internet DEPLOYMENT

My twenty focus groups were each essentially groups of eight to twelve folk, 195 in all

Virtually all of them were professionals--half were designers in the high-tech sector, a quarter are or were executives in high-tech circles, and the final quarter are business people or academics very familiar with our technological age.

In other words, not a David Letterman "man on the street" interview set

The companies they named included a potpourri:

The clear winners were BBN (Bolt, Beranek, and Newman), CERN, Netscape, RAND, and XeroxPARC

A second group included IBM, Microsoft, Synoptics, WorldCom, Adobe, 3Com, Apple and DEC

Universities and societies got named a lot: UCLA, UCSB, UCSD, Stanford, Berkeley, MIT, MN, Utah, Maryland, Cornell, Wisconsin, and Illinois

A third group was AT&T, A/OL, CompuServe, Telenet, Bridge Networks, Vitalink, and Equatorial Communications (I had not heard that name in years!)

Companies with single mentions included Cisco, Cray, Disney, and HP

The people named were almost a 'who's who':

Vint Cerf was a clear winner; Doug Engelbart was 2nd; Tim Berners-Lee, Bob Metcalfe, and Larry Roberts tied for third, just ahead of Bob Kahn.  All of these are well-known inventors of the infrastructure, but 'deployment'?

Steve Jobs, John Lasseter, Michael Eisner, Paul Baran, J.C.Lickliter, and Ivan Sutherland each drew several votes.

Al Gore got mentioned, as did Len Kleinrock, Jim Clark, Jim Barksdale, Marc Andreessen, Irwin Jacobs, Vannevar Bush, Ted Nelson, Ed Teller, and Bill Gates.

No one from HP was named.  The lone person who cited it had no name to go with it.

No one from Cisco was named.  The lone person who cited Cisco as a company was asked "who" at Cisco.  The answer: "Cisco was headed by a man and a woman; I don't know their names, but she was always grumpy.” 


 

The 'story' behind the posits

Posit #1, that the Internet is an epochal shift for civilization

James Fellows, an erudite Atlantic Monthly contributor, conducted a survey of "The 50 Greatest Breakthroughs since the Wheel," published in the November 2013 Atlantic Monthly, pp. 56-68

His panel of a dozen experts included Leslie Berlin, John Doerr, George Dyson, Walt Isaacson, Joi Ito, and Padmasree Warrior--indeed a prestigious grouping.

They concluded that the Internet ranked 9th, behind (in order) vaccination, the internal combustion engine, paper, optical lenses, semiconductor technology, penicillin, electricity, and the printing press.

It was well ahead of airplanes, refrigeration, the personal computer, the automobile, making steel, nuclear fusion, the telephone, radio or television.

Hummn, quite a list of what makes our society work, huh?

NO ARGUMENT THAT IT IS A BIG DEAL, RIGHT?


Posit #2, it happened OVERNIGHT

November 17, 1988 was the date of the first contact from America to Europe via 'an Internet'

The Internet Society says in 1991, there were 900 operational networks in the world on the Internet.

Tim Berners-Lee released the WWW URL definitions in 1993 from CERN

Internet Society founded in 1993

Netscape went public in August 1995

October 24, 1995, the Federal Networking Council (USA) defined "Internet" as the official name

The Internet Society says that in 1996, there were 50,000 operational networks WW on the Internet

According to the Internet Society, January 1, 1999, there were 50,000,000 operational networks in 206 of the 248 countries of the world on the Internet

Dec 31, 2000:  360 Million users, one-third in the USA

Dec 31, 2012: 2.406 Billion users, one-eighth in the USA (80% of population); Europe has 63%, Asia 27%, and Africa 16% penetration.  Overall, 34% of the world's population is using the Internet

NO ARGUMENT THAT IT HAPPENED "OVERNIGHT", RIGHT?

Compare this to television in America, for example.  Demonstrated in 1927, offered for sale in 1937, 2,000 sets sold by 1940; 9 TV stations in 8 cities by 1945; 3.6 M sets by 1950; first national broadcast October 1951; 21 M sets end of 1953.

Who made the Internet "DEPLOY" so fast?

Two posits:
1. the Internet is one of the epochal events in civilization's history
2. It happened "overnight"

Two questions:
A. Name three companies most responsible for this
B. Name five people most responsible for this

I posited these two points, and asked these two questions, of twenty ad hoc focus groups in 2013.

Write down YOUR answers, and we'll talk about 'my results' in the next post

Infrastructure creation takes LOTS of folk

There's a great belief on the part of journalists and analysts that "the great man theory of evolution" is true.  Enough that the books about 'treat companies' such as IBM, Intel, Cisco, Boeing, and HP, tend to focus on the leadership (see the latest re Zuckerberg).  And, in many respects, they are correct.

The recent movie, Lincoln, or the insightful Saving Mr. Banks, certainly give us perspective that that ineluctable quality of bold leadership matters.

But it is also true that minions are valuable, and very often they are key.  Take Intel for example.  Intel's 'corporate history' is mostly told through stories about its founders, Gordon Moore and Bob Noyce, and its energetic forceful leader Andy Grove.   Once in a while, the invention of the microcomputer by Ted Hoff and some others is told parenthetically.

The really big story usually told (Grive himself popularized this version) is that Intel (read Intel leadership) missed the significance of the micro processor, and when the Japanese onslaught came on strong in 1985 and created a crisis, Grove was smart engouh and bold enough to talk Gordon into switching horses, so to speak.

What this story fails to outline clearly is that the handwriting had been on the wall at Intel for seven years, and legions of folk soldiered on without top management support -- in fact, with opprobrium actually -- to have the micro 'ready' for its time in the sun.   Bill Davidow, Phil Kaufman, Dave House (no relation to me, although we joke that he's my older brother), Stirling Hou and many many others endured, and after a mere fifteen years, they were 'heard'.  But you never see that story in print, do you?

The paper by the Internet Society mentioned in the two previous posts does a good job of outlining the fact that it wasn't just Al Gore who invented the Internet, but also the fact that it wasn't just Cerf, Kahn and a few cohorts either.  It was myriads of folk, at lots of places.

The key thing was the conceptual design of the Internet was handled somewhat differently--it actually was conceived to be 'inclusive' of lots of uncoordinated efforts, purposely.  When's the last time you heard of that as a major design principle?