Blocking breakthrough innovation

The announcement of Steve Ballmer’s retirement as CEO of Microsoft has been accompanied by the recital of a sad list of major innovations created by that company, but rejected by the management during his term of office and exploited successfully by competitors – notably by Apple.

The list includes the iPhone and the iPad. And they are probably just the tip of the iceberg. What’s more, the company did launch a stream of new products that failed.

Poor Ballmer [?] is by no means alone. He’s just more famous than the other CEOs who routinely block breakthrough ideas.

The central problem in innovation isn’t coming up with ideas, nor with implementing them. It’s with recognising and supporting them. After all, the more disruptive the idea, the less likely it is that consumer research will pick it out as a winner, and the more likely it is that it will contravene an existing mindset.   

Distressingly there’s no evidence that senior managers are any better at picking breakthrough winners than my mum.

Can Apple turn the corner (again)?

Apple’s share price did well in the twelve months following the death of Steve Jobs in October 2011.

But since then it has been on the slide pretty continuously, some 28% down on the October 2012 peak. Analysts are still not recommending “buy”.

Of course, the innovation kings have been overtaken in the mobile phone market by fast-follower and improver, Samsung. Now they have added competition from the Chinese giant, Huawei. Orders for iPhone 5 parts have been cut on weak demand. Competitors are circling Apple’s leadership in the tablet market, including Google, Amazon and Microsoft.

The consequence is that Apple has missed Wall Street estimates in the last two quarters and its new product offerings seem less radical and are generating less enthusiastic response.

What’s to be done?

Steve Jobs. Saint?

Working this week in Manila with a wonderful group of young Filipino leader/managers, I’ve been asked several times why I have not written about Steve Jobs since his death one month ago.

I think the truth is that I have been wrestling internally with a couple of issues.

On the one hand, there’s no doubt that, particularly since his return second time around to the company he founded, Apple’s story has been one of continuous and spectacular success. And he has written and spoken inspiringly.

So what’s the problem?

Well, for one thing it’s clear that the great successes of the company were all built on the innovations of others – from the laptop to the iPad. And all the other blockbusters in between. Picking up other people’s inventions and improving them for the customer is good, but really doesn’t make Jobs comparable with, say, Thomas Edison, who was the founding father of so many of the world-changing innovations of the late nineteenth and early twentieth centuries.

And then there’s the man who has been described as “Jobs the Tyrant”. Years ago I was told that it was not a good idea for an Apple staffer to get into an elevator with Steve. Apparently there was a good chance that you might emerge unemployed. I guess that story is more emblematic than literally true.

And yet, since then I have continuously heard and read about the tantrums and tirades, the disrespectful ways that colleagues could be treated.

No doubt the upside to all this was a sense within the organisation of what people call “creative tension” - tension which can drive performance. At least in the short run.

Jobs’s biographer, Walter Isaacson, said recently: “In the end, you have to judge him on the outcome.” Right now, the Apple juggernaut rolls on, apparently unstoppable.

Only time will tell what the outcome will be now that he is gone. Will enhancing the innovations of others be sufficient? And how will the climate change in Apple now that he no longer visits the building?

Maybe in future I should include Apple in Brand Renovation masterclasses that I give. For, in my mind, the company is a superb “renovator”, rather than being a real innovator.

By the way, are you coming along on Tuesday in Manila?

Manila Masterclass with Roger Neill, 8 November 2011

From living room to den to phone to…

In an interview in Rolling Stone in 1994, Steve Jobs spoke joyfully and perceptively about the shift of focus from the living room, the “set-top box”, where convergence had been headed up to that point, to the “den”.

“I love it,” he said. “I think the den is far more interesting than the living room… I’m very excited about having the internet in my den.”

And so it came about.

But now, as my friend, Jackie Bradley, points out, it’s no longer the den – it’s the phone through which it all converges. And my business partner, Alison Duffy, is a total convert. Jobs got that one right too.

Not for me. I like it in the den. And I can’t bear the idea that I’m connected to everything, everywhere I go, every minute of the day, no matter what I’m doing. I still want a life of my own, with broad expanses of thinking and being time.

Or is that just not going to be possible?

And where to next? Better ask Steve.

Microsoft and their search for breakthrough innovation

There’s been much discussion over recent years as to why Microsoft has had such a low to non-existent strike rate in developing breakthrough innovations.

Certainly it’s not for want of trying, nor for want of resource. In fact, it’s twenty years since Bill Gates first decided to pour megabucks into R&D. Currently that budget is running at $9 billion a year. But two decades on, aside from a stream of incremental innovations, there’s little to show for all that investment.

Currently the company has high hopes for its Kinect system. But was that really what Gates had in mind when he started on this great creative Odyssey – a games controller?

The fact that Apple has been so successful in creating and introducing one blockbuster after another, has led inexorably to their overtaking Microsoft in market value last year.

Lack of breakthroughs – disruptive innovations – is certainly not confined to Microsoft. My experience is that many large, established corporations have the same problem. And they usually know it and take steps aimed at remedying the situation.

Nearly always they assume that they understand what needs to be fixed – and get on with fixing it. Without noticeable effect.

In reality, there are many possible blockages and barriers, some of them behavioural, often attitudinal, occasionally at organisational, strategic, skills and process levels. And it’s critically important that the right issues are diagnosed and the right treatment prescribed.

“Stunningly arrogant,” as Microsoft has been described, may or may not be the source of their problem. They need to know which it is before spending more time and effort trying to fix it.

In major companies that I know well, the wrong diagnosis, coupled with the wrong treatment, has led to the problem being redoubled.